Governing Law Clauses in Contracts
📄Upload your contract for free to automatically review and negotiate terms like governing law — powered by Gerri, the AI agent for redlines. 📃
What is a governing law clause?
Governing law specifies which state’s or country’s laws will apply if there’s a dispute about the contract. It doesn’t say where a lawsuit happens (that’s venue or jurisdiction), just whose rules get used to interpret and enforce the contract.
Also known as: applicable law, choice of law, law governing the agreement, or controlling law
What governing law terms do most contracts have?
Based on data from more than 10,000 contracts:
The most common states for governing law in SaaS contracts are:
Delaware (82%) California (10%) Florida (3%)
The most common states for governing law in NDAs are:
Delaware (73%) California (9%) New York (5%)
Example governing law language
Sample language from the Common Paper standard Cloud Service Agreement:
Governing Law and Chosen Courts. The laws of the State of California will govern all interpretations and disputes about this Agreement, without regard to its conflict of laws provisions.
Sample language from the Common Paper standard Mutual NDA:
Governing Law and Jurisdiction. This MNDA and all matters relating hereto are governed by, and construed in accordance with, the laws of the State of California, without regard to its conflict of laws provisions.
Risks to watch for in governing law clauses
| ⚠️ Risk Type | Description |
|---|---|
| 🌍 Unfavorable Law Chosen | The contract may apply laws from a state or country with legal standards that disadvantage you. |
| 📜 Governing Law ≠ Jurisdiction Confusion | Parties conflate where disputes are heard with which laws apply, leading to costly procedural messes. |
| 🤐 Hidden or Omitted Clause | Some contracts skip the clause entirely, leaving interpretation open to the court. |
How Gerri, the AI Agent for redlines, can help
- 📤 Reviews uploaded or emailed contracts
- ⚠️ Proposes redlines based on your team’s specific policies and positions
- ✅ Understands the context and explains decisions
- 📄 Outputs a ready-to-send document for your counterparty to review
- ⏰ Saves 80% of legal review time and accelerates sales cycles