Applicable Laws; laws governing contracts (1992)

X and Y entered into a contract in Australia, whereby it was agreed that X would
build a commercial building for Y in the Philippines, and in payment for the
construction, Y will transfer and convey his cattle ranch located in the United
States in favor of X. What law would govern: a) The validity of the contract? b)
The performance of the contract? c) The consideration of the contract?
SUGGESTED ANSWER:
(a) The validity of the contract will be governed by Australian law, because the
validity refers to the element of the making of the contract in this case.
(Optional Addendum:"... unless the parties agreed to be bound by another law".}

(b) The performance will be governed by the law of the Philippines where the
contract is to be performed.

(c) The consideration will be governed by the law of the

United States where the ranch is located. (Optional Addendum: In the foregoing
cases, when the foreign law would apply, the absence of proof of that foreign law
would render Philippine law applicable under the "eclectic theory".)