Foreign Currency Obligations

• Author: Stephen G.A. Pitel/Nicholas S. Rafferty
• Profession: Faculty of Law, University of Western Ontario/Faculty of Law, University of Calgary
• Pages: 44-51

44

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 relati ng 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 it s order in that currenc y. 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 breach, the date of the claim, the date of judgment,

or the date of 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 the