TRINITY COLLEGE DUBLIN

SCHOOL OF LAW

COMMERCIAL LAW

Semester Two 2016/2017

Professor Deirdre Ahern

INTRODUCTION TO COMMERCIAL LAW

Reading List No. 1

C. HISTORY AND NATURE OF COMMERCIAL LAW.

White, Chapters 1, 3
Forde, Chapter 1
Arden, Time for an English Commercial Code (1997) 56 CLJ 516

Commercial law can be defined narrowly or broadly, which contains many topics
including agency, distribution, the sales of goods and supply of services,
insurance law etc.

Discussion of the content of commercial law as the intersection of the law of

personal property with the law of contract.

RM Goode s definition of commercial law: that branch of law which is concerned

with contractual rights and duties arising from the supply of goods and services in
the way of trade.

It is not about the law of real property, but of personal property. Personal property
is seen as goods. Commentators find it difficult to define as it involves an
amalgam of laws regarding trade.

Not concerned with end user consumers, we are concerned with those involved
in the trade chain.

Commercial law is transaction based; is primarily focused on dealing with

merchants or professional business persons rather than consumers; centered on
contracts and the usages of the market; and lastly is concerned with large mass
transactions in which each participant is a regular player, so that transactions are
typical, repetitive and suitable for standardised treatment.

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It is used to facilitate trade rather than regulate it, illustrated by the Sale of Goods
Act 1893. A non-interventionist approach has been adopted by the Irish courts,
similar to the laissez-faire approach within contract law. It is assumed that the
parties, being businesses, meet on equal footing and this personal autonomy od
the companies is encouraged.

Tradax (Ireland) Ltd v Irish Grain Board Ltd [1984] OHiggins CJ

must be exercised with care. The Courts have no role in acting as
contract makers, or as counsellors, to advise or direct what agreement ought to
have been made by two people, whether business men or not, who choose to
enter contractual relations with each other at 14

D. SOURCES OF COMMERCIAL LAW

(i) International accords and uniform codes

(ii) Domestic legislation
(iii) European Directives and Regulations
(i) Case law
(ii) Trade custom and practice

E. THE HISTORICAL DEVELOPMENT OF COMMERCIAL LAW

(1) The Personal Property Paradigm

Commercial law as the law of personal property. Personal property is also

known as chattel property/movable property.
Honore defines ownership as the greatest possible interest in a thing wich a
mature system of law recognises.

(i) Choses in possession

a. Tangible items that are movable i.e. goods or money (a coin)
(ii) Choses in action (documentary and non-documentary intangible
property)
a. non-tangible such as a document of title to goods (a cheque)

(2) From Lex Mercatoria to Commercial Law

Tracing the roots of modern commercial law in the lex mercatoria Merchant
Law
This process developed as trade custom and practice that transcended national
boundaries. This continued to develop until the common law began to take hold
in England. Commercial law became consumed into Common Law, while on the
mainland it became a part of their civil codes.

Building the legislative framework of modern commercial law:

Joint Stock Companies Act 1844

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Limited Liability Act 1855
Bills of Exchange Act 1882
Bankruptcy Act 1883
Partnership Act 1890
Sale of Goods Act 1893
Marine Insurance Act 1906

Post-1922 legislative developments

Sale of Goods and Supply of Services Act 1980
The Electronic Commerce Act 2000
Arbitration Acts 1980 and 1998, Arbitration (International Commercial) Act 1998
Arbitration Act 2010

Harmonisation of rules of international trade

The International Chamber of Commerce
UNIDROIT (the International Institute for Unification of Private Law)
UNCITRAL (United Nations Commission on International Trade Law)

F. KEY PRINCIPLES UNDERLYING COMMERCIAL LAW

Philosophy underlying commercial law: [the law should] allow, so far as it can,
commercial men to do business the way they want to do it
per Lord Devlin in Kum v Wah Tat Bank Ltd [1971] 1 LL Rep 439, 444.

Professor Goode has identified eight principles which comprise the philosophy
underlying commercial law:
(1) Party autonomy
Respect for freedom of contract
Tradax (Ireland) Ltd v Irish Grain Board Ltd [1984] McCarthy J
held that It is not the function of the courts to write a contract
for parties who have met upon commercially equal terms; if
such parties want to enter unreasonable, unfair or even
disastrous contracts that is their business, not the business of
the courts.
Professor Schitthoff has stated The basis of commercial law is
the contractual principle of autonomy of the parties will. Subject
to the ultimate reservation of public policy, the parties are free to
arrange their affairs as they like.

(2) Predictability
need to be able to rely on the contact
Vallejo v Wheeler (1774) Lord Mansfield said In all mercantile
transactions the great object should be certainty: and therefore
it is of more consequence that a rule be certain, than whether
the rule is established one way or the other. Because
speculators in trade then know what ground to go upon.

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 (3) Flexibility
Has to be able to be applicable to new situations e.g.
technology
The most common means by which the courts give effect to
custom and usage is by implying a term in the contract. The
trade custom must be reasonable, consistent, and universally
recognised in the trade as a legally binding custom.

(4) Good faith

The subjective sense of acting honestly is a requirement before
certain rights can be exercised under different Acts and Bills.

(5) The encouragement of self-help

Courts expect you to put in enough due diligence to cover
yourself

(6) The facilitation of security interests

e.g. a mortgage

(7) The protection of vested rights

(8) The protection of innocent third parties.

X steals a car from Y, and sells to innocent Z two innocent
parties, the law must decide where the loss will fall.

The role of the law in commercial affairs: appreciating the concept of

mandatory rules and default rules and the appropriate balance in commercial
law - freedom of contract versus legal certainty and costs savings.

G. THE ROLE OF LAW IN BUSINESS LIFE

The role of the law in commercial affairs: appreciating the concept of mandatory
rules and default rules.

Default rules are rules that apply which would not have been contracted
otherwise. Dont need lawyers to help you create these rules.

The appropriate balance in commercial law - freedom of contract versus legal

certainty and costs savings.