In a contract involving a U.S. company and a manufacturing process in another country, which clause is essential to ensure U.S. law applies in case of disputes?

The correct choice, which refers to the "Choice of law clause," is essential because it explicitly designates which jurisdiction's laws will govern the contract and any disputes that may arise from it. This clause provides clarity and certainty about the legal framework that will apply, which is especially important in international agreements. Without this clause, parties could face confusion regarding which laws apply, potentially leading to disputes over legal interpretations and enforcement of terms.

Though the terms "Governing law clause" and "Choice of law clause" are often used interchangeably, "Choice of law clause" is the more accurate term to reflect the intent to specify the applicable law, especially in a diverse international scenario. This distinction may influence how disputes are resolved and which laws apply, emphasizing the importance of clearly articulating these intentions in the contract.

On the other hand, the “Force majeure clause” deals with unforeseen circumstances preventing contract performance, while the “Liability clause” addresses the responsibilities of parties regarding damages and losses. Neither of these would establish which laws will apply should a dispute occur, making the choice of law clause crucial for ensuring that U.S. law applies in the event of a disagreement between parties in different legal jurisdictions.