PREVIEW CONFLICT OF LAWS II
Here, the course is concerned with which law would (most appropriately) apply to a contract which is amenable to more than one law. This usually happens where there is a foreign element. Take for example; Mr Chike (a Nigerian) entered into an agreement with Mr Vincent (a Briton) in Paris and the contract/agreement is to be carried out in Nigeria. Which law would apply? From the scenario, you can see Britain, Paris, Nigeria…
NOTE ONE: This question may be answered by selecting the proper law which (according to the court in Bonython V Commonwealth of Australia) is the law that parties intended the contract to be governed by. This “intention” of the parties may be – express, – implied (from the agreement) or – imputed based on the facts and circumstances.
- Express Choice: parties can expressly choose the law that would govern their agreement (P and Q Steamship Navigation Co V Shand) and/or choose the place where the dispute would be heard (Capital Oil and Access Bank V Coscharis, Bonython V Common Wealth of Australia 1951 AC page 201). This is usually done by inserting a choice of law clause and/or Choice of Jurisdiction/venue clause (respectively) in the agreement. Provided that (as noted by Lord Wright in Vital Foods V Unus Shipping Company) the express choice of the parties is bona fide, legal and not contrary to public policy. Peer international cooperation V Termider Publishers ltd, Kendal V Kendal, Rhaman V
- Implied Choice: where parties did not expressly choose the applicable law, the court would decipher it by looking at their agreement. E.g. in Re Tunisiene, the court held that where parties chose a jurisdiction but did not choose a law, the law of the jurisdiction chosen could also govern the transaction.
- Imputed Choice: Where there is neither an express choice nor can any be implied from the agreement, the court would choose the law of the place with the closest and most real connection based on the facts of the case. This is often referred to as the Centre of Gravity Test. The courts look at the place of contracting or performance, place of residence of the parties, place of breach, etc… In The Assuzione, wheat was to be carried from Paris to Venice, payable in Italian currency. The court held that Italian law was the applicable law because both parties had contractual obligations to perform in Italy and the payment was in Italian currency. Therefore it had the most substantial connection with the agreement.
THE PROPER LAW OF CONTRACT WOULD NOT GOVERN THE FOLLOWING ISSUES:
The proper law of contract is the law subjectively determined by the parties (i.e. chosen by the parties/deciphered from their intention (discussed above)). While the “putative proper law” is the law objectively determined (devoid of the parties’ intention and applied by the court).
The courts would not allow PLSubjectively determined to govern certain contractual matters because the parties cannot agree outside the law. In this sense, putative proper law looks at the reality and validity of the contract before there is any talk of PLSubjectively determined.
Look at this situation: A agrees to re-stock B’s brothel (at Ikoyi Lagos) with sex toys to be used in homosexual acts. A and B then agree that U.S Law would govern the agreement rather than Nigeria’s law because the latter prohibits homosexual acts. PL objectively determined (i.e PutativePL) would kick in to invalidate the agreement for being illegal.
In essence; the PLsubjectively determined would NOT govern the following:
- Questions relating to the existence of the contract and its validity: Professor Olaniyan has noted that it would amount to putting the cart before the horse if the proper law of a contract were to govern the question whether there was ever a contract.
- Questions relating to whether the contract is illegal:
- If the contract is illegal under the law chosen by the parties, then it is a nullity.
- If the contract is contrary to public policy under the law of the choice of jurisdiction it can also be nullified.
- If it is illegal under the law of the place of performance (lex solutionis) it can be nullified (Although it can be performed in another place that permits it).
- If it is illegal under the law of the place of contracting, the agreement can be nullified (although mere procedural irregularity can be pardoned-Re Missouri Steam Ship Company.
Questions of Formal Validity: various legal systems prescribe various procedures for the creation of certain contracts and agreement. If the contract deals with (lets say) a land in Lagos, the parties cannot circumvent the requirement of wri…..
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