INTERNATIONAL LAW PARMA UNIVERSITY International Business and Development International Market and Organization Laws Prof. Gabriele Catalini

Guiding Principles

Art. 1.1 Freedom of contract The parties are free to enter into a contract and to determine its content.

Art. 1.2 (No form required) Nothing in these Principles requires a contract, statement or any other act to be made in or evidenced by a particular form. It may be proved by any means, including witnesses.

Art. 1.7 (Good faith and fair dealing) (1) Each party must act in accordance with good faith and fair dealing in international trade. (2) The parties may not exclude or limit this duty.

Art. 1.9 (Usages and practices) (1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves. (2) The parties are bound by a usage that is widely known to and regularly observed in international trade by parties in the particular trade concerned except where the application of such a usage would be unreasonable.

Art.1.12 (Computation of time set by parties) (1) Official holidays or non-business days occurring during a period set by parties for an act to be performed are included in calculating the period. (2) However, if the last day of the period is an official holiday or a non-business day at the place of business of the party to perform the act, the period is extended until the first business day which follows, unless the circumstances indicate otherwise. (3) The relevant time zone is that of the place of business of the party setting the time, unless the circumstances indicate otherwise.

Art (Manner of formation) A contract may be concluded either by the acceptance of an offer or by conduct of the parties that is sufficient to show agreement.

Art (Definition of offer) A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance.

Battle of the form Last shot doctrine

Applicable law to contractual obligations

Sources of Law

Rome Convention  The issue has been first faced in the Rome Convention in 1980  The need for a regulation derived from the conflicts of law arising between parties of different countries  The aim of the Convention was in fact to harmonise the choice of law system in contracts involving EU member state by establishing uniform rules - Signed in Rome – 19 june Replaced by Rome I regulation 593/2008

1) Autonomy of contractual parties In contractual obligations when a choice of law is involved the parties of the contract can: - choose the law applicable to the whole or part of the contract - select the court that will judge any dispute that may arise between the parties under the contract - change, by mutual agreement and any time, the law applicable to the contract

2) Legal certainty This principle is guaranteed by the fact that when contractual parties choose but especially when they don’t choose the law applicable to the contract, the legal effects will be certain and predicatable for the parties involved. 3) Protection of weaker parties The general principle of freedom of choice for contractual parties is sometimes limited in presence of weaker parties such as consumers (who generally boast a less bargaining power) – B2C

Art. 1  The rules of this Convention shall apply to contractual obligations in any situation involving a choice between the laws of different countries.  The rules shall not apply to: 1.questions involving the status or legal capacity of natural persons 2.obligations arising out of family relationships, matrimonial property, wills and succession 3.insurance contracts

Art.3 Freedom of choice The law is decided by the parties:  Expressly or clearly demonstrated by the terms of the contract or the circumstances of the case  To the whole or a part of the contract  It can be changed at any time (by mutual agreement)  Foreign laws are accepted (non-mandatory rules)

Art.4 Applicable law in the absence of choice If the law is not decided by the parties:  The law of the country most closely connected to the contract  Law of the performing party’s country  Case of the immovable property  If the carrier has his business place in the same country of the consignor’s business place  It depends on the circumstances

Art.8 Material validity  The existence and the validity of the contract are determined by the lex contractus, in the respect of this Convention  Absence of consent: assessment of one party’s conduct by his/her own country’s law

Art.11 Incapacity “In a contract concluded between persons who are in the same country, a natural person who would have 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 the conclusion of the contract or was not aware thereof as a result of negligence.”

Art.13 Subrogation Debtor Creditor Third party Does the third party have the right to estinguish the debt on behalf of the debtor? If so, either fully or in a limited extent.

Art. 17 No retrospective effect “This Convention shall apply in a Contracting State to contracts made after the date on which this Convention has entered into force with respect to that State.” Art.19 States with more than one legal system  States with several territorial units: each unit has to be considered as a country

DIFFERENCES BETWEEN ROME AND ROME I (Reg. N. 593/2008) Article 3 - Freedom of choice The regulation contains two useful clarifications:  A choice of law by the parties NEEDS NOT to be made in express terms. The circumstance of the case is now sufficient.  In case of a dispute under the contract, this will be taken into account when determining whether a choice of law was demonstrated.

DIFFERENCES BETWEEN ROME AND ROME I Art. 4 - Applicable law in the absence of choice Improvement of provisions by creating several hierarchic rules for the definition of the used law. In particular:  In financial contracts the certainty of an applicable law must be ensured  Application of the rule of the “closest connection”

DIFFERENCES BETWEEN ROME AND ROME I Art States with more then one legal system  Member States decide what law rules to apply between their internal jurisdictions.  For example, disputes that are connected to two or more jurisdictions of England, Wales, Scotland and Northern Ireland can be subject to whatever choice of the law rules the UK deems appropriate.  With this limitation, the proper boundaries in EU legislation are recognized