PROPER LAW OF A CONTRACT

In some cases prominent international business men and women are caught up with in the middle of “trading conflicts” and with such, the next question is what jurisdiction law applies?  International Trade cases usually face this challenge since this is the area of focus for lawyers in the legal practice. The system of law that is applied in private international law to a contract with foreign elements is referred to as “Proper law of a contract.” Which system governs the contract will usually depend on the intention of the parties to the contract, to be determined in each case by considering the terms of the
contract, and all the surrounding facts. If the parties have expressly agreed which law should govern the contract, that law will normally be applied by virtue of the Rome convention (1980; in force form 1 April 1991). If, as is usual, they have not expressly agreed, the courts try to infer their intention from all the circumstances; if it cannot be inferred, they will apply the system of law with which the contract has “its closest and most real connection”. In connection”, In the UK the Rome Convention is implemented by the contracts Applicable Law Act 1990. There was a case with a similar situation that involved a contract for the distribution of sherry in England. The sherry was produced in Spain and was to be marketed in England. Under Article 4(2), the contract would be governed by Spanish law (the law of both the central administration and the place of business of the Spanish company) if the production and delivery of the sherry reflected the performance which was characteristic of the contract, and by English law (the law on the distributor’s central administration and relevant place of business) if the acceptance and promotion of the sherry was regarded as the performance characteristic of the contract. This was in the case of Evans Marshall&Co V. Bertole [1973] 1 WLR 349. In reference to this in accordance with proper law of contract it confers a choice of law privilege on those who supply goods and services. 

In certain circumstances the seller usually insists that the laws of his or her jurisdiction ought to apply since they have a risk of doing business internationally and as such use the clause of choice of law clause to their advantage in most cases.  With this, there is always a clash with drawing this clause by both parties to balance the favour economically to both sides advantage.  However, even with this agreement drawn, both parties cannot be deprived to protective legislation that applies in his or her country of habitual residence. The contact between the transaction and the chosen law are potentially too numerous and the weight to be afforded each contact difficult to establish. Difficulties are bound to arise if the concept is not to apply to all types of contracts in future since some of the jurisdiction does not consider this principal. Any attempt to divide contracts into groups is doomed to failure, grey areas will always emerge. Furthermore, the law becomes too difficult. If a concept of characteristic performance is to apply it ought to have a universal application. If Proper law of a contract is to be used, it must be capable of precise application.