Agenda for 5th Class
• Choice of Law in Contracts (continued)
– Unilateral v bilateral guarantee contracts
– Restatement 2nd
– Interest analysis (continued)
• Lilienthal
– Comparative Impairment
• Farmers
• Choice of law clauses
– Restatement 2nd
– The argument in favor
• Nedlloyd Lines (CB 633-44)
• The Law Market (Handout pp. 10-18)
– Cases involving Covenants not to Compete
1
Assignment for Next Class
• Marriage
– Traditional approach (CB 66-78)
– Miscegenation cases (Handout pp. 1-5)
– California cases (Handout pp. 6-7)
– Restatement 2nd (Handout)
• You need not read every Comment carefully
• You can skip or skim the Reporter’s Notes
• Questions on next slides
• Optional
– Hoffheimer, Chapter 9, except pp. 105 & Qs 8-9
– Spillenger, pp. 275-78
2
Questions to Think About
• In re May’s Estate
– Should it matter that the parties seem to have gone to Rhode Island
solely to get married?
– Should it matter that the decedent could have written a will directing his
assets to be distributed in a way that would have matched the
distribution under the assumption that he had been married?
– How would this case have been resolved under the 1st Restatement?
– How would this case be resolved under the 2nd Restatement?
– How would this case be resolved, if the parties were domiciled in
California and the case was brought in California?
– How would this case have been resolved if New York applied interest
analysis or comparative impairment?
– Consider the statutory interpretation in Lanham v Lanham in the
paragraph that spans pp. 74-75. If the interpretation there were applied
to In re May’s Estate, what would the result have been? What is the best
interpretation of a statute declaring a particular kind of marriage void?
3
– Should there be a policy in favor of marriages?
Questions to Think About
• Lanham v Lanham
– Should it matter that the parties seem to have gone to Michigan solely to
get married?
– Should it matter that the decedent could have written a will directing his
assets to be distributed in a way that would have matched the
distribution under the assumption that he had been married?
– How would this case have been resolved the Wisconsin court applied
New York choice of law and precedents circa 1953?
– How would this case have been resolved under the 1st Restatement?
– How would this case be resolved under the 2nd Restatement?
– How would this case be resolved, if the parties were domiciled in
California and the case was brought in California?
– How would this case have been resolved if Wisconsin applied interest
analysis or comparative impairment?
4
Questions to Think About
• State v Ross
– Were you surprised by the outcome?
– How would this case have been resolved under the First Restatement?
Restatement 2nd? Interest Analysis? Comparative Impairment?
– What is Judge Rodman’s attitude toward mixed race marriages?
– How could Judge Rodman respond to Judge Reade’s arguments about
polygamy and marriages between nine year olds?
– Why does Judge Reade think that voiding the marriage would not disturb
the legitimacy of children and property rights?
• State v Bell
– Why does the court in this case reach a different result than in State v
Ross?
– Which opinion is more persuasive, State v Bell or State v Ross?
• What, if anything, do these cases suggest about recognition of same-sex
marriages, when such marriages were contracted in states which allow such
5
marriages, but where recognition is sought in states which do not?
Questions to Think About
• In re estate of Grant V. Levie
– The court alludes to an argument based on
Hurtado. What do you think that argument was? Is
it persuasive?
– Should it matter that the decedent could have
written a will directing his assets to be distributed in
a way that would have matched the distribution
under the assumption that he had been married?
6
Restatement 2nd on Contracts
• 188. Law Governing in the Parties in the Absence of Effective Choice by the
Parties
– (1) The rights and duties of the parties with respect to an issue in
contract are determined by the local law of the state which, with respect
to that issue, has the most significant relationship to the transaction and
the parties under the principles stated in § 6.
– (2) In the absence of an effective choice of law by the parties (see §
187), the contacts to be taken into account in applying the principles of §
6 to determine the law applicable to an issue include: (a) the place of
contracting, (b) the place of negotiation of the contract, (c) the place of
performance, (d) the location of the subject matter of the contract, and
(e) the domicil, residence, nationality, place of incorporation and place of
business of the parties. These contacts are to be evaluated according to
their relative importance with respect to the particular issue.
– (3) If the place of negotiating the contract and the place of performance
are in the same state, the local law of this state will usually be applied,
except as otherwise provided in §§ 189-199 and 203.
• § 198. Capacity to Contract
– (1) The capacity of the parties to contract is determined by the law
selected by application of the rules of §§ 187- 188.
– (2) The capacity of a party to contract will usually be upheld if he has7
such capacity under the local law of the state of his domicil.
Lilienthal & Farmers
• Lilienthal
– What do you think the outcome of this case would have been under the
traditional approach?
– What do you think the outcome of this case would have been under
comparative impairment?
– What do you think the outcome of this case would have been under the
Restatement 2nd?
– Does your answer to these questions depend on whether suit was
brought in California or Oregon?
• Farmers
– Why do you think that Farmers filed for declaratory relief?
– Why does California have “a strong interest in seeing that its antistacking law is enforced”?
– Why does the court refer to “Governmental Interest Analysis” and section
193 of the Second Restatement of Conflict of Laws, when California has
chosen Comparative Impairment as its approach to Conflict of Laws?
– Is this a False Conflict or True Conflict case?
– What do you think the outcome of this case would have been under the
traditional approach? Interest Analysis? Restatement 2nd?
8
– Do your answers to the previous question depend on whether suit was
brought in California or Arizona?
Arguments for Choice of Law Clauses
• The Law Market
– Are you persuaded by O’Hara and Ribstein’s reasons to generally
respect choice-of-law clauses. Why or why not?
– O’Hara and Ribstein suggest that choice-of-law clauses in consumer
contracts should be enforced even in consumer contracts, unless such
clauses are expressly forbidden by statute. Do you agree with that
proposal? Why or why not?
• Nedlloyd Lines
– Can you think of any reason not to enforce choice-of-law clauses agreed
to by large, sophisticated businesses?
– Do you agree with the majority that the choice-of-law clause governed
the action for breach of fiduciary duty?
– Suppose the court had found that the choice-of-law clause did not
govern the action for breach of fiduciary duty. How do you think lawyers
would have drafted choice of law clauses differently in subsequent
contracts?
9
Restatement 2nd & Lilienthal Hypotheticals
• § 187. Law Of The State Chosen By The Parties
– (1) The law of the state chosen by the parties to govern their contractual rights and duties
will be applied if the particular issue is one which the parties could have resolved by an
explicit provision in their agreement directed to that issue.
– (2) The law of the state chosen by the parties to govern their contractual rights and duties
will be applied, even if the particular issue is one which the parties could not have resolved
by an explicit provision in their agreement directed to that issue, unless either
• (a) the chosen state has no substantial relationship to the parties or the transaction
and there is no other reasonable basis for the parties' choice, or
• (b) application of the law of the chosen state would be contrary to a fundamental policy
of a state which has a materially greater interest than the chosen state in the
determination of the particular issue and which, under the rule of § 188, would be the
state of the applicable law in the absence of an effective choice of law by the parties.
• Suppose the contract in Lilienthal v. Kaufman had included the following
clause: “This contract shall be governed by California law.” If Oregon courts
followed the Restatement 2nd approach to choice of law clauses, would that
have changed the outcome of the case?
• Suppose the contract in Lilenthal v. Kaufman had included the choice of law
clause mentioned above and the following clause: “All disputes arising out of
this contract shall be litigated in California state court.” Would that have
10
changed the outcome of the case?
Covenants Not to Compete I
• Cook Sign
– The Minnesota Court of Appeals applied the Better
Law approach to choice of law.
• How is that approach different from the Restatement 2nd
approach to choice of law clauses?
• What do you think of this approach to choice of law?
– Compare this case to Applications Group
• Which approach to the enforceability of choice of law
clauses did you find more persuasive?
• Do you think the fact that one court enforced the choice of
law clause while the other did not reflects the different
choice of law approaches chosen by California and
Minnesota? Or some other factor?
11
Covenants Not to Compete II
• Applications Group
– According to the opinion, Hunter admitted that it used covenants not to
compete to deter and prevent solicitation, recruitment and hiring of its
employees and “to avoid a bidding war that would increase the salary of
its consultants.” If you were representing Hunter, can you think of
reasons to use covenants not to compete that might been more
effective?
– If California courts invalidate covenants not to compete between
employers and employees in other states, who bears the cost of such
invalidation? Who benefits?
– After this case, if Hunter wants to avoid liability for unfair competition
under California Unfair Practices Act §17200, what would it need to do
(or not do)?
12