[You might also want to read this September 2009 post in which I refine my thinking on “arising out of” and “relating to”.]
A Canadian law firm recently shared with me its draft “boilerplate” template. On reading it, I saw that the law firm recommends that its lawyers use the following language in any governing-law provisions (I’ve omitted the bit excluding conflicts-of-law principles, as that’s a separate issue that I won’t be addressing in this post):
This agreement is governed by, and is to be interpreted, construed and enforced in accordance with, the laws of [jurisdiction] … .
The above language is entirely consistent with mainstream contract language. Furthermore, it’s analogous to the language recommended in a U.S. treatise on boilerplate:
The laws of the State of Vermont … govern all matters arising out of or relating to this Agreement … , including, without limitation, its [validity,] interpretation, construction, performance, and enforcement.
Both bits of language reflect the same approach, namely that the verb to govern, meaning “to control,” is by itself inadequate. So both provisions offer additional concepts, with the treatise using the three offered in the law firm’s language and adding two others.
Clearly one could scour caselaw, the Restatements, and the major contract-law treatises and parse subtle distinctions between validity, interpretation, construction, performance, and enforcement. But to engage in such analysis is perhaps not to see the forest for the trees. In many cases in different jurisdictions, judges of varying degrees of semantic acuity have considered, with respect to any number of issues, governing-law provisions worded any number of ways. So collecting, magpie-like, court pronouncements as to the meaning of this word or that word wouldn’t seem conducive to the uncluttered perspective necessary if one’s to devise clear and concise contract language.
Economy suggests that one start with the broadest concept and supplement only as necessary. So consider the following (here too I’ve omitted any mention of excluding conflicts-of-law principles):
The laws of [jurisdiction] govern this agreement and all proceedings arising out of it … .
I’m not sure that all proceedings arising out of it is necessary, but sometimes it’s worth going the extra mile to avoid any confusion and head off comment.
Does one need to expand my suggested language? I did some very limited preliminary research and failed to find any case that holds that this language is inadequate. For example, here’s what the California Supreme Court said in Nedlloyd Lines B.V. v. Superior Court, 834 P.2d 1148, 1155 (Cal. 1992):
[W]e hold a valid choice-of-law clause, which provides that a specified body of law “governs” the “agreement” between the parties, encompasses all causes of action arising from or related to that agreement, regardless of how they are characterized, including tortious breaches of duties emanating from the agreement or the legal relationships it creates.
Are you aware of any caselaw that has found wanting contract language analogous to my proposed language? Are you aware of any other basis for finding my proposed language inadequate? In any jurisdiction, in the U.S. or elsewhere? (By the way, I reserve judgment on whether it would be advisable to make it clear that the governing-law provision also covers any tort claims.)
Even in the absence of any clear shortcomings to using simply govern, one might nevertheless elect to supplement my proposed language, just in case. But it’s a bad idea to throw in extra language on the off chance that your contract comes before a judge who’s lacking in semantic acuity—doing so muddies the meaning for everyone else.