Choice-of-Law Clauses in U.S. Bond Indentures

13 Capital Markets Law Journal 152 (2018)

UNC Legal Studies Research Paper

18 Pages Posted: 19 Oct 2017 Last revised: 17 Apr 2018

See all articles by John F. Coyle

John F. Coyle

University of North Carolina School of Law

Date Written: October 31, 2017


Over the past few decades, the state and federal courts in New York have adopted a number of interpretive rules that they use exclusively to construe choice-of-law clauses. Several of these rules produce outcomes that are arguably inconsistent with the expectations of most contracting parties. Drawing upon a hand-collected dataset of 351 form bond indentures filed with the SEC, this Article seeks to determine whether the choice-of-law clauses in these indentures have been updated to account for these adverse interpretive decisions. In a surprising number of instances, it finds that these clauses have not been updated.

The Article argues that this inattention likely stems from the fact that neither the issuers nor the underwriters nor the lawyers who advise them view the ancillary language in the choice-of-law clause — everything except the words “New York” — as particularly important. Since most new indentures are based on past templates, choice-of-law clauses in old agreements routinely slip into new agreements without discussion or alteration.The effect of this inattention is to expose the issuer to unnecessary legal risk. To address this risk, the article proposes “model” clause language for drafters to incorporate into future bond indentures. The use of this language will, in the author’s view, substantially reduce the risk that claims relating to an indenture will be governed by the law of a state other than New York.

Keywords: indenture; bond; choice-of-law clause; scope; contract drafting

Suggested Citation

Coyle, John F., Choice-of-Law Clauses in U.S. Bond Indentures (October 31, 2017). 13 Capital Markets Law Journal 152 (2018), UNC Legal Studies Research Paper, Available at SSRN: or

John F. Coyle (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919-843-9634 (Phone)


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