Capítulo IV. Desarrollo de hipótesis y modelo conceptual
2. Los procesos de la cadena de suministro
2.2 Proceso de adquisición
A choice of law is law is not subject to any requirement as to form unless otherwise agreed by the parties.
Formal validity refers to the formal requirements necessary in order to validate a contract – the alienation of immovable property in South African law provides a prime example, as one of the requirements is that the contract must be reduced to writing in order to be formally valid.141 The WG was initially tempted to add a provision requiring some sort of formal validity, but found that most instruments dealing with international
139 Fredericks and Neels “Tacit choice” (n 107) 107-108; Forsyth (n 25) 329; Van R Rooyen (n 53) 99-100.
140 Benidai Trading case (n 127); Laconian case (n 50).
141 Permanent Bureau of the Hague Conference (n 5) 21.
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contracts had very little or no requirements as to form other then “the clear manifestation of the intent to choose the law”.142 This is not always the stance in many national legal systems which require that some contracts comply with some set of formal requirements.143 The WG found that in instances where formal requirements for the validity of the contract were in issue, it was usually the lex loci contractus that determined the substance of those requirements. This position was found to be unsatisfactory because the use of the lex loci contractus in these instances was sometimes unintentional or unplanned,144 making this the basis of validity would therefore go against the grain of the P. The composition of this principle as is, does away with any uncertainty regarding formalities and augments the principle of party freedom.
1. Australia
The issues relating to the law that governs the formal validity of a contract are split into several different categories under Australian law, namely, capacity, offer and acceptance, contracts relating to immovable property, consideration and consent.145 Under most of these headings the putative proper law will apply. Only consideration and contracts relating to immovable property will be discussed in terms of Article 5. As capacity is excluded from the scope of the P it will not be discussed.146 The other issues
142 Permanent Bureau of the Hague Conference (n 5) 21.
143 See Turkish Civil Code article 7 – Legal transactions must be carried out in conformity with the form envisaged by the substantive law provisions of the law of the country where the transaction is carried out or of the law applicable to the substance of that legal transaction (i.e. this article elects either the lex loci solutionis or the proper law); Also see Swiss Civil Code Article 124 which states that a contract could be valid in terms of the lex loci contractus, lex domicile or the proper law of the contract.
144 Permanent Bureau of the Hague Conference (n 5) 21.
145 Mortensen Private International Law in Australia (2006) 405-406.
146 See Article 1(3)(a).
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relating to formal validity are dealt with under the commentary to Article 6(a).147
a. Contracts relating to immovable property
The starting point under Australian law was that formalities regarding contracts for the sale of immovable property was a procedural matter and was therefore to be governed by the lex fori.148 Older authority, however, seems to favour the lex loci contractus.149 The contemporary view, favours the putative proper law in these instances.150
b. Consideration
In some cases consideration is a requirement for a valid contract to come into being under Australian law.151 It has been held by Australian courts that this requirement should be governed by the putative proper law.152 The caveat that Mortensen adds to this, is that it should be the putative proper law objectively ascertained as opposed to an agreement between the parties.
The reasoning behind this is to prevent parties from a different state circumventing the requirement of consideration by electing the law of a state in which consideration is not required.153
The requirement of Article 5 is clear – it states that there is to be no requirement as to formal validity pertaining to the choice of law unless otherwise agreed by the parties. The aspects dealt with relating to formal validity ultimately select the putative proper law to determine this question.
147 This section intertwines to a large extent with the putative proper law as required by Article 6(a) of the Hague Principles. Please refer to the commentary to article 6(a) for further discussion.
148 Mortensen (n 145) 404.
149 See Guepratte v Young 1851 64 ALL ER 804 – this case was not available to me and I have had to rely on the interpretation provided by Mortensen (n 145) 404.
150 Mortensen (n 145) 404.
151 Mortensen (n 145) 404.
152 Re Boncina 1912 2 Ch 394.
153 Mortensen (n 145) 405.
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Since the formal validity requirements will vary according to the law so chosen, it is highly unlikely that there will not be some sort of formal validity requirement in all instances. The nature of this problem would therefore render it unwise to make a pronouncement on the compatibility of Australian law with Article 5. As it stands, however, it would seem that Australian law is indeed incompatible with Article 5.
2. South Africa
The reasons for requiring a contract to comply with certain formalities are the same under South African law as they are under Australian law.
Conventionally formalities being a matter that fell under evidence, and evidence and procedure being a matter that fell to the lex fori,154 the position, according to Forsyth, was that the lex fori should govern issues of formality. The problem with this view is that at the time of contracting, the forum that the matter will be litigated in is usually unknown and because of this the lex loci contractus would be a more suitable governing law.155 But even the lex loci contractus has since been outdated: the reach and speed of modern communication means that a contract can be concluded anywhere without it necessarily having any bearing on the contract.156 This has led to the proper law being accepted as an alternative legal system on which to base formality.157
In South African law as in Australian law it is desirable to increase the number of testing legal systems with which a contract can comply in order to ensure that as few contracts as possible will be rendered invalid because of a failure to adhere to strict formalities.158 The reasoning behind this is that if a contract is not formally valid then most of the provisions in it will
154 Forsyth (n 25) 341.
155 Forsyth (n 25) 341; Van Rooyen (n 53) 72.
156 Forsyth (n 25) 341.
157 Forsyth (n 25) 341.
158 Forsyth (n 25) 342.
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also be so invalid (barring any provisions that are severable from the rest of the contract, normally the choice of law clause and the arbitration clause) this would lead to a contract being considered void ab initio, meaning that no rights and obligations have come into being between the parties. The gravity of such a situation is obvious, the effect that this would have on any party that has performed either partially or in full would be severe.
Allowing a contract to be valid in terms of a number of legal systems increases the chances of validity and would therefore circumvent these problems.
In Ex Parte Spinazze,159 Corbett JA advocated the use of a facultative approach to the determination of the legal system that would govern the issue of formal validity. He held that the lex loci contractus and the lex causae should be used in the alternative, and that a contract valid in terms of the proper should remain valid even if it was contrary to the requirements of the lex loci contractus.160 This position was endorsed by the court in Creutzberg v Commercial Bank of Namibia Ltd.161 Mpati AP referred directly to the decision in Spinazze and held that “the facultative approach was intended to ensure that a contract was not rendered invalid merely for lack of the forms required by the lex loci contractus when it complied as to form with its proper law”.162 Based on the above stated cases as well as the opinion of Forsyth it would seem that the following legal systems would be applicable to the issue of formalities: the lex fori; the lex loci contractus; the lex rei sitae; the proper law of the contract; and probably even the lex domicilli of either party.163
However, even though South African law allows a whole range of legal systems to determine the formality of the contract (and even though this
159 Spinazze case (n 97).
160 Spinazze case (n 97) 665 B-C.
161 2006 4 All SA 327 (SCA) 330-331.
162 Creutzberg case (n 161) 331.
163 Forsyth (n 25) 342.
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position is in line with the private international law trends in the Western World), it does not allow the parties the freedom to decide the issue of formalities for themselves. Also as is the case with Australian law it is clear that in some instances, depending on the law governing the formality aspect of the contract, there would be certain prescribed formalities. The legal position is South African law would therefore be incompatible with article 5.
VII. ARTICLE 6 – AGREEMENT ON THE CHOICE OF LAW AND