A drafting compromise by the U.C.C. drafters in section 1-105 dictated the state having an "appropriate relation" to govern choice of law problems in the absence of a contractual clause, and if there is a clause, a "reasonable relation" to the state selected. The purpose was to leave choice of law problems to the general rules of the common law. Thus, some courts in breach of warranty cases continue to apply the tests of "place of injury" for personal injury suits and "place of contracting" for what does not involve personal injury, while others look for the state having the most "significant contacts" with the transaction. When there is a choice of law clause, two approaches continue to be used: "reasonable relation" and "appropriate relation." Reasonable relation is held to require less contact by the state selected by the parties than appropriate relation. It is questionable, however, whether the selection merely serves to effect an allocation of a risk that under governing law could have been allocated by a term in the contract specifically allocating the risk. With this background, counsel seeking to protect the client from any unfortunate results of a choice of law clause, endeavor to show, often unsuccessfully, that the result is contrary to strong policy of the forum state.
David Frisch, Fairfax Leary, Jr. & John D. Wladis, U.C.C. Survey: General Provisions, Bulk Transfers, and Documents of Title, 41 Bus. Law. 1363 (1986).