The Procurement Glossary » Governing Law

Governing Law

Contracts & Legal

Definition

The jurisdiction whose laws will be used to interpret and enforce a contract.

Explanation

Governing law (with jurisdiction) determines how the contract is read and where disputes are heard. In cross-border deals it is a key negotiation point, as it affects rights, remedies and enforceability.

Example

The contract is governed by Malaysian law, with disputes heard in the courts of Kuala Lumpur.

Related terms

• Dispute Resolution — The contractually agreed process for resolving disagreements — often escalation, then mediation or arbitration, before litigation.
• Arbitration — A private dispute-resolution process where an independent arbitrator issues a binding decision instead of a court.
• Contract — A legally binding agreement between buyer and supplier setting out what will be supplied, at what price and on what terms.
• Terms and Conditions (T&Cs) — The standard clauses governing a transaction or relationship, covering rights, obligations, liabilities and remedies.

Frequently Asked Questions

What is Governing Law?

The jurisdiction whose laws will be used to interpret and enforce a contract. Governing law (with jurisdiction) determines how the contract is read and where disputes are heard. In cross-border deals it is a key negotiation point, as it affects rights, remedies and enforceability.

Can you give an example of Governing Law?

The contract is governed by Malaysian law, with disputes heard in the courts of Kuala Lumpur.

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