Lubecka.Law Blog

Applicable law in international contracts - how Adam proved that details matter?

Case study

Let’s look at the following set of facts.

Adam concluded the sale agreement of 1,000,000.00 calendars and undertook to send the ordered goods to Spain. The products were to be delivered within the time specified in the contract. The contract with the buyer had a written form. In the agreement the parties regulated mutual rights and obligations, including contractual penalties for late delivery of the ordered goods. In the final provisions of the agreement, the parties indicated that the provisions of Spanish law will apply to any claims arising from the concluded agreement in the field of contractual penalties. The parties also gave jurisdiction to the courts in Spain.

Unfortunately, Adam was unable to deliver the ordered calendars to the buyer, which is why he withdrew from the contract. The buyer called on him to return the advance payment made to him in the amount of half the price of the ordered goods. Adam did not return the amount paid to him within the time limit set for this purpose, due to which the buyer brought the case to court. The Spanish court determined that the provisions of Spanish law would apply to the case. Adam questioned the above, pointing out that the applicable law in the case should be Polish law.

Is Adam right?

According to given information, the parties concluded a sales contract, in which they specified that Spanish law would govern any claims related to contractual penalties arising from the agreement. However, they did not specify which law would apply to other types of claims arising from the contract. Thus, in order to determine the law applicable to the assessment of other claims, the parties should apply the provisions of the Regulation of the European Parliament and of the Council (EC) No 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I). According to the provision of Art. 4 sec. 1 lit. a) the above mentioned legal regulation in the scope in which the law applicable to the contract has not been chosen, the sale contract of goods shall be governed by the law of the country in which the seller has his habitual residence.

The above indicates that Polish law will be the applicable law in the discussed factual situation. This is because Adam has his habitual residence in Poland.

Adam is right in this case.

Joanna Lubecka
attorney

02

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