I’m in NY. I am going to do business with a man in Pennsylvania. I have an excellent boilerplate NDA from someone. I just plugged my name in instead of theirs. Here’s the issue. The NDA, in several places, refers to how the laws of this state or that state apply in the case of conflict.
Do I say that the laws of NY apply since I live here, or the laws of Pennsylvania apply because HE lives there? Which laws apply when doing business regarding an NDA across state lines?
Cartooniverse
IANAL, but in my experience, the person drawing up the agreement usually specifies that it will be interpreted in accordance with the laws of his home state, as being more convenient for him.
I’m not touching the other questions because they seek legal advice. This is a complicated issue and it is worth having a lawyer look at the document if it is worth asking here. Your last question though is one that is worth addressing, generally. Here is the general answer.
As a general rule when more than one state’s law could possibly apply to a contract, different courts apply different rules. There were two old-fashioned rules:
And see, http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=11th&navby=case&no=969270man; http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=ks&vol=ctapp/2002/20021108/&invol=88409
Now choice of law methodology is a lot more complicated, if no more predictable. http://www.willamette.edu/wucl/wlo/conflicts/04survey/04Surv2.pdf (pdf); http://en.wikipedia.org/wiki/Choice_of_law.
Because choice of law decisions are so unpredictable, parties often determine which law will apply by including a choice of law clause in the agreeement. An express choice of law clause in a contract will be given effect so long as application of the chosen law does not violate the forum State’s fundamental public policy. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=wa&vol=447033maj&searchval&invol=1
Of course knowing which state’s laws apply to future disputes may not be all that helpful. You never know which side of a dispute you’ll be on, and you never know when some esoteric rule available in one state might have saved the day for you, had you not chosen another state’s laws. Indeed, most lawyers routinely choose their home state’s laws in these things without even analyzing the options. Few drafters of choice of law clauses actually make a side-by-side comparison of the contract law of the states of residence of the two parties or the state where the contract is to be performed. Without a choice of law clause, lawyers for the parties in litigation could argue for the application of the law most favorable to their side under the unique facts of the case. See, http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=ks&vol=ctapp/2002/20020125/&invol=85351 (example of a Kansas Court applying Canadian law to a contract formed in Canada). To some extent this is still possible becasue there are two provisos regarding choice of law clauses:
Perhaps more important than a choice of law clause is a forum selection clause. These clauses spell out which court gets to decide the case. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=nc&vol=appeals2001/&invol=001097-1Absent a forum selection clause, a contracting party might well find himself litigating in a distant forum, having a judge in that forum decide what the law of his home state is, See, http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=486&invol=717, and even applying the forum state’s statutes of limitations to the dispute. Id. Similarly, a contracting party who accepts a choice of law clause that selects the law of a distant forum risks subjecting herself to jurisdiction in that forum absent a forum selection clause. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=us&vol=471&invol=462 (Choice of Florida law in Burger King franchise agreement was one factor that argued in favor of subjecting franchisee with few ties to Florida to jurisdiction there).
Of course, forum selection clauses are also subject to a public policy exception. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=US&vol=407&invol=1; http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=9th&navby=case&no=9955633
Here is a discussion of choice-of-law clauses in NDAs: http://www.michbar.org/e-journal/bar_journal/bppjan02.html.
This one is pretty good too: http://www.fmglaw.com/Publications49.html
As for the general concept: Well done, Gfactor.
As for the specific question: I’m not touching this one either, for various reasons including the one identified by Gfactor.
On this point:
I agree that one can never know (in advance) the details of the specific future dispute that will arise from the contract, so one can seldom intelligently choose the jurisdiction that will supply the governing law on this basis.
There are two things that a smart drafter can know ahead of time, though. Sometimes State A’s law generally favors one side over the other (the employer, consumers, whatever). If it’s a consumer protection issue, odds are the consumer is better of with California or Illinois law, rather than, say, Delaware.
Also, if I’m the one drafting, I can save my client a few dollars if I can choose a state with law that I know. If the other side insists on Oklahoma law, on the other hand, I may need to do some research to properly represent my client. So if my side has the negotiating leverage to compel Illinois law, that’s what I’m going to do.
Yes. Good point.
I always tell my clients that they are compromising here. By agreeing to my state’s forum, they may get an efficiency advantage, especially if the agreement also chooses our state as the forum.
They are giving up potential advantages though. Sometimes another state’s law might win the case, and sometimes it might just make it cheaper to litigate. Sometimes not. So the client needs to consider whether certainty and efficiency outweigh potential tactical advantage.
Without the forum selection clause, the client still risks a foreign court interpreting our home state law, or choosing to apply different law on public policy grounds. So the value of the choice of law clause alone is diminished in that case. Indeed, in my state a forum selection clause is far more valuable than a choice of law clause, because Michigan applies the Lex Fori (law of the forum) unless there is a good reason not to. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=6th&navby=case&no=02a0273p That means that if the case is litigated in Michigan, Michigan’s law will probably apply anyway. So by selecting the forum I am also selecting the law.
I just want to emphasize what previous posters have said – there is no way of answering your question without a detailed examination of your legal situation and the legal consequences of making such choices. You should not enter into such a contract without consulting a lawyer.
What others have said is true, very often a party to a contract chooses the applicable law and forum based on convenience. Large corporations tend to choose law and forum based on the most favourable applicable law. It’s pretty rare, I think, for a small business to choose a distant state’s law and forum, because the costs of enforcement become very high.
I am reading all of this and am grateful for the information. I also respect the position of the lawyers posting in here who cannot be too specific, for fear of offering legal advice without being my representative.
I’m running and not near the machine that HAS the document in question, but I believe there are clauses that address which court is to be the one deciding. When I get home I’ll cut and paste and see if this document at least is worded properly.
I suspect it is. It was drawn up to protect intellectual property by attornies representing a rather famous inventor who has successfully protected his intellectual property in the past.
Thanks again ! More later !
Cartooniverse, just to amplify on your question, when I was a lowly law student, I took an entire COURSE on what we call “Conflicts.” That’s how difficult the subject can be to figure out. 
Do not assume that this means it will meet your needs. With regard to your question in this thread, do not assume that any of this means that the choice of law and choice of forum clauses will meet your needs. This “rather famous inventor” (why not reveal his name?) likely is in a situation that is very different from yours.
Amen.
Mine was called “Jurisdiction and Choice of Law.” It has come in handy more than once. If you want to read some complicated stuff, check this out http://www.willamette.edu/wucl/wlo/conflicts/00survey/00survey.htm. And see the annual choice of law summaries here.
Oh. That’s easy. Because it’s irrelevant and I protect his privacy. Kind of a weird question coming from an attorney, ain’t it? 
You are right. It may not meet my needs. However, I cannot afford an attorney to write one up for me, and I sorta know the fellow. I am tempted to use it and just alter it by inserting my name instead of the original fellow’s. Still…paranoia demands that I examine that closely.
And, as it happens you are entirely incorrect. He could not be more in the same situation than I am, since my invention is an accessory that works with his, and his CAD engineer is the one whose talents I wish to engage. He makes the kind of things I have designed, though has never thought to design my idea. So, he hires this man to do CAD design work for his inventions. I wish to do the same.
We are in identical situations.
Famous last words. Good luck to you though.
Can you afford one to take a quick look at the form you propose to use? That would probably cost you a lot less than hiring a lawyer to draft one from scratch.
Here is an anecdote about the last time I had a choice-of-law issue in my own practice. It was about six months ago. Under a clause in a contract with one of our brokers, the broker owed my company $2500. I sent the broker a demand letter. The broker called back and told me that his lawyer had said that the clause was unenforceable under the law of state x (the broker’s home state), he made the mistake of telling me that he would see me in court. I reviewed the agreement and found that it had a feeble choice of law clause (it was drafted by someone other than me, and needed a little work), but it did have a forum selection clause. So . . .
I spent the $50 it cost to file and serve a lawsuit here in Michigan. Michigan law is unclear on the issue, but probably favors my company. At the very least, I was able to sign the complaint without violating ethical rules and rules imposing sanctions for legally unsupported claims. That was all it took. The guy called up and wanted to know where to send the check. He had already lost. It would have cost him more just to reatain an attorney in Michigan to defend the case, and he stood a very good chance of losing. The forum selection clause made it uneccessary for me to worry about the choice-of-law issue, or even argue the unforceability of the clause under Michigan law.
Absent the forum selection clause my client would have been subject to three kinds of uncertainty:
reatain=retain
No, actually. You’re not his attorney, so from my point of view, you’ve nothing to protect. I don’t see how knowing about this particular contract violates his personal privacy in any significant way, especially since he already shared it with you. Anyway, attorneys don’t keep secrets by saying things like, “I know something about a really famous inventor, but I can’t tell you who he is.” An attorney would not mention it at all. Additionally, attorneys are not allowed to keep their clients’ identities secret, only their communications.
How do you know? Have you consulted any attorneys? I can’t imagine that it should be too expensive to take this already written contract and have one check it out to make sure it’s okay. What’s more affordable, a little bit of precaution or the big mess down the road?
I can’t see how this factors at all into your decision.
No, not paranoia. Prudence. It would be even more prudent to consult an attorney.
Do you have the same financial resources, the same reputation and fame, the same contacts whom you can get to act on your behalf? Do you have debts and obligations that he doesn’t have? Do you have the same legal history he has? Do you live in the same state and operate under same contract law? Do you have as much money as he does that would help you get out of a bind if this contract turns out to be troublesome?
If you are in identical situations, I’d be rather surprised. But I’m not going to say one way or the other because I’m not your lawyer. And neither are you.