A choice of law clause in a contract is one whereby the parties to that contract specify which law (i.e. the law of which state or nation) will govern disputes arising under the contract. Some states will not honor choice of law clauses as a matter of public policy, but most states now honor such clauses. A cause of action brought in any such state (called the 'forum state') must be resolved in accordance with the law of the state specified in the contract (the 'choice of law state').

This may lead to problems, as courts of the forum state may be unfamiliar with the law of the choice of law state, and may apply the statute or case law of the choice of law incorrectly. Furthermore, disputes as to the scope of a choice of law provision are likely to arise when a lawsuit between parties to the contract is premised on a tort such as fraud or breach of fiduciary duty, instead of a breach of the contract itself.

The criticism has often been made by legal scholars that forum state judges faced with such a provision will employ various legal devices to escape from the strict requirements of the contract. Such devices purportedly allow judges to rely on their own sense of a fair outcome based on the facts of the case at hand, rather than strictly interpreting the terms of the contract, and the law of the choice of law state. While such rulings might lead to a fairer outcome, critics contend that they undermine the predictability of the legal system upon which contracts are based.

Escape devices include things such as:

• Public policy: States will not apply a 'foreign' law that violates the deeply-held convictions of the forum state's legal system.
• Renvoi : Courts may look for a provision in the law of the choice of law state that permits the court to use the law of the forum state; most states frown upon renvoi in a choice of law situation, insisting that the only law to be looked at is the substantive law of contracts, not the law governing choice of law.
• Procedural law: Classifying laws as procedural rules of the court rather than substantive laws of the state allows a court to use the law of the forum state. In some cases, this makes sense - after all, if the forum state requires legal documents to be printed in a twelve-point font, and the choice of law state requires the same documents to be printed in a fourteen-point font, it makes little sense to require the court to determine which font size should be used in a choice of law dispute. However, many contentious cases have centered on findings that things such as burdens of proof, admissibility of evidence, and statutes of limitations are procedural rather than substantive, because these thigs can change the outcome of a case.