Foreign Currency Obligations

• Author: Stephen G.A. Pitel; Nicholas S. Rafferty
• Pages: 45-52

CHAPTER

4

FOREIGN

CURRENCY

OBLIGATIONS

A.

INTRODUCTION

Dividing

up

the

world

into

different

countries

not

only

gives

rise

to

conflict

of

laws

issues

relating

to

foreign

legal

rules

and

judicial

deci



sions

but

also

issues

relating

to

foreign

currencies.

Consider

the

follow



ing

simple

and

typical

example.

An

Ontario

company

sells

goods

to

a

company

in

Ghana.

The

contract

is

governed

by

Ontario

law

and

the

buyer

is

to

pay

500,000

cedi,

the

currency

of

Ghana,

into

the

seller

’

s

bank

account

in

Ghana.

The

goods

are

supplied

but

the

buyer

does

not

pay

and

the

seller

sues

for

breach

of

contract

in

Ontario.

There

are

sev



eral

ways

we

could

describe

the

seller

’

s

claim.

It

could

be

for

500,000

cedi,

such

that

the

court

would

make

its

order

in

that

currency.

It

could

instead

be

for

an

amount

in

Canadian

dollars,

obtained

by

converting

the

cedi

into

dollars.

If

so,

that

conversion

could

be

done

at

various

times:

the

date

of

the

breach,

the

date

of

the

claim,

the

date

of

the

judg



ment,

or

the

date

of

the

payment.

Sometimes

these

are

only

academic

questions.

If

the

rate

of

exchange

between

the

dollar

and

the

cedi

does

not

change

from

the

time

of

the

breach

to

the

time

the

buyer

eventually

satisfies

the

judgment,

it

does

not

matter

which

currency

is

used

or

when

any

conversion

takes

place.

As

we

know,

however,

exchange

rates

usually

do

change

over

time.

Even

small

changes

could

have

a

significant

impact

on

what

the

seller

re



covers,

depending

on

the

size

of

the

claim.

A

more

dramatic

change

in

the

exchange

rate

raises

these

issues

more

starkly.

If

during

the

trial

45