San Jose, CA asked in Contracts for California

Q: What Jurisdiction should I put down in a contract?

I currently have a contract where I normally call out Jurisdiction in the USA (our contracts with distributors are both domestic and international). I have seen contracts call out Jurisdiction in Delaware (where our company is incorporated) or Santa Clara (where we are operating). Do you have a take whether you think we should call out the jurisdiction in USA, Delaware, or Santa Clara? What would be the pros and cons for each location?

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James L. Arrasmith
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A: When choosing a jurisdiction for your contract, you should consider where it will be most favorable for your business operations. If you select Delaware, you're choosing a state known for being business-friendly, with well-established corporate laws that are favorable to companies. This can provide legal predictability and is often preferred for companies incorporated there.

On the other hand, choosing Santa Clara County as the jurisdiction can be beneficial if your company primarily operates there. Local jurisdiction might make any legal proceedings more convenient for your team, especially if you expect disputes to require in-person involvement or local expertise.

Listing "USA" as the jurisdiction is broad and might be too vague, making enforcement of the contract potentially more complex. It may also open up the possibility of legal actions in various states, leading to uncertainty. Carefully weigh the convenience of local jurisdiction against the benefits of Delaware's corporate law environment.

A: CHOICE OF LAW: First ask what law is most beneficial to my position, in the event of a dispute or lawsuit. As a California lawyer I usually pick California and Orange County as jurisdiction and venue, importantly I pick choice of law either for my entire contract interpretation, non contract disputes, and or other specific situs laws for particular issues. For example I pick California and Orange County Superior Court as the place to litigate the contract dispute and possibly entity situs law for specific rules to govern interpretation for entity protection issues, such as Wyoming, Nevada or Delaware, for example, for charging orders, to gain possible benefits with the laws of the state of incorporation.

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