Chosen law applies if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue
i.e. could explicitly provide that performance is due at beginning or end or day, or can just incorporate state law that already determines that
If the particular issue is one which the parties could not have resolved by an explicit provision, law of chosen state will be applied unless:
the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties choice,
OR
application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
Forum will apply its own legal principles in determining whether fundamental or materially greater
In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law.
Note: There is presumption in U.S. that applicable law, in absence of choice, will be place of payment.
ANALYSIS
Is issue within the parties contractual power?
Determined by law of §188 state
If we’re talking about something you weren’t allowed to contract about in the 188 state, then move to §187(2) to determine if chosen law will govern.
Is there substantial relationship or reasonable basis?
Courts tend not to try to sort out motives, but if there really is no connection whatsoever, may be at risk
Would application of chosen law be contrary to a policy of the state that would otherwise govern under §188?
Is the interest of the §188 state materially greater than the interest of the chosen state (absent there being a choice provision)?
Forum uses own law to determine whether fundamental or material.
Uniform Commercial Code
If rule we’re dealing with is in the UCC then UCC 1-301 has choice of law rules
§301-1(c) says if parties choose particular law, that law is effective whether or not the transaction bears a relation to the State or country designated
See page 137
New York §5-1401
If the agreement arises out of a transaction covering $250,000 or more and the parties choose NY law, then NY law should govern, whether or not there is a reasonable relation
