Legal Question in Business Law in California

Re: German manufacturer - US distributor

First, you are correct about the dominant purpose concept for deciding whether applicable law is the UCC or common law. Fortunately, in some instances the result is the same under either body of law.

If the contract doesn't mention jurisdiction for trial of disputes, the possibility exists that a lawsuit could be brought in either California or Germany. Two issues would be examined: whether the court has jurisdiction over the parties, and whether the chosen forum was too inconvenient. Tests for establishing jurisdiction in a state court in the U.S. are too complex for full discussion here, but the essence is if the party being sued could reasonably have anticipated being subjected to the jurisdiction of the state's court, it is probably susceptible to jurisdiction. The other issue invokes the principle of "forum non conveniens," i.e. if suit in California is relatively inconvenient and suit in Germany is relatively more convenient due to language of the documents, location of witnesses and evidence, etc., and the laws of the more convenient jurisdiction allow for a full and fair trial with the same relief available, the suit will be rejected by the court of the inconvenient forum.

Finally, if there is any tendency, I would say that the common law is moving toward the UCC, so that differences between the two are decreasing; also, that faced with a close choice, courts would exercise their discretion to choose the body of law that would result in a fairer and neater resolution of the legal issues and do justice for the parties. In other words, a pragmatic rather than technical or theoretical choice would be made.