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5-10 Law, Business & Government [CH 5

Law Merchant
Developing concurrently, with the establishment of common law and equity, a “law
of merchants” or as it came to be called law merchant. Law merchant developed
fair towns: A town
committed to fair trade in separately because merchants initially were not allowed access to the common law courts
their dealings. for the settlement of their disputes. Merchants were required to establish their business in
fair towns, and if any disputes arose, they were required to settle them in their own courts.
drafts The merchant courts developed an important body of law regulating the sales transactions
A form of checks used of merchants and the “commercial paper” (drafts and notes) by which they were financed.
among merchants.
Eventually the merchants were allowed to bring their cases and issues into law courts,
notes which did adopt and enforce the “law merchant,” maintaining its separate identity. The
Promissory notes to pay English Sale of Goods Act and the English Bills of Exchange Act and the American
debts. counterparts were derivatives of the law merchant. In the United States, the law merchant
evolved into the Uniform Commercial Code, of which in its most recent form states that

“unless displaced by the particular provisions of this Act, the principles of law and equity,
including the law merchant . . . shall supplement its provisions” (U.C.C. 1103).

Law in the United States and its several states.
So how does all of the previous apply to law in the United States? The United States
Constitution defines how the federal government is to function and the first 10 amendments
(Bill of Rights) specifically limit the scope of the federal government. The organic

document to the U.S. Constitution is the Declaration of Independence. These are the
foundation of U.S. Law, and our laws are derived from three major sources: Common Law,
Statutory law, and administrative law.
There has been a move away from the preeminence of federal and state constitutions
which leads to confusions. Benjamin Cardozo (1870-1938), appointed to the Supreme
Court in 1932, openly refused to be bound by any concept of transcendent laws or fixed

rights and wrongs: “If there is any law which is back of the sovereignty of the state, and
superior thereto, it is not law in such a sense as to concern the judge or lawyer, however,
much it concerns the statesman or the moralist.”
Cardozo also encouraged the court to eliminate the use of its foundational precedents.
He even condoned the prospect of the court departing from its traditional role and instead

assuming the function of lawmaker. As he explained, “I take judge-made law as one of the
existing realities of life.”
Cardozo’s point is that non-elected judges will make better laws than the peoples
elected representatives. This usurpation of power is anathema to our Declaration of
Independence, our Constitution and our states Constitutions.
Reflective of this same philosophy, Charles Evans Hughes (1862-1948), the Court’s

Chief Justice from 1930 to 1941, declared that “We are under a Constitution, but the
Constitution is what the judges say it is.” What Hughes is saying here is that a judge need
not adhere to the intent of the Constitution in its meaning and form; thus, a judge may say
that the Constitution may mean something that it does not state, which is contrary to
common law constitutional interpretation. Chief Justice John Marshall, in delivering the opinion of the
The body of law arising out
of judicial decisions related Supreme Court in Marbury v. Madison (1803) stated "It cannot be presumed that any
to the unwritten law the clause in the constitution is intended to be without effect; and therefore such
United States inherited from construction is inadmissible, unless the words require it."
England.
Common Law refers to the body of law arising out of judicial decisions. Common law
precedents has its roots in English Law, the Bible, and common sense, being referred to as the
Standards established by unwritten law which the United States inherited from England and those customs and court
judicial systems that later decisions of early England. These judicial decisions established precedents, or standards,
are used to help decide
similar cases. that later are used to help decide similar cases.
Statutory Law, is a written law that includes state and federal constitutions, local
statutory law legislative enactments, treaties of the federal government, city ordinances, and other local
Written law that includes
state and federal governments. Together the laws enacted by these various legislative bodies make up
constitutions, legislative statutory law. Statutes are written to pertain to business practices and can even address how
enactments, treaties of the large an advertising sign may be. Legislative bodies will pass laws regulating general and
federal government, and specific business practices, establish tax regulations for individuals and businesses alike.
ordinances of towns, cities, Zoning ordinances are an example of a city statute such as regulating that all liquor sales
and other local
governments. must be restricted to greater than 500 feet away from schools and churches.

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