Information Technology Reference
In-Depth Information
At European level, the legal source that indicates which law will be applicable
to the contract made by
SuperICTResources
and
SaaSforyou
is the abovementioned
Rome Convention, which states - Art. 3(1) - the basic principle that “A contract
shall be governed by the law chosen by the parties.”
5
In our example the negotia-
tors forgot to choose which law will govern the contract, and therefore Art. 4(1) is
applicable, and thus “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.”
6
Two issues have to be addressed: firstly, what does it mean 'governing the
contract'? Then, how is it possible to assess to which country the agreement is most
closely connected? The answer to the first question can be found in Art. 10(1) of
the Convention, pursuant to which “The law applicable to a contract…shall govern
in particular: (a) interpretation; (b) performance; (c) within the limits of the powers
conferred on the court by its procedural law, the consequence of breach, including
the assessment of damages in so far as it is governed by rules of law; (d) the various
ways of extinguishing obligations, and prescription and limitation of actions; (e)
the consequences of nullity of the contract.” This mean that, in our example, the
governing law will assess how
SuperICTResources
must deliver the services, how
the agreement must be interpreted, how much damages (if any) the company has to
pay to the customer for breach of contract, etc.
7
The latter issue can be solved in light of Art. 4(2), pursuant to which “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 unincorporated, 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.” In the above example, provided that the performance
5
This provision then points out that “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.”
Paragraph 2 then specifies that “The parties may at any time agree to subject the contract to
a law other than that which previously governed it, whether as 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…or adversely affect the rights of third parties.”
6
Furthermore, “Nevertheless, a separable part of the contract which has a closer connection
with another country may be by way of exception be governed by the law of that other
country.”
7
Art. 10(2) then points out 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 performance takes place.”
