Merchant Law Research Articles

Merchant Law in a Merchant Court: Rethinking the Code's Search for Immanent Business Norms

In the spirit of the Code and Karl Llewellyn, this Article begins by looking at merchant practice. It presents a case study of the private legal system created by the National Grain and Feed Association to resolve contract disputes among its members. The study pays especially close attention to the willingness of NGFA's industry-expert adjudicators to take trade usage, course of dealing, and course of performance into account in deciding cases. It finds that despite their industry expertise, NGFA arbitrators are reluctant to look to these indicia of immanent business norms. The Article then challenges the idea that courts should seek to discover and apply immanent business norms in deciding cases. It demonstrates that while the drafters of the Code sought to incorporate these norms into the law in an effort to make commercial law more responsive to and reflective of commercial reality, they failed to recognize that this approach would fundamentally alter the very reality they sought to reflect, and would do so in ways that would have undesirable effects on commercial relationships and would undermine the Code's own stated goals of promoting flexibility in commercial transactions and permit[ting] the continued expansion of commercial practices through custom, usage and agreement of the parties.

Law, Economics, and Inefficient Norms

t Assistant Professor, University of Pennsylvania Law School. My thanks to Matthew Adler, Lisa Bernstein, David Charny, Robert Ellickson, John Lott, Reed Shuldiner, participants at the Symposium on Law, Economics & Norms at the University of Pennsylvania Law School, and participants at a workshop at the University of Toronto Law School. 'See ROBERT C. ELLICKSON, ORDER WITHOUT LAW: How NEIGHBORS SETrLE DISPUTES 167-83 (1991); Robert C. Ellickson, Property in Land, 102 YALE L.J. 1315, 1320-21 (1993). 2 See, e.g., ELLICKSON, supra note 1, at 283 (arguing that the law should defer to group norms for everyday disputes between members); Lisa Bernstein, Merchant Law in a Merchant Court: Rethinking the Code's Search for Immanent Business Norms, 144 U. PA. L. REV. 1765, 1770 (1996) (stating that 'transactors do not necessarily want the relationship-preserving norms they follow in performing contracts and cooperatively resolving disputes among themselves to be used by third-party neutrals to decide [their] cases (footnote omitted)); Robert D. Cooter, Decentralized Law for a Complex Economy: The Structural Approach to Adjudicating the New Law Merchant, 144 U. PA. L. REV. 1643, 1650 (1996) [hereinafter Cooter, Decentralized Law] (stating conditions under which law should defer to norms); Robert D. Cooter, Structural Adjudication and the New Law Merchant: A Model of Decentralized Law, 14 INT'L REV. L. & ECON. 215, 226-27 (1994) (same); Richard A. Epstein, International News Service v. Associated Press: Custom and Law As Sources of Property Rights in News, 78 VA. L. REV. 85, 85 (1992) [hereinafter Epstein, Custom in Property] ('The state's chief function is to discover and reflect accurately what the community has customarily regarded as binding social rules and then to enforce those rules in specific controversies.); Richard A. Epstein, The Path to The T.J. Hooper: The Theoiy and History of Custom in the Law of Tort, 21 J. LEGAL STUD. 3, 4 (1992) [hereinafter Epstein, Custom in Torts] (arguing that where the standard of liability is negligence, courts should regard custom as conclusive evidence of due care); Jason S. Johnston, The Statute of Frauds and Business Norms: A Testable Game-Theoretic Model, 144 U. PA. L. REV. 1859, 1863-64 (1996) (discussing the Statute of Frauds and the circumstances in which this formality is or is not needed).

Developments in merchant shipping law in the former USSR and their applicability with regard to the 1969 ussr-the Netherlands treaty on merchant shipping: A note

Developments in merchant shipping law in the former USSR and their applicability with regard to the 1969 ussr-the Netherlands treaty on merchant shipping: A note

The Historical Background of Commercial Arbitration

EARL S. WOLAVERt The origin of arbitration is lost in obscurity. At what time or place man first decided submit his chief or his friends for a decision and a settlement with his adversary, instead of resorting violence and self-help, or the public legal machinery available, is not known; and any inquiry of sort would belong more properly in the history of social growth and ethics than in either law or economics. In all religions there are many injunctions be at peace with one's neighbors and be reconciled speedily with an adversary. Aristotle urged the benefits of conciliation.' In Heraldus' Animadversiones 2 there is described a court of reconcilement that existed among the Greeks. It was common among the Romans to put an end litigation by means of arbitration.3 Bell says this amicable private tribunal is of an earlier date than the public courts. 4 The introduction of arbitration seems be coeval with the foundation of our law.5 In the earliest forms of society disputes were tried by the heads of families, whence is derived the patriarchal tribunal noW given the office of arbitrator.6 From the charters that were issued the English gilds, it is clear that these traders recognized the value of some extrajudicial method and, in sonme of the earlier books on the law merchant, it is certain the merchant preferred justice according the Law of Merchants that of the common law. The history of arbitration, unlike the history of law, is not an account of the growth and development of principles and doctrines that have come, through a long use, have a general validity and force. While arbitration probably antedates all the former legal systems, it has not developed any code of substantive principles, but is, with very few exceptions, a matter of free decision, each case being viewed in the light of practical expediency and decided in accord with the ethical or economic norms of some particular group. One case is not authority for another since the decisions are in terms of persons and practices and not in accord with prescribed rules and doctrines. If we assume that arbitration is a substitute for a proceeding at law and that it is governed only by the sense and conscience of the arbitrators, it

Arbitration of Disputes between Exporters and Importers and Its Relation to International Good Will

T HE administration of a law of merchants, by merchants, and for merchants, is rooted in a respectable past. Passing over the system of commercial arbitration of ancient Greece we find a substantial body of rules in the Middle Ages. Prior to 1606 and the appointment of Coke as Lord Chief Justice, the Law Merchant in England was administered by special courts of merchants conducted at the fairs for the benefit of the traders gathered there from all countries. This court was