Contract Jurisdiction

[John Doe Jr.]

Jurisdiction

California

I am a California resident and have a choice of having a promissory note written under New York law or California law.

I doubt it will go into litigation but if it ever did, what are the pros and cons of one state versus another?

I think California would be far more convenient for me. The company issuing the note is not based in New York. They are in Guam.

 

[adjusterjack]

Probably doesn't matter. Contract law basics are relatively universal throughout the US. A promissory note can be as simple as a paragraph and as complex as a mortgage contract. Somebody promises to pay you and they don't you sue them for breach of contract, typically where the defendant is located or where the contract was created.

Since you reside in CA I don't see any advantage to NY as choice of law. You'd have to enforce it in Guam anyway, which could be problematic no matter how easy it might be to get a judgment.

If you are lending money to somebody in Guam be less concerned with choice of law and more concerned with the ability of the borrower to pay. Have an attorney write the promissory note for you that covers all the bases and perhaps get the note collateralized.

 

[zddoodah]

I doubt it will go into litigation but if it ever did, what are the pros and cons of one state versus another?

This question calls for legal advice.

I think California would be far more convenient for me. The company issuing the note is not based in New York. [It is] in Guam.

Convenience has nothing to do with choice of law. Choice of law, jurisdiction and venue are all distinctly different concepts, and convenience is related more to venue and jurisdiction.

Since this is a promissory note, the big question is who is borrower and who is the lender? Generally speaking, the borrower would prefer jurisdiction/venue in his/her/its place of residence or principal place of business, while the lender would prefer his/her/its principal place of business/residence (although it's less important for the lender).

As far as choice of law, if you're in CA and the other party is in Guam, why would NY law even be considered? Generally speaking, even if a contract says to apply the laws of State X, a court in State Y won't apply State X law if State X appears to have nothing to do with the transaction.

So...are you the borrower or the lender? Why are you obtaining funding from or loan ing money to a company in Guam?