In this November 2011 blog post I discussed how I had belatedly discovered a new category of contract language—language of intention. For the heck of it, here’s something that I just wrote regarding the murky boundaries of language of intention:
If one were strict about it, language of intention would crop up in unexpected places. For example, in the U.S., a court might override the parties’ choice of governing law on the grounds that the state specified doesn’t bear a reasonable relationship to the transaction, or because applying the law of that state would be contrary to public policy. But it would be unduly purist to therefore insist on using for the governing-law provision not language of policy but language of intention: “The parties intend that the laws of the state of New York will govern ….” When the choice specified by the parties in a contract applies unless a court decides that it falls within specified exceptions, stick with language of policy: “The laws of the state of New York govern ….”
Ken, your example is no doubt true under US law, but not under EU law. Under the Rome Convention, Article 3(1), “a contract shall be governed by the law chosen by the parties”. In other words, once the parties have chosen, that is binding on the court (if the Convention applies). For the sake of standardisation of choice of law clauses in international contracts, I suggest it would be desirable to stick with language of policy. You can always add that US variant about not applying conflicts of law provisions.
Mark: In the post I recommend that even in the U.S. you use language of policy for governing-law provisions. That means that you can use language of policy whatever the governing law. That’s just as well—it would be really tedious to have to adjust the category of contract language depending on the jurisdiction. Ken
My reaction is that the category of intention is universal and therefore unnecessary. The parties intend everything in the contract.
In MSCD you condemn the formulation “the parties intend to be bound by this agreement,” I seem to recall. Why is it okay if reduced to one part of the contract, the choice of law provision?
The severability clause or a specially crafted additional severability clause seems like the way to deal with the specific risk mentioned: “New York law is to be applied. If a court having jurisdiction holds New York law inapplicable, then [whatever].”In Connecticut we have a battle between the legislature, which passed a statute mandating the judicial use of the “plain meaning” rule of statutory construction, and the judiciary, which wants the freedom to look at legislative history in every case. It may wind up being decided as a separation of powers issue. My sympathy is with the legislature, which can specify the means of interpreting its own language as rightly as it can define terms uses in statutes. In contract drafting, the choice of law provision is in logic no different from appending a gigantic exhibit making the law of New York (or wherever) part of the deal. A court should not reject a choice of law any more readily than it would reject a definition, a provision in an exhibit, or any other part of the parties’ agreement.
The question is whether what the parties agree to requires a legal determination.
My original post on language of intention related to whether someone is an independent contractor or an employee. That’s a question of law and fact to be determined based on how the relationship develops. If there’s a dispute a court would decide.
Similarly, if a commercial contract says that Florida law applies but otherwise omits some specifics of the relationship and it turns out that a disputed transaction has no nexus with Florida, a court might decline to apply Florida law.
On the other hand, if all the elements of a transaction are specified in a contract, perhaps the alternative to language of policy would be not language of intention but language of belief.
I’ll continue chewing this over …