Will a Montana court honor this contract's choice-of-law clause?
Usually yes, but Montana runs a two-step test before it will, and a separate statute supplies the DEFAULT rule when the contract is silent. Absent a choice-of-law clause, Montana's own interpretation statute controls: “A contract is to be interpreted according to the law and usage of the place where it is to be performed or, if it does not indicate a place of performance, according to the law and usage of the place where it is made” (§ 28-3-102, MCA). Where the parties DID choose a state's law, Montana applies the two-step “Modroo” test built on the Restatement (Second) of Conflict of Laws §§ 187-188: K. Barber v. Bradford Aquatic explains that the first step asks “whether Montana law would apply under the Restatement § 188 had the parties made no valid choice-of-law election in their contract”, the “most significant relationship” analysis, and § 6 of the Restatement first asks whether Montana has its own statutory choice-of-law directive, which for a contract IS § 28-3-102. If a chosen state's law would conflict with a fundamental Montana public policy AND Montana has a materially greater interest in the dispute than the chosen state, Montana's own law and public policy can displace the parties' choice under Restatement § 187(2)(b): the same public-policy override that applies to forum clauses. K. Barber is a useful measure of how that comes out in practice: the Court ran the analysis and ENFORCED the clause, holding that “[t]he parties’ choice-of-law provision in that contract is enforceable under this Court’s approach under the Restatement, and the forum selection provision is enforceable under North Carolina law.”
The trap
A choice-of-law clause paired with a construction contract for a Montana project is not just disfavored: it is flatly VOID under § 28-2-2116(1), MCA, regardless of the Restatement analysis described above; that statutory override does not depend on any public-policy balancing. Outside construction, do not assume a chosen state's law survives automatically just because the parties are sophisticated: Polzin v. Appleway Equipment Leasing recounts a district court that had gone the OTHER way entirely, holding “forum selection clauses are against Montana public policy…void as unconstitutional” before the Montana Supreme Court reversed and clarified that clauses are tested under the Restatement, not declared void outright, so the doctrine has genuinely moved, and older Montana authority predating that correction should not be relied on. And remember the attorney-fees interaction already recorded in these Montana rules: Masters Group v. Comerica Bank held Montana's own reciprocal-attorney-fees statute, § 28-3-704, simply DOES NOT APPLY once a valid choice-of-law clause makes another state's law govern the contract: a choice-of-law clause can cost a Montana party a Montana-law protection even where the clause itself is fully enforceable.
7 authorities
- statuteMont. Code Ann. § 28-3-102enactment date not established
The words that state the rule
A contract is to be interpreted according to the law and usage of the place where it is to be performed or, if it does not indicate a place of performance, according to the law and usage of the place where it is made.
- statuteMont. Code Ann. § 28-2-2116enactment date not established
The words that state the rule
A provision, covenant, clause, or understanding that is in, collateral to, or affects a construction contract for a project in this state and that makes the contract subject to the laws of another state or that requires any litigation, arbitration, or other dispute resolution proceeding arising from a dispute pertaining to the contract to be conducted in another state is against the public policy of this state and is void and unenforceable.
The words that state the rule
The first prong of the Modroo test requires that this Court determine whether Montana law would apply under the Restatement § 188 had the parties made no valid choice-of-law election in their contract. Modroo, ¶ 54. In relevant part, that section provides: (1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.
The words that state the rule
In reliance on our decision in Keystone v. Triad Systems Corporation, 1998 MT 326, 292 Mont. 229, 971 P.2d 1240, the District Court concluded that forum selection clauses are against Montana public policy, stating: “choice of forum clauses are void as unconstitutional.”
The words that state the rule
In sum, we refuse to apply the law of the state chosen by the parties if three factors are met: (1) but for the choice of law provision, Montana law would apply under § 188 of the Restatement; (2) Montana has a materially greater interest in the particular issue than the parties chosen state; and (3) application of the chosen state’s law would contravene a Montana fundamental policy.
The words that state the rule
Because there is no authority to award attorney fees under the contract, and, as the contract is governed by Michigan law and therefore Montana’s reciprocal attorney fees statute, § 28-3-704(1), MCA, does not apply, the District Court was without legal authority to award attorney fees.
The words that state the rule
Barber and Bradford negotiated and entered into a valid employment contract. The parties’ choice-of-law provision in that contract is enforceable under this Court’s approach under the Restatement, and the forum selection provision is enforceable under North Carolina law. We affirm.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.