Questions on choice-of-law provisions in contracts
rule of validation
1) Is it really true that because the law of X makes your contract valid and the law of Y makes it invalid that you must have wanted the law of X to apply? Assume the law of Y, but not the law of X, gives you something you definitely want. But, unbeknownst to you, something you put in the contract – but that is not very important to you – makes the contract invalid under the law of Y, but not under the law of X. If you knew about the problem, you would not decide that the law of X should apply. You would instead get rid of the unimportant provision that is offensive under the law of Y. So wouldn’t it be wrong for a court to apply the law of X to the contract, in order to make it valid?
2) Why does the Second Restatement use a rule of validation concerning usury laws (see p. 110 in the 7th and p. 108 in the 8th ed.)?
3) Why are courts more generous in respecting the parties’ choice of law concerning matters of interpretation vs. matters of validity?
4) Isn’t choosing the law that makes your contract valid a form of illegitimate bootstrapping? After all, you can’t have a valid contract that will be able to choose law, until law has already been applied to the contract to make it is valid. But once law has been applied to the contract to make it valid, the choice of law provision should be considered irrelevant.
5) Isn’t it wrong to allow the parties to contract around an otherwise applicable law that would protect one of the parties to the contract because he has unequal bargaining power?
6) Section 187(2)(a) of the 2nd Restatement allows the parties to choose the law governing their contract even if the chosen state has no substantial relationship to the parties or the transaction, provided that there is another “reasonable basis” for the parties’ choice. What could this reasonable basis possibly be?
7) How would Siegelman have come out under the 2nd Restatement, section 187?
8) Does Citicorp’s move to