Governing Law Clauses

"The parties to any contract or agreement relating a transaction of at least $250,000 may agree that the law of this state governs their rights and duties in whole or in part, whether or not the contract or agreement bears a reasonable relation to this state. This, however, does not apply to any contract or agreement for labor or personal services; relating to any transaction for personal, family or household services; or to the extent providedfor in section 1--301 of the Uniform Commercial Code. NY General Obligations §5-1401"

"While labor and personal services contracts are exempt from this rule, New York does not otherwise recognize a public policy exception to its application regardless of whether the application of New York substantive law may offend the public policy of another jurisdiction.Supply & Bldg. Co. v. Estee Lauder Int'l Inc, 2000 WL 223838 (S.D.N.Y. Feb. 25, 2000).While § 5-1401 establishes a mandatory choice-of-law rule when a contract designates New York law, when a choice-of-law provision designates the law of another jurisdiction, New York will follow the traditional rule honoring the parties' choice of law unless the chosen jurisdiction bears ""no substantial relationship"" with the parties or the transaction and there is ""no other reasonable basis"" for the choice (nexus test), or unless application of the law would offend a ""fundamental policy"" of a state with an interest in the transaction materially greater than that of the chosen jurisdiction and whose law would apply in the absence of an effective choice of law by the parties (fundamental policy test). Radioactive J.V. v. Manson, 153 F. Supp.2d 462, 469-470 (S.D.N.Y.2001)."

It has been noted by some federal courts, however, that while General Obligations Law § 5-1401 supersedes common-law conflicts principles, it is not without its limits and must still remain within the constitutional bounds of due process and the Full Faith and Credit Clause. See Lehman Bro. Comm'l Corp. v. Minmetals Internat'l Non-Ferrous Metals Trading Co., 179 F.Supp.2d 118 (S.D.N.Y. 2000).