Governing Law
Contracts usually include a clause that provides for the terms and conditions of the contract to be interpreted according to laws of a specific state (or country). The drafter of the contract will often attempt to make the contract subject to the laws of his/her state.
Does Virginia Tech use a governing law provision in its agreements?
Yes. Our contracts should include the following provision:
The validity and interpretation of this Agreement and the legal relationship of the parties to it shall be governed by the laws of the Commonwealth of Virginia and the applicable U.S. Federal law.
Can Virginia Tech accept governing law of another state/country?
No. Virginia Tech is an instrumentality of the Commonwealth of Virginia and, as such cannot agree to a provision calling for its contracts to be interpreted under the laws of another state. Clauses indicating that the contract should be governed by any state other than Virginia are to be revised. Delete the name of the other state and insert the Commonwealth of Virginia.
As a State Agency, Virginia Tech can only agree to those actions which the State legislature has authorized. The University has no authorizing legislation which would allow it to be bound by the laws of any state other than the Commonwealth of Virginia. If agreement cannot be reached, you can agree to remain silent on the issue and remove all reference to either party's governing law.
What rationale should be used in taking exception to this clause?
Governing Law
Virginia Tech has no authority to agree to be bound by the law of any other state due to the fact that it is a state university and (1) the General Assembly has never given up nor delegated its authority to make the laws of Virginia or those that govern the activities of state government. Therefore, employees of the state do not have the authority to contractually agree to bind a state agency to laws of another state; and (2) the Commonwealth of Virginia has sovereign immunity which must be explicitly waived before the University would be amenable to the jurisdiction of the courts of another state. In Virginia's waiver of sovereign immunity from suit for contractual matters, jurisdiction is limited to the Circuit Courts of the Commonwealth of Virginia.
Last update: September 25, 2002
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