Source: https://www.oncontracts.com/cheat-sheets/choice-of-law-crib-sheet/california/
Timestamp: 2019-04-20 10:21:14+00:00

Document:
See Cal. Civ. Code § 1717 (accessed 2010-01-29).
[ADDED 2011-07-10] In addition to the usual rules governing contractual choice of law, a California statutory provision expressly validates a contractual choice of California law for non-personal contracts having a value of at least $250,000, even if there is no relationship between the contract and California. See Cal. Civ. Code § 1646.5.
In RRX Industries we affirmed the trial court’s award of consequential damages notwithstanding a provision in a computer software contract which limited the seller’s liability to the contract price.
The seller in RRX Industries completed installation of a computer software system for the buyer, but was unable to get the bugs out of the system or make it operate reliably.
We noted that “the software never functioned as intended …[, the seller] failed to correct adequately programming errors …[, and] did not provide [the buyer’s] employees with sufficient training.” Id. at 546.
California courts have looked to Cal. Lab. Code § 2750.5 to hold that a contractor that uses an unlicensed subcontractor is responsible for unpaid wages, withholding, and worker’s compensation premiums of the subcontractor’s employees; see generally this Pillsbury Winthrop memo.
In September 2014, California enacted Assembly Bill 1897 (codified as Cal. Labor Code § 2810.3), which made certain business customers liable for unpaid wages and worker’s compensation coverage of their contractors’ non-exempt employees. See generally Todd Lebowitz, New California Law Imposes Joint Liability on Businesses and Contract Vendors for Wage Violations and Workers’ Compensation Coverage (EmploymentLawSpotlight.com Nov. 10, 2014).
In California, “a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made.” Cal. Civ. Code § 1671(b); see also this post.
Post-employment non-competition clauses are pretty much verboten in California; the state is fiercely protective of "open competition and employee mobility." Edwards v. Arthur Andersen LLP, 44 Cal.4th 937, 189 P.3d 285, 81 Cal. Rptr.3d 282 (2008) (affirming court of appeals ruling that post-employment non-competition covenant was void).
Even putting a non-competition clause in a California employment agreement is deemed unfair competition under Cal. Bus. & Prof. Code § 17200 – see Applied Materials, Inc., v. Advanced Micro-Fabrication Equipment (Shanghai) Co., No. C 07-05248 JW (N.D. Cal. May 20, 2009) (granting defendant’s motion for summary judgment on its counterclaim for unfair competition); see also this post.
Drafters of distributor- and reseller agreements should be extremely cautious about agreeing to the pricing that the “downstream” party will charge to its own customers. See a spring 2010 article by Scott Martin of Greenberg Traurig at http://goo.gl/eAky.
“In order to assure the consuming public that products sold in California contain ‘safe’ chemicals, California’s recent Green Chemistry Initiative promises to open up a manufacturer’s internal processes to public dis­closure, inspection and comment by any party—including en­vi­ron­men­tal advocacy groups and business competitors.” Alston & Bird LLP, Increased Risks to Disclosure of Proprietary Information and Trade Secrets Presented by New California Environmental Legislation (Oct. 18, 2010; accessed Nov. 1, 2010).
California’s legendary unfair competition law was once abused as a shakedown tool by certain lawyers, some of whom were disbarred as a result.
California voters amended the law in 2004 by approving Proposition 64, so that under section 17204, standing to sue is now limited to private plaintiffs who suffered injury in fact and lost money or property as a result of the unfair competition, along with the attorney general, district attorneys, and certain other government attorneys.
Regardless, the UCL still has significant teeth, and should be kept in mind by companies that might be amenable to suit in California.
See this January 2011 blog posting.
In California, a contractor that undertakes work required to be done by a licensed contractor (e.g., certain construction- or remodeling work), but that does not itself have the proper license(s) at all times while performing the work, may forfeit its right to be paid for any of the work. See, e.g., Great West Contractors, Inc., v. WSS Industrial Construction, Inc., 162 Cal.App.4th 581, 76 Cal.Rptr.3d 8, No. B191662 (Cal. App. Apr. 28, 2008) (reversing $220,000-plus judgment in favor of subcontractor, on grounds that subcontractor had not obtained the required license when it prepared initial shop drawings and did other preliminary work).
Moreover, under a 2002 ‘disgorgement’ amendment to the California statute, such a contractor might have to repay any payments it did receive for the work. See Kyle A. Ostergard, California Contractors Beware: You Must Be Properly Licensed at All Times! for more analysis and cautions.
The California Supreme Court has held that, by statute — specifically, Cal. Civ. Code § 2778(3) — unless the parties to a contract agree otherwise, a party having an indemnity obligation under the contract is also obligated, upon request, to provide a defense for the protected party. See Crawford v. Weather Shield Mfg. Inc., 44 Cal.4th 541, 553 (2008) (affirming court of appeal’s affirmance of trial-court judgment).
[UPDATED 2010-12-09:] A California appeals court held in 2010 that the duty to defend applies even without an allegation that the indemnifying party was negligent. See Universal Development vs. CH2M Hill, No. H033610, 181 Cal.App.4th 10 (2010) (affirming judgment that engineering firm was liable to real-estate developer for cost of defending against negligence suit by homeowner association).
Apparently in response to the Universal Development decision, in 2010 the California legislature enacted a statute limiting the duty of design professionals to indemnify or defend public agencies with which they contract. See S.B. 972, amending Cal. Civ. Code § 2782.8.
[ADDED 2012-10-06:] “… it has been said that if one seeks, in a noninsurance agreement, to be indemnified for his or her own active negligence, or regardless of the indemnitor’s fault — protections beyond those afforded by the doctrines of implied or equitable indemnity — language on the point must be particularly clear and explicit, and will be construed strictly against the indemnitee.” Crawford v. Weather Shield Mfg. Inc., 44 Cal.4th 541, 552 (2008) (extensive citations omitted; not relevant to the court’s holding).
[ADDED 2010-12-08:] See Grafton Partners L.P. v. Superior Court, No. S123344 (Cal. Aug. 4, 2005) (affirming ruling that pre-trial waiver of jury trial was unconstitutional because it did not fit within one of the statutorily-permitted waivers). For suggestions on other alternatives to a jury trial in California, see Susan Alker, Jury Trial Waivers – California is Just Different (Nov. 12, 2010; accessed Dec. 8, 2010).

References: § 1717
 § 1646
 § 2750
 § 2810
 § 1671
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 § 17200
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 § 2778
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 § 2782
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