Second Restatement (Most Significant Relationship)
Rule
The Second Restatement of Conflict of Laws (1971), authored by Willis Reese, directs courts to apply the law of the state with the most significant relationship to the parties and the occurrence with respect to the particular issue. This replaces the mechanical territorial rules of the First Restatement with a flexible, multi-factor analysis guided by § 6 policy factors and issue-specific contact lists.
Elements / Test
Step 1 — § 6 Policy Factors (apply to every choice-of-law question)
- The needs of the interstate and international systems
- The relevant policies of the forum
- The relevant policies of other interested states and the relative interests of those states in the determination of the particular issue
- The protection of justified expectations of the parties
- The basic policies underlying the particular field of law
- Certainty, predictability, and uniformity of result
- Ease in the determination and application of the law to be applied
Step 2 — Issue-Specific Contact Lists
Torts (§ 145): Contacts to evaluate:
- Place of injury
- Place of conduct causing the injury
- Domicile, residence, nationality, place of incorporation, and place of business of the parties
- Place where the relationship between the parties is centered
Contracts (§ 188): Contacts to evaluate (absent party choice):
- Place of contracting
- Place of negotiation of the contract
- Place of performance
- Location of the subject matter of the contract
- Domicile, residence, nationality, place of incorporation, and place of business of the parties
Party Autonomy — § 187: Parties may choose governing law. The chosen law applies unless:
- (a) the chosen state has no substantial relationship to the parties or the transaction AND there is no other reasonable basis for the parties’ choice, OR
- (b) application of the chosen law would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue AND which would be the state of applicable law absent the choice
Property:
- Real property (§§ 222–243): law of the situs — continues to follow territorial rule
- Personal property (§ 244): most significant relationship
Family Law:
- Marriage validity: usually place of celebration, unless strong policy against at domicile
- Divorce: domicile-based
Step 3 — Depecage
The Second Restatement expressly permits depecage: applying different states’ laws to different issues within the same case. Each issue is analyzed separately under the most-significant-relationship test.
Exceptions
- Party choice upheld unless both prongs of § 187(2) are satisfied (see above)
- Public policy: Courts may decline to apply foreign law that violates a fundamental policy of the forum or another highly interested state
- Presumptive rules: For some issues, the Second Restatement creates presumptive connecting factors (e.g., situs for real property; place of injury for personal injury) that can be overcome by showing another state has a more significant relationship
Policy
- Flexibility: Allows courts to consider the full range of relevant state interests and contacts
- Modern multi-state transactions: Avoids arbitrary results from rigid territorial rules
- Party expectations: Particularly protective of commercial parties who plan their transactions
- Criticisms: Unpredictable; gives judges too much discretion; § 6 factors are vague and do not rank-order the considerations; can degenerate into interest analysis in practice
Key Cases
- Babcock v. Jackson — interest analysis precursor that influenced the Second Restatement drafting
- Schultz v. Boy Scouts of America — NY applied Second Restatement factors in tort; domicile of parties heavily weighted
- Allstate Insurance Co. v. Hague — constitutional floor case; also illustrates that most-significant-relationship analysis must satisfy Due Process and Full Faith and Credit