SECTION X - Law Of Contracts

Author:E. J. Cohn
Profession:Sir
Pages:18
 
FREE EXCERPT
  1. The lex causac of a contract according to German private international law is in the first instance the law to which the parties expressly or impliedly have agreed to submit their contract (so-called principle of party-autonomy).

    According to the governing view among German writers on private international law, the parties cannot agree to submit a contract to a legal system with which the contract in question has no relationship whatsoever. There is, however, no judicial confirmation of this view. The parties may agree to submit different parts of a contract to different legal systems.

    EXAMPLE: An international loan is repayable in several countries. It is possible to stipulate that performance in every country is governed by the individual country's law.

    The existence of an implied agreement is deduced from rules such as arbitration clauses, clauses relating to the place of performance, the use of technical terms or of conceptions of a legal system, submission to the jurisdiction of the Courts of a country, and also from the language used, if there is corroboration by other circumstances of the case.

  2. The legal system to which the parties have submitted their contract includes any amendments which have come into force after the conclusion of the contract, but excludes the laws of private international law of the legal system in question, the presumption being that the parties intended to refer to the municipal law only.

  3. If the parties have not, either expressly or impliedly, agreed to submit the contract to any one legal system, the German Courts will assume that it was their intention to submit it to that legal system with which the contract has the strongest factual connection. This doctrine, frequently referred to as the theory of the hypothetical (it would perhaps be better to say fictitious) exercise of party autonomy has been developed by the Reichsgericht and has been maintained by the Courts notwithstanding strong protests from many writers on private international law. It has no basis in any written statutory rule, but has served the Courts well in developing a number of rules of interpretation which have rendered it possible in doubtful cases to assign contracts to an appropriate legal system.

    EXAMPLES: Standard contracts concluded according to a uniform scheme by large firms are subject to the law of the country in which the firm in question has the seat of its management. This applies e.g. to insurance contracts...

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