While the creation of a federal government and state governments has its policy benefits, it can often cause headaches in litigation. Specifically, when there are parties from multiple states which State’s law applies to the dispute?
For breach of contract actions, Missouri courts will typically defer to a valid choice of law provision in a contract which states which State’s law is applicable in the event of a dispute. However, such provisions do not always exist in contracts. As such, Missouri courts apply a factor based analysis when there is no express choice of law provision. The factors to be considered when determining what State to choose are (1) the place of contracting, (2) the place of negotiation of the contract, (3) the place of performance, (4) the location and subject matter of the contract, and (5) the domicile, residence, nationality, place of incorporation and place of business of the parties. CIT Group/Equip. Fin., Inc. v. Integrated Fin. Serv., Inc., 910 S.W.2d 722, 728 (Mo. Ct. App. 1995); Brown v. Brown, 678 S.W.2d 831, 833 (Mo. Ct. App. 1984).
Missouri courts do not “tally” the foregoing factors favor and then give it to the state with more. Rather, courts evaluate the contacts based on their relative important to the particular issue(s) before the court. Accordingly, different factors may be entitled to more weigh in regard to one issue than in regard to another. Hartzler v. American Family Mut. Ins. Co., 881 S.W.2d 653, 656 (Mo. Ct. App. 1994).
Contact us with questions germane to contracts and other business disputes.