Opinion ID: 2997151
Heading Depth: 2
Heading Rank: 1

Heading: Indiana Law Applies

Text: Initially, we must determine whether Indiana or Illinois law applies. The contract here does not contain a choice-oflaw provision. Federal courts sitting in diversity apply the choice-of-law rules of the forum state to determine the applicable substantive law. Jupiter Aluminum Corp. v. Home Ins. Co., 225 F.3d 868, 873 (7th Cir. 2000) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Illinois has adopted the “most significant contacts” test proffered by the Restatement (Second) of Conflicts § 188 (1971) in deciding choice-of-law disputes with respect to contractual issues. Ruiz v. Blentech Corp., 89 F.3d 320, 323-24 (7th Cir. 1996); Wildey v. Springs, 47 F.3d 1475, 1481-83 (7th Cir. 1995). Under this test, “the contacts relevant to the choiceof-law decision include ‘the place of contracting, negotiation, performance, location of the subject matter of the contract, and the domicil[e], residen[ce], place of incorporation, and business of the parties.” Wildey, 47 F.3d at 1483 (quoting Palmer v. Beverly Enters., 823 F.2d 1105, 1109-10 (7th Cir. 1987)). Hinc and LOS disagree on which state has the most significant contacts, with Hinc arguing that the contract is governed by Indiana law and LOS claiming that Illinois law applies. Hinc signed the contract in Illinois the day after LOS signed in Indiana. “The place of contracting is the jurisdiction wherein is accomplished the last act necessary to give validity to the contract.” Ill. Tool Works v. Sierracin Corp., 479 N.E.2d 1046, 1051 (Ill. App. Ct. 1985). The common law mailbox rule provides that once an offer is made, acceptance is effective when the offeree puts the signed contract in the 6 No. 03-4247 mail. Restatement (Second) of Contracts § 63 (1979); see Gordon v. Tow, 498 N.E.2d 718, 723 (Ill. App. Ct. 1986). Thus, under the mailbox rule, the place of contracting is Illinois because the contract became effective when Hinc mailed the contract in Illinois. Negotiation of contractual terms took place over the telephone while each party was in its home state. Prior to the drafting of the contract, Hinc visited LOS in Indiana to discuss possible applications of his formula; LOS representatives never entered Illinois. Therefore, the place of negotiation favors Indiana. The place of performance favors Indiana as well. The issue in this suit is LOS’s alleged failure to make any effort in carrying out its contractual obligation to market Stain Remover. This alleged breach occurred in Indiana, where LOS made its business decisions. Moreover, the subject matter of the contract—production and marketing services to be performed by LOS—is located in Indiana. With Hinc residing in Illinois and LOS in Indiana, the domicile factor is neutral. While the place of contracting favors Illinois, the place of negotiation, the place of performance, and the location of the subject matter of the contract all favor Indiana. On balance, we agree with the district court that Indiana law controls this case.