Convention on the Law Applicable to Contractual Obligations

Convention on the Law Applicable to Contractual Obligations

 

TITLE I

SCOPE OF THE CONVENTION

Article 1

Scope of the Convention

1. The rules of this Convention shall apply to contractual obligations
in any situation involving a choice between the laws of different
countries.

2. They shall not apply to:

(a) questions involving the status or legal capacity of natural
persons, without prejudice to Article 11;

(b) contractual obligations relating to:

— wills and succession,

— rights in property arising out of a matrimonial relationship,

— rights and duties arising out of a family relationship,
parentage, marriage or affinity, including maintenance
obligations in respect of children who are not legitimate;

(c) obligations arising under Bills of exchange, cheques and promissory
notes and other negotiable instruments to the extent that the
obligations under such other negotiable instruments arise out of
their negotiable character;

(d) arbitration agreements and agreements on the choice of court;

(e) questions governed by the law of companies and other bodies
corporate or unicorporate such as the creation, by registration or
otherwise, legal capacity, internal organization or winding up of
companies and other bodies corporate or unincorporate and the
personal liability of officers and members as such for the
obligations of the company or body;

(f) the question whether an agent is able to bind a principal, or an
organ to bind a company or body corporate or unincorporate, to a
third party;

(g) the constitution of trusts and the relationship between settlors,
trustees and beneficiaries;

(h) evidence and procedure, without prejudice to Article 14.

3. The rules of this Convention do not apply to contracts of insurance
which cover risks situated in the territories of the Member States of the
European Economic Community. In order to determine whether a risk is
situated in these territories the court shall apply its internal law.

4. The preceding paragraph does not apply to contracts of re-insurance.

Article 2

Application of law of non-contracting States

Any law specified by this Convention shall be applied whether or not it
is the law of a Contracting State.

TITLE II

UNIFORM RULES

Article 3

Freedom of choice

1. A contract shall be governed by the law chosen by the parties. The
choice must be expressed or demonstrated with reasonable certainty by the
terms of the contract or the circumstances of the case. By their choice
the parties can select the law applicable to the whole or a part only of
the contract.

2. The parties may at any time agree to subject the contract to a law
other than that which previously governed it, whether us a result of an
earlier choice under this Article or of Other provisions of this
Convention. Any variation by the parties of the law to be applied made
after the conclusion of the contract shall not prejudice its formal
validity under Article 9 or adversely affect the rights of third parties.

3. The fact that the parties have chosen a Foreign Law , whether or not
accompanied by the choice of a foreign tribunal, shall not, where all the
other elements relevant to the situation at the time of the choice are
connected with one country only, prejudice the application of rules of
the law of that country which cannot be derogated from by contract,
hereinafter called mandatory rules’.

4. The existence and validity of the consent of the parties as to the
choice of the applicable law shall be determined in accordance with the
provisions of Articles 8, 9 and 11.

Article 4

Applicable law in the absence of choice

1. To the extent that the law applicable to the contract has not been
chosen in accordance with Article 3, the contract shall be governed by
the law of the country with which it is most closely connected.
Nevertheless, a severable part of the contract which has a closer
connection with another country may by way of exception be governed by
the law of that other country.

2. Subject to the provisions of paragraph 5 of this Article, it shall be
presumed that the contract is most closely connected with the country
where the party who is to effect the performance which is characteristic
of the contract has, at the time of conclusion of the contract, his
habitual residence, or, in the case of a body corporate or unincorporate,
its central administration. However, if the contract is entered into in
the course of that party’s trade or profession, that country shall be the
country in which the principal place of business is situated or, where
under the terms of the contract the performance is to be effected through
a place of business other than the principal place of business, the
country in which that other place of business is situated.

3. Notwithstanding the provisions of paragraph 2 of this Article, to the
extent that the subject matter of the contract is a right in immovable
property or a right to use immovable property it shall be presumed that
the contract is most closely connected with the country where immovable
property is situated.

4. A contract for the carriage of goods shall not be subject to the
presumption in paragraph 2. In such a contract if the country in which,
at the time the contract is concluded, the carrier has his principal
place of business is also the country in which the place of loading or
the place of discharge or the principal place of business of the
consignor is situated, it shall be presumed that the contract is most
closely connected with that country. In applying this paragraph single
voyage charter-parties and other countries the main purpose of which is
the carriage of goods shall be treated as contracts for the carriage of
goods.

5. Paragraph 2 shall not apply if the characteristic performance cannot
be determined, and the presumptions in paragraphs 2, 3 and 4 shall be
disregarded if it appears from the circumstances as a whole that the
contract is more closely connected with another country.

Article 5

Certain consumer contracts

1. This Article applies to a contract the object of which is the supply
of goods or services to a person (‘the consumer’) for a purpose which can
be regarded as being outside his trade or profession, or a contract for
the provision of credit for that object.

2. Notwithstanding the provisions of Article 3, a choice of law made by
the parties shall not have the result of depriving the consumer of the
protection afforded to him by the mandatory rules of the law of the
country in which he has his habitual residence:

— if in that country the conclusion of the contract was preceded by a
specific invitation addressed to him or by advertising, and he had
taken in that country all the steps necessary on his part for the
conclusion of the contract, or

— if the other party or his agent received the consumer’s order in
that country, or

— if the contract is for the sale of goods and the consumer travelled
from that country to another country and there gave his order,
provided that the consumer’s journey was arranged by the seller for
the purpose of inducing the consumer to buy.

3. Notwithstanding the provisions of Article 4, a contract to which this
Article applies shall, in the absence of choice in accordance with
Article 3, be governed by the law of the country in which the consumer
has his habitual residence if it is entered into in the circumstances
described in paragraph 2 of this Article.

4. This Article shall not apply to:

(a) a contract of carriage;

(b) a contract for the supply of services where the services are to be
supplied to the consumer exclusively in a country other than that
in which he has his habitual residence.

5. Notwithstanding the provisions of paragraph 4, this Article shall
apply to a contract which, for an inclusive price, provides for a
combination of travel and accommodation.

 

Conclusion

Notes

See Also

References and Further Reading

About the Author/s and Reviewer/s

Author: international

Mentioned in these Entries

Bills, Convention on the Law Applicable to Contractual Obligations 2, Convention on the Law Applicable to Contractual Obligations 3, Conventions: Chronological Index 1971-1990, Foreign Law, International commercial arbitration, Other provisions, Outline of Choice of forum and law, country.


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