3 - The tipping point in law

Summary

Contract law: unaffected by online transnationality?

Unlike trademark law, contract law is one area in which the transnational nature of the Internet could pose no more than a small problem – at least in theory. Because, at least in theory, in a transnational contract it is the parties who decide who is going to regulate them: they decide which court should adjudicate their dispute (choice-of-forum clause) and which law should govern their dispute (choice-of-law clause). The contractual parties, exercising their contractual autonomy, create the link to found regulatory competence. In theory, the location of the parties, the location where the contract was entered into, the location of its performance or any breach thereof do not matter. All that matters is which legal system the parties to the contract have chosen, and therefore the non-territorial nature of the Internet and online activity is quite irrelevant.

That is the theory. The reality is more complex. Contractual parties not infrequently fail to make those choices which link them to one legal system rather than another. More critically, contractual autonomy is not something which exists outside and beyond legal systems. On the contrary, it is created or, at the very least, must be recognised and enforced by States. And, while most legal systems are committed to contractual autonomy generally, they invariably impose some restrictions on it, refusing, for example, to recognise contractual agreements the performance of which would involve an illegality.