ALI's Principles: My Recommendation for Software Vendors

I'm recommending to all of my clients that they insert into their operative software license agreements the following or something close to it in the choice of law clause: "This Agreement and all related disputes shall be governed by the laws of _______, without regard to the United Nations Convention on Contracts for the International Sale of Goods or the American Law Institute's Principles of the Law of Software Contracts ("Principles"). The parties agree that (i) the Principles shall have no application whatsoever to the interpretation or enforcement of this Agreement, and (ii) neither party shall invoke the Principles in whole or in part in any judicial or arbitral proceeding relating to this Agreement."

But, aren't many of the rules stated in the Principles, especially the controversial ones like the implied warranty of no hidden material defects and the implied indemnification obligation, not excludable or disclaimable, or disclaimable only with specific prescribed language?

Well, that's what the Principles say. The Principles dictate, for example, that the newly-discovered warranty of no hidden defects cannot be excluded or disclaimed.

Here's the thing: the Prinicples have no force of law whatsoever. They have persuasive authority only. They are not the equivalent of a statute or judicial decision. If the parties agree in their contract that the Principles will have no effect, why would a court feel free to disregard that?

For example, if a famous law review article written by a highly regarded law professor advocated for a specific interpretation of common contract language, and this interpretation would benefit one side over the other, there's no reason why the parties could not simply agree that this professor's article will be disregarded in any legal proceeding.

The same should hold true for the Principles.

notices    log in

© 2006, 2017 Sean Hogle PC. All rights reserved. These pages constitute ATTORNEY ADVERTISEMENT.