This Article analyzes the concept of choice of law by contractual parties with a focus on the relational requirement: that a transaction be reasonably related to the jurisdiction selected in the parties’ governing law provision. The Author discusses the doctrine of party autonomy, its development throughout the world, and its relationship to the concept of choice of law. The Author explains a majority of states’ recent rejection of proposals to remove the relational requirement in favor of the relation-based alternative that is still dominant in the United States. Included in this discussion are the proffered reasons behind and the consequences of this rejection. The Author proposes a more liberal approach in the United States to choice of law while explaining how the relational requirement creates problems as far as contractual choice of law.
The Author discusses the constitutional restrictions on adopting a more liberal approach With respect to choice of law in the United States, as well as the concerns about parties circumventing the mandatory rule, selecting an odd law, and forum shopping. The Author advances the idea that the relational requirement in the United States is unnecessary and an overreaction to the possible exploitation of the freedom to choose a contract’s governing body of law. The Article proposes that removing the relational requirement would lead to greater certainty, predictability, and uniformity, which are fundamental principles in contract law.