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Table of Contents     Cover      Featured Article

MCLE Test and Answer Sheet

Test No. 86:Choice Location (July/August 2000 LA Lawyer)

Instructions for Obtaining MCLE Credits
The Los Angeles County Bar Association certifies that this activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of 1 hour.


1.Study the CLE article in this issue.


2.Answer the test questions by marking the appropriate boxes. Each question has only one answer. Photocopies of this answer sheet may be submitted; however, this form should not be enlarged or reduced.

3.Mail the answer sheet and the $15 testing fee ($20 for non-LACBA members) to:
Los Angeles Lawyer
MCLE Test
P.O. Box 55020
Los Angeles, CA 90055 
Make checks payable to Los Angeles Lawyer.

4.You can also fill in the test form and submit it directly to LACBA by clicking "Submit." To submit your test answers online you will need to pay by credit card. After submitting your answers you will be presented with a screen requesting payment information. This information will be submitted in a secure mode which will allow you to safely transmit your credit card number over the Internet. If you prefer not to pay by credit card, please print this answer sheet and submit your responses by regular mail.

5.Within six weeks, Los Angeles Lawyer will return your test with the correct answers, a rationale for the correct answers, and a certificate verifying the CLE credit you earned through this self-assessment activity.

6.For future reference, please retain the CLE test materials returned to you.
Test Sheet 
Mark your answers to the test by clicking next to your choice.  All questions must be answered.  Each question has only one answer. This test is worth 1 hour of credit.*

1. In California, courts apply the principles set forth in the Restatement (Second) of Conflict of Laws to determine the enforceability of choice of law provisions in contracts.
True.
False.

2. The principles governing the enforceability of freely negotiated choice of law provisions in California reflect a strong policy favoring the enforcement of such provisions.
True.
False.
True.
False.

3. In California, a choice of law provision must be governed by the law of a state where one of the parties either resides or is domiciled.
True.
False.


4. California courts seldom use the lack of a reasonable basis as a justification for not enforcing choice of law provisions.
True.
False.

5. In which of the following scenarios is a California court least likely to find a reasonable basis for the parties' choice of law?
A. The parties choose New York law to govern a refinancing of a loan secured by a Broadway theater. Both parties reside in California and have never been to New York.
B. The parties choose Louisiana law to govern their contract because if there is a dispute, they agree it would be exciting to litigate in New Orleans.
C. The parties choose Oregon law to govern their agreement. One party resides in Oregon during the summer months of each year.
D. The parties choose Delaware law to govern their agreement. One party is incorporated in Delaware but does not reside there.

6. The most common reason why a California court may not enforce a choice of law provision is the court's determination that the provision is contrary to fundamental policy.
True.
False.

7. If California law prohibits a waiver of a particular personal benefit, a California court is not likely to enforce a choice of law provision that in effect is a waiver of that benefit because there is no reasonable basis for the parties' choice of law.
True.
False.

8. Which of the following contractual provisions are most likely not contrary to fundamental policy?
A. A choice of law provision that permits nonmutual attorney's fees.
B. A choice of law provision that permits restrictive covenants in an employment contract.
C. A choice of law provision that conflicts with California's treatment of forfeiture clauses.
D. A choice of law provision that conflicts with California's bar to deficiency judgments.

9. If the parties' choice of law is contrary to fundamental policy in California, then the contract is void.
True.
False.

10. Which of the following is not part of an exception to the general rule governing enforceability of choice of law provisions in California?
A. The application of the laws of the chosen state is likely to produce an unjust result.
B. The chosen state has no substantial relationship to the parties.
C. The application of the law of the chosen state is contrary to the fundamental policy of another state.
D. The chosen state has no substantial relationship to the transaction.

11. If a California court determines that there is a reasonable basis for the parties' freely negotiated choice of law provision, then the chosen state necessarily has a substantial relationship to the parties or the transaction.
True.
False.

12. Whether a choice of law provision has a substantial relationship to the parties or transaction may be a factor in determining whether the application of the provision contradicts the fundamental policy of another
True.
False.

HYPOTHETICAL 1
DelCo is incorporated in Delaware, has its principal place of business in Florida, and maintains another office in Texas. DelCo has hired Cal to open a California branch office to service the needs of its main client, ColoCo-a Colorado corporation with a single office in Denver, Colorado. The employment agreement between DelCo and Cal contains provisions for stock options, a covenant not to compete, some specific provisions regarding the term of Cal's employment, and various other standard provisions.

13. Assuming the employment agreement between Cal and DelCo contains a choice of law provision, which of the following jurisdictions is most likely to be held to lack a substantial relationship to the parties?
A. Delaware.
B. Florida.
C. Colorado.
D. California.

14. Assume that in their choice of law provision, DelCo and Cal selected Delaware law to govern the employment agreement. If there is a dispute, a California court will apply California law to some portions of the agreement and Delaware law to the rest because the application of the choice of law provision to some portion of the agreement violates a fundamental policy of California.
True.
False.

15. Which of the following provisions, if any, of the employment agreement between DelCo and Cal are likely to be contrary to the fundamental policy of California if Delaware law is chosen to govern the employment agreement?
A. Stock options, the term of the contract, and the covenant not to compete.
B. Stock options and the covenant not to compete.
C. The covenant not to compete.
D. None of the above.

HYPOTHETICAL 2
Assume the same facts as Hypothetical 1. Cal enters into a contract on behalf of DelCo to sell surfboards to ColoCo. Among other provisions, the contract states that it will be governed by Florida law and, in case of a dispute, the prevailing party is entitled to receive attorney's fees.

16. Based only on the information provided, if a lawsuit is filed in California regarding Cal's contract with ColoCo, what state law will a California court most likely apply in interpreting the contract?
A. Award attorney's fees to ColoCo if the award is permitted by Florida law.
B. Award attorney's fees to ColoCo if the award is permitted by California law.
C. Award attorney's fees to DelCo if the award is permitted by California law.
D. Refuse to award attorney's fees to either party because the award would be contrary to fundamental policy in California.

17. If ColoCo prevails in the lawsuit against DelCo, a California court is likely to:
A. Award attorney's fees to ColoCo if the award is permitted by Florida law.
B. Award attorney's fees to ColoCo if the award is permitted by California law.
C. Award attorney's fees to DelCo if the award is permitted by California law.
D. Refuse to award attorney's fees to either party because the award would be contrary to fundamental policy in California.

18. Assume that a California court determined that the application of the choice of law provision to some specific issue in the agreement between Cal and ColoCo would be contrary to a fundamental policy of Colorado and that Colorado has a materially greater interest than Florida in determining the issue. The court is likely to apply:
A. The law of the state that would have governed the transaction in the absence of an effective choice by the parties.
B. Colorado law if it is the law that would have governed the transaction in the absence of an effective choice by the parties.
C. California law regardless of the parties' choice of law.
D. Florida law to protect the expectations of the parties.

HYPOTHETICAL 3
Nue Yark and Cali Phorna meet for the first time while on vacation in Utah. Nue is from New York and Cali is from California. Neither party has ever been to Utah before. While eating lunch, they decide to jointly build a ski resort in Utah. They draft a definitive contract on the back of a napkin containing the basic terms of their agreement, including a choice of law clause selecting Utah law.

19. Is this choice of law clause likely to be enforced by a California court?
Yes.
No.

20. Which one of the following is the factor that is least likely to be considered by California courts when determining whether the application of a choice of law provision is contrary to a fundamental policy of California?
A. There is a clear legislative statement on the issue involved.
B. Neither party resides in the chosen jurisdiction.
C. The choice of law provision acts as a waiver of protections that cannot be waived pursuant to California law.
D. The contract is subject to a comprehensive state regulatory scheme in California.

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*The Los Angeles County Bar Association has been approved as a continuing legal education provider of Minimum Continuing Legal Education credit by The State Bar of California. This self-assessment activity will qualify for Minimum Continuing Legal Education credit by The State Bar of California in the amount of one hour.

   
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