Economics Dictionary of ArgumentsHome
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| Law merchant: The Law Merchant (lex mercatoria) was a set of commercial laws and customs used by merchants in medieval Europe. It developed independently of national laws to facilitate trade across regions. Over time, it influenced modern commercial law, promoting standards like contracts, negotiable instruments, and dispute resolution in international commerce. See also Law, Legislation, Rule of law._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Guido E. Tabellini on Law Merchant - Dictionary of Arguments
Mokyr I 24 Law merchant/Mokyr/Tabellini: (…) European corporations relied on external enforcement and formal procedures to sustain their contractual arrangements. This created a social demand for wellfunctioning legal institutions. The evolution of the “law merchant” or lex mercatoria, that accompanied the commercial revolution and the associated proliferation of private corporate structures, is a manifestation of this phenomenon. The law merchant evolved as a system of principles and procedures, developed by the community of merchants throughout Western Europe. >Corporations. Somewhat like the English common law, it evolved bottom up as a system of best practices, enforced through a system of merchant courts. The law merchant was said to reconcile widely different local customs, and minimize conflict and frictions between merchants transacting at arm’s length – although this standardization has recently been questioned by Donahue (2004)(1) and Kadens (2015)(2). Often the principles embodied in the law merchant, such as the principles of reciprocity of rights and of good faith, had appeared first in private agreements, and were then defined more precisely in the law merchant, acquiring a more universal nature. Adjudication was decided by courts of merchants, local officials and jurists. Since judges in these courts had few enforcement powers, the main sanction for refusal to comply with the court decision was reputational damage and expulsion from the community of traders (Milgrom, North and Weingast, 1990)(3). Thanks to its customary origin and close links to actual commercial practice, the law merchant introduced several legal innovations that gave additional impetus to the growth of corporations, bringing about a more precise definition of property rights and corporate organizations. The codification of bankruptcy procedures and the development of various financial instruments are some of the prime examples of such innovations. >Bankruptcy. Merchant law also gave a precise form to new corporate structures, such as the commenda, a kind of joint venture between a traveling merchant and a sedentary financier. The commenda was used to execute long distance trade; each investor was liable only for the amount invested, and profits were shared between the investor and the travelling trader (Berman 1983(4); Harris, 2020(5)). Cf. >Chinese history/Mokyr/Tabellini. 1. Donahue, Charles Jr. 2004-2005. “Medieval and Early Modern Lex Mercatoria: An Attempt at the Probatio Diabolica.” Chicago Journal of International Law, Vol. 5, pp. 21-38. 2. Kadens, Emily. 2015. “The Medieval Law Merchant: The Tyranny of a Construct.” Journal of Legal Analysis, Vol. 7 No. 2, pp. 251–289. 3. Milgrom, Paul R., Douglass C. North, and Barry R. Weingast. 1990. The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs. Economics and Politics, Vol. 2, pp. 1–23. 4. Berman, Harold J. 1983. Law and Revolution – The Formation of the Western Legal Tradition. Cambridge, MA: Harvard University Press. 5. Harris, Ron. 2020. Going the Distance: Eurasian Trade and the Rise of the Business Corporation. Princeton: Princeton University Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconTabell I Guido Tabellini Torsten Persson The size and scope of government: Comparative politics with rational politicians 1999 Mokyr I Joel Mokyr Guido Tabellini Social Organizations and Political Institutions: Why China and Europe Diverged CESifo Working Paper No. 10405 Munich May 2023 |
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