1
Commercial Law
Week 1:
Reading
Introduction
- Transnational commercial law consists of that set of rules, from whatever source,
which governs international commercial transactions and is common to a number of
legal systems
Derived from international instruments of various kinds
- Uniform Customs and Practice for Documentary Credits published by the
International Chamber of Commerce and the Model Arbitration Rules issued by the
United Nations Commission on International Trade Law (UNCITRAL)
- Legislative guides of the kind published by UNCITRAL and UNIDROIT
- UNIDROIT Principles of International Commercial Contracts
NB: lex mercatoria - consisting of the unwritten customs and usages of merchants and
general principles of commercial law
Regional harmonisation through regional organisations such as:
- European Union (most important)
- Organisation of American States (OAS)
- Organisation for the Harmonisation of Business Law in Africa (OHADA)
Chapter 1
A: NATURE OF COMMERCIAL LAW
Commercial law = law’s response to mercantile disputes, encompassing ‘all those
principles, rules and statutory provisions which bear on the private law rights and
obligations of parties to commercial transactions
- concerned with transactions between professionals, whether they are merchants,
financiers, or intermediaries
Transnational commercial law = set of private law principles and rules which govern
international commercial transactions and are common to legal systems generally or to
a significant number of legal systems
- focus is on private law and on transactions, particularly cross-border transactions
- NB: distinguish from international economic law, which is a branch of public
international law and is concerned primarily with dealings between states and
resolution of inter-state disputes by organs of the WTO.
, 2
Three concepts of transnational law
transnational (i.e. cross-border) character of a commercial transaction entails specific
legal problems and consequence
three usages
1. as a general description of the legal regime of an international commercial
transaction;
2. as a label for the factual uniformity or similarity in contract laws applicable to or
contractual patterns used in international commercial transactions; and, finally,
3. as a term to denote international sources of commercial law, i.e. internationally
uniform law in the proper sense.
- relevant to understanding the legal regime of international commerce
‘Transnational law’ in the broadest sense has been de ned by Jessup as ‘all law which
regulates actions or events that transcend national frontiers’
- label for all legal norms governing international business contracts and might serve as
a mere description of the complex legal circumstances surrounding international
transactions
The drafters of international commercial contracts have to take into account the various
legal environments and complex legal situations,
- relevant not only when drafting clauses on choice of law and forum, but also when
deciding on the time and manner of delivery and payment, and clauses on specific
dispute settlement procedures.
-> These contractual provisions dealing with the transnational situation might equally
be labelled ‘transnational law’ in so far as they constitute legally binding lex contractus
De facto uniform law and contractual patterns
- single out those legal rules, principles and contractual pat- terns which are
internationally used or recognised in a uniform or similar way although they may stem
partly from different national laws
- international commerce is, to a growing extent, guided and co-ordinated by such
uniform rules and pattern
- This phenomenon of uniform rules serving uniform needs of international business
and economic co-operation is today commonly labeled lex mercatoria.
Transnational law
- label for internationally uniform law in the proper sense, based on international
sources of law, i.e., either on conventions (‘international legislation’) or on customary
law.
, 3
Examples of international conventions can be found in the law of international
transportation of goods by sea, air and land
- once signed by the signatory states and embodied in their national legal systems, will
be an important international source of uniform commercial law.
International customary law
- of limited assistance in solving legal problems of international commerce. ere are few
legal principles, such as pacta sunt servanda, which are generally recognised and can
be termed international customary law
Lex mercatoria
elements of the law merchant:
public international law, uniform laws, general principles of law, rules of international
organisations, customs and usages, standard form contracts, and reporting of arbitral
awards
- ius non scriptum, and thus to de ne it as that part of transnational commercial law
which consists of the unwritten customs and usages of merchants, so far as these satisfy
certain externally set criteria for validation
- traditional to include general principles of law
- strong argument in favour of excluding such principles in that they are not specific to
international transactions or even to commercial dealings
What drives commercial law?
- commercial law is not devised in the abstract but is a response to the practices and
legitimate needs of merchant
- mercantile practice evolves as a response to impediments to trade, whether legal or
practical, that has to be surmounted and to the driving force of com- petition as each
enterprise strives to attract increased business by developing new products in goods and
services.
- rely on the willingness of courts, in case of a dispute, to uphold the validity of the
transaction
- in most developed countries, the courts are sensitive to the. need to avoid damaging
commercial instruments that are fulfilling a useful and legitimate purpose, if only
because of the potentially adverse effects this could have on the stability of the industry
- the more widespread the market practice, and the more damaging the effects of
invalidating it, the more likely it is to be upheld by the courts
rules of transnational commercial law are not necessarily different in content from those of
national law and should not be set up in opposition to national law rules but rather should be seen
as drawing upon and as complementary to those rules
, 4
Contracts
The law of contract underpins all commercial transactions:
- core principle is party autonomy
- the freedom of parties to ‘make their own law’ in the relations between them- selves.
Contractual terms may be express or implied.
- Whether a contract term is valid is, in case of a dispute concerning the contract, a
matter to be determined by a court or other tribunal of competent jurisdiction.
-
Usage
Usage is the observance of a commercial practice from a sense of obligation, as opposed to
mere courtesy, expediency, or convenience.
A usage may become enacted in a statute or embodied in a contract or set of trade rules
incorporated by contract, but this changes its character. Formerly, writers distinguished
usage from custom, but nowadays the terms tend to be used interchangeably and we shall use
the term ‘usage’.
- examples of usage: a particular trade or a locality such as a town or a port.
The existence of usage are questions of fact to be determined by the court or law.
Two limbs to the lex mercatoria, namely international trade usage and general principles of
law. Once a usage has acquired such general acceptance as to become independent of any
particular form of international trading activity, it ceases to be usage and becomes elevated
into a general principle which, it will be argued, is best regarded as a distinct source of
transnational commercial law and does not form part of the lex mercatoria.
Arbitration
- good for general reasons
- Applying the lex mercatoria, arbitrators may take advantage of their freedom to select
the better rule of law which courts sometimes miss. For instance, the Scandinavian
Sale of Goods Act provides that the buyer who wished to invoke a late delivery of the
goods must give notice immediately upon delivery. This rule is not fit for international
sales. Non-Scandinavian buyers do not know of it, and for them it may be a trap. The
rule in Article 49(2) of the Convention on the International Sale of Goods, under
which notice must be given within a reasonable time, offers a better solution . . .
-
in-class
- body of transnational commercial law * & its development over time
Commercial Law
Week 1:
Reading
Introduction
- Transnational commercial law consists of that set of rules, from whatever source,
which governs international commercial transactions and is common to a number of
legal systems
Derived from international instruments of various kinds
- Uniform Customs and Practice for Documentary Credits published by the
International Chamber of Commerce and the Model Arbitration Rules issued by the
United Nations Commission on International Trade Law (UNCITRAL)
- Legislative guides of the kind published by UNCITRAL and UNIDROIT
- UNIDROIT Principles of International Commercial Contracts
NB: lex mercatoria - consisting of the unwritten customs and usages of merchants and
general principles of commercial law
Regional harmonisation through regional organisations such as:
- European Union (most important)
- Organisation of American States (OAS)
- Organisation for the Harmonisation of Business Law in Africa (OHADA)
Chapter 1
A: NATURE OF COMMERCIAL LAW
Commercial law = law’s response to mercantile disputes, encompassing ‘all those
principles, rules and statutory provisions which bear on the private law rights and
obligations of parties to commercial transactions
- concerned with transactions between professionals, whether they are merchants,
financiers, or intermediaries
Transnational commercial law = set of private law principles and rules which govern
international commercial transactions and are common to legal systems generally or to
a significant number of legal systems
- focus is on private law and on transactions, particularly cross-border transactions
- NB: distinguish from international economic law, which is a branch of public
international law and is concerned primarily with dealings between states and
resolution of inter-state disputes by organs of the WTO.
, 2
Three concepts of transnational law
transnational (i.e. cross-border) character of a commercial transaction entails specific
legal problems and consequence
three usages
1. as a general description of the legal regime of an international commercial
transaction;
2. as a label for the factual uniformity or similarity in contract laws applicable to or
contractual patterns used in international commercial transactions; and, finally,
3. as a term to denote international sources of commercial law, i.e. internationally
uniform law in the proper sense.
- relevant to understanding the legal regime of international commerce
‘Transnational law’ in the broadest sense has been de ned by Jessup as ‘all law which
regulates actions or events that transcend national frontiers’
- label for all legal norms governing international business contracts and might serve as
a mere description of the complex legal circumstances surrounding international
transactions
The drafters of international commercial contracts have to take into account the various
legal environments and complex legal situations,
- relevant not only when drafting clauses on choice of law and forum, but also when
deciding on the time and manner of delivery and payment, and clauses on specific
dispute settlement procedures.
-> These contractual provisions dealing with the transnational situation might equally
be labelled ‘transnational law’ in so far as they constitute legally binding lex contractus
De facto uniform law and contractual patterns
- single out those legal rules, principles and contractual pat- terns which are
internationally used or recognised in a uniform or similar way although they may stem
partly from different national laws
- international commerce is, to a growing extent, guided and co-ordinated by such
uniform rules and pattern
- This phenomenon of uniform rules serving uniform needs of international business
and economic co-operation is today commonly labeled lex mercatoria.
Transnational law
- label for internationally uniform law in the proper sense, based on international
sources of law, i.e., either on conventions (‘international legislation’) or on customary
law.
, 3
Examples of international conventions can be found in the law of international
transportation of goods by sea, air and land
- once signed by the signatory states and embodied in their national legal systems, will
be an important international source of uniform commercial law.
International customary law
- of limited assistance in solving legal problems of international commerce. ere are few
legal principles, such as pacta sunt servanda, which are generally recognised and can
be termed international customary law
Lex mercatoria
elements of the law merchant:
public international law, uniform laws, general principles of law, rules of international
organisations, customs and usages, standard form contracts, and reporting of arbitral
awards
- ius non scriptum, and thus to de ne it as that part of transnational commercial law
which consists of the unwritten customs and usages of merchants, so far as these satisfy
certain externally set criteria for validation
- traditional to include general principles of law
- strong argument in favour of excluding such principles in that they are not specific to
international transactions or even to commercial dealings
What drives commercial law?
- commercial law is not devised in the abstract but is a response to the practices and
legitimate needs of merchant
- mercantile practice evolves as a response to impediments to trade, whether legal or
practical, that has to be surmounted and to the driving force of com- petition as each
enterprise strives to attract increased business by developing new products in goods and
services.
- rely on the willingness of courts, in case of a dispute, to uphold the validity of the
transaction
- in most developed countries, the courts are sensitive to the. need to avoid damaging
commercial instruments that are fulfilling a useful and legitimate purpose, if only
because of the potentially adverse effects this could have on the stability of the industry
- the more widespread the market practice, and the more damaging the effects of
invalidating it, the more likely it is to be upheld by the courts
rules of transnational commercial law are not necessarily different in content from those of
national law and should not be set up in opposition to national law rules but rather should be seen
as drawing upon and as complementary to those rules
, 4
Contracts
The law of contract underpins all commercial transactions:
- core principle is party autonomy
- the freedom of parties to ‘make their own law’ in the relations between them- selves.
Contractual terms may be express or implied.
- Whether a contract term is valid is, in case of a dispute concerning the contract, a
matter to be determined by a court or other tribunal of competent jurisdiction.
-
Usage
Usage is the observance of a commercial practice from a sense of obligation, as opposed to
mere courtesy, expediency, or convenience.
A usage may become enacted in a statute or embodied in a contract or set of trade rules
incorporated by contract, but this changes its character. Formerly, writers distinguished
usage from custom, but nowadays the terms tend to be used interchangeably and we shall use
the term ‘usage’.
- examples of usage: a particular trade or a locality such as a town or a port.
The existence of usage are questions of fact to be determined by the court or law.
Two limbs to the lex mercatoria, namely international trade usage and general principles of
law. Once a usage has acquired such general acceptance as to become independent of any
particular form of international trading activity, it ceases to be usage and becomes elevated
into a general principle which, it will be argued, is best regarded as a distinct source of
transnational commercial law and does not form part of the lex mercatoria.
Arbitration
- good for general reasons
- Applying the lex mercatoria, arbitrators may take advantage of their freedom to select
the better rule of law which courts sometimes miss. For instance, the Scandinavian
Sale of Goods Act provides that the buyer who wished to invoke a late delivery of the
goods must give notice immediately upon delivery. This rule is not fit for international
sales. Non-Scandinavian buyers do not know of it, and for them it may be a trap. The
rule in Article 49(2) of the Convention on the International Sale of Goods, under
which notice must be given within a reasonable time, offers a better solution . . .
-
in-class
- body of transnational commercial law * & its development over time
