Center Of Gravity Theory

Summary of Center Of Gravity Theory

A principle in law which contends that whenever a contract involves parties in several legal jurisdictions and the document fails to prescribe which law shall govern, a court may apply the system of law having the most significant relationship to the contract. Factors to be considered by a court in determining which law to apply may include the places where the parties are situated, the place where the contract was negotiated or signed or where performance is to take place, the currency used in the contract, and the citizenship of the parties. Local courts may apply varying weights to the various factors. Some legal systems (including those of England, Sweden, France, and some American states) employ the principle of validation, i.e., if more than one legal system might apply to a given contract, the court will apply the system that validates the contract if the law of another potential jurisdiction would invalidate it.

(Main Author: William J. Miller)