Choice of law in contract
Formation
Consideration
In re Bonacina
[1912] 2 Ch 394 (English Court of Appeal)
Whether consideration is a necessary element of a binding obligation is determined by the
proper law of the contract.
Background
Lodovico Carlo Bonacina, an Italian national long resident in England, was adjudicated
bankrupt in England in 1897. At the commencement of the bankruptcy, Bonacina was
indebted to Giacomo Mina, an Italian national resident in Italy. This debt was not disclosed
in the English bankruptcy and Mina made no claim in respect of the debt because he was
unaware of the bankruptcy. Four years later, in 1901, Bonacina was discharged from the
English bankruptcy with effect under English bankruptcy legislation that he was discharged
from any debt provable in the bankruptcy.
In 1906, Bonacina executed a document in Italy known as a privata scrittura in which
Bonacina acknowledged his debt to Mina and promised to repay it. According to the expert
evidence, the English doctrine of consideration had no application in Italian law and the
moral obligation of Bonacina to repay the debt had been transformed under Italian law into a
legal obligation by execution of the privata scrittura. In 1908, before repayment of the debt,
Bonacina died and Mina made a claim for the debt in the administration in England of
Bonacina’s deceased estate.
Disposition
Although Bonacina had given no consideration under English law for his promise in 1906 to
repay to Mina the bankruptcy-discharged debt, the proper law of the privata scrittura was
Italian law. Accordingly, this promise created a new contract under Italian law which was
enforceable in England.
Judgment extracts
FARWELL LJ. …[402] Now in the present case the new contract, although made long after
discharge, has in English law no consideration to support it: but it is an Italian contract made
in Italy between Italians and is governed by Italian law, and the expert evidence convinces
me that it is a contract valid and enforceable in Italy. If so, the only bar to its validity here
disappears. … [T]he question of consideration goes, not to the procedure, but to the validity
of the contract, and that is a matter of foreign law.
KENNEDY LJ. … [403]The doctrine of consideration as it exists with us is peculiar to our
common law; it is not to be found in the law of Italy or, so far as I am aware, in the law of
other Continental countries which derive the principles of their jurisprudence in regard to
contractual obligations from the Roman source. The “privata scrittura” in the present case,
being based upon the moral obligation to pay a just debt, created, according to Italian law, as
2
new [404] and valid a legal obligation as the contract of a debtor for good consideration to
pay a debt from which the debtor had been released by a discharge in bankruptcy … .
Appeal allowed
__________________________________
A note about Stilk v. Myrick (1809) 170 ER 1168
Italian law as applied in Re Bonacina (above) may be compared with the common law as applied in Stilk v.
Myrick, a decision of Lord Ellenborough in the Court of King’s Bench.
The plaintiff, a seafarer, was employed by the defendant, a ship’s captain, at a wage of £5 per month as a
member of the crew of a ship for a voyage from London to the Baltic and back. In the contract of employment,
the plaintiff agreed to do all he could in the event of “emergencies of the voyage”. During the voyage, two
members of the crew deserted and the defendant, having unsuccessfully attempted to replace the deserters,
entered into an agreement with the plaintiff and the other eight remaining crew members that they should be
entitled equally to the wages of the deserters if they worked the ship back to London.
After completion of the voyage, the plaintiff sought to recover the supplementary wage which the defendant had
agreed to pay.
Lord Ellenborough held that the agreement for the payment of the supplementary wage was void for lack of
consideration. The desertion of the two crew members was an emergency of the voyage and the plaintiff was
under an existing legal duty to work the ship back to London.
Comment: In Stilk v. Myrick, the proper law of the agreement between the plaintiff and the defendant for the
payment of the supplementary wage was not in contention and the case was decided by reference to English law.
What would the outcome of the case have been if the proper law of the agreement was Greek law which has no
doctrine of consideration and regards a gratuitous promise seriously made as legally enforceable?
The agreement for the payment of the supplementary wage in Stilk v. Myrick was entered into at Cronstadt
(Kronstadt), Russia, a fact to which Lord Ellenborough and counsel for both parties apparently attributed no
significance. However, under the common law rules of private international law prevailing at the time of the
case, the applicable substantive law in relation to contract was the lex loci contractus (the law of the place where
the contract was made).
__________________________