Most commercial agreements contain a clause choosing a governing law and a forum. They are usually negotiated last, in a hurry, and they routinely decide more about the outcome than the substantive terms.

Choice of law determines the rules that apply. It can decide whether an overbroad non-compete is narrowed or struck entirely, whether a consequential damages waiver is enforceable, how long the limitations period runs, and what duties are implied. Courts generally enforce the parties’ choice where the chosen state has a reasonable relationship to the transaction and the choice does not offend a fundamental policy of a state with a materially greater interest — the second limb being where these clauses get tested.

Forum selection determines where. Its practical effect is cost and convenience: which side travels, which side’s counsel is local, which court’s docket and procedures apply. Exclusive clauses are generally enforced; permissive ones merely consent to jurisdiction.

The two do not have to match, and often should not be assumed to. Also check whether the clause covers only contract claims or extends to related tort claims — a narrow clause invites a dispute litigated in two places at once.