Pigs Get Fat, And Hogs Get Slaughtered

A lawyer’s job is to advantage his client where possible. I believe that and have done it to the best of my ability throughout my career. But I learned early on that you are limited in how far you can go. As a young lawyer, I once drafted a proposed purchase agreement that was so transparently and heavily weighted in favor of the buyer (my client) that the seller concluded we were in bad faith and walked away from the deal. I learned from that. You cannot take advocacy so far as to attempt to deny the other side the essential benefits of its bargain.

That lesson came to mind when I read about the Fourth Circuit Court of Appeals case of Hayes v. Delbert Services Corp., which concerned the enforceability of arbitration and governing-law clauses. The contract¬†disclaimed the applicability of any state or federal law, providing instead that disputes would be governed by the laws of the Cheyenne River Sioux Nation. I infer, though the excerpt I’ve read does not say, that the Sioux Nation in question doesn’t have much law on the subject in dispute and that the parties have no connection to that Sioux Nation. Unsurprisingly, the court struck down the offending provisions.

If either of the parties had a meaningful connection to the Sioux Nation, I would expect the choice-of-law provision to be upheld. But it is offensive for a party with superior bargaining power to impose that choice on someone else when neither has such a connection. I have used arbitration clauses and choice-of-law provisions in my agreements, as have most transactional lawyers, but I’ve had better judgment than to try to push things as far as the lawyers did in this case–at least since that early experience I described.


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