Contracts/Governing law
General Rules
See generally Conflict of Laws
A contract is governed as to its intrinsic validity and effect by the law with reference to which the parties intended, or fairly may be presumed to have intended, to oontract,[1] the real place of the contract being a matter of mutual intention, except in exceptional circumstances evincing a purpose in making the contract to commit a fraud on the law.[2] This law governs not only as to the execution, authentication, and construction of the contract, but also as to the legal obligations arising from it, and as to what is to be deemed a performance, satisfaction, or discharge.[3] The intention of the parties may be either expressed or implied from their acts and conduct at the time of making the contract.[4] Parties to a contract may contract with reference to the laws of any state or country, if they have a substantial connection with the subject matter.[5]
Place of contract
The act of the parties in entering into a contract at a particular place, in the absence of anything shown to the contrary, suffi ciently indicates their intention to contract with reference to the laws of that place; hence the rule, as it is usually stated, that a contract as to its validity and interpretation is governed by the law of the place where it is made—the lex loci con tractus,16 or, more accurately, that contracts to be governed as to their nature, validity, and interpretation by the law of the place where they irere made, unless the contracting parties clearly appear to have had some other place in view.17 The presumption recognized by these statements, that the proper law of the contract is the law of the country where the contract is made, applies with special force when the contract is to be performed wholly in the country where it is made, or may be performed anywhere; but it may apply to a contract partly or even wholly to be performed in an other country.18
Place of performance
When the contract is made in one country and is to be performed either wholly or partly in another,·the proper law of the contract, especially as to the mode of performance, may be presumed to be the law of the country where performance is to take place, the lex loci solutionis.19 This rule yields to a contrary intent of the parties,20 although it has been said that, "to show that the parties did not intend the place of performance to be the place of the contract, when void at the place of performance, it must clearly appear that they intended to be governed by the law of the place where . . . [the contract] was made."21
Neither place of contract nor place of performance controlling.
Neither the place where the con tract is made nor the place at which it is to be per formed is conclusive as to the law by which the parties intended the contract to be governed,22 but both are merely important indicia of such fact.23
Performance in several states.
While in numerous cases an entire contract to be performed partly in the state where made and partly in another state has been held to be governed by the law of the place of making,21 and there are other decisions to the effect that each portion is to be governed by the laws of the state in which that portion is performed,26 the better rule would seem to be that the presumed intention of the parties, gathered from the attending circumstances, is to be taken as controlling.2"
Interstate commerce.
Place of enforcement.
Domicile of parties.
Express provision in contract
Where the parties have expressly provided that the contract shall be governed by the law of a particular country, this intention will as a rule be carried out by the courts,3' and a party is bound by his choice.32 "Parties may substitute the laws of another place or country, than that where the contract is entered into, both in relation to the legality and extent of the original obligation, and in relation to the respec tive rights of the parties, for a breach or violation of its terms."33 This is part of the jus gentium, and is enforced ex comitate, when the enforcement of the contract is sought in the courts of a country governed by a different rule than the local or adopted law of the contract.84
Implied provision in contract
Comity basis of all rules
Fact of Agreement
Capacity of Parties
Form and Execution
Revenue stamps.
Legality
General Rules.
Agreements Contrary to Good Morals.
Agreements Injurious to the State or Its Citizens
Agreements Contrary to Constitution or Legislation of State.
Agreements Contrary to Public Policy.
Agreements Relating to Realty
Agreements Relating to Personalty
Carriage of Goods.
Defenses
Presumptions
Remedies
General Rules
Particular Matters Affecting Remedy
Statutes of Limitations
Exemption Laws
Discharge in Bankruptcy or Insolvency
Protection from Civil Arrest
Whether Instrument Is a Specialty
Whether Remedy Is at Law or in Equity
Parties
Conflict of Laws as to Time
In General
Agreement Illegal When Made but Afterward Legalized
Agreement Legal When Made but Afterward Prohibited
References
- ↑ "The general principle is that a contract is to be governed by the law with a view to which it was made, and this is a question of intention, to be deduced, when not expressly declared, from the place, terms, character, and purposes of the transaction." Croissant v. Empire State Realty Co., 29 App. (D.C.) 538.
- ↑ International Harvester Co. v. McAdam, 142 Wis. 114, 118, 124 NW 1042, 26 LRANS 774, 20 AnnCas 614.
International Harvester Co. v. McAdam, supra.As to mere personal c o n t racts t h e law thereo f as to t h e i r val idity and I n terpre tat i o n . Is that of the place where t h e y were made ; the lex Joel c o n trac t u s , u nle ss t h e parties thereto I n te n d e d that they sho u ld be go v erned by t h e law of t h e p l ace of performance ; th e lex Joel solu t i o n i s , o r o f some o t h e r p l ace. T h a t I s . the place o f the contract Is, genera l l y s pe a k i ng, a matter o f mu tual Intent i o n , bu t the I n te n ded place. as det e r m i n e d by l egal presu m p t ion I n s o m e cases a n d e v i d e n t iary c i rcum s tances In o the rs, s e t tles all q uest i o n s as to t h e l ega l t �> s t of val i d i ty and In terpretat i o n. Surh presu mpt i o n , I n the a bsence of evidence to t h e co n trary, Is t ha t the place of m a k i n g and pe r f o rmance, In a phys Ical se nse, Is t h e p lace In a legal s e n s e, b u t the place of pPrformancO> when d ltre re n t from t h a t of the a ctual mak i n g, Is the place In such l egal sense, subject to the presum ption bei n g rebu tted by clear e v i dence of I n t e n ti o n , th is bei n g a g a i n s u bject to some exce p t i o n s In cas e o f l n t e n t l o n to com m i t a frau d on t h e law.
[a] The term "proper law of a contract" means the law or laws by which the parties to a contract intended, or may fairly be presumed to have intended , the contract to be governed, or in other words the law or laws to which the parties intended, or may fairly be presumed to have intended, to submit themselves, or more accurately, although in more cumbersome language, the law of the country or the laws of the countries by the law or the laws whereof the parties to a contract intended or may fairly be presumed to have intended the contract to be governed. Hamlyn v. Tallsker Distillery, [1894] A.C. 202; Lloyd v. Gulbert, L.R. 1 Q.B. 115, 6 B. & S. 100, 118 ECL 100, 122 Reprint 1134, 5 ERC 870; In re Missouri SS. Co., 42 Ch. D. 321.
- ↑ U.S.-O w e n v. G i l e s . 1 5 7 Fed.
8 2 5 , 86 CCA 1 8 9
I o w a.-Ba nco d e S o n o ra v . Ba n kers' M ut. Casual ty Co., 1 2 4 Iowa 6 7 6 . 1 3 . AmSR 3 6 7 .
Ky.-- Union Cent. L. Ins. Co., 143 Ky. 640, 136 SW 101 4, 1015, 33 LRANS 881 [quot Cyc]; Davis v. Morton, 5 Bus h 160, 96 AmD 345.
Mass.-HIJI v. Chase, 143 Mass. 1 2 9 , 9 NE 30 ; Stebbins v. Leowolf, 3 Cush. 137.
Mo.-Thompson v. Chicago Trad- ers' I ns. Co. , 169 Mo. 12, 68 SW 8 8 9 .
N. Y.-Dicklnson v. Edwards, 77 N. Y. 673, 33 AmR 671.
[a] Illustrations.--- Where two citizens of France, at Parla1 entered Into a marriage contract ror com- munltf of goods according to the law o Paris, and the husband after- ward deserted his wife. went to New York,· and after remaining there many years, died there, It was held that the rights of the wife In the distribution of the es tate must be go verned by the law ot' France. De- Petcouche v. Savetler, 3 Johns. Ch. <N. Y ) 190, 8 AmD 478 .
- Where plaintiffs who lived In New York made a contract In New York with defendants, whereby plalntltrs paid certain bllls for defendants' accom- modatlon, the money being paid In New York, It was held In an action In New York to recover the amount paid on such bllls that the law ot' New York, and not that ot' Mi s s ouri , governed the c ontract notwlthstand- lng defendants resided In Missouri, and the bills were drawn there. Sul'- dam v. Barber, 18 N. Y. 468, 75 AmD 254 [rev 13 N. Y. Super. 34].
- AnWhere mo ney was boiTowed In Mas- sachusetts ot' A by an agent ot' B. a resident of New Hampshire, the agen t bei ng employed by B t'or the purpose, and the latter, after recelv- Mclng the money fro m the agent to whom It had been delivered by A. signed and returned/ to A a recelnt sent with the money, It was held that the contract was made In Mas- sachusetts and governed by the laws thereof, and that the fac t that the receipt was si gned In New Hamp- shire was Immaterial. HJII v. Chase, 143 Mass. 129. 9 NE 30.
- A statute of the state In which an action Is tried. prov iding that time Is not <it' the essence of a contract unless by Its terms e_xpressly so provid ed, has no application where the con tract In suit was made and was to be per- t'ormed In another state. Owen v. Giles , 157 Fed. 825. 85 CCA 189.
- It' by the lex loci the day ot' performance of a contract Is extended to Monday, when the contem plated <lay o t' performance fall!! on Sunday, that rule will be anplled In the place where the contract was to be per- formed. Stebbi ns v. Leowolf, 3 Cush. ( Mass.) 137. Bertonneau
- ↑ Bertonneau v. Southern Pac. Co., 17 Cal . A. 439, 120 P 53.
SeeExpress provision in contract.
See Implied provision in contract. - ↑ Crawford v. Seattle, etc., R. Co. , 86 Wash. 6 2 8, 1 5 0 P 1155, LRA 1 916D 732.
