Contracts provide sophisticated schemes to guide conduct and regulate behaviour in relationships rife with conflicting commercial interests. They are often heavily negotiated, meticulously crafted and packaged with provisions intended to confine the parties’ entire agreement to the written document.

However, the structure of contractual relationships is increasingly three dimensional, reflecting the statutory and regulatory landscape and the circumstances of a particular commercial arrangement. Whilst the written text remains centre stage, this broadened field on which contracts are construed and disputes determined means that rights and obligations increasingly turn on factors not expressly recorded in that agreement.

Freedom of contract has, of course, never been entirely unfettered. That contracts must be read against the statutory and regulatory frameworks within which they operate is age-old. The impact, however, is increasing. There has been a proliferation of domestic and international law and regulation in recent years, with the growing body of EU law particularly significant to businesses operating in Europe. As the statute book grows, so does the encroachment onto the parties’ ‘blank page’ starting point.

Greater internationalism further increases this impact. As contracts transcend borders, they engage the laws of each territory they touch upon. Whereas the governing law of the contract will call for the closest consideration, mandatory provisions of numerous legal systems will potentially impact upon the terms and scope of the agreement.

Oct-Dec 2015 issue

Wiggin LLP