Governing Law and Transnational Contracts — Common Law and Indian Law

A Navi Mumbai garment exporter signs a supply contract with a buyer in Hamburg. The contract is drafted in English, payment is in dollars, and a clause says the contract is governed by English law. When the goods arrive late, which country's rules decide whether the exporter must pay damages: India's, Germany's, England's, or all three in turn? A court has to answer that before it can even begin to decide who was in breach. This topic is about how it does so.

In two minutes

In a contract with a foreign element, the court first finds the law that governs the contract (the proper law): the law the parties chose, or failing that the law with which the contract is most closely connected, always subject to the forum's own public policy.

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