Facts: A self-governing territory of QLD borrowed money from retail investors mostly from the UK in 1895, and loan was to be repaid in 1945. There was no express choice of law, and no inferred choice of law. The loan documentation said that the loan was to be repaid in ‘pounds, sterling’, the currency of QLD and England at the time. In 1931 there was a 25% devaluation of the AU currency against the English currency. In 1945, the English investors wanted to be repaid in English pounds, not AU pounds.
Issue: What law applied to the contract?
Held: The proper law of the contract was QLD law. The loan was secured by statute in QLD in the form of a charge over the public revenues of QLD, and therefore QLD was the legal system that had the most real and closest connection with the contract. So it was to be paid in AU pounds (legal tender in QLD)
Ratio: The objective proper law of the contract is the system of law by reference to which the contract was made or that which the transaction has its most real and closest connection.