CONTRACTS, ILLEGALITY AND COMITY: RALLI BROS REVISITED

Abstract

There has always been considerable uncertainty about the nature and scope of the rule by which contractual performance is excused if illegal in the place of performance, even though performance would not be illegal by the contract's governing law. This article revisits the so-called “Ralli Bros rule” and looks at how the scope of the rule has been developed and its nature misunderstood. It argues that the rule is neither a choice of law rule nor part of the rules discharging a contract for frustration but is instead a public policy rule favouring judicial abstention for reasons of comity. This has implications for how the rule interacts with the choice of law rules for contracts under the Rome Convention and the Rome I Regulation.