Research Paper: Evolution of Commercial Law From the 18th Century to the Current International E-Commerce Era

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¶ … evolution of commercial law from the eighteenth century to the current international e-commerce era, with an eye towards specific crises and responses that led to formation of the current system of general commercial law. These crises include the conflict between national law and the law merchant during the eighteenth century, the emergence of negotiable instruments in the early nineteenth century, the importance of new forms of insurance during the middle of the nineteenth century, the consolidation and monopolization of the Industrial Revolution, and the global effects of the internet on commerce and copyright. Tracing these crises and the legal system's response allows one to better understand how the evolution of commercial law is constituted by a mixture of disruptive change and long-standing legacies, as each new generation contributes to the whole of the law while continuing to deal with the long-standing effects of centuries-old rulings.

The evolution of commercial law from the eighteenth century all the way up to today can be characterized as both dramatic and expected, disruptive yet incremental. This is because by the eighteenth century, many of the legal concepts and frameworks that make up contemporary commercial law were already in existence, albeit in modified forms. At the same time, however, the eighteenth century saw a period of global expansion that would change the face of the world forever, and as a result, commercial law was forced to adapt. As European powers expanded their influence through colonization and imperial expansion, gradually commercial law became standardized across international borders, so that by the nineteenth and early twentieth century, international commercial law had largely coalesced into a unified system (albeit with plenty of room for isolationist economic policies, exploitation, and inequality). Only with the development of the computer in the latter half of the twentieth century did commercial law undergo another dramatic change, as the combination of e-commerce and a larger trend towards globalization began to effectively erase whatever remaining international borders or legal distinctions still existed. By tracing the evolution of commercial law from the eighteenth century to the current international e-commerce era, and particularly the development of the law merchant, negotiability, insurance, and antitrust efforts, it will be possible to see how commercial law, like all other areas of culture, politics, and business, has proceeded towards unification at an exponentially increasing rate, hindered only by conceptions of national identity or autonomy that appear positively provincial in light of the dramatic cultural, political, and economic developments of the last three hundred years.

To begin, it is necessary to point out that many of the key concepts and legal frameworks that constitute commercial law were created well before the eighteenth century, through the natural, contemporaneous evolution of common law and international (or inter-city) trade. For example, the twelfth century saw what one might characterize as the birth of the banking system, as trade expanded across the European and Asia continents. Trade caravans and traveling merchants needed ways to ensure that commerce could function effectively over the vast distances involved. As a result, common standards and customs of trade and commerce developed, to the point that some merchants were using the forerunner of bank checks by the end of the twelfth century (Schaffer, Agusti, & Earle, 2009, p. 118). Over time, courts began to adopt the self-enforced common laws of the merchants ("lex mercatoria or law merchant,"), such that the trade developments of the twelfth century may be seen as the ancestors of contemporary commercial law (Schaffer, Agusti, & Earle, 2009, p. 118).

That the twelfth century law merchant represents a crucial point of understanding for appreciating the evolution of commercial law from the eighteenth century onward is evidenced by the fact that English commercial law was essentially born out of the codification and legitimization of the law merchant. It is important to note that the law merchant, though developed largely independent of local common law courts, did not represent an entirely separate legal system, but rather a relatively distinct set of laws governing mercantilism that were simply not as widely recognized or used as the common law (understandable, considering they concerned themselves with a specific portion of the population) (Rogers, 2004, p. 20). This distinction was further compounded by the fact that the law merchant, by nature, needed to deal with international law well outside the scope of common law courts, because it was intended to ensure efficient and trustworthy trade structures and strategies between international merchants, rather than domestic traders, whose disputes and contracts could more easily be handled by local courts. This divergence between the law merchant and the regular common law courts precipitated a kind of minor crisis in eighteenth century England, the conclusion of which would result in the birth of a truly modern commercial law.

By the middle of the eighteenth century, the differences between the law merchant and English common law were coming to a head, as the law merchant increasingly conformed to continental standards that differed in important ways from English law. Although there were a number of important distinctions, one particularly obvious one will serve to illustrate the problem. Because the law merchant evolved from a system of unwritten rules and standards created and enforced by merchants themselves, merchants were frequently bound by their word, and although written contracts existed, they were no more or less concrete than simple verbal agreements (Schaffer, Agusti, & Earle, p. 118). In contrast, English law held that individuals were only responsible for contracts recorded with a written signature, so disputes arose which could not be effectively resolved; English law requiring written signatures served to protect individuals from frivolous accusations and suits, but it resulted in practically unresolvable disputes that served to disrupt trade and discourage international cooperation. In response to this legal crisis, one notable English barrister and judge, Lord Mansfield, took it upon himself to reconcile English common law with the internationally-used law merchant, bringing the former up-to-date with the latter while attempting to ensure that the protections offered by English law were not lost. Mansfield "ruled that it was up to the English courts to say what the law merchant was and not merely what merchants thought it to be," and doing so was an attempt to inject into English law a number of legal concepts developed as part of the law merchant, such as the notion of good faith in contracts, or having a jury of peers determine the outcome of certain suits (in this case, a jury of merchants would rule on suits that dealt with both the law merchant and English common law) (Schaffer, Agusti, & Earle, 2009, p. 118).

In addition to the conflict between English common law and the law merchant, there were a number of other domestic and international conflicts in the eighteenth century that contributed to the evolution and modernization of commercial law. The Jacobite Rebellion in Scotland led to a number of important reforms, as the system of feudal ownership and inconsistent commercial regulations allowed Charles to raise funds and supplies both internationally and domestically, much to the surprise of the British Crown (Reid, Reinhard, & Zimmerman, 2000, p. 160). Although the 1707 Act of Union between England and Scotland "had provided that laws regulating trade, customs excises should be standardized," it was not until later in the century that this standardization actually began to occur, because the same conflict that existed between English common law and the international law merchant existed between Scotland and England; while England had developed its own legal culture largely apart from continental Europe (albeit sharing the same Roman influences), Scotland's legal system had largely evolved alongside the European one, which partially helps to explain Charles' success in coordinating his commercial and economic allegiances (Paisey & Paisey, 2004, p. 1041).

Perhaps the biggest distinction between Scottish and English commercial law in the eighteenth century was the concept of judicial precedent, which English law held in high esteem but which Scottish law largely disregarded in favor of principle (Paisey & Paisey, 2004, p. 1040). Like the distinction between the verbal agreements of the law merchant and the signature requirement of English common law, the attention to principle over precedent was the result of Scottish law's closer association with continental modes of legal thought. Over the course of the eighteenth, the English standard won out, although even then "English courts respected Scottish decisions" (Paisey & Paisey, 2004, p. 1043). Distinctions between Scottish and English law in the eighteenth century are an important topic in the evolution of commercial law, because they help to demonstrate the larger trend of unification and coordination that began with the emergence of the law merchant but which moved exponentially quicker over the course of latter centuries. The standardization of English and Scottish law, as well as the integration of English law with the law merchant, may be seen as the first stages of a truly general concept of commercial law that exists above and beyond any national system, because for perhaps the first time, lawmakers,… [END OF PREVIEW]

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