Whose law, whose courtroom
Two of the most consequential clauses in any contract are usually buried in the boilerplate at the end. The choice of law clause names which jurisdiction's substantive law governs disputes. The forum selection clause names which courts may hear those disputes. Together, they determine where any fight will happen and whose rules apply when it does.
These choices matter because the same contract can produce dramatically different outcomes in different jurisdictions. A non-compete inside an NDA is void in California, enforceable in Texas, partially enforceable in Colorado above an income threshold. A clause requiring arbitration before AAA in Delaware looks innocuous until the recipient — based in Oregon — has to fly to Wilmington for hearings.
The aggressive variant is the jurisdiction trap: choice of law and forum selection that have no real connection to the parties' actual location, chosen because they favor the drafting party. Delaware and New York forum-selection clauses appear in NDAs between two California companies. The cost of litigating an out-of-state dispute can exceed the value of the underlying claim, which is the point.
Arbitration, class waivers, and the FAA
Mandatory arbitration clauses have become near-universal in consumer and employment contracts in the United States. The Federal Arbitration Act preempts most state-law attempts to limit them, and the Supreme Court has consistently enforced them even where the practical effect is to deny remedies that would be available in court.
Two features of arbitration clauses warrant particular attention. First, class-action waivers require disputes to be brought individually, preventing the consolidation of small claims into class proceedings. For small-dollar claims, this often means no claim will be brought at all, since the cost of individual arbitration exceeds the recovery. Second, the choice of arbitral forum (AAA, JAMS, ADR Center) and rules (Commercial, Employment, Consumer) affects both cost and procedural protections.
Exclusive forum clauses are similar but for courts. An exclusive Delaware forum clause in an NDA between two non-Delaware parties forces any litigation to happen in Delaware. This is often a tactical choice — Delaware has well-developed business law and specialized courts — but the practical effect is to raise the cost of any dispute for the recipient.
What this looks like in real contracts
State-by-state enforceability
The substantive impact of governing-law choice varies sharply across U.S. jurisdictions. Five jurisdictions are particularly consequential for NDAs:
Note: choice-of-law clauses do not always control. Courts may apply the forum's law where the chosen jurisdiction's law would violate a strong public policy of the forum state. California courts regularly do this for non-competes, refusing to apply out-of-state law that would permit what California voids.
What NDASentry flags in this category
8.1 Inconvenient forum / jurisdiction trap
Choice of law or forum selection in a jurisdiction with no meaningful connection to the parties — typically Delaware or New York — chosen because it favors the drafting party or because it raises the cost of any dispute for the recipient. Out-of-state forum selection can make legitimate claims uneconomic to pursue.
8.2 Choice-of-law mismatched with the parties' actual location
Governing law chosen from a jurisdiction with no connection to either party or to the subject matter. Often selected because it produces favorable substantive outcomes — for example, applying Texas law to enforce non-competes between California-based parties.
8.3 Mandatory arbitration with class-action waiver
Combination of mandatory arbitration and class-action waiver removes access to courts and class remedies. For individual high-value claims, arbitration may be neutral or favorable. For small-dollar claims that would only be economically viable as class actions, the combination effectively eliminates the claim.
8.4 Exclusive vs. non-exclusive forum
Exclusive forum clauses cut off the recipient's home-court advantage entirely, requiring all disputes to be filed in the chosen forum. Non-exclusive clauses merely permit suit in the chosen forum while leaving other options open. The difference is significant in cross-jurisdictional disputes.
We are scoring a corpus of public NDAs to publish prevalence data for each pattern in this taxonomy. The findings — including what percentage of real NDAs contain the patterns above, broken down by industry and jurisdiction — will appear here when the study is complete.