Governing Law

Definition - What does Governing Law mean?

Governing law, also known as choice of law, is a clause that is included into contracts, which gives the parties involved the right to choose which region's laws they will follow if two regions' laws conflict with one another. For example, if a trucking company in Iowa is doing business with a retail business in Texas, and the laws regarding trucking inspections are different in each state, there may be a clause in the contract that lets them choose which state's standards they would like to follow. This would be an example of governing law.

Justipedia explains Governing Law

Governing law is used when two parties in a contract are located in regions with conflicting laws. If there is no dispute between the laws of the two different regions of the parties in the contract, then there is no need for governing law. However, if there is, then it is necessary for the parties to choose which region's laws they will follow. In these circumstances, there is a need for a governing law clause in their contract.

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