Kristinus v. H. Stern Com. E Ind. S.A.
1979 U.S. Dist. LEXIS 14830, 463 F. Supp. 1263 (1979)
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Rule of Law:
In a conflict of laws analysis for a contract dispute, courts will apply the law of the jurisdiction with the greatest interest in the litigation, and the place of performance can be a dispositive factor that gives a jurisdiction a paramount interest, even over the jurisdiction where the contract was formed.
Facts:
- While visiting Rio de Janeiro, Brazil, Rainer Kristinus, a Pennsylvania resident, received a flyer from H. Stern Com. E Ind. S.A. under his hotel room door.
- The flyer advertised a one-year guarantee for a refund, credit, or exchange, specifically naming 'H. Stern Jewelers New York' as being at the customer's disposal for help and service.
- An H. Stern vice-president orally assured Kristinus that he could return gems he was considering purchasing for a complete refund in New York.
- Based on these representations, Kristinus purchased three gems from H. Stern in Brazil for $30,467.43.
- The following month, Kristinus presented the gems to H. Stern Jewelers, Inc. in New York City and requested the promised refund.
- The New York store denied his request for a refund.
Procedural Posture:
- Rainer Kristinus filed a lawsuit for specific performance against H. Stern Com. E Ind. S.A. in the U.S. District Court for the Southern District of New York (a federal trial court).
- H. Stern filed a motion to dismiss the complaint.
- H. Stern argued in its motion that the alleged oral promise was unenforceable under Brazilian law, which it contended should govern the transaction.
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Issue:
Does Brazilian law, which would render an oral contract for a certain value unenforceable, govern a dispute over a contract made in Brazil when the contract was specifically to be performed in New York?
Opinions:
Majority - Lasker, District Judge
No. New York law governs the dispute because New York has the greatest interest in the litigation. The court applied New York's 'interest analysis' approach to choice of law, balancing the interests of Brazil and New York. Brazil's interests in its evidentiary rules are twofold: 1) protecting the integrity of its own judicial process from perjury, which is not implicated in a New York lawsuit, and 2) protecting those transacting business in Brazil from unfounded claims. New York's interests include ensuring that entities doing business within its borders honor their obligations, an interest that is significantly heightened when the performance of the contract, such as the refund, is to occur in New York. Because the promise was to be performed in New York, New York's interest in regulating business affairs and protecting contractual expectations within its territory outweighs Brazil's generalized interest in applying its own contract formation rules.
Analysis:
This case exemplifies the modern 'interest analysis' approach to choice of law, moving away from rigid, territorial rules like the law of the place of contracting ('lex loci contractus'). The court's decision establishes that the place of performance is a powerful, and sometimes overriding, factor in determining which jurisdiction has the 'greatest interest' in a contract dispute. This precedent prevents businesses from inducing contracts in jurisdictions with restrictive laws by promising performance in a different jurisdiction, only to later use the foreign law as a shield to evade their obligations. It reinforces the principle that a state's interest in policing conduct and enforcing promises within its own borders is exceptionally strong.
