A governing law clause is a contractual term that describes the laws of the jurisdiction that will govern the terms of the contract and any dispute arising out of it. It typically appears at the end of a contract.
- The contract should ideally be governed by the laws of Ontario because lawyers in Ontario have legal expertise on the laws of Ontario but not on the laws of foreign jurisdictions.
- It is important that the University be able to calculate the costs associated with entering into a contract, especially if a dispute arises. Foreign law clauses often make this calculation impossible because lawyers in Ontario, including Office of University Counsel, are experts in Ontario law only and therefore it is hard to predict what would happen if the contract was interpreted under the laws of another jurisdiction;
- Some jurisdictions are lower risk: other provinces in Canada and New York, for example, because for the most part, their legal regime aligns with Ontario law and it would not be difficult or prohibitively expensive to retain local counsel in New York;
- In contrast, laws of other nations may pose higher risks because the laws are unknown to local lawyers here in Ontario, and it would be very costly to defend or bring a claim in these jurisdictions;
- If the Dean or Principal supports a contract with a foreign Governing Law jurisdiction and the Provost approves of the jurisdiction, the division will be asked to confirm in writing that it will be financially responsible for the costs of defending or bringing a claim in the foreign jurisdiction.