{"id":10126,"date":"2022-07-05T15:05:42","date_gmt":"2022-07-05T15:05:42","guid":{"rendered":"http:\/\/legalblog.ie\/contract-issues-eu-ii\/"},"modified":"2024-02-29T22:18:26","modified_gmt":"2024-02-29T22:18:26","slug":"contract-issues-eu-ii","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/contract-issues-eu-ii\/","title":{"rendered":"Contract Issues EU"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Extent_of_Applicable_Law\" title=\"Extent of Applicable Law\">Extent of Applicable Law<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Performance\" title=\"Performance\">Performance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Breach_Consequences\" title=\"Breach &amp; Consequences\">Breach &amp; Consequences<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Procedural_Rules\" title=\"Procedural Rules\">Procedural Rules<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Void_Illegal\" title=\"Void &amp; Illegal\">Void &amp; Illegal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Unlawful_in_Place_of_Performance\" title=\"Unlawful in Place of Performance\">Unlawful in Place of Performance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Set-Off\" title=\"Set-Off\">Set-Off<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Capacity_I\" title=\"Capacity I\">Capacity I<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/legalblog.ie\/contract-issues-eu-ii\/#Capacity_II\" title=\"Capacity II\">Capacity II<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Extent_of_Applicable_Law\"><\/span>Extent of Applicable Law<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The general position is that all issues arising under the contract are governed by the applicable law except where otherwise provided under the Convention, such as in the case of material validity and incapacity.<\/p>\n<p>Issues of interpretation of the contract are governed in accordance with the law chosen or the law applicable under the Convention when none is chosen.\u00a0 It is possible, in principle, for parties to choose different laws to apply to different parts. This may exceptionally occur where the choices are not clearly incompatible.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Performance\"><\/span>Performance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The question of the performance of the contract is governed by the chosen law or the applicable law under the Convention.\u00a0 This applies to the diligence with which the obligations must be performed, conditions relating to the<\/p>\n<ul>\n<li>time and place of performance, the extent to which obligations can be performed by another party, conditions as to performance both in general and in relation to certain categories of obligations such as joint and several obligations, divisible and indivisible obligations;<\/li>\n<li>where performance consists of money, the conditions relating to the discharge of the debtor, appropriation of payment and receipt.<\/li>\n<\/ul>\n<p>The Convention provides that in relation to the manner of performance and the steps to be taken in the event of defective performance, regard shall be had to the law of the country in which the performance takes place.\u00a0 This applies where the country of performance differs from the law applicable.<\/p>\n<p>It appears that this is intended to deal with issues specific to the place of performance, such as regulatory requirements that bear on the manner of performance, customs, public holidays, and definitions of the time of days in which performance may take place. The rule merely requires that the court is to have regard to the law concerned.\u00a0 It may apply in whole or in part.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Breach_Consequences\"><\/span>Breach &amp; Consequences<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Subject to limits on powers conferred on the court by its procedural law, the consequences of the breach, including assessment of damage is governed by the law that applies under the Convention, this includes<\/p>\n<ul>\n<li>issues of liability, causation<\/li>\n<li>procedural requirements connected with termination and holding another party liable<\/li>\n<li>the consequences of the breach including the assessment of damages, insofar as it is governed by rules of law; if the matter is one of fact, this is determined by the court under its procedural rules.\u00a0 If questions of law arise, then the Convention applies the applicable law.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Procedural_Rules\"><\/span>Procedural Rules<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The court applies its own procedural laws. The rules of the court or the forum where the court is held invariably apply with respect to basic procedural mechanisms.\u00a0 Accordingly, if the foreign law allows for particular types of orders which are incompatible with the forums, this limits the availability of those remedies.<\/p>\n<p>Traditionally, statute of limitations periods are procedural in nature. \u00a0\u00a0However, the Convention makes it clear that issues of limitation are determined by the chosen law or applicable law under the Convention.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Void_Illegal\"><\/span>Void &amp; Illegal<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The consequences of nullity are determined by the chosen law or applicable law.\u00a0 Nullity refers to the voidness of the contract.\u00a0 The United Kingdom entered a reservation with respect to this provision as voidness is not a contractual issue but an issue of quasi-contract\/restitution.<\/p>\n<p>Illegality raises special issues.\u00a0 The general principle is that the court will not enforce contracts which are illegal under the law of the jurisdiction concerned.\u00a0 However, there are degrees of illegality.\u00a0 The general principle under the Convention is that the chosen law or applicable law under the Convention\/ Regulation applies.<\/p>\n<p>However, contracts may be illegal under other laws.\u00a0 The discretion to apply the mandatory rules of a foreign State may be invoked to deal with issues of legality under a foreign law.<\/p>\n<p>An agreement to breach domestic law is unsurprisingly unenforceable.\u00a0 An agreement to breach a foreign law is generally against public policy at common law as being unenforceable and inconsistent with the comity of nations.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Unlawful_in_Place_of_Performance\"><\/span>Unlawful in Place of Performance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Agreements may be unlawful in the foreign place in which they are to be performed.\u00a0 In circumstances where domestic law applies, the court may imply at common-law, a term as to the continuing validity of the action in the place of performance.\u00a0 Under the Convention, common law may deem frustration to arise where an agreement becomes unlawful under foreign law at the place of performance.<\/p>\n<p>Illegality may arise under the law of the place of performance abroad where the applicable law is also foreign law but that of another foreign country.<\/p>\n<p>The Convention has no specific provision dealing with illegality in accordance with the law of performance.\u00a0 The illegality may relate to a mandatory foreign rule covered by the ordinary provisions dealing with mandatory rules of a foreign jurisdiction with which there is a close connection.<\/p>\n<p>Illegality may go to the manner of performance in which event the Convention may require that the law of the place of performance applies.<\/p>\n<p>There is a public policy exclusion.\u00a0 There may be cases where parties deliberately attempt to evade a foreign law and others where the illegality supervenes by reason of a change in law.\u00a0The courts m must give effect to an overriding mandatory provision of the place of performance in so far as it renders the performance of the contract unlawful.\u00a0 T<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Set-Off\"><\/span>Set-Off<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Rome Regulation introduced provisions in relation to set-off.\u00a0 Where a right of set-off is not agreed upon by the parties, set-off is governed by the law applicable to the claim against which the right of set-off is asserted.<\/p>\n<p>This applies to set-offs arising by law. \u00a0Set off arising by contract is subject to the general provisions.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Capacity_I\"><\/span>Capacity I<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Convention does not generally apply to the question of the capacity of corporations nor to the status and capacity of individuals.\u00a0 \u00a0Accordingly, common law rules on the conflicts of laws apply to issues of capacity.<\/p>\n<p>The common law rules on capacity do not definitively determine which law applies.\u00a0 It may be the law of domicile, the law where the contract is concluded or the proper law of the contract.\u00a0 Domicile is disfavored in modern times as a basis for incapacity in that it may lead to arbitrary effects which disrupt business expectations.<\/p>\n<p>One approach is that validity under domicile, or proper law is sufficient from a capacity perspective.\u00a0 Another approach promotes the law of the place where the contract is concluded.\u00a0 However, this has been criticised.<\/p>\n<p>The proper law of the contract is favoured in modern decisions.\u00a0 The contract must have a substantial connection with the country concerned.\u00a0 A person cannot intentionally confer capacity by simply determining to apply a law with which the contract has no relationship in fact.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Capacity_II\"><\/span>Capacity II<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In a contract concluded between persons who are in the same country, a natural person who would have the capacity under the law of that country may invoke his incapacity resulting from another law only if the other party to the contract was aware of this incapacity at the time of conclusion of the contract or was not aware of it as a result of negligence.<\/p>\n<p>The provision does not apply to the incapacity of corporations.\u00a0 It applies where the natural person has capacity under the law of the place where the contract is concluded but does not have capacity under another law which may be relevant.<\/p>\n<p>The place of conclusion of the contract may be less clear where the parties are in different countries, given the difficulties that may arise in determining where the offer and acceptance have occurred in some cases.<\/p>\n<p>Where the conditions are met, the incapacity may be invoked if the other party was aware of the incapacity or would have been but for his negligence.\u00a0 The principle can be invoked only by the person who lacks capacity.<\/p>\n<p>The position is the same under the Rome Regulation.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-10126\" data-postid=\"10126\" class=\"themify_builder_content themify_builder_content-10126 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Extent of Applicable Law The general position is that all issues arising under the contract are governed by the applicable law except where otherwise provided under the Convention, such as in the case of material validity and incapacity. Issues of interpretation of the contract are governed in accordance with the law chosen or the law [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[153],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10126"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=10126"}],"version-history":[{"count":8,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10126\/revisions"}],"predecessor-version":[{"id":32510,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10126\/revisions\/32510"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=10126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=10126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=10126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}