Introduction

Freedom of contract is an important legal principle. Giving effect to it involves determining whether the parties reached agreement, and what it was they agreed to. It also involves filling in the gaps in their agreement and deciding what to do if they fail to carry it out. In all these matters, the policy of the law should be to give effect to what the parties intended or would have intended if they had considered the matter. As far as choice of law is concerned, this policy involves determining the system of law that they might reasonably have expected to apply. The purpose of choice-of-law rules in this area should be to identify this system.

There is, however, another aspect of the law of contract. In some situations, the law is not concerned with discovering what the parties intended (or might have intended). Its purpose is to override their intention: it prohibits them from agreeing to certain terms or imposes certain terms on them. This is done either to protect the weaker party or to give effect to some governmental policy. Consumer-protection rules are an example of the former; export embargoes adopted for foreign-policy reasons are an example of the latter. These are sometimes called mandatory rules. Where they are in issue, it makes no sense to select the applicable law on the basis of the intention, actual or presumed, of the parties: their intention is not relevant.