Scope of the law

The applicable law of a contract, once established, will not cover every matter of dispute between the parties. Article 10 of the Rome convention specifies the matters that are to be governed by the applicable law.

These are: interpretation, performance, the consequence of breach (including damages in so far as these are determined by rules of law), the extinguishing of obligations, limitation of actions, and the consequence of nullifying the contract.

Listed below are examples of how the law of different countries may apply to different aspects of a contract.

The applicable law will test the material or essential validity of a contract. To do so the court will pretend that the contract is valid, will establish the applicable law and then determine whether the contract is in fact valid according to that law.

Article 9 of the convention provides that the contract may either satisfy the formal requirements of the applicable law or, alternatively, of the law of the country where it is made.

Article 10(2) provides that in relation to manner of performance and the steps to be taken in case of defective performance, the law of the country in which performance takes place should be applied.