Professor John F. Coyle
As a result of research by Carolina Law Associate Professor John F. Coyle, some North Carolina attorneys are redrafting their standard choice-of-law clauses to improve clarity in contracts and avoid possible negative consequences.
Coyle’s article, “The Canons of Construction for Choice-of-Law Clauses,” is the first comprehensive study of the interpretive rules U.S. courts use to interpret ambiguous contractual language. The article examines the rules and assesses whether or not they reflect what the parties want.
His paper, to be published in the Washington Law Review this spring, is just one example of how research by Carolina Law faculty impacts attorneys’ work.
“When it comes to real-world implications of law-faculty research, it doesn’t get more real-world than choice-of-law clauses. Virtually every lawyer in the United States will have to grapple with one of these clauses at some point in their career. My goal is to give these lawyers the tools they need to draft them correctly and litigate them with an eye to the relevant precedents,” Coyle says.
The research provides a comprehensive overview of a body of law that many attorneys are unaware of. It also suggests model language for choice-of-law clauses to address ambiguity in commercial contracts and reduce the chance that courts will misinterpret clauses.
Coyle’s research shows that some of the canons courts use to interpret unclear choice-of-law clauses are sometimes inconsistent — depending on the particular rule — with the expectations of the contracting parties.
This mismatch between canons and party expectations can be significant. If a court construes the scope of a clause too narrowly, the case’s outcome could be affected. Parties may also have to pay lawyers to litigate a choice-of-law issue that’s unrelated to the central dispute.
“The parties can always redraft their contract to make their choice-of-law clauses clearer,” Coyle says. “In many cases, however, the contracting parties are unaware of the interpretive rules I discuss and don’t know that they should be rewriting their agreements.”
Coyle is spreading awareness among North Carolina attorneys, with presentations at three law firms in December and two in January.
“John’s research was incredibly interesting. The governing-law provision is a much-overlooked provision, with unintended consequences if not carefully drafted. John drilled down on several nuanced aspects to the provision and common misconceptions and provided a great road map to avoid unintended consequences,” says Byron Kirkland '87, a partner at Smith Anderson in Raleigh, where Coyle gave a presentation.
“It shows the importance of not accepting boilerplate provisions at face value. His research highlights traps in drafting that can be easily avoided,” Kirkland says. “We were very impressed with the research and practical guidance John provided. I have used his findings in drafting contracts since the presentation, and I am confident other members of our firm have as well.”
Some lawyers at Wyrick Robbins in Raleigh who attended Coyle’s presentation there also have acted on his conclusions.
“It was interesting to learn that a few of my assumptions regarding how a court would address a choice-of-law issue were not correct and to consider the potential implications for a client,” Wyrick Robbins attorney Amy Risseeuw says.
She plans to use Coyle’s sample provision in her contracts and has recommended that other lawyers in her practice group do as well.
“With the insight John provided, especially the ‘best practices’ choice-of-law provision, I will be able to avoid the potential pitfalls that might have arisen if I were using different language in clients’ contracts,” Risseeuw says.
Coyle’s research could help lawyers all over the country. He presented his findings at the Association of American Law Schools conference this month in San Francisco.
“I want to shine a light on these clauses and help transactional lawyers draft to the result that their clients probably want,” Coyle says. “I want them to be fully aware of the different ways courts have interpreted these clauses, so they can more effectively advance their clients’ interests when litigating choice-of-law issues.”
-January 19, 2017