Choice-of-Law Clauses That Quietly Fail: A State-by-State Breakdown

Why "pick Delaware and move on" can fail

A governing-law clause tells a court which state's contract law to apply. It does not decide whether another state's protective statute still reaches the dispute. In employment, franchise, some consumer and some construction contracts, it often does not.

That gap is where most choice-of-law clauses come undone. The clause does what it was drafted to do, and a statute from the state where the worker, franchisee or customer sits does something else.

Reviewed and corrected on 6 October 2026. This is general information, not legal advice; check the cited statute or opinion before relying on it.

Choice of law clause enforceability by state is, in practice, a question about which statutes and which policies the chosen law can lose to. This post maps that question state by state and then covers the drafting moves that follow from it.

Short answer: are choice-of-law clauses enforceable by state?

In the high-court decisions and statutes we read, a governing-law clause in an arm's-length commercial contract is generally honored, but each state sets its own limits. Many states test the clause under Restatement (Second) of Conflict of Laws § 187: the parties' pick controls unless the chosen state has no substantial relationship to the deal and there is no other reasonable basis for the choice, or applying the chosen law would be contrary to a fundamental policy of a state with a materially greater interest in the issue whose law would otherwise apply. Several states do not use § 187. Georgia, Kansas and New Mexico keep an older place-of-contracting rule with a public-policy exception, and Oregon and Louisiana use statutes.

At least six states have statutes that let the parties to a large commercial contract choose that state's law with little or no connection to it: New York and California at $250,000 (N.Y. Gen. Oblig. Law § 5-1401; Cal. Civ. Code § 1646.5), Illinois and Florida at $250,000 (735 ILCS 105/5-5; Fla. Stat. § 685.101), Delaware at $100,000 (6 Del. C. § 2708), and Texas at $1 million for part of the question (Tex. Bus. & Com. Code ch. 271). Each has conditions and exclusions, covered below. None of them stops another state's fundamental policy from applying. On the other side, statutes in some states reach an out-of-state choice of law or forum directly, especially for workers and franchisees. The 50-state table shows what we read for each state.

Official text, as of 6 October 2026: 6 Del. C. § 2708

Citation: 6 Del. C. § 2708(a) and (c)(2), read on 6 October 2026 at delcode.delaware.gov.

What it says: the parties to a written agreement may choose Delaware law "without regard to principles of conflict of laws" if they are subject to the jurisdiction of Delaware courts, or arbitration in Delaware, and may be served with legal process. Then:

"The foregoing shall conclusively be presumed to be a significant, material and reasonable relationship with this State and shall be enforced whether or not there are other relationships with this State."

Subsection (c)(2) says the section does not apply to a contract "Involving less than $100,000," and (c)(1) carves out what § 1-301(c) of Title 6 provides to the contrary.

What changed in 2026: nothing we found. The section's source line still reads "69 Del. Laws, c. 127, § 1 ; 75 Del. Laws, c. 66, § 5".

What it does not do: it supplies the relationship prong of § 187(2)(a) for a Delaware choice. It does not answer the fundamental-policy prong, and the Court of Chancery has applied that prong against Delaware clauses (see the Delaware discussion below).

TL;DR

• Courts test a chosen law in four ways: Restatement § 187 (many states), a state-specific rule that honors the choice unless it offends forum policy (for example Georgia, Kansas, New Mexico, Alabama), a choice-of-law statute (Oregon, Louisiana), and, for large commercial contracts, a statutory pass that removes the relationship requirement (New York, California, Illinois, Florida, Delaware, and in part Texas).
• The clause governs the contract. Whether a protective statute from the other party's home state still applies is a separate question, and the answer turns on the statute and the state.
• N.Y. Gen. Oblig. Law § 5-1401 covers choice of law at $250,000. Section 5-1402 is a separate forum statute that starts at $1,000,000.
• The Delaware Court of Chancery has refused to apply a Delaware choice of law to non-compete defendants based in California and Alabama (Ascension, NuVasive, Focus Financial, HighTower). A Delaware clause does not settle a non-compete dispute.
• Statutes that reach an out-of-state choice of law for workers include California Lab. Code § 925, Washington RCW 49.62.050, Colorado C.R.S. § 8-2-113(6), Minnesota Stat. § 181.988, Louisiana R.S. 23:921(A)(2) and Massachusetts G.L. c. 149, § 24L(e). Washington will void almost all noncompetition covenants from 30 June 2027.
• Several franchise statutes name a choice-of-law clause outright (Washington RCW 19.100.220, Minnesota Stat. § 80C.21, Arkansas, Iowa, Rhode Island).
• Statutes in other states void a clause that moves a sales representative, equipment dealer, consumer lease or construction dispute to another state's law (lists below). The 50-state table gives the provisions we read for each state.

Part of our all-50-states legal reference series.

How courts treat a chosen law

When a court is asked to honor your choice-of-law clause, it does not use one national rule. It uses its own state's rule, and a federal court sitting in diversity does the same: it applies the conflicts rules of the state where it sits (Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487 (1941)). The state rules fall into four groups.

Restatement (Second) of Conflict of Laws § 187

Many states follow § 187, either by adopting it or by applying it case by case. The California Supreme Court put it this way in Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459 (1992): in determining enforceability of arm's-length choice-of-law clauses, California courts "shall apply the principles set forth in Restatement section 187, which reflects a strong policy favoring enforcement of such provisions." Section 187(2) says the chosen law applies unless either:

1. 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
2. applying the chosen law would be contrary to a fundamental policy of a state that has a materially greater interest than the chosen state in the particular issue and whose law would apply under § 188 if the parties had made no choice.

The second prong is where most failed clauses come undone. The other state's policy must be fundamental, that state must have a materially greater interest, and it must be the state whose law would apply by default. All three boxes have to be checked.

Two state supreme courts have treated a protective statute's policy as decisive. The Kansas Supreme Court refused to apply a New York choice of law against the Kansas Securities Act on public-policy grounds (Brenner v. Oppenheimer & Co., 273 Kan. 525 (2002)). The Wisconsin Supreme Court held that because the Wisconsin Fair Dealership Law "embodies a strong state public policy, parties cannot avoid it by including a contrary choice of law provision" (Bush v. National School Studios, Inc., 139 Wis. 2d 635 (1987)). It is not automatic, though. The New York Court of Appeals held that New York's policy against pay-if-paid construction subcontracts was not fundamental enough to override a Florida choice (Welsbach Electric Corp. v. MasTec North America, Inc., 7 N.Y.3d 624 (2006)), and the Michigan Supreme Court applied a chosen Michigan law over Illinois's construction indemnity statute (Chrysler Corp. v. Skyline Industrial Services, Inc., 448 Mich. 113 (1995)).

State rules that are not § 187

Some state high courts have said in terms that they do not follow § 187. The Georgia Supreme Court has held that the Restatement (Second) "has never been adopted in Georgia" and refuses to enforce a chosen law that contravenes Georgia policy (Convergys Corp. v. Keener, 276 Ga. 808 (2003); CS-Lakeview at Gwinnett, Inc. v. Simon Property Group, Inc., 283 Ga. 426 (2008)). Kansas courts "still follow the Restatement (First) of Conflict of Laws" (Ary Jewelers, L.L.C. v. Krigel, 277 Kan. 464 (2004)). New Mexico "adheres to a traditional conflicts of law analysis contained in Restatement (First)" but respects party autonomy unless the chosen law offends New Mexico public policy (United Wholesale Liquor Co. v. Brown-Forman Distillers Corp., 108 N.M. 467 (1989); Fiser v. Dell Computer Corp., 144 N.M. 464 (2008)). Mississippi uses a "center of gravity" test (Boardman v. USAA, 470 So. 2d 1024 (Miss. 1985)). Kentucky's Supreme Court declined to enforce a New York clause and applied Kentucky law using the most-significant-relationship test (Schnuerle v. Insight Communications Co., 376 S.W.3d 561 (Ky. 2012)). The table gives each state's rule with its source.

Statutes that govern the choice itself

Oregon and Louisiana set the rule by statute. Oregon's ORS 15.350 says the parties' contractual rights "are governed by the law or laws that the parties have chosen," except as ORS 15.320, 15.325, 15.330, 15.335 or 15.355 provide. Section 15.355 denies a choice that would require or bar an act where it is performed or "contravene an established fundamental policy" of the state whose law would otherwise govern, and defines "fundamental" narrowly. Louisiana Civil Code art. 3540 applies the law "expressly chosen or clearly relied upon by the parties, except to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under Article 3537."

Statutory passes for large commercial contracts

Six statutes give a pass on the relationship requirement. Each applies only in the enacting state's courts, and each has conditions that the older version of this post left out.

• New York, Gen. Oblig. Law § 5-1401. For a transaction "covering in the aggregate not less than two hundred fifty thousand dollars," the parties may choose New York law "whether or not such contract, agreement or undertaking bears a reasonable relation to this state." It does not apply to contracts "for labor or personal services" or "relating to any transaction for personal, family or household services." The Court of Appeals has held that where New York law is chosen under § 5-1401, "the need for a conflict-of-laws analysis is obviated" (IRB-Brasil Resseguros, S.A. v. Inepar Investments, S.A., 20 N.Y.3d 310 (2012)).
• New York, Gen. Oblig. Law § 5-1402. This is a forum statute with a higher threshold. A person may sue a foreign corporation, non-resident or foreign state in New York on a contract that has a New York choice of law under § 5-1401, covers "not less than one million dollars," and contains the foreign party's agreement to New York jurisdiction.
• California, Civ. Code § 1646.5. Parties to a transaction of "not less than two hundred fifty thousand dollars ($250,000)" may choose California law "whether or not" it bears a reasonable relation to California, except for labor or personal-services contracts and transactions primarily for personal, family or household purposes.
• Illinois, 735 ILCS 105/5-5. The same $250,000 pass, with the same labor, personal-services and household exclusions.
• Florida, Fla. Stat. § 685.101. A $250,000 pass that is narrower than the others. It does not apply to a transaction with no substantial or reasonable Florida relation in which every party is a US resident of another state or an entity organized elsewhere with no Florida place of business, or to contracts for "labor or employment" or household purposes.
• Delaware, 6 Del. C. § 2708. A $100,000 floor, with the jurisdiction and service conditions quoted above.

Texas is a partial case. A "qualified transaction" is one of at least $1 million (Tex. Bus. & Com. Code § 271.001). Section 271.006 lets the parties choose any jurisdiction's law to govern interpretation or construction "regardless of whether the transaction bears a reasonable relation to that jurisdiction." For other issues, including validity and enforceability, § 271.005(a) requires that the transaction "bears a reasonable relation to that jurisdiction", and § 271.005(b) then says the chosen law governs "regardless of whether the application of that law is contrary to a fundamental or public policy of this state or of any other jurisdiction." Both sections are subject to Chapter 272.

Above the threshold, the substantial-relationship prong is satisfied by statute in the enacting state's own courts. A court in another state applies its own conflicts rules, and the fundamental-policy prong still exists everywhere except where a statute like Texas § 271.005(b) says otherwise.

The Delaware Court of Chancery and non-compete covenants

The older version of this post said Delaware courts honor Delaware clauses without re-running the conflicts question. For commercial deals between companies that is a fair summary of the general rule, but for non-compete covenants the Court of Chancery has run the § 187(2) analysis and refused the Delaware choice more than once:

• Ascension Insurance Holdings, LLC v. Underwood, C.A. No. 9897-VCG (Del. Ch. Jan. 28, 2015): a non-compete with a California resident. The court found that California law would apply absent the clause, that enforcing the covenant would conflict with California's fundamental policy, and that California's interest was materially greater. It denied a preliminary injunction.
• NuVasive, Inc. v. Miles, C.A. No. 2017-0720-SG: on September 28, 2018 the court enforced the Delaware choice because Cal. Lab. Code § 925(e) exempts employees represented by counsel in negotiating the clause, and the court assumed that exception applied. In 2019 it applied California law to the non-compete (June 7, 2019 bench ruling) and to the non-solicitation covenants (Aug. 26, 2019 opinion).
• Focus Financial Partners, LLC v. Holsopple, C.A. No. 2020-0188-JTL (Del. Ch. Oct. 26, 2020): section 2708(a) satisfied the relationship prong, but the court held California law applied "notwithstanding the Delaware-Law Provision" and let the employee void the clauses under Lab. Code § 925.
• HighTower Holding, LLC v. Gibson, C.A. No. 2022-0086-LWW (Del. Ch. Feb. 9, 2023): "Despite the parties' choice of Delaware law," the court applied Alabama law, citing Alabama's legislatively expressed policy against broad non-competes, and denied a preliminary injunction.

Statutes and decisions that reach a chosen law

The pattern across the country: a state-specific statute or decision can knock out an out-of-state choice of law or forum when an in-state worker, franchisee or consumer is on the protected side. This list only includes provisions we read in October 2026. Many other protective statutes exist that we did not read; "not listed" does not mean "no override."

Employment

• California. Lab. Code § 925: an employer may not require an employee who primarily resides and works in California, as a condition of employment, to agree to adjudicate a California claim outside California or to give up the substantive protection of California law. Such a provision is "voidable by the employee," adjudication includes arbitration, and the section does not apply to an employee "in fact individually represented by legal counsel" in negotiating the clause. It applies to contracts entered, modified or extended on or after January 1, 2017. Bus. & Prof. Code § 16600.5 adds that a void non-compete "is unenforceable regardless of where and when the contract was signed" and bars an employer from attempting to enforce it.
• Washington. RCW 49.62.050 voids a noncompetition covenant signed by a Washington-based employee or independent contractor if it requires adjudication outside Washington, deprives the worker of the chapter's protections, or "allows or requires the application of choice of law principles or the substantive law of any jurisdiction other than Washington state." The section was last amended by 2024 c 36 s 4. Separately, Engrossed Substitute House Bill 1155 (Laws of 2026, ch. 149, approved March 23, 2026, effective June 30, 2027) provides that "all noncompetition covenants are void and unenforceable" and requires employers to make reasonable efforts to notify affected workers in writing by October 1, 2027. That bill amends RCW 49.62.020 and other sections; it does not amend RCW 49.62.050.
• Colorado. C.R.S. § 8-2-113(6): a covenant not to compete that applies to a worker who primarily resided or worked in Colorado at termination may not require adjudication outside Colorado, and "Notwithstanding any contractual provision to the contrary, Colorado law governs" for a worker who primarily resided and worked there.
• Minnesota. Minn. Stat. § 181.988, subd. 3 lets an employee who primarily resides and works in Minnesota void a clause that requires out-of-state adjudication or strips Minnesota's substantive protection, but "applies only to claims arising under this section."
• Louisiana. La. R.S. 23:921(A)(2) makes a choice-of-forum or choice-of-law clause in an employment contract "null and void" unless the employee "expressly, knowingly, and voluntarily" agrees to and ratifies it after the incident being litigated.
• Massachusetts. G.L. c. 149, § 24L(e): no choice-of-law provision "that would have the effect of avoiding the requirements of this section will be enforceable" for an employee who lived or worked in Massachusetts for at least 30 days before the end of employment. The Supreme Judicial Court also refused a Massachusetts choice for a California employee in Oxford Global Resources, LLC v. Hernandez, 480 Mass. 462 (2018).
• Florida (the other direction). Fla. Stat. § 542.45(1)(a), enacted by ch. 2025-213, applies to a covered noncompete with a covered employee whose primary place of work is in Florida "regardless of any applicable choice of law provisions." It makes covered agreements enforceable if its conditions are met.
• Virginia. Va. Code § 40.1-28.7:8 bars non-competes with "low-wage" employees (now including employees entitled to overtime under the FLSA) and with health care professionals, and makes a non-compete unenforceable if the employer discharges the employee without severance unless for cause. The section was amended in 2025 and 2026 (2025, c. 585; 2026, cc. 883, 1113 and 1114). It has no choice-of-law clause, so check each amendment's effective date for agreements signed earlier.
• New York. No statute. The Court of Appeals held a Florida choice of law "unenforceable as to the non-solicitation provision" of an employee's agreement (Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364 (2015)).

Franchise

• Washington. RCW 19.100.220(2) voids "any agreement, condition, stipulation or provision, including a choice of law provision" that waives compliance with the Franchise Investment Protection Act, and subsection (3) says the chapter "represents a fundamental policy of the state of Washington."
• Minnesota. Minn. Stat. § 80C.21 voids "any condition, stipulation or provision, including any choice of law provision" that waives or has the effect of waiving compliance with the Franchise Act for a Minnesota resident or a franchise operated in Minnesota.
• Arkansas, Iowa, Rhode Island. Ark. Code § 4-72-206(b) ("A condition, stipulation, or provision requiring the application of the law of another state in lieu of this subchapter is void"); Iowa Code § 537A.10(14) (same wording, "in lieu of this section"); R.I. Gen. Laws § 19-28.1-14 (a provision "requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this act"). Missouri's Motor Vehicle Franchise Practices provision says "Missouri law shall govern the franchise and the dispute" (RSMo § 407.835.3(2)).
• Illinois. 815 ILCS 705/4 voids an out-of-state forum for a franchise agreement (out-of-state arbitration is allowed), and 705/41 voids a provision binding a franchisee "to waive compliance with any provision of this Act or any other law of this State."
• California, Michigan, North Dakota. Cal. Corp. Code § 31512 and Bus. & Prof. Code § 20010 void provisions waiving compliance; MCL 445.1527 voids a waiver that deprives a franchisee of the act's protections and a provision "requiring that arbitration or litigation be conducted outside this state"; N.D. Cent. Code § 51-19-16(7) voids a provision binding a franchisee to waive compliance. None of these names choice of law, so whether a choice-of-law clause counts as a waiver is a question for the courts.
• Court decisions. Instructional Systems, Inc. v. Computer Curriculum Corp., 130 N.J. 324 (1992), applied New Jersey's Franchise Practices Act despite a California choice; Kubis & Perszyk Associates, Inc. v. Sun Microsystems, Inc., 146 N.J. 176 (1996), presumes out-of-state forum clauses in franchise agreements invalid; Bush (Wisconsin, above).
• The opposite rule. Idaho Code § 29-110(2) says a choice-of-law condition in a franchise agreement "is enforceable." It applies to agreements entered or renewed on or after July 1, 2003 by a franchisee who was an Idaho resident or an Idaho-organized entity.

Sales representatives and dealers

• Sales representatives. These acts void a provision that tries to waive the statute by making the contract subject to another state's law. Ala. Code § 8-24-5(a) says the chapter "may not be waived, whether by express waiver or by any provision in a contract attempting to make the contract or agreement subject to the laws of another state." O.C.G.A. § 10-1-703 says Georgia courts "shall not recognize any purported waiver" made "by attempt to make a contract or agreement subject to the laws of another state." Kentucky (KRS § 371.385), Maryland (Md. Code, Lab. & Empl. § 3-603), New Hampshire (N.H. Rev. Stat. § 339-E:6), Ohio (Ohio Rev. Code § 1335.11(F)(2)) and South Carolina (S.C. Code Ann. § 39-65-70) use similar wording. Utah Code § 34-44-104(2) is narrower: for a writing required by § 34-44-201 that is entered into in Utah, a provision that makes the sales representative subject to another state's laws is void.
• Dealers and distributors. S.D. Codified Laws § 37-5-11 voids a provision in an agreement between a wholesaler, manufacturer or distributor of farm machinery or of industrial or construction equipment and a retail dealer "requiring the application of the laws of another state to disputes arising under the agreement." Wyo. Stat. § 40-20-110(b) voids a provision in a contract with respect to a supplier that "requires the application of the laws of another state or country" for a claim otherwise enforceable under Wyoming's equipment dealer act. K.S.A. § 8-2417(b) says no franchise agreement may "compel a party to consent to jurisdiction or governance by the law of another state or territory outside Kansas."

Consumer

• Tennessee. Tenn. Code Ann. § 47-18-113(b) voids a provision "requiring the application of the laws of another state with respect to any claim arising under or relating to the Tennessee Consumer Protection Act of 1977." We read the Justia copy of the 2024 Code, not the official site.
• Wisconsin. Wis. Stat. § 421.201(10)(a) makes invalid, in covered consumer transactions, a term "That the law of another state shall apply," and § 421.106(1) bars a customer from waiving the Act.
• Nevada. NRS 97B.100: a choice-of-law provision in a consumer form contract (a retail charge agreement, retail installment contract or consumer lease, NRS 97B.070) signed or formed while the consumer resides in Nevada with a person operating in Nevada "is void."
• Consumer leases. UCC § 2A-106(1), as enacted in Alaska (Alaska Stat. § 45.12.106(a)), Ohio (Ohio Rev. Code § 1310.04(A)) and Pennsylvania (13 Pa.C.S. § 2A106(a)), among others, says that if the chosen law is that of a jurisdiction other than where the lessee resides when the lease becomes enforceable (or within 30 days) or where the goods are to be used, "the choice is not enforceable." Connecticut goes further: "The parties to a consumer lease may not agree that the transaction is governed by other law" in place of its consumer leasing sections (Conn. Gen. Stat. § 42-394(c)).
• Consumer credit. Maine's Consumer Credit Code, 9-A M.R.S. § 1-201(8)(A), makes invalid, subject to subsection 7, an agreement by a buyer, lessee or debtor "That the law of another state shall apply" in covered consumer credit transactions. In Pennsylvania a buyer's waiver, "including any purported waiver effected by a contractual choice of the law of another jurisdiction contained in a closed-end credit agreement or an open-end credit agreement," is void (12 Pa.C.S. § 6303).
• Foreclosure consulting. Neb. Rev. Stat. § 76-2715 voids a provision in a foreclosure consulting contract that purports to "Consent to jurisdiction for litigation or choice of law in a state other than Nebraska."
• Oregon. ORS 15.320(4) applies Oregon law to a consumer contract with an Oregon-resident consumer whose assent was obtained in Oregon or who was induced by an Oregon invitation or advertisement, whatever the clause says.
• Software agreements. Vermont (9 V.S.A. § 2463a) and West Virginia (W. Va. Code § 55-8-15) make voidable a clause in a computer information agreement that selects the law of a state that has enacted the Uniform Computer Information Transactions Act, if the resisting party is a resident or has its principal place of business there.
• Court decisions. Schnuerle (Kentucky) and Fiser v. Dell (New Mexico, class-action ban held contrary to fundamental New Mexico policy).
• No express text found. We did not find express anti-waiver or choice-of-law text in Massachusetts G.L. c. 93A §§ 9 and 11 or in Fla. Stat. § 501.211. For those statutes the court decides under its own state's rule whether the clause yields.

Construction

• Indiana. Ind. Code § 32-28-3-17: "A provision in a contract for the improvement of real estate in Indiana is void if the provision: (1) makes the contract subject to the laws of another state; or (2) requires litigation, arbitration, or other dispute resolution process on the contract occur in another state." The Indiana Supreme Court applied it in MPACT Construction Group, LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901 (Ind. 2004).
• Texas. Tex. Bus. & Com. Code § 272.001(b), as amended by H.B. 2960 (signed June 20, 2025, effective September 1, 2025): a provision making a construction contract for Texas real property "subject to another state's law, litigation in the courts of another state, or arbitration in another state" is "void as against public policy." It applies to contracts entered into or renewed on or after the effective date. The earlier version made the provision voidable.
• Oklahoma. 15 O.S. § 221(E) voids a provision in a construction agreement that "attempts to circumvent this section by making the agreement subject to the laws of another state." We read the Justia copy.
• Arizona, Mississippi, Montana, Kansas. A.R.S. § 32-1186(A)(1) voids a provision in, collateral to or affecting a construction contract "that makes the contract subject to the laws of another state or that requires any litigation arising from the contract to be conducted in another state." Mont. Code Ann. § 28-2-2116(1) is to the same effect for a construction contract "for a project in this state." Miss. Code Ann. § 87-7-9(1) voids a provision in a contract, subcontract or purchase order for the improvement of real property in Mississippi that makes it "subject to the laws of another state," but only for contracts entered into on or after July 1, 2018, at least one of whose parties is a Mississippi resident, among owners, contractors, subcontractors, materialmen and design professionals. K.S.A. § 16-121(e) says that "Notwithstanding any contractual provision to the contrary, the laws of the state of Kansas shall apply to and govern every contract to be performed in this state," where "contract" in that section means a construction contract, motor carrier transportation contract, dealer agreement or franchise agreement.
• Other states. Outside statutes like these, whether a general construction indemnity statute overrides a chosen law is decided case by case under § 187(2)(b) in the states we checked (see Chrysler above).

The arbitration caveat. A state-law rule that overrides a choice-of-law clause inside an arbitration agreement can be preempted by the Federal Arbitration Act. This post covers the choice-of-law clause and does not analyze arbitration clauses.

The 50-state table

This is a working reference. The middle column gives the rule we found in the state's own court decisions or statutes, with the case or statute. The right column lists express statutes or decisions that reach an out-of-state choice of law or forum for the state, from the list above. Each cell lists what we found and read, not everything the state has.

Two notes on the table. First, the middle column describes decisions we read, and some are intermediate appellate decisions. Where a state's highest court has not said anything on a chosen-law clause that we found, we name the court that did. Second, the right column is not a list of every non-waivable statute in the state. The non-compete and franchise columns change fastest, and several states changed their rules in 2024, 2025 and 2026.

The four failure modes you will see

Each of these is a hypothetical built from the statutes and decisions above.

Employment contracts

A New York employer relocates a senior hire to California and keeps the New York choice of law and forum in the offer letter. If the employer required the clause as a condition of employment, the employee primarily lives and works in California, the contract was entered, modified or extended on or after January 1, 2017, and she was not individually represented by counsel in negotiating the clause, Lab. Code § 925(b) lets her void it. The matter is then heard in California under California law, and Bus. & Prof. Code § 16600.5 says a void non-compete is unenforceable "regardless of where and when the contract was signed."

Franchise agreements

A franchisor picks its home state's law for a franchisee in Washington or Minnesota. Washington voids a "choice of law provision" that waives compliance with its Franchise Investment Protection Act, and Minnesota voids one that has the effect of waiving compliance with its Franchise Act. In Wisconsin and New Jersey the state supreme courts reached similar results by decision (Bush; Instructional Systems).

Consumer contracts

A SaaS vendor chooses Delaware law and a Delaware forum in its terms. A California consumer sues under California's Consumers Legal Remedies Act. The Act says "Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void" (Civ. Code § 1751). Whether the Delaware clause survives is decided under Nedlloyd and § 187(2)(b), so the outcome is not automatic. In Tennessee, Wisconsin and Nevada the statutes say more directly that a foreign choice of law or forum is void for covered consumer claims.

Construction contracts

A general contractor insists on its home state's law for a project in another state. Indiana voids a clause making a contract for the improvement of Indiana real estate subject to another state's law. Arizona, Kansas, Mississippi, Montana and Oklahoma have comparable statutes, and Texas now voids such a clause for contracts entered or renewed on or after September 1, 2025. Where there is no such statute, a construction indemnity statute such as the one in Chrysler was held not to override a chosen law in at least one high-court decision.

A clause pattern to review

The common boilerplate says "This Agreement shall be governed by and construed in accordance with the laws of the State of [X], without regard to its conflict of laws principles." In Oxford Global Resources, LLC v. Hernandez, 480 Mass. 462 (2018), the Massachusetts Supreme Judicial Court held a clause that said the agreement was governed by Massachusetts law "without giving effect to the conflict of laws provisions thereof" unenforceable, because it barred a court from doing a choice-of-law analysis that, as a matter of public policy, should lead to the application of California law. A drafter who wants to preserve rights that cannot be waived could add a sentence along these lines: "Nothing in this Section waives a right or remedy that cannot be waived under the law of a party's state of residence."

Drafting tactics

1. Pick a law connected to the deal. Headquarters, place of performance, place of incorporation or the seat of the lead party. A choice with no connection needs a statutory hook (N.Y. Gen. Oblig. Law § 5-1401, Cal. Civ. Code § 1646.5, 6 Del. C. § 2708, 735 ILCS 105/5-5, Fla. Stat. § 685.101) and you must meet that statute's conditions. Outside those statutes, § 187(2)(a) requires a substantial relationship or another reasonable basis.

2. Pair governing law with a forum clause and a severability clause. Courts analyze them separately. In Oxford Global the choice-of-law clause failed on its own analysis, and the court addressed the Massachusetts forum clause separately.

3. Name the rights you cannot win on. A sentence preserving rights that cannot be waived under the law of the other party's state shows the court the clause is not trying to strip them. An example: "[Chosen state] law governs this agreement, except that any right or remedy a party has under a non-waivable statute of the state where that party resides is preserved."

4. For employees, draft to the worker's state. California Lab. Code § 925 and Washington RCW 49.62.050 apply on their own terms. Washington voids noncompetition covenants altogether from June 30, 2027 (Laws of 2026, ch. 149).

5. Use the commercial statutes when the deal qualifies. If a contract clears $250,000 and is not a labor, personal-services or household contract, New York, California, Illinois and Florida have statutes that remove the relationship requirement, subject to Florida's exclusions. Delaware does so at $100,000 if its jurisdiction and service conditions are met. Check the conditions before you cite the statute in the clause.

6. Re-read the clause when the deal facts change. A clause written for a single-state customer base may fit badly once the customers or the project are in other states.

Authority worth keeping on the shelf

• Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459 (1992) (Baxter, J.): the California Supreme Court's framework for arm's-length choice-of-law clauses, enforcing a Hong Kong choice in an international shipping venture.
• Hodas v. Morin, 442 Mass. 544 (2004): a gestational-carrier parentage case. It states the Massachusetts rule that courts "will uphold the parties' choice as long as the result is not contrary to public policy" and applies § 187(2), enforcing the parties' Massachusetts choice over another state's policy. For a Massachusetts clause that was refused, see Oxford Global Resources, LLC v. Hernandez, 480 Mass. 462 (2018), where a California employee's non-solicitation and confidentiality dispute was sent to California.
• The Delaware Chancery decisions listed above, which show the court running the § 187(2) analysis on non-compete covenants.
• Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364 (2015), and Welsbach, 7 N.Y.3d 624 (2006), for how New York treats a chosen law outside § 5-1401.
• Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487 (1941): a federal court sitting in diversity applies the conflicts rule of the state where it sits.
• UCC § 1-301(a): "when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties." Some states still number this provision § 1-105.

Two questions before signing

Which two states is this dispute most likely to land in (the chosen state and the state where the other party actually operates), and what does the protective statute in that second state say about a chosen law or forum?

If the chosen law would lose to a statute on the claim most likely to be filed, the clause is not protecting the deal. It is setting the contract-interpretation rules for the wrong case.

FAQ

Are choice-of-law clauses enforceable in every state?

In the decisions and statutes we read, yes in the general case, but none enforces one automatically. Many states apply Restatement § 187: the chosen law controls unless the chosen state has no substantial relationship and no other reasonable basis, or applying it would violate a fundamental policy of a state with a materially greater interest. Others, including Georgia, Kansas and New Mexico, use an older rule with a public-policy exception. Statutes in some states reach an out-of-state choice of law for workers, franchisees and some consumers.

Does the chosen state need a connection to the contract?

Usually. Under § 187 the chosen state needs a substantial relationship to the parties or the transaction, or some other reasonable basis. The exceptions are the commercial statutes: New York (Gen. Oblig. Law § 5-1401), California (Civ. Code § 1646.5), Illinois (735 ILCS 105/5-5) and Florida (Fla. Stat. § 685.101) at $250,000, and Delaware (6 Del. C. § 2708) at $100,000. Each has exclusions and conditions. Texas § 271.006 allows a choice without a relationship for interpretation in a transaction of at least $1 million, but § 271.005 requires a reasonable relation for validity.

What is 6 Del. C. § 2708?

It is Delaware's choice-of-law statute for written agreements. If the parties choose Delaware law, are subject to the jurisdiction of Delaware courts or arbitration in Delaware, and may be served with legal process, the choice is "conclusively" presumed to be a significant, material and reasonable relationship with Delaware. It does not apply to contracts involving less than $100,000.

What is the difference between a choice-of-law clause and a forum-selection clause?

A choice-of-law clause says which state's law governs. A forum-selection clause says which court or arbitral seat hears the dispute. Courts analyze them separately, so one can fail while the other holds. In Oxford Global the Massachusetts court held the choice-of-law clause unenforceable and treated the forum clause under forum non conveniens principles.

Can a choice-of-law clause override a state's consumer-protection law?

It depends on the statute. Tennessee, Wisconsin and Nevada have statutes that say so directly for covered consumer claims, and California's Consumers Legal Remedies Act voids waivers. For other consumer statutes, such as Massachusetts Chapter 93A and Florida's FDUTPA, we did not find express text on a chosen law, so a court decides under its state's conflicts rule.

Which state law is best for a high-value commercial contract?

That is a judgment call. New York, Delaware, California, Illinois and Florida have statutes that remove the relationship requirement for large arm's-length contracts, and Florida's pass is narrower than the others. None of these statutes stops another state's fundamental policy from applying. Anchor the clause to the statute and check its conditions.

Does California Labor Code § 925 void choice-of-law clauses?

Not automatically. Under § 925, a clause that requires an employee who primarily resides and works in California to litigate or arbitrate a California claim elsewhere, or to give up California's substantive protection, is voidable by the employee. If the employee voids it, the case is heard in California under California law. The section does not apply to an employee who was individually represented by counsel in negotiating the clause.

Related reading

For related state-by-state coverage, see Non-Compete Enforceability by State: A 2026 Map, Washington non-compete law, Colorado non-compete law and Indemnification Caps by State: How 50 Jurisdictions Read the Same Clause. For a different clause, see Jury Trial Waivers: Enforceability by State. To find Delaware statutes yourself, see how to find and cite Delaware law.

For the US statutes, regulations and court rules these laws sit in, see the US primary law API.

Arshita Anand

Co-Founder & CEO · Attorney

Arshita leads product and strategy at Vaquill AI, the US primary law data API. As an attorney, she decides which law we carry, how each section is sourced and cited, and what legal AI and compliance teams need from the data.