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

A governing law clause (also called a choice of law clause) specifies which country's or jurisdiction's laws will be used to interpret and enforce the contract. In the UK context, it is important to note that England and Wales, Scotland, and Northern Ireland each have their own legal systems. Most UK commercial contracts specify English law, which is the most widely used and understood system for commercial agreements globally.

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Last updated: February 2025

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 Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales. The parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales. Note: This is illustrative wording only and should be tailored by a qualified legal professional.

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

FAQ

Can I choose any country's law to govern my contract?

In B2B contracts, yes — the parties have broad freedom to choose any governing law, even one unconnected to either party. However, the chosen law will not override mandatory rules of the jurisdiction where the contract is performed. In consumer and employment contracts, the choice cannot deprive the weaker party of mandatory local protections.

What is the difference between English law and Scots law?

Scotland has its own distinct legal system based on a mixture of civil law and common law traditions. Key differences include property law, contract formation rules, and court procedures. For example, Scots law does not require consideration for a contract to be binding (a promise can be enforceable without anything in return). Most UK commercial contracts specify English law for consistency and because it is more widely understood internationally.

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This is guidance for UK businesses, not legal advice. Example wording is illustrative. Consult a solicitor for complex matters.

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