Applicable law in civil case - which state?

The Small claims court: Can you sue for additional damages for “inconvenience?” thread got me thinking about another legal issue.

In a civil lawsuit between parties in two different states they could remove the matter to federal court if the amount in dispute is enough. But what if it isn’t? Which law applies?

Hypothetical: Business in Illinois sues a person in Texas for non-payment on a contract for a sale of 1000 widgets. The lawsuit is brought in state court in Texas.

Must the law in Texas be the governing law (assuming applicable law was not specified in the contract)? I presume both parties can cite Texas law since the court is there, but can the plaintiff or defendant cite provisions of Illinois law? Can the Defendant?

There are entire books on “Choice of Law.”

First, being in Federal Court doesn’t solve the problem. The federal court is supposed to apply the same law as the forum state. (state substantive law, and federal procedural law, to make it more complicated.

Most contracts contain a choice of law provision, to avoid this problem. (and forum selection clause) They are usually, but not always, enforceable.

However, many civil cases do not involve contracts. And some contracts are silent on this issue. Short answer, the parties fight over which law applies based on the choice of law provisions of that state (they vary)/

There is even a Restatement of Conflict of Laws to help sort it out.

Yeah, a very thorny issue. Usually for a contract, venue lies where the payment was due. However, the other state might have a law that allows a suit to be filed there. There is also the “first to file” doctrine in which if two states have valid jurisdiction over the claim the one cedes to the other where it was first filed.

It’s always contested because each party wants to drink coffee on their front porch and drive to the courtroom in the morning for hearings while making the other party get on an airplane and book a hotel room and hire an unknown out of state lawyer.

But yeah, you can have a “choice of law” provision where, say a Texas court is applying Illinois law, and then you get the “public policy” exception.

There was a case in West Virginia (don’t have a cite) where the two parties were West Virginia residents but got into an accident in Ocean City, MD. One of the parties pled the Maryland law of contributory negligence (which bars recovery for a plaintiff who is even 1% at fault) and the WV Supreme Court said nope, not doing that, it violates WV public policy.

You could read volumes of books on the subject.