Jackson v. Pasadena Receivables, Inc.
921 A.2d 799 | Court of Appeals of Maryland | 2007
What This Case Means for Subcontractors
A Maryland court enforced a credit card agreement even though the debtor never signed it, because the agreement included a choice of law clause selecting South Dakota law. The court ruled that the parties' choice of law is enforceable when the chosen state has a substantial connection to the transaction, and Maryland's signature requirement is not a fundamental public policy that overrides that choice. This matters to construction subcontractors because it shows courts will enforce contract terms you agree to, even if they conflict with your home state's rules.
Key Takeaways
- •Choice of law clauses in contracts are enforceable even when they conflict with your state's requirements, as long as the chosen state has a real connection to the deal
- •Don't assume your home state's rules automatically protect you—courts may apply another state's law if the contract says so and that state has a legitimate interest
- •Review all contract terms before signing, including which state's law governs, because you may lose protections you thought you had
The law of the state chosen by the parties to govern their contractual rights and duties will be applied.
Frequently Asked Question
If I sign a contract that says it's governed by another state's law, will a court enforce that choice?
Yes, courts generally enforce choice of law clauses if the chosen state has a substantial relationship to the transaction. Your home state's rules may not protect you if you agreed to another state's law. Always review which state's law governs before signing any contract.
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