Lecture notes Commercial Law

Commercial law - notes




Table of contents
Week 1. Introduction  General principles and themes.........................................................................................2
Week 2. International sales of goods and the CISG I  scope and interpretation ..................................................7
Week 3. International sales of goods and the CISG II  key provisions................................................................16
Week 4. Carriage of goods by sea......................................................................................................................23
Week 5. International bank payment undertakings...........................................................................................33
Week 6. Agency & distribution...........................................................................................................................42
Week 7. Financial leasing...................................................................................................................................51
Week 8. Receivables financing...........................................................................................................................55
Week 9. International mobile equipment...........................................................................................................64
Week 10. Transactions in securities...................................................................................................................71
Week 11. Cross-border insolvency......................................................................................................................81
Week 12. Recurrent issues and challenges of international harmonization of commercial law.......................89




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,Week 1. Introduction  General principles and themes

Nature of commercial law

What drives commercial law?
 Commercial law derives from the practices and needs
of merchants to uphold their transactions.
o These transactions should be widespread;
however, the flip side is that because they are so
widespread there are high cost to invalidate them.

The nature of commercial law
 Body of law that governs commercial transactions.
 What are commercial transactions?
o According to Roy Goode, they are:
 Arrangements and agreements between
professionals for the provision and acquisition
of goods, services, and facilities in the way of trade.

Four key characteristics
 In civil law states, typically there is a commercial law code, while in Anglo-American
jurisdictions there is not.
 What essentially is commercial law and what is not commercial law?




Examples of typical commercial transactions
 Carriage of goods | Distributorship
 Warehousing | Insurance
 Equipment leasing | Receivables financing

The development of transnational commercial law

The evolution of medieval law of merchant
 Commercial law had a transnational nature historically.




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,Characteristics of medieval law of merchant | qualities
 Objectively.
o From usage to defined customary law
 Universality.
o Transnational in nature.
 Reciprocity of rights.
o Procedural and substantive fairness in exchange.
 Participatory adjudications.
o Merchants select judges.
 Coherence and integrated body of rules.
 Organic growth of commercial instruments and institutions.

Characteristics of medieval law of merchant | shortcomings
 Not an organized body of law, but disparate assortment of customary rules.
 Varies from place to place.

Nationalization of commercial law
 Born with an international nature, however it has been through a nationalization phase.
 Desire of central courts to expand jurisdiction.
 Rise of modern nation state and elaboration of law codes.
o Rise of national laws governing international trade (thus declining role of law of
merchant).
o Narrowing of legal education.
o Growth of conflict-of-laws rules to determine cases with foreign elements.

Return to internationalism and growth of transnational commercial law
 Second half of 19th century – beginning 20th century.
 Growing recognition that international commercial transactions are different than domestic
ones.
 Diversity and inadequate of national legal systems give rise to uncertainty.
o Different laws, practices and expectations.
o Conflict of laws rules do not solve these differences.
 These differences gave rise to efforts of harmonization of commercial law.

Problems with harmonization | benefits with harmonization
 Many international private law
conventions remain unsuccessful.




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, Sources of (transnational) commercial law

Sources of (transnational) commercial law
 I. Contracts.
o Standard contracts.
o Contractually incorporated rules and trade terms.
 II. Law of merchant (lex merchatoria) | trade customs and usages.
 III. General principles of law.
 IV. National legislation and case law.
 V. International and regional documents.
o Conventions (instruments intended to be legally binding).
o Model laws and rules (facultative instruments).
 VI. Restatements of scholars.

I. Contracts  What about ‘’contract makes law’’?
 Party autonomy  what the parties agree will be.
o Binding on them and respected by courts or arbitral tribunals.
 The validity of contractual provisions normally does not become an issue unless:
o A party challenges it, or
o It raises a public policy issue.
 Thus, within the framework of external legal norms people can make their own law.

I. Standard form contracts
 Standard contracts as a legal norm can be a debatable statement.
o In real life there are many standard contract terms and terms providers.
o Can be an oversimplification of real situation.
o Lack concrete criteria.

I. Contractually incorporated non-binding rules promulgated by international
organizations
 International trade terms, like INCOTERMS, UCP600.
 Take effect when incorporates into the contract.
o Help to facilitate uniformity of practices.
o Need to be consistent with the terms of the contract.

II. Customs and usages
 Lex mercatoria as unwritten customs and usages of merchants.
o Custom  a rule which has obtained the force of law in particular locality.
o Usage  settles practice of a particular trade of profession.
 Consistently adopted commercial practices can be a factual situation indicative of a legal
norm.
o E.g., the letter of credit binding upon issue.
 The central question  when can a usage be legally operative?
o By its mere existence (thus practices make law)?
o After the validation of certain external criteria?

II. The normative force of usages
 A usage needs to be normative
o Burden lies on those alleging the existence of such custom and usage.
o But mere existence of a usage is not enough.
 Certain external criteria of validity must be there in order for a usage to become a legally
binding obligation.
o External validation by a court or arbitral tribunal.


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