Legal Question in Business Law in New York

Re: Contract Origin Question (Interstate)

I am not quite certain by what you mean using the phrase "guidelines, limitations, and who is best to facilitate such an agreement".

The laws of the State of New York would guide all activities under the contract, including breach, performanace, etc.

Call with any questions.

Good Luck

RRG

Re: Contract Origin Question (Interstate)

The first order of business would be to review the entire clause (most preferably the entire contract).

In general, the UK company is attempting to make New York law the substantive law governing the contract, meaning that if a dispute arose and one party were to sue another, the case law and statutes of New York would most likely be applied to the contractual dispute.

The UK company is probably asking for this because it is familiar with New York law and New York law is a known commercial law state. It may also have attorneys based in New York.

When contracting with a non-U.S. entity, there are certain provisions that the U.S. based entity should include, especially provisions governing where the U.K. company can be sued in the United States and how service of process may be effected. I do not know if your contract covers those provisions.

If you need further direction, feel free to contact me.

Michael S. Paradise, Esq.

212-489-4777

Re: Contract Origin Question (Interstate)

To answer your question would require a dissertation on contract law in New York! As a general guide, please see our web site - on the right side panel you will see a link to "Business Contracts". A review of the contract in question would be necessary to advise you as to how New York law would address certain issues. Just judging from your brief description, the most obvious concern relates to defense and enforcement. The company in the UK apparently would not mind taking a direct flight to New York to either enforce the agreement or to defend any claims of breach. Essentially, they appear to be taking a compromise position - you both travel to New York if there is a dispute regarding the contract. If they have a New York office, then they probably have New York counsel. If you would like to have your contract reviewed by our firm, you can call to make arrangements to either e-mail or fax the document and to discuss fee arrangements.

Re: Contract Origin Question (Interstate)

Very briefly, if chosen, the New York choice of law would be used to interpret the contractual language of your agreement and, possibly, dictate certain provisions apart from what you have expressly agreed on. It's difficult to generalize here, but contract laws of most U.S. jurisdictions are very similar, and it is not uncommon in international transactions to choose New York law.

However, depending on the nature of your contract (software licensing ? software development and other services ? assignment of rights in IP ? sale of hardware ? outsourcing ?) and its specific provisions (limitations on damages, acceptance of work/services/goods, warranties, indemnification, etc.), different state laws may provide for different consequences and affect your substantive rights and duties. Moreover, international law may be implicated as well. If you are contracting with a non-U.S. entity, as you seem to be, and your contract involves a sale of goods, for example, the U.N. Convention on the International Sale of Goods may apply unless expressly opted out of. This may significantly change your legal rights.

There may also be some tactical considerations here. Normally, you would select the same forum (state) as the substantive law selected to govern the agreement because it is costlier to prove foreign law (you would need expert witnesses and local counsel). There may be times, though, when you would select a specific forum for procedural advantages, presence of your local counsel, availability of the other party's assets for enforcement, provision for attorney's fees and a myriad of other reasons.

The bottom line is that if your contract was specifically developed under Arizona law, you would be doing yourselves a disservice without involving New York counsel to review the changes requested by the British party. Contracts with foreign parties add another layer of complexity and may implicate U.S. federal laws (export controls, for example).

Feel free to contact me if you have further questions or need the amended contract reviewed.

Please note that this reply is not legal advice and should not be relied on as such.