In the conflict of laws

Conflict of laws

Conflict of laws is a set of procedural rules that determines which legal system and which jurisdiction's applies to a given dispute...

, the lex loci contractus is the Latin

Latin

Latin is an Italic language originally spoken in Latium and Ancient Rome. It, along with most European languages, is a descendant of the ancient Proto-Indo-European language. Although it is considered a dead language, a number of scholars and members of the Christian clergy speak it fluently, and...

 term for "law of the place where the contract is made".

Explanation

When a case comes before a court

Court

A court is a form of tribunal, often a governmental institution, with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal, and administrative matters in accordance with the rule of law...

 and all the main features of the case are local, the court will apply the lex fori

Lex fori

Lex fori is a legal term used in the conflict of laws used to refer to the laws of the jurisdiction in which a legal action is brought...

, the prevailing municipal law

Law

Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...

, to decide the case. But if there are "foreign" elements to the case, the forum court may be obliged under the conflict of laws system to consider:

• whether the forum court has jurisdiction
  Jurisdiction
  Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
  
   to hear the case (see the problem of forum shopping
  Forum shopping
  Forum shopping is the informal name given to the practice adopted by some litigants to get their legal case heard in the court thought most likely to provide a favorable judgment...
  
  );
• it must then characterise
  Characterisation (conflict)
  In conflict of laws, characterisation is the second stage in the procedure to resolve a lawsuit involving a foreign law element. This process is described in English law as classification and as qualification in French law...
  
   the issues, i.e. allocate the factual basis of the case to its relevant legal classes; and
• then apply the choice of law
  Choice of law
  Choice of law is a procedural stage in the litigation of a case involving the conflict of laws when it is necessary to reconcile the differences between the laws of different legal jurisdictions, such as sovereign states, federated states , or provinces...
  
   rules to decide which law is to be applied to each class.

The lex loci contractus is one of the possible choice of law rules applied to cases testing the validity of a contract

Contract (conflict)

In the conflict of laws, the validity of a contract with one or more foreign law elements will be decided by reference to the so-called "proper law" of the contract.-History:...

. For example, suppose that a person domiciled

Domicile (law)

In law, domicile is the status or attribution of being a permanent resident in a particular jurisdiction. A person can remain domiciled in a jurisdiction even after they have left it, if they have maintained sufficient links with that jurisdiction or have not displayed an intention to leave...

 in Canada

Canada

Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 and a person habitually resident in France

France

The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

, make a contract by e-mail. They agree to meet in New York State to record a CD of hip hop music

Hip hop music

Hip hop music, also called hip-hop, rap music or hip-hop music, is a musical genre consisting of a stylized rhythmic music that commonly accompanies rapping, a rhythmic and rhyming speech that is chanted...

. The possibly relevant choice of law rules would be:

• the lex domicilii
  Lex domicilii
  The lex domicilii is the Latin term for "law of the domicile" in the conflict of laws. Conflict is the branch of public law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are applied....
  
   and law of habitual residence to determine whether the parties had the capacity
  Capacity (law)
  The capacity of both natural and legal persons determines whether they may make binding amendments to their rights, duties and obligations, such as getting married or merging, entering into contracts, making gifts, or writing a valid will...
  
   to enter into the contract;
• the lex loci contractus which could be difficult to establish since neither party left his own jurisdiction (reliance on postal rules for offer and acceptance
  Offer and acceptance
  Offer and acceptance analysis is a traditional approach in contract law used to determine whether an agreement exists between two parties. Agreement consists of an offer by an indication of one person to another of the offeror's willingness to enter into a contract on certain terms without...
  
   in the several putative leges causae
  Lex causae
  In the conflict of laws, lex causae is the law or laws chosen by the forum court from among the relevant legal systems to arrive at its judgement of an international or interjurisdictional case....
  
   might produce different results);
• the lex loci solutionis
  Lex loci solutionis
  The lex loci solutionis is the Latin term for "law of the place where relevant performance occurs" in the conflict of laws. Conflict is the branch of public law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are...
  
   might be the most relevant since New York is the most closely connected to the substance of the obligations assumed;
• the proper law
  Proper law
  The Doctrine of the Proper Law is applied in the choice of law stage of a lawsuit involving the conflict of laws.-Explanation:In a conflicts lawsuit, one or more state laws will be relevant to the decision-making process. If the laws are the same, this will cause no problems, but if there are...
  
  ; and
• the lex fori which might have public policy
  Public policy (law)
  In private international law, the public policy doctrine or ordre public concerns the body of principles that underpin the operation of legal systems in each state. This addresses the social, moral and economic values that tie a society together: values that vary in different cultures and change...
  
   issues if, say, one of the parties was an infant
  Minor (law)
  In law, a minor is a person under a certain age — the age of majority — which legally demarcates childhood from adulthood; the age depends upon jurisdiction and application, but is typically 18...
  
  .

Implications of the law

The provisions of this legal concept can be construed to confirm the following:

• If a contract is valid where it was consummated, it is (generally) valid everywhere (i.e. in all comity
  Comity
  In law, comity specifically refers to legal reciprocity—the principle that one jurisdiction will extend certain courtesies to other nations , particularly by recognizing the validity and effect of their executive, legislative, and judicial acts...
  
   states);
• If a contract is void where it was consummated, it is void everywhere (i.e. in all comity states);
• An exception in comity exists: The agreement will not be held valid in the forum country if it violates the law of the forum country, or if it violates the law of nature, or if it violates the Law of God;
• A contract may be deemed valid in lex loci contractus, but if it is a revenue law of that state it will not be enforced in the forum state.

If a contract is consummated in one state but its content specifies that it is to be carried out in another state, two loci are thus generated: locus celebrate contractus (where it was signed) and locus solutionis (where it is to be performed). The laws of the locus celebrate contractus state will govern all matters concerning the mode of constructing the contract, the meaning of each factor therein, the nature of the contract, and its validity. The laws of the locus solutionis state will apply to the performance or execution of the contract.

Determining lex loci contractus at law

Sometimes the locus celebrate contractus state is difficult to determine, for example if the contract was signed at sea or on a moving train, or if the details of the contract signing were not well documented. If a court is called upon to determine the applicable state, it may use any or all of the following factors:

• The residence or main domicile of the signatory parties;
• The main place of business of the signatory parties;
• The state in which the business was incorporated;
• The state nominated for arbitration proceedings in case of a conflict (lex loci arbitri
  Lex loci arbitri
  The lex loci arbitri is the Latin term for "law of the place where arbitration is to take place" in the conflict of Laws. Conflict is the branch of public law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are...
  
  );
• The language used to write the contract;
• The format of the contract (only relevant if the contract format is unique to a state or group of states within the comity group);
• The currency in which payment for performance of the contract is specified to be paid;
• The nation of registration of any ship involved in performance of the contract;
• The state where completion of the contract is specified to occur (lex loci solutionis
  Lex loci solutionis
  The lex loci solutionis is the Latin term for "law of the place where relevant performance occurs" in the conflict of laws. Conflict is the branch of public law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are...
  
  );
• A pattern of similar contracts involving the same parties;
• The state where any third parties to the contract are located;
• The state where any insurance companies connected with the contract are located.

See also

• Lex loci arbitri
  Lex loci arbitri
  The lex loci arbitri is the Latin term for "law of the place where arbitration is to take place" in the conflict of Laws. Conflict is the branch of public law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are...
  
  
• Lex loci celebrationis
  Lex loci celebrationis
  The lex loci celebrationis is the Latin term for "law of the place where the marriage is celebrated" in the conflict of laws. Conflict is the branch of public law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are...
  
  
• Lex loci delicti commissi
  Lex loci delicti commissi
  The lex loci delicti commissi is the Latin term for "law of the place where the delict [tort] was committed" in the conflict of laws. Conflict of laws is the branch of law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are...
  
  
• Lex situs
  Lex situs
  The term lex situs refers to the law of the place in which property is situated for the purposes of the conflict of laws. For example, property may subject to tax pursuant to the law of the place of the property or by virtue of the domicile of its owner...