The governing law provision of an agreement articulates the parameters of the body of law governing any legal dispute arising under such agreement.  Therefore, the governing law provision is an important provision of an agreement, and should not be omitted.   Generally, a well constructed governing law provision addresses forum selection and choice of law.  Forum selection determines the state in which any dispute under the agreement will be litigated.  Adverse parties can utilize the choice of forum for strategic advantage during the litigation process.  In addition, by designating the choice of forum in the agreement, parties can anticipate risks, guarantee a favorable forum, and limit strategic advantage to the opposing party.  Accordingly, when drafting the agreement, it is wise to choose a state whose location and procedural laws are favorable to your position. 

Choice of law is an equally important part of a governing law provision.  This clause indicates which body of law will be interpreted by the court in the selected forum.  The choice of law clause prevents disputes over which law governs the agreement.  Without agreement by the parties on the choice of law, courts must make a complicated judicial determination for each dispute.   When making the decision as to which body of law should govern the agreement, you should choose the law of a jurisdiction that is stable, developed, and familiar.  Each of these elements, taken in concert, will likely assist your entity in a corporate dispute.

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