Lex Loci Contractus

Lex loci contractus (the law of the place of the contract). Generally speaking, the validity of a contract is decided by the law of the place where it was made. If valid there, it is, by the general law of nations (jure gentium), held valid everywhere, by the tacit or implied consent of the parties. the rule is founded not merely in the convenience, but in the necessities of nations; for otherwise it would be impracticable for them to carry on an extensive intercourse and commerce with each other. the whole system of agencies, of purchases and sales, of mutual credits, and of transfers of negotiable instruments, rests on this foundation; and the nation which should refuse to acknowledge the common principles would soon find its whole commercial intercourse reduced to a state like that in which it now exists among savage tribes.

The same rule applies to the invalidity of contracts; if void or illegal by the law of the place of the contract, they are generally held void and illegal everywhere. This would seem to be a principle derived from the very elements of natural justice. The code expounds it: Nullum enim pactum, nullam conventionem, nullum contractum, inter eos videri volumus subsecutum, qui contrahunt lege contrahere prohibente (Inst. 1. I., tit. 14, 1. 5). If void in its origin, it seems difficult to find any principle upon which any subsequent validity can be given to it in any other country. But there is an exception to the rule as to the universal validity of contracts:''No nation is bound to recognise or enforce any contracts injurious to its own interests, or its subjects.' See Odgen v. Ogden, 1908, P. 46; CONFICT OF LAWS; and consult Dicey's Conflict of Laws, and Westlake on Private International Law.