A more thorough explanation:

A choice-of-law clause is a part of a contract that specifies which jurisdiction's laws will be used to resolve any disputes that may arise between the parties involved. This means that if there is a disagreement, the parties have agreed in advance which laws will be used to settle the dispute.

For example, a company based in New York may have a contract with a supplier based in California. The contract may include a choice-of-law clause that states that any disputes will be resolved using New York law. This means that if there is a disagreement between the two parties, the laws of New York will be used to settle the dispute, even though the supplier is based in California.

Another example could be a software company based in the United States that has a contract with a customer based in Europe. The contract may include a choice-of-law clause that specifies that any disputes will be resolved using the laws of the state of California. This means that if there is a disagreement between the two parties, the laws of California will be used to settle the dispute, even though the customer is based in Europe.

Overall, a choice-of-law clause is an important part of a contract that helps to ensure that any disputes are resolved fairly and efficiently, by specifying in advance which laws will be used to settle the dispute.