Contract
| Author | Stephen G.A. Pitel; Nicholas S. Rafferty |
| Pages | 285-304 |
CHAPTER
14
CONTRACT
A.
INTRODUCTION
Policy
considerations
have
played
an
important
role
in
the
develop
ment
of
choice
of
law
rules
for
contract.
Four
of
the
more
central
con
siderations
are
as
follows:
(1)
to
respect
party
autonomy,
in
terms
of
giving
effect
to
party
choice;
(2)
to
honour
the
reasonable
expectations
of
the
parties;
(3)
to
achieve
uniformity
of
results,
so
that
the
outcome
does
not
depend
on
the
place
where
the
dispute
is
resolved;
and,
more
recently,
(4)
to
give
effect
to
laws
designed
to
protect
contracting
par
ties,
especially
in
consumer
transactions.
B.
THE
PROPER
LAW
RULE
The
early
English
and
American
choice
of
law
rule
for
contract
was
the
lex
loci
contractus
—
the
law
of
the
place
of
contracting.
1
This
rule
drew
considerable
strength
from
the
vested
rights
theory,
explained
in
Chap
ter
10.
However,
as
we
have
seen,
that
theory
is
open
to
considerable
criticism,
and
likewise
this
rule
came
under
attack.
One
problem
was
that
it
required
somewhat
artificial
rules
to
identify
the
place
where
a
contract
was
made
in
cases
involving
mail
or
telegraph.
For
mail,
courts
used
the
postal
acceptance
rule,
under
which
the
contract
was
1
Wilmot
v
Shaw
(1881),
14
NSR
343
(CA).
285
286
CONFLICT
OF
LAWS
made
at
the
place
where
the
acceptance
was
mailed
rather
than
the
place
where
it
was
received
by
the
offeror.
2
A
second
problem
was
that
the
rule
did
not
cover
certain
contracts,
such
as
those
made
on
board
a
ship
in
international
waters.
A
third
and
more
important
problem
was
that
the
rule
did
not
give
sufficient
effect
to
party
autonomy.
For
parties
to
choose
the
applicable
law
of
their
contract
under
this
rule,
they
would
have
to
arrange
to
make
the
contract
in
the
country
of
their
choice.
This
would
often
be
inconvenient
or
impractical.
Further,
the
place
of
the
contracting
rule
could
lead
to
fortuitous
results
that
do
not
reflect
the
reasonable
expectations
of
the
parties,
such
as
a
contract
made
by
two
English
residents
while
on
a
brief
visit
to
France.
3
As
a
result,
the
courts
evolved
exceptions
to
the
place
of
contracting
rule.
As
far
back
as
Robinson
v
Bland,
Lord
Mansfield
held
that
if
the
par
ties
had
in
mind
a
different
applicable
law,
such
as
the
law
of
the
place
where
the
contract
was
to
be
performed,
then
that
law
and
not
the
law
of
the
place
of
contracting
would
be
applied.
4
5
Over
time,
these
exceptions
came
to
displace
the
rigid
rule.
The
modern
common
law
rule
is
that
a
contract
is
governed
by
its
“
proper
law.
”
This
is
of
course
a
vague
concept,
and
the
courts
have
accordingly
fleshed
out
what
is
meant
by
a
contract
’
s
proper
law.
It
is
the
law
that
the
parties
intended,
either
expressly
or
implicitly,
to
govern
the
contract,
and
in
the
absence
of
any
such
inten
tion
it
is
the
law
with
which
the
transaction
has
its
closest
and
most
real
connection.
3
Canadian
courts
followed
the
English
courts
in
adopting
the
proper
law
rule,
and
English
decisions
in
this
area
have
historically
had
persua
sive
value
in
Canada.
However,
as
part
of
its
membership
in
the
Euro
pean
Union,
England
has,
since
1990,
rejected
the
proper
law
rule
and
instead
adopted
the
rules
formulated
for
use
across
Europe.
6
The
new
rules
apply
in
all
cases
before
the
English
courts,
not
just
those
involving
2
Household
Fire
&
Carriage
Accident
Insurance
Company
v
Grant
(1879),
4
Ex
D
216
at
221.
3
In
Amin
Rasheed
Shipping
Corp
v
Kuwait
Insurance
Co,
[1984]
AC
50
(HL)
[Amin
Rasheed],
Lord
Diplock
referred
to
the
place
of
contracting
as
often
being
“
a
mere
matter
of
chance."
See
also
Shorn
Importing
Ltd
v
Babchuk
(1971),
21
DLR
(3d)
349
(BCSC).
4
(1760),
2
Burr
1077.
5
Bonython
v
Commonwealth
of
Australia,
[1951]
AC
201
at
219
(PC);
Tomkinson
v
First
Pennsylvania
Banking
and
Trust
Co,
[1961]
AC
1007
at
1068
and
1081
(HL);
Amin
Rasheed,
above
note
3
at
61;
Etler
v
Kertesz,
[1960]
OR
672
(CA)
[Etler],
6
Contracts
(Applicable
Law)
Act
1990
(UK),
c
36,
implementing
the
Convention
on
the
Law
Applicable
to
Contractual
Obligations
(1980),
OJ
C027
26/01/1998
at
34
[Rome
Convention].
See
now
Rome
I,
below
note
56.
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