Why New York Law Is Preferred

Jurisdiction: New York

Why Choose New York Law

Last verified: 2026-01-25

Attorney-ReviewedUnited StatesUpdated January 25, 2026

TL;DR

• New York has well-developed commercial law with extensive case precedents.
• NY GOL § 5-1401 allows parties to choose NY law for contracts ≥$250K.
• International commercial contracts often specify NY law for predictability.
• Governing law and dispute forum are separate choices.
• Not ideal for consumer/employment contracts due to mandatory local protections.

Why New York Law is Preferred

Developed Case Law

NY courts have decided thousands of commercial disputes, creating extensive precedents. This means more predictable outcomes and clearer interpretations of contract terms.

Commercial Division

NY Supreme Court has specialized Commercial Division courts with judges experienced in complex business disputes. Cases are handled more efficiently than general dockets.

Party Autonomy

NY law respects freedom of contract. Courts generally enforce terms as written without excessive paternalism, which sophisticated business parties often prefer.

International Recognition

NY law is familiar to international parties and their counsel. Major financing, M&A, and cross-border transactions routinely use NY law, creating network effects.

The $250,000 Rule

New York General Obligations Law § 5-1401 provides:

The parties to any contract...may agree that the law of this state shall govern their rights and duties in whole or in part, whether or not such contract...bears a reasonable relation to this state.

This applies to contracts involving $250,000 or more in aggregate value.

When NY Law May Not Be Ideal

Consumer Contracts

Many jurisdictions have mandatory consumer protection laws that apply regardless of choice of law. A NY law clause won't override consumer protections in the consumer's home jurisdiction.

Employment Agreements

Employment law has strong local mandatory rules. Even with NY law choice, local labor laws where the employee works typically apply to key protections.

Small Contracts

For contracts under $250,000, the special NY rule doesn't apply and courts may apply the law with the most significant relationship to the transaction.

Frequently Asked Questions

Yes, under NY General Obligations Law § 5-1401, parties can choose NY law for contracts involving at least $250,000. This makes NY law accessible for significant commercial transactions regardless of party location.

Both are well-developed. Delaware is particularly known for corporate law (the Court of Chancery). NY is broader and often chosen for commercial contracts, financing transactions, and international deals.

Not necessarily. Governing law and dispute forum are separate. You can choose NY law to govern the contract while specifying arbitration or a different court for disputes. However, choosing NY courts (forum selection) often accompanies NY law choice.

No legal requirement, but practical considerations favor English. NY courts operate in English, and most NY commercial law precedents and practice are in English. Bilingual contracts can specify which version controls.

Choice of law has limitations. For consumer and employment contracts, mandatory protections of the consumer/employee's home jurisdiction often apply regardless of contractual choice. NY law choice works best for B2B commercial contracts.

Sources

•NY General Obligations Law § 5-1401
•NY General Obligations Law § 5-1401 (N.Y. Gen. Oblig. Law § 5-1401)

Cite This Entry

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EchoLegal, “Why New York Law Is Preferred,” EchoLegal Legal Encyclopedia, v1.0 (last updated Jan 25, 2026), https://echo-legal.com/en/amerika/ny-law-neden-tercih-edilir.

Bluebook

Why New York Law Is Preferred, EchoLegal Legal Encyclopedia (last updated Jan 25, 2026), https://echo-legal.com/en/amerika/ny-law-neden-tercih-edilir.

Citation ID:ecl-gde-00007

This content is for general informational purposes only and does not constitute legal advice.