A governing law clause determines which state or country's laws apply to your contract — and where d...
By Gia Gray · Updated May 2026
Freelancers work across state lines and national borders all the time — a designer in Austin working for a client in New York, a developer in London building an app for a startup in San Francisco. When a dispute arises, one of the first questions is: whose law applies? That's what the governing law clause answers.
The answer matters more than most people realize. Contract law varies significantly between states and countries — what's enforceable in one jurisdiction may not be in another. Non-compete clauses are nearly unenforceable in California but can be strictly enforced in Florida. Mandatory arbitration requirements are treated differently in different states. Even the statute of limitations on contract claims varies.
A governing law clause (also called a "choice of law" clause) specifies which jurisdiction's laws will apply to interpret and enforce the contract. It often includes a related "venue" or "forum selection" clause that specifies where disputes must be litigated.
In plain English: if we ever end up in a dispute, we'll use [State X]'s laws to figure out who's right — and we'll resolve it [in that state's courts / through arbitration].
California essentially refuses to enforce non-compete clauses. If a client's contract has a governing law clause pointing to California, a non-compete embedded in that contract is likely unenforceable — even if you're not in California.
Most states have adopted the Uniform Trade Secrets Act, but with variations. The governing law clause determines which version applies to any trade secret claim.
How long a client has to sue you for breach varies by state — typically 3–6 years for written contracts. The governing law clause determines which timeline applies.
Some states have specific rules about how damages are calculated, whether punitive damages are available, and what attorneys' fees can be recovered.
Governing law (which state's rules) is separate from forum selection (where the case is heard). A contract might specify California law but require disputes to be resolved in New York courts. These can be negotiated separately.
Generate a free freelance contract with a properly drafted governing law clause — you choose the jurisdiction.
Generate Free Contract →Yes, and it's common when freelancers work with out-of-state clients. Courts generally respect governing law clauses as long as there's a reasonable connection to the chosen state. The risk is that you may be subject to that state's laws in ways that differ from your home state.
Courts apply conflict-of-law rules to determine which jurisdiction's law governs. This is unpredictable and can result in either party's home state law applying. Having an explicit clause is always preferable to leaving it to judicial discretion.
It affects where disputes must be litigated if there's also a forum selection clause. The governing law clause alone specifies which laws apply, not necessarily where the case is heard. Make sure both are addressed in your contract.
Understanding one clause makes the next one easier. Here are more plain-English explanations of common contract clauses freelancers encounter: