Choice of Law
Choice of law clauses designate which jurisdiction's law governs MCA contract interpretation — typically funder's home state — used to ensure consistent legal interpretation across multi-state merchant portfolios.
Why This Matters
Choice of law clause function: specifies governing law for contract interpretation (e.g., 'this agreement governed by New York law'), provides certainty across multi-state merchant portfolios, enables funder reliance on familiar legal framework. NY law is heavily used in MCA contracts given developed commercial law. Choice of law clauses generally enforceable when reasonable nexus exists between selected state and parties (typically funder's principal place of business). State commercial finance disclosure laws (NY, CA, VA) often apply notwithstanding contractual choice of law selection — disclosure requirements based on merchant location override contractual choice for disclosure purposes.
Frequently Asked Questions
Frequently Asked Questions
Why do MCA contracts use NY law most often?
NY commercial law is highly developed for finance transactions, court system experienced with commercial finance disputes, and many MCA funders headquartered in NY. NY law provides predictability for MCA-specific issues.
Can merchants challenge choice of law selections?
Possible but difficult — courts generally enforce reasonable choice of law selections in commercial contracts. Successful challenges require showing fundamental policy conflicts with merchant's home state or absence of reasonable nexus to selected state.