Governing Law Clause in UK Contracts: What It Means & Example Wording

When to Include a Governing Law Clause

• In every contract, but especially in international or cross-border agreements where the parties are in different jurisdictions
• When one party is based in Scotland or Northern Ireland and the other in England and Wales — the legal systems differ in material ways
• In online terms and conditions where customers may be based anywhere in the world

Example Wording

This example wording is illustrative only. Customise it to your specific circumstances and consider seeking legal advice.

Is a Governing Law Clause Enforceable in the UK?

Governing law clauses are generally enforceable in the UK. Under the Rome I Regulation (retained in UK law post-Brexit as the Law Applicable to Contractual Obligations Regulations), parties to a commercial contract are free to choose the applicable law. However, in consumer contracts, the choice of law cannot deprive the consumer of mandatory protections available under the law of their habitual residence. In employment contracts, the choice of law cannot override the mandatory protections of the jurisdiction where the employee habitually works.

Common Mistakes

• Specifying 'UK law' as the governing law — there is no such thing as 'UK law'; you must choose English law, Scots law, or Northern Irish law
• Confusing the governing law clause with the jurisdiction clause — governing law determines which law applies, jurisdiction determines which courts will hear disputes. They can (and sometimes do) specify different countries
• Failing to include a governing law clause at all in an international contract — without one, the courts must determine the applicable law using conflict-of-law rules, which adds uncertainty and cost