4. Contractual obligations

Abstract

This chapter deals with contract disputes which have foreign elements that come before the English court: one or both of the parties may be foreign; the making or performance of the contract may be connected with a number of foreign countries. In this type of case which law is the court to apply? The general principle is that every international contract has a governing law — known at common law as the ‘proper law’and under EU law as the ‘applicable law’. Subject to certain limitations, parties to a contract are free to choose the applicable law; if the parties fail to make a choice, the governing law is, as a general rule, the law of the country with which the contract is most closely connected. The remainder of the chapter focuses on the Rome I Regulation, including its scope and interpretation; determining the applicable law; the limits of the applicable law; articles 5 to 8; and choice of law aspects of various contractual issues.