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Unpublished Paper
CHOOSING THE CHOICE: DISTILLING AND DESIGNATING CONTRACT CHOICE OF LAW IN VIRGINIA
ExpressO (2015)
  • Jessica Pak
Abstract

Choice of law[1] has been said to cause more “consternation and confusion among the bench and bar” than any legal subject.[2] Contract interpretation, in turn, has been identified by the great choice of law theorist Joseph Beale as the most confusing issue in the conflict of laws.[3] Unfortunately, the perplexity of this legal topic is paralleled by its practical importance. Choice of law is a matter of paramount concern in any dispute involving more than one jurisdiction, as a court cannot adjudicate a case without first ascertaining which law applies. Particularly in contract cases where the laws of different jurisdictions conflict, the choice of law decision may determine which party prevails and which suffers defeat. It is thus imperative that states implement a uniform and systematic approach that allows judges and lawyers to readily ascertain the rules governing contract choice of law. Virginia has yet to achieve this goal.

Consider, as illustration, the following hypothetical case. A Maryland manufacturer and a Virginia retailer contract in Maryland that the manufacturer will produce items to be delivered to and sold by the retailer in Virginia. The parties do not specify which law should govern the contract in the case of conflict. The plaintiff brings suit in Virginia, where the breach allegedly occurred. Which law applies? Common sense would say that the question is simple: should a contract be governed by the law of the place where it was made or where it was to be performed? Unfortunately, the heart of the problem lurks beneath this superficial layer. The question is not what law should govern as much as it is why.

In the above hypothetical, Virginia’s earliest precedent, rooted in the theory of comity, would designate Virginia law as controlling since the parties presumably chose Virginia as the place of performance with the intent that Virginia law would govern matters of “validity, nature, interpretation and effect.”[4] The irksome yet surviving holding of Poole v. Perkins would also designate Virginia law as governing, but on the rationale that whenever the law of the place of making differs from that of the place of performance, the parties presumptively contracted “with reference” to the latter.[5]

Many Virginia courts have exerted herculean effort to definitively answer the question of why a particular law should govern in contract choice of law cases. For over two centuries, Virginia courts have sampled and even mixed various choice of law theories, only to find this area to be a legal slip knot; as theories are proposed and rules are tweaked, the confusion has become increasingly choking. Today, Virginia courts struggle with analytical gaps and irreconcilable precedent. Theories and principles appear and reappear, feeding discussion yet offering little guidance. Courts claim theories and rules but follow the analysis of another. Ultimately, Virginia courts are at a loss, left with irreconcilable and sometimes incomprehensive precedents.

The purpose of this Article is two-fold: First, to dispel some of the confusion that has clouded Virginia’s contract choice of law jurisprudence by identifying issues that must be addressed if Virginia is to achieve a workable approach. Second, to propose a solution that should bring uniformity and predictability, maximize state and party interests, and preserve values that Virginia courts have historically found paramount.

This Article begins with an explanation of general principles in Part One, the understanding of which are prerequisite to a discussion of choice of law in Virginia. This section includes a brief explanation of Latin terminology that frequently appears in choice of law discussions, as well as an overview of the narrow circumstances in which choice of law cases are dispositive in Virginia jurisprudence. Part Two surveys Virginia’s early contract choice of law cases, focusing on the influence of early legal theorists and the impression of the comity theory. Part Three examines Poole v. Perkins, analyzes the rationale behind this decision, and reviews its impact on Virginia jurisprudence. Part Four distinguishes Virginia’s choice of law jurisprudence from that of the First Restatement of the Conflict of Laws, highlighting the theoretical differences between the two and emphasizing the independent development of Virginia’s choice of law theory. Part Five presents observations on the current status of Virginia’s contract choice of law jurisprudence and notes several issues that should be addressed. In conclusion, this Article in Part Six suggests that Virginia should reaffirm its traditional rule that “matters of making” are be governed by the law where the contract was made, while “matters of performance” are governed by the law of the place of performance. It also recommends that Virginia refine this bifurcated framework to define the precise meaning of “matters of making” and “matters of performance.” This Article submits that this approach would greatly assist Virginia courts seeking to address this intricate subject in a manner that is not only predictable and uniform, but also deferential to the principles that have long distinguished Virginia jurisprudence.

[1] Gary J. Spahn, et al. eds., Jurisprudence and Procedure: Choice of Laws, § 12:8, n.2 (Va. Prac. Products Liability 2013) (stating that the term “choice of laws” is preferable to the synonymous term “conflict of laws,” inasmuch as the relevant laws of the states with an interest in the controversy do not always “conflict.” The term “choice of laws” better illustrates that the rules involve an analysis of the law which applies in a given case).

[2] Gregory E. Smith, Choice of Law in the United States, 38 Hastings L.J. 1041, 1041 (1987).

[3] Joseph H. Beale, What Law Governs the Validity of A Contract, 23 Harv. L. Rev. 1 (1909) “NO [sic] topic of the Conflict of Laws is more confused than that which deals with the law applying to the validity of contracts.”

[4] Freeman’s Bank v. Ruckman, 57 Va. 126, 127 (1860) (emphasis added).

[5] Poole v. Perkins, 126 Va. 331, 331, 101 S.E. 240, 245 (1919).

Disciplines
Publication Date
February 4, 2015
Citation Information
Jessica Pak. "CHOOSING THE CHOICE: DISTILLING AND DESIGNATING CONTRACT CHOICE OF LAW IN VIRGINIA" ExpressO (2015)
Available at: http://works.bepress.com/jessica_pak/1/