5.5 Contract Actions Generally

• Library: Virginia Law and Practice: A Handbook for Attorneys (Virginia CLE) (2020 Ed.)

5.5 CONTRACT ACTIONS GENERALLY

5.501 Nature, Validity, and Interpretation of Contracts. The nature, validity, and interpretation of contracts are governed by the law of the place where made, unless the contrary appears to be the express intention of the parties. ³⁴

If the owners' alleged liability is a matter of contract, the law of the place where the contract was formed applies when interpreting the contract and determining its nature and validity. ³⁵

In deciding conflict of laws issues, Virginia applies lex loci contractus, meaning that "the nature, validity and interpretation of contracts are governed by the law of the place where [the contract was] made." ³⁶

5.502 Performance of Contracts. Although "everything relating to the making of the contract is to be governed by the law of the place where

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it was made; everything relating to the performance of the contract is to be controlled by the law of the place of performance." ³⁷

If the parties merely sign the contract in one jurisdiction, but, at the time of execution, the parties intend for the contract to be fully performed in another, specific jurisdiction, the law of the place of performance (the lex loci solutionis) will be applied rather than the law of the place where the contract was formally executed. ³⁸

The "law of the place of performance governs questions concerning the performance of a contract" and "the place of performance of a sales contract is usually considered to be the place where goods are delivered." ³⁹

5.503 Intent of Parties. The true test for the determination of the proper law of a contract is the intent of the parties. ⁴⁰ This intent "may be expressed in the contract itself" or "may be inferred from the surrounding circumstances." ⁴¹

To determine which law governs the contract, the court must first look to the agreement itself. It is recognized in Virginia that

the locus solutionis of a contract primarily depends upon the intention of the parties. It is a part of the principle of freedom of contract to choose the place where a contract shall be performed. This choice may be expressed in the contract itself; if not, it may be inferred from the surrounding circumstances. ⁴²

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"Where parties to a contract have expressly declared that the agreement shall be construed as made with reference to the law of a particular jurisdiction, [the court] will recognize such agreement and enforce it, applying the law of the stipulated jurisdiction." ⁴³

Lex loci...