Breach of Contract, Remedies and Particularly Damages in Private International Law

The undisputed and ever increasing relevance of international contracts in both private and business transactions, together with the differences detectable in the substantive laws in the many legal orders, justify the attention paid to this topic, due to the possible diverse outcomes of the same dispute in the different jurisdictions. Among these differences, for instance, the several possible remedies available against breach of contract (specific performance, reduction of the price of purchase, termination of the contract, damages) and their pre-requisites. Civil law orders, on one side, show a preference for specific performance or reduction of the price as a result of their moral approach to breach of contract and in fact generally require fault of the breaching party in order to assess damages, whereas common law systems, on the other side â implementing an economic approach â favour damages, regardless of fault. The aforementioned differences in substantive law show the importance of studying the conflict-of-law rules in breach of contract and its consequences, in order to assure â inasmuch as possible â the quest for the â best governing lawâ and uniformity in the final outcome of the dispute. dealing with the breach of a contract bearing multi-state connections, which shall be the law governing the breach of contract and the remedies against it? Shall all these issues be governed by the law applicable to the contract or should there be exceptions? From a general point of view it may be assessed that the law applicable to the contract applies, with a few exceptions. As far as the law applicable to damages is concerned, for example, the issue of the possible concurrence of the lex fori with the law governing the contract arises. The matter concerning the law applicable to damages has traditionally been split into two separate issues, the first one pertaining to the remoteness (i.e. forseeability) and the heads of damages and commonly governed by the law applicable to the contract in light of the fact that such issues play no role in the correct carrying out of the process and the enforcement of the lex fori is therefore ruled out. The second one is related to the measure and quantification of damages and, as stated in case-law concerning extra-contractual liability which may nevertheless be addressed to as for breach of contract as well, a restricted enforcement of the lex fori should be justified, but only as far as aspects pertaining to the proper functioning of the judicial mechanism are concerned, such as, for instance, the manner of assessment of damages. Some legal orders, for instance, will require a jury to assess the measure and quantification of damages, in which case, the lex fori applies. As for the matter concerning interests, relevant differences may once again be pointed out from both the substantive and the PIL point of view. From the substantive-law point of view some legal orders, such as the Italian and the Swiss ones, do not allow compound interest and others, such as the Islamic ones, do not allow the assessment of interests at all, although providing for alternative means of compensation. And while common law orders usually characterize interests as a matter of procedure therefore applying the lex fori, in the civil law countries the same issue is considered as a matter of substance and thus governed by the lex contractus. These differences, once again, underline the possible different outcomes of the same dispute and the importance of the detection of the proper applicable law.