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Private and Public in the Design of Commercial Law: Lessons from the History of Bills of Exchange

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The Future of the Commercial Contract in Scholarship and Law Reform
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Abstract

This chapter provides a historical perspective on the interaction between private and public actors in the area of commercial law, to identify lessons about an appropriate design of commercial law. Historically private actors generally have borne responsibility for creating rules to regulate their transactions whereas public actors often have supported and subsequently codified this private regulation. A central theme in this contribution is whether private actor solutions need public actor intervention to thrive. Although public actor intervention might not be necessary per se for clarity, predictability and the wide use of private actor solutions, that still leaves the possibility open that public actor intervention still might have those effects on private actor solutions. The history of bills of exchange is used to address these questions, because it provides a vivid interaction between private and public actors. It will be concluded that from a historical perspective, private actors appear to be pre-eminently suited to creating relevant legal rules, regardless of the level—local, regional, global—where these rules are used, provided a relatively efficient enforcement mechanism exists. Although it can be assumed that public actor intervention will generally create more legal certainty for a private actor solution, the actual effects of this legal certainty are very difficult to establish. Moreover, public actor intervention does not appear to be necessary per se for a wide use of clear and predictable private actor solutions.

I am particularly grateful to Anna Beckers and Nicole Kornet for the stimulating exchange of ideas about the appropriate design of commercial law when working together on our chapter Who does What in Commercial Law? The Case for a Multi-Level & Multi-Actor Approach to Regulating Commercial Transactions, Beckers (2015). For critical remarks on the history of bills of exchange in the Early Modern Period, I would like to thank Bram Van Hofstraeten.

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Notes

  1. 1.

    Whether or not the European Union is the right—public—actor is amongst others extensively discussed in literature on proportionality and subsidiarity. See for an overview, instead of many, Jansen and Rademacher (2012), pp. 299–313.

  2. 2.

    See e.g. Schwenzer (2012); the various contributions to Magnus (2012) and Kornet (2012). See also the contribution of Anagnostopoulou in this volume.

  3. 3.

    See e.g. Beckers et al. (2015).

  4. 4.

    For a normative framework taking the exchange of goods and services as starting point, see e.g. Beckers et al. (2015), pp. 131–145.

  5. 5.

    It is submitted that no lex mercatoria existed in the sense of ‘an autonomos system of legal rules applying to merchants throughout the civilized world, akin in status to civil or canon law’, or ‘a corpus of international rules accepted by merchants everywhere, and was for that reason part of the jus gentium or law of nations’, Baker (1999), p. 81. See for other rebuttals of such a lex mercatoria, i.a. Ewart (1903), Epstein (2004), Donahue (2004), Kadens (2004) and Kadens (2012).

  6. 6.

    See De Roover (1953), pp. 29–42; Spufford (1987), pp. 825–826; Rogers (1995), pp. 32–33.

  7. 7.

    See Rogers (1995), pp. 33–34; Goode and McKendrick (2010), pp. 516–517. See also Asser (1987), pp. 112–114.

  8. 8.

    Rogers (1995), p. 34.

  9. 9.

    Van der Wee (1977), pp. 328–332, 348–350. See also Rogers (1995), p. 94; Asser (1987), p. 122; De Ruysscher (2009b), pp. 265–277.

  10. 10.

    See e.g. Kadens (2004), pp. 57–58; Baker (1999), p. 85; Ewart (1903), p. 152; Asser (1987), pp. 116–122, 124–130.

  11. 11.

    See Gelderblom (2013), p. 138; Kadens (2004), pp. 51–54; Epstein (2004), pp. 16–20. For the high Middle Ages impartial legal enforcement is more problematic, see e.g. Greif (2004), pp. 116–119.

  12. 12.

    Gelderblom (2013), pp. 135–136.

  13. 13.

    Gelderblom (2013), p. 138.

  14. 14.

    Gelderblom (2013), p. 135.

  15. 15.

    Gelderblom (2013), p. 135; Asser (1987), p. 106.

  16. 16.

    See Lichtenauer (1956), pp. 87–88; Asser (1987), pp. 106–107; De Ruysscher (2009a), pp. 478–479. See also Van der Wee (1977), pp. 328–332, 335–336, 344.

  17. 17.

    On the fundamental problem of statistical identification in modern empirical economics, see Helland and Klick (2011), pp. 108–109. Compare also Olson (1982), pp. 137–140. On the problem of isolating factors that influence economic development, see Helland and Klick (2011), p. 100.

  18. 18.

    See De Ruysscher (2009b), p. 259.

  19. 19.

    Whereby particularly also non-legal sources need to be incorporated in such research, as legal sources only give a distorted, viz. legal, picture of actual commercial practice, see De Ruysscher (2009b), pp. 12–13, 245.

  20. 20.

    In 1937, the basis for a transaction cost theory was already laid down by Coase (1937). See briefly on the development and impact of neo-institutionalism and particularly the transaction cost theory, Screpanti and Zamagni (1993), pp. 384–388. For an overview of empirical studies addressing the costs of legal uncertainty, see Wagner (2005), pp. 31–32, 35–37. Most of these studies concentrate on explaining cross-country variations in growth due to difference in legal uncertainty within a country. See also Smits (2005), pp. 169–170.

  21. 21.

    See note 17.

  22. 22.

    Although there might be a relation between the amount of trade and the number of commercial legal disputes, such relation does not say anything about the actual popularity of a specific legal instrument, such as a bill of exchange, see De Ruysscher (2009b), p. 264.

  23. 23.

    See e.g. the large empirical study on trends and developments in Dutch private and administrative legal disputes between roughly 2002 and 2012, Diephuis et al. (2013).

  24. 24.

    See De Ruysscher (2009b), pp. 137–141.

  25. 25.

    Fundamentally De Ruysscher (2009a), see e.g. 464.

  26. 26.

    See Rogers (1995), pp. 44–68; Baker 1979, pp. 308–313.

  27. 27.

    Rogers (1995), pp. 12–20.

  28. 28.

    See Baker (1999), pp. 85–86; Rogers (1995), pp. 20–31.

  29. 29.

    See Baker (1999), p. 85; Gelderblom (2013), p. 138; Ewart (1903), p. 152.

  30. 30.

    See Rogers (1995), pp. 94, 194–195.

  31. 31.

    See Van der Wee (1977), pp. 328–332, 348–350; De Ruysscher (2009b), pp. 265–277.

  32. 32.

    See Rogers (1995), pp. 177–186; Dylag (2010), pp. 158–165.

  33. 33.

    See Rogers (1995), pp. 186–188; Dylag (2010), pp. 165–174.

  34. 34.

    Dylag (2010), pp. 168–174.

  35. 35.

    E.g. Flume (2014), pp. 53–56; Klomp (1998), pp. 13–24.

  36. 36.

    Flume (2014), pp. 56–59.

  37. 37.

    E.g. Flume (2014), pp. 50–51, 56–57; Rückert (1993), pp. 24–25.

  38. 38.

    E.g. Gelderblom (2013), pp. 133–139; Flume (2014), pp. 49–50; Klomp (1998), pp. 94–97.

  39. 39.

    See Van Hofstraeten (2015).

  40. 40.

    Flume (2014), pp. 53–54, 59–60. With the German Bürgerliches Gesetzbuch of 1900 a general law of contract was introduced, and the Handelsgesetzbuch of 1896 had thus regained more a specific commercial character than its predecessor, the Allgemeines Deutsches Handelsgesetzbuch. Indeed, merchants or entrepreneurs again became identified as such by the HGB, see Flume (2014), pp. 65–67. On the problematic side of this distinction between businesses and consumers in contemporary European contract law, see recently Maren Heidemann (2016), pp. 667–668.

  41. 41.

    E.g. Bergfeld (1987), pp. 101–103; Kanning (2003), p. 61.

  42. 42.

    On the introduction and different structures of a.o. the Code de commerce, the Allgemeines Deutsches Handelsgesetzbuch, and the Sale of Goods Act 1893, see Flume (2014), pp. 43–83.

  43. 43.

    Chaptal M, ministre de l’intérieur (4 December 1801), in: Locré (1837), p. 2: ‘Il vous [les commissaires-rédacteurs] était réservé de donner à la France une législation uniforme; mais, jusqu’aujourd’hui, l’ensemble des lois françaises n’a présenté qu’un chaos qui se compose de coutumes locales, dont la plupart sont contraires entre elles, et de réglemens qui, presque tous, ont été déterminés par l’empire des circonstances.’

  44. 44.

    Although introduction of the Allgemeines Deutsches Handelsgesetzbuch (ADHGB) also had the more general and political goal of unifying German law, see Bergfeld (1987), pp. 101–103, 105. See also Wieacker (1974), p. 90.

  45. 45.

    Chalmers (1981), p. viii: ‘Legislation, too, is cheaper than litigation. Moreover, in mercantile matters, the certainty of the rule is often of more importance than the substance of the rule.’

  46. 46.

    See e.g. North (1991), p. 97; Greif (2004), pp. 109–110.

  47. 47.

    For instance, via the French translation book of Johannes Phoonsen (1631–1702) on the customary exchange law and practice of Amsterdam. See Asser (1987), p. 107; Gelderblom (2013), pp. 138–139.

  48. 48.

    See fundamentally De Ruysscher (2011).

  49. 49.

    See e.g. Asser (1880), p. 2; Baker (1999), p. 85; Ewart (1903), p. 152; Asser (1987), pp. 116–122, 124–130.

  50. 50.

    See e.g. Wallert (1996), p. 162; Schmoeckel (2008), p. 100.

  51. 51.

    See e.g. Wallert (1996), pp. 129–145.

  52. 52.

    Before the Allgemeine Deutsche Wechselordnung of 1869/71, numerous local laws on bills existed, more than fifty in 1847, Brox (2005), pp. 228–229. See extensively on the introduction of the Wechselordnung, Kuntze (1862) and Von Pannwitz (1999).

  53. 53.

    See e.g. Asser (1880).

  54. 54.

    Although it had already a predecessor in the Bills of Exchange Act 1704, see Goode and McKendrick (2010), p. 521.

  55. 55.

    See e.g. Meyer (1909) and Wallert (1996), pp. 137–138, 144; Asser (1880), pp. 5–9.

  56. 56.

    See 2.2 From Private Usage to Early Modern Public Intervention.

  57. 57.

    See e.g. Wallert (1996), pp. 123–204.

  58. 58.

    See e.g. for England: Deane (1973), pp. 209–216; Deane and Cole (1969), pp. 238–241; Aldcroft (1992), pp. 66–69; Mathias (1983), pp. 261–262; for Germany: Hoffmann (1963), pp. 104–105; Pierenkemper and Tilly (2004), pp. 58–68, 76–80; Henderson (1975), p. 51; for France: Labrousse (1954), p. 9; Price (1981), pp. 20–26, 27–37, 109–119; Bouvier (1997), pp. 652, 668–669.

  59. 59.

    Detailed Tipton (1976), pp. 17–80; more in general Zorn (1963, 1973, 1978).

  60. 60.

    See for instance Henderson (1975), pp. 31–43; Pierenkemper and Tilly (2004), pp. 34–36.

  61. 61.

    In 1831 the first (industrial) railroad was built, near Essen, and stretched just over 7 km. By 1900 the German territories were connected by 51,000 km of railroad. See Pierenkemper and Tilly (2004), pp. 58–68, 76–80; Kanning (2003), pp. 70–76.

  62. 62.

    Dumke (1977), p. 479.

  63. 63.

    See Tipton (1976), pp. 39–80; Zorn (1963), pp. 328–330.

  64. 64.

    See Tipton (1976), pp. 39–80; Zorn (1963), pp. 328–330.

  65. 65.

    Zorn (1973), pp. 329–330.

  66. 66.

    See for instance Pierenkemper and Tilly (2004), pp. 34–36; Henderson (1975), pp. 31–43.

  67. 67.

    See e.g. the overview in Flume (2014), pp. 56, 64–65. On the recent reform of the Code civil and its impact on commercial law, see e.g. the contribution of Pédamon in this volume.

  68. 68.

    See e.g. Screpanti and Zamagni (1993), pp. 25–27, 42–43.

  69. 69.

    See e.g. Deane and Cole (1969), p. 47; Wintle (2000), pp. 147–150; Van Zanden and Van Riel (2004), pp. 183–187; Bairoch (1989), pp. 36–45.

  70. 70.

    The Hague Conference has currently 82 Members: 81 States and the EU, see https://www.hcch.net/en/instruments/conventions/status-table/?cid=29. The activities of the Hague Conference are also extended to e.g. family law and the law of succession. See Schmitthoff (1981), pp. 26–27.

  71. 71.

    Currently the Gafta has over 1650 members in 94 countries, including traders, brokers, superintendents, analysts, fumigators, arbitrators, individuals, professionals and branches of members, see http://www.gafta.com/Membership.

  72. 72.

    The ILA’s membership, presently around 4000, ranges from lawyers in private practice, academia, government and the judiciary, to non-lawyer experts from commercial, industrial and financial spheres, and representatives of bodies such as shipping and arbitration organisations and chambers of commerce, see http://www.ila-hq.org/index.php/about-us/aboutus2.

  73. 73.

    In 2011 the IMC (or CMI) members were 56 National Maritime Law Associations, with memberships ranging from 10 to 3600. See http://comitemaritime.org/Relationship-with-UN-organisations/0,27114,111432,00.html. Schmitthoff (1981), pp. 26–29.

  74. 74.

    See e.g. Wallert (1996), pp. 165–166; Goode and McKendrick (2010), p. 1353.

  75. 75.

    Fundamentally on the economics of World War I, Broadberry, Harrison (2005). On the influence of World War I on private law, see Lobban and Van Boom (2014), and specifically on the World War I’s influence on unforeseen circumstances, see Oosterhuis (2014).

  76. 76.

    The Hague Visby Rules (1924), have as their premise that a carrier has greater bargaining power than the shipper, and that to protect the interests of the shipper/cargo-owner, the law should at least impose a set of minimum obligations upon the carrier. See e.g. Goode and McKendrick (2010), p. 1144.

  77. 77.

    See http://comitemaritime.org/Uploads/Publications/CMI_YBK_Part_III.pdf.

  78. 78.

    See e.g. Wallert (1996), pp. 166–169; Schmitthoff (1981), pp. 24–26. In 1936 eighteen states had ratified or acceded the convention. See https://treaties.un.org/pages/LONViewDetails.aspx?src=LON&id=551&chapter=30&clang=_en.

  79. 79.

    See Schmoeckel (2008), p. 100.

  80. 80.

    See Goode and McKendrick (2010), p. 521.

  81. 81.

    The ICC currently has over 6.5 million members in more than 130 countries. See https://iccwbo.org/about-us/who-we-are/.

  82. 82.

    Currently 63 States are members of UNIDROIT, see http://www.unidroit.org/about-unidroit/membership.

  83. 83.

    See http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG_status.html. See also e.g. Schmitthoff (1981), pp. 24–26; Hartkamp (2011), pp. 240–241.

  84. 84.

    See https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XI-D-3&chapter=11&lang=en; https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XI-E-1&chapter=11&clang=_en. The Hague Visby Rules and the Hamburg Rules are eventually to be replaced by the Rotterdam Rules (2009, not yet in force).

  85. 85.

    See II. Explanatory Note by the UNCITRAL Secretariat on the United Nations Convention on International Bills of Exchange and International Promissory Notes, p. 42 (<http://www.unc itral.org/pdf/english/texts/payments/billsnotes/Bills_of_Exchange_expl_Note.pdf>). See also e.g. Goode and McKendrick (2010), p. 521; Schmitthoff (1981), p. 25; Schoordijk (1989).

  86. 86.

    See http://www.uncitral.org/uncitral/en/uncitral_texts/payments/1988Convention_bills_status.html.

  87. 87.

    See Schmitthoff (1981), p. 31. See also Goode and McKendrick (2010), p. 1354.

  88. 88.

    See http://www.iata.org/about/Pages/index.aspx.

  89. 89.

    See e.g. Cordes (2016), pp. 468–470.

  90. 90.

    See e.g. the contribution of Andhov in this volume.

  91. 91.

    See e.g. the contribution of Andhov in this volume.

  92. 92.

    Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law (COM/2011/0635 final) (2011) (CESL), Explanatory Memorandum, 2–4: ‘In cross-border transactions between a business and a consumer, contract law related transaction costs and legal obstacles stemming from differences between different national mandatory consumer protection rules have a significant impact. (…) The value of the trade foregone each year between Member States due to differences in contract law alone amounts to tens of billions of Euros. (…) The overall objective of the proposal is to improve the establishment and the functioning of the internal market by facilitating the expansion of cross-border trade for business and crossborder purchases for consumers. This objective can be achieved by making available a selfstanding uniform set of contract law rules including provisions to protect consumers, the Common European Sales Law, which is to be considered as a second contract law regime within the national law of each Member State.’ [italics JO].

  93. 93.

    See e.g. Bull (2016), pp. 105–113.

  94. 94.

    See e.g. Kornet (2012) and the contribution of Anagnostopoulou in this volume.

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Oosterhuis, J. (2018). Private and Public in the Design of Commercial Law: Lessons from the History of Bills of Exchange. In: Heidemann, M., Lee, J. (eds) The Future of the Commercial Contract in Scholarship and Law Reform. Springer, Cham. https://doi.org/10.1007/978-3-319-95969-6_14

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