Chapters 8–12 discussed distinctive civil law institutions mostly associated with codified civil and commercial law. This chapter introduces distinctive legal institutions instrumental in the development of the law of commercial contracts in England. Some of the institutions introduced by this chapter are discussed in comparative detail in Chapters 22–24, devoted to the formation and interpretation of commercial contracts and to the drafting of commercial and financial practices. Accordingly, Chapter 22 will answer questions such as: Why are the rules on commercial contract formation different in the Code Civil, BGB and the U.C.C? Or, why are “firm” promises, offers or options to sell or purchase within a specified or reasonable period of time unenforceable under the Code Civil and its progeny?
At the root of the above comparison lies the question: What is a commercial contract? Additionally, can a promise to give or do something in the future remain binding on the promisor for a specified or reasonable time even though the promisee did not accept the promise during that time? This is a critical question for commercial promises everywhere because their performance is often deferred to a future time during which the promisor remains bound. Think, for example, of the manner in which present day buyers of stocks and bonds typically issue their terse buy orders in developed financial marketplaces: “Buy X stock at Y price, order valid until 4 pm of Z date.” If this purchase order could be revoked at any time prior to the broker’s or seller’s acceptance, could such an expeditious method of buying securities be viable?
The determination of what is a contract is also critical for the interpretation of commercial promises because if there is no valid contract, there is nothing to interpret and even less to transform into a standard practice. Finally, the question and determination of the validity of executory promises is critical because a code as influential as the Code Civil regards them as revocable “pollicitations.”1 It is for these reasons that this introductory chapter examines the development of enforceable executory promises in English law (including unconditional promises to pay a sum certain) during the seventeenth and eighteenth centuries, the seminal years of England’s world-leading commercialization.
Similarly, Chapter 21 will examine the development of United States legal institutions derived at times directly, at other times indirectly and at times not at all from their English predecessor.
As described by an English legal historian, England’s beginnings as a commercial and trading nation were humble:
During the period of history known as the Middle Ages, the industrial attainments of the English were far below the level of their continental rivals, France, Germany, Italy, Spain and the Low Countries…. As late as the sixteenth century the type of English society was mainly that of a pastoral and mining community, exchanging its undressed cloth, wool, hides, tin and lead for the manufactures of the continent and the produce of the East.2
Nonetheless, by the middle of the eighteenth century, Britain, in large measure thanks to its tradesmen, became a major commercial power, and shortly thereafter thanks to its inventors, entrepreneurs and financiers, it became the world’s leading industrial nation.3 Because our concern in this chapter is with England’s commercial pre-eminence our focus will be on its trade and tradesmen.
Daniel Defoe, a popular eighteenth-century English journalist and novelist, (best known for his 1719 novel The Life and Adventures of Robinson Crusoe)4 had only praise for his fellow English tradesmen:
It is said of England … [that] we all value ourselves … [as] a trading country; and King Charles II., who was perhaps that prince of all the kings that ever reigned in England, that best understood the country … used to say, ‘That the tradesmen were the only gentry in England.’5
To which he added his own assessment:
We are the greatest trading country in the world, because we have the greatest exportation of the growth and product of our land, and of the manufacture and labour of our people; and the greatest importation and consumption of the growth, product, and manufactures of other countries from abroad, of any nation in the world. [Why?]
…
First, our tradesmen are not, as in other countries, the meanest of our people.
Secondly, some of the greatest and best, and most flourishing families, among not the gentry only, but even the nobility, have been raised from trade, owe their beginning, their wealth, and their estates, to trade; and, I may add,
Thirdly, those families are not at all ashamed of their original, and, indeed, have no occasion to be ashamed of it.6
Yet, by tradesmen Defoe did not necessarily mean Braudel’s street merchants, shopkeepers or peddlers,7 or Shakespeare’s Shylock (a commonly held view of the moneylender-usurer throughout post Renaissance Europe). The tradesman praised by Defoe was primarily the English international trader:
By trade we must … include navigation, and foreign discoveries, because they are, generally speaking, all promoted and carried on by trade, and even by tradesmen….
…
Have not the trade and tradesmen born the burden of the war?—and do they not still pay four millions a-year interest for the public debts? … Is not trade the inexhausted fund of all funds, and upon which all the rest depend?8
However, the term tradesman had different meanings throughout Great Britain. For example, in the north of Britain and in Ireland:
[W]hen you say a tradesman, you are understood to mean a mechanic, such as a smith, a carpenter, a shoemaker, and the like, such as here we call a handicraftsman….
But in England, and especially in London, and the south parts of Britain, we take in another sense … all sorts of warehouse-keepers, shopkeepers, whether wholesale dealers or retailers of goods, are called tradesmen, or … trading men … our grocers, mercers, linen and woollen drapers, Blackwell-hall factors, tobacconists, haberdashers … glovers, hosiers, milliners, booksellers … and all other shopkeepers, who do not actually work upon, make, or manufacture, the goods they sell.
On the other hand, those who make the goods they sell, though they do keep shops to sell them, are not called tradesmen, but handicrafts [men]….9
Please recall that the division of labor between the makers of goods and their financiers and merchandisers resulted from the breakdown of the guild system and its eventual replacement by capitalism.10 Thus, the amalgamation of craftsmen and shopkeepers under the category of tradesmen did much to commercialize the former English guild system. As obligatory apprenticeships, fixed prices and compensation schemes, and uniform standards of quality withered away, it became very difficult to distinguish a tradesman from a businessman. This was true even though England has 752had a deeply ingrained class system in which gentlemen in Daniel Defoe’s days felt entitled to converse with their peers undisturbed by the participation of inferior class tradesmen. Thus, Defoe recalls a “smart, but just repartee, [between] a London tradesman [and] a gentleman”11 in which:
[A] gentleman, who had a good estate too, rudely reproached him [the London tradesman] in company, and bade him hold his tongue, for he was no gentleman. ‘No, Sir,’ says he, ’but I can buy a gentleman, and therefore I claim a liberty to speak among gentlemen.12
I remind the reader that this classist attitude still esteems international tradesmen. Further it did not translate into a widespread rejection of merchants by other classes and especially those of lesser wealth, as was the case in France and Spain during the same period.13 As was discussed in earlier chapters,14 the disdain for merchants as a class was present in Napoleon Bonaparte’s reference to England as a “nation of shopkeepers” (“L’Angleterre est une nation de boutiquiers”).
The English commercial revolution was vitally nourished by the intercontinental trade that followed Spain’s, Portugal’s and England’s voyages of exploration to the Americas and the East Indies. Hundreds of explorers were followed by thousands of traders and colonizers and in short order, their trade was institutionalized with chartered, monopolistic and mercantilistic trading companies such as England’s company of Merchant Adventurers15 and the East India Company.16
Trade was also supported by the Bank of England, which was chartered in 1694 and capitalized by a loan of £1,200,000 to the English Government, in return for which the subscribers would be incorporated as the “Governor and Company of the Bank of England.”17 During the Bank’s early years, the Government continued to rely on it as a financier and issuer of new coinage,18 but it also became engaged in “conventional banking business, [by] accepting deposits and discounting bills [of exchange].”19 The latter became a particularly important source of commercial credit as were the Bank’s notes whose unconditional “promises to pay” were widely relied upon.
The ease with which tradesmen could engage in commercial transactions was both a cause and a reflection of how widespread commercialization had become in England. Accordingly, Wyndham Beawes’s 1773 commercial manual Lex Mercatoria Rediviva20 did not list the bureaucratic hurdles that merchants had to be prepared to overcome, 753but instead the skills that were expected of him and what he was supposed to know about his trade: (1) To write properly and correctly; (2) All the rules of arithmetic with any affinity or relation to commerce; (3) To keep books of double and single entry; (4) To be expert in the order and forms of invoices, accounts of sales, policies of insurance, charter parties, bills of lading and bills of exchange; and (5) To know the agreement between the monies, weights and measures of all parts.21
Noticeably absent in that list were the elements of contracts typified as commercial or as “acts of commerce” in the Code de Commerce and its progeny.22 In fact, when Beawes discusses the formality of commercial contracts, he tersely informs his readers (as heterogeneous a group of tradesmen as those in Defoe’s lists) that in England “A Contract for [the Sale of] Goods may be made … by Word of Mouth.”23 This informal and undifferentiated approach to contracts sharply contrasted, as you will recall, with the French civil and commercial codes’ distinction between civil and commercial transactions. Although the latter listed “acts of commerce,” the French codes often required a judicial determination of whether a given transaction was “civil” or not-for-profit and thus governed by the Code Civil, or commercial and governed by the Code de Commerce.24
Despite the reservations that positivistic-minded legislators, judges and legal commentators have with the ethical components of commercial practices,25 the undeniable fact is that the viability of these practices, especially when they involve strangers, depends upon trust. And trust can only come about when one party’s conduct is morally acceptable to the other. Ethical commercial standards, then, are essential to the trustworthiness of a counterparty or proffered contract. But ethical standards must reflect their commercial context and thus must be realistic enough to assume the for-profit motivation of the parties.
The application of a commercially unrealistic ethical standard was present in the Red Ink case decision discussed in Chapter 9.26 It involved, as I am sure many of you will recall, a young French lover’s promise of payment for a prostitute’s sexual favors as signified in a bill of exchange. Perhaps due to the high passion of the moment, the young lover signed the bill with his own blood. As the passion subsided, however, he 754reneged on his promise, and when sued by his payee, he alleged the illegality of the act that caused his promise.
Speaking for a commercial court, Judge Bedos decided that regardless of the legality of the underlying transaction, a court such as his, which was concerned with encouraging virtuous conduct, was required to apply a higher standard of morality such as found in the Christian duty of love and compassion for a needy prostitute; accordingly, he ordered the signer to marry the payee of the bill.27 It is not difficult to see why, realistically, such an ethical standard could not be applied to the payment of everyday bills of exchange in satisfaction of their underlying commercial transactions.
In Chapter 27 of The Complete English Tradesman, Defoe attempted to provide a more realistic and commercially-based analysis of a tradesman’s honest promises.28 In his own business dealings, Defoe had encountered outright dishonesty and chicanery as well as borderline unethical conduct. The governing principle of an honest commercial promise was:
Trade cannot make a knave of an honest man, for there is a specific difference between honesty and knavery which can never be altered by trade….
[Yet] … there are some latitudes, like poetical licenses … which by the custom and usage of trade he may … take some liberties, but within bounds….29
One of these poetic (commercial) licenses was a tradesman’s “liberty to ask more than he will take.” Defoe opined that despite a seller’s representations to his potential buyer that his asking price was the final one, he should be forgiven for such a sales tactic. Not only was it a standard practice among sellers, but this practice was usually matched by the buyers’ similar misrepresentations of the funds they had available for their purchases.
Another such a license applied to the debtors’ assurances of immediate payment when in fact payments could not be made until a later time or not at all. Defoe attributed the predicament of these otherwise honest debtors to a credit market in which payments owed by buyers to sellers or by borrowers to lenders were part of a supply chain. Hence, once a buyer or borrower in the initial links of the chain defaulted, it was likely that subsequent creditors, despite the honesty of their own promises of payment, could not pay their own debts in time.
Defoe’s concern with the honesty and morality of a tradesman’s promise was also an important trait of his “Complete Tradesman” because it reflected an awareness of what makes a commercial practice trustworthy and thus viable. Chapters 22 and 23 of this book share the same concern and explore the commercial meaning of good faith and its components of honesty, reasonableness and fairness.
Starting in the early fifteenth century, England’s international trade was increasingly monopolistic and mercantilistic. The first group of merchants to engage in royally chartered and protected trade was the Company of the Merchant Adventurers, who, starting in the fifteenth century, exported English finished cloth to the Netherlands and Germany.30 By the middle of the sixteenth century, three-fourths of English foreign trade was controlled by London officers of this company who also served as financiers and advisers to the Tudor monarchs.31 By 1564, however, they lost an important market in the Spanish Netherlands, and a century later they also lost their monopolistic trading privileges.32 Still, the Merchant Adventurers started England’s own pattern of monopolistic, royally-protected international trade.
This pattern continued during the seventeenth century with the founding of the British East Indies Company. Its 1602 Royal Charter empowered it to trade as Britain’s surrogate in the East Indies.33 Roughly a century and a half later, England was a full competitor with Spain’s and Portugal’s monopolies and had become a major importer and exporter (in an original or transformed state) of cotton, silk, indigo and salpetre from South India and tea from China. In the case of imported Chinese tea, England soon found itself paying for it with opium, and embroiled in the opium wars with China that lasted until late into the nineteenth century.34
This modus operandi closely resembled those of Britain’s European competitors—monopolistic, mercantilistic and often militaristic. Unlike its European competitors, however, English tradesmen evidenced a greater ability to take advantage of changing economic and political circumstances, especially through their colonial correspondents.
Professor C. Knick Harley of Western University of Canada wrote an insightful chapter on England’s eighteenth-century trade and mercantilistic practices for Cambridge University’s “Economic History of Modern Britain.”35 It shows that European traders imported large quantities of eastern goods, but did not develop a corresponding eastward flow of European goods.36 Their trade was largely paid with the gold and silver mined in the Americas. As bullion or as coin, these metals repaid Spain’s loans from Western European bankers and subsequently these bankers and many English tradesmen used it to pay for their imports from Asia.
In addition, two American crops—sugar and tobacco—played in Harley’s words:
[A] greater role in British (and European) trade than did all trade to the east…. Before Columbus’ voyages, sugar was expensive—a spice or medicine 756of the well-to-do as…. Tobacco … [meanwhile], was [unique and] the Americas’ other great export staple.37
It was apparent that the English and the merchants doing business in the American colonies had much in common and much at stake in their cooperation. The principal areas of cooperation were: (1) The American colonies acting as key importers of Britain’s goods and services;38 (2) The British merchants and their colonial counterparts acting as commission and del credere agents for each other,39 largely supported by cheap commercial and consumer credit available with English bankers and factors; and (3) Their mutual reliance on slavery to radically lower the costs of producing cotton, sugar and tobacco and to generate unprecedented profits that provided much of the investment and credit capital to both British and colonial entrepreneurs.40
In sum, as a result of Britain’s central role in this European, Asian and American multilateral trade system, its trade policies were dualistic: Outside its colonial boundaries, England’s policies were mercantilistic and at times militaristic. Inside these boundaries, through the medium of colonial tradesmen, mercantilistic laws such as the British Navigation Acts41 did not prevent the re-export or the import of goods to and from its competitors. Hence, Britain relied on a freer trade system with and through its colonies than did Spain.42
A 1965 study by Professor William Roberts, III of Pennsylvania State University examined the Trans-Atlantic business practices of the London House of Samuel Storke, one of the largest English mercantile houses in eighteenth century colonial trade.43 Storke was born in Hampshire, England late in the seventeenth century to a family of clothiers with close relatives in North America.44 His father, John Storke, Sr. was a cousin to Judge Samuel Sewall of Boston, Massachusetts. The judge inherited property in England and Storke Sr. helped him collect its rental income for many years. In exchange, Samuel Storke spent two years in Boston with his relatives and upon his return to England set up his own trading company.45
Prior to Samuel Storke’s return, Storke, Sr. had sent occasional “ventures” or consignments of cloth to Judge Sewall or to his son-in-law in New England for them to help sell and share in the commissions.46 The Sewalls reciprocated by channeling colonial purchase orders of English consumer and commercial goods to Storke.47 From this familial transactional nucleus grew one of the most important trade relationships during England’s colonial days in America.
At first, Samuel Storke procured goods in England for his colonial clients and charged a purchase agent’s commission. The goods were as varied as hardware, glass, china, tea, spices and textiles including English woolens, silks, linens and cottons.48 When buying goods on commission for his colonial clients, Storke “seldom had to advance credit to his correspondents…. [and did not buy the goods] until he had cash in hand or bills of exchange from them.”49 Conversely, when Storke sold goods on commission to his colonial clients, he made only “the smallest outlay of capital” to pay for transportation and storage costs as well as for customs duties.50
The commission business, then, required only small outlays of capital, mostly to pay for the cost of transport and storage of the goods on the English side. As his commission business grew, he also procured maritime insurance policies for his colonial clients which earned him a brokerage fee.51 Because commercial credit was plentiful in eighteenth-century England,52 Storke could obtain three to six months credit when purchasing goods for his colonial customers.53 And even though bad debts were a chronic problem in colonial trade, he did not experience it to a significant degree; apparently his network of traders was sufficiently solvent and trustworthy to render defaults rare. 54
Storke’s profits from his sales and consignments to New England and New York were considerable. According to Professor Roberts, European goods destined for the North American retail trade yielded “as much as 500–600 per cent over prime cost, depending on exchange differentials … [they earned] proportionately less in the wholesale business.”55 Unlike his commission business, however, many of Storke’s consignments required entrustment, especially because some consignments were unsolicited.56 The consignee, in turn, either expressly or tacitly promised to use his 758best efforts in selling the consigned goods. Nevertheless, in some instances, Storke instructed his consignee to sell only for a fixed price.57
The central role of executory promises was apparent in Storke’s colonial correspondence and records of transactions. They contain numerous references to consignments in which he had made goods available “on account” often by advancing part of the purchase price to his consignees.58 In fact, in many instances, Storke seemed willing to entrust his consignees or joint venturers with the proceeds of the sale of consigned goods to be used as investments in joint ventures or partnerships with his colonial counterparts. According to Professor Roberts, “Storke seldom ordered the proceeds of his consignments to be returned to him in London. He generally used them for long range investments or speculation [in his colonial businesses].”59
Significant entrustment also took place in his many joint ventures to build, outfit and ship trans-Atlantic cargo.60 These joint ventures often resulted in intricate webs of cooperation between the English and the colonial tradesmen. By relying on the latter’s international trade connections, English traders gained access to certain markets dominated by their European competitors. Conversely, some highly popular items in colonial markets that were shipped out of Hamburg or Amsterdam could be obtained in those ports more quickly and cheaply through Storke’s contacts.61 And as joint ventures proliferated, a closer cooperation developed between the English and the colonials by a cross participation in their respective decision making processes. As described by Professor Roberts:
Storke’s relationships with his colonial correspondents exhibit a high order of cooperation and interaction in matters of entrepreneurial initiative, credit, and investment…. 62
Most of the credit Storke extended in the colonial trade resulted not from an inescapable tendency of American merchants to fall behind in paying for English manufactured goods, but from Storke’s own initiative in sending consignments to his colonial correspondents.63
The highly cooperative and entrusting method of doing business between Samuel Storke and many of his North American consignees, commission agents and joint venturers was certainly facilitated by the quasi-familiar nature of their relationships. Two byproducts of this quasi-familiar trade were: First, the fixed prices of some of the most desirable goods or products as often requested by English consignors.64 English tradesmen could trust their colonial counterparts to keep the prices of their consigned 759goods—especially those that were in high demand in the colonies—at the level the consignors requested and this made their profitability more predictable. It should also be kept in mind that a market in which consignors and consignees or buyers and sellers are located at long distances from each other (and one in which mail delivery is often tardy) does not lend itself to haggling, which, as many of us have experienced, is usually a face-to-face endeavor.
Markets whose prices were fixed did away with the need for “poetic licenses” and with the haggling described by Daniel Defoe as typical of the early-eighteenth-century English trade.65 Indeed, the anonymous annotator of the 1726 edition of The Complete English Tradesman added in a footnote to Defoe’s description of the haggling practices of his time: “The practice of haggling about prices is now very properly abandoned by all respectable dealers in goods, greatly to the comfort of both sellers and buyers.”66 Last, but not least, fixed prices added honesty, fairness and reliability to seller or consignors’ price quotations, for they enabled wholesalers to defend themselves against the accusation of price-discrimination or of unequal and uncompetitive pricing.
The second beneficial byproduct of the colonial trade was the standardization of weights and measures throughout the British Empire. In an 1821 Report to the United States Congress, President John Quincy Adams referred to the importance of weights and measures as follows:
Weights and measures may be ranked among the necessaries of life to every individual of human society. They enter into the economical arrangements and daily concerns of every family. They are necessary to every occupation of human industry; to the distribution and security of every species of property; to every transaction of trade and commerce….67
By the eighteenth century, England had achieved a greater degree of standardization of its weights and measures than all its European competitors. The National Aeronautics and Space Administration (NASA), whose calculations depend upon the accuracy of units of weights and measures, eulogized the English units as:
[W]ell suited to commerce and trade because they had been developed and refined to meet commercial needs. Through English colonization and its dominance of world commerce during the 17th, 18th, and l9th centuries, the English system of measurement units became established in many parts of the world, including the American colonies.68
Some economic historians attribute England’s eighteenth century emergence as a leading trading and manufacturing nation to its powerful consumer society. As the first editor of England’s Annals of Commerce wrote at the beginning of the nineteenth century: “The home trade is with good reason believed to be a vast deal greater in value 760[and importance] than the whole of the foreign trade, the people of Great Britain being the best customers to the manufacturers and traders of Great Britain.”69
Consumerism, however, was not thought a complete blessing. As described in 1750 by novelist Henry Fielding in his Enquiry into the Causes of the Late Increase of Robbers:
Nothing has wrought such an alteration in this order of people, as the introduction of trade. This hath indeed given a new face to the whole nation, hath in great measure subverted the former state of affairs, and hath almost totally changed the manners, customs, and habits of the people, more especially of the lower sort. The narrowness of their future is changed into wealth; their frugality into luxury, their humility into pride, and their subjection into equality.70
It would not be very long before England enjoyed the highest wage income and standard of living in Europe.71 As will be discussed in Chapter 21, at the same time English employers were paying the highest wages, English lenders increased their supply of commercial and consumer credit.72 Thus, as of the middle of the eighteenth century, commercial credit was a significant factor in the sharp rise of England’s home trade and the connection between a consumer society’s willingness to spend and a commercial (and subsequently industrial) society’s higher wages was apparent. Less apparent, but equally significant, was the role of slavery in the rise of a consumer society and in the commercialization of that society.
Britain’s experience with slavery during the seminal years of its commercialization and attainment of a world-leading standard of living deserves attention, especially by readers interested in learning about the effects of depriving a sizeable number of highly productive market participants from equal treatment both as producers of goods and services and as human beings.
I will rely on excerpts from studies by Professors Robin Blackburn of Essex University and Simon Schama of Columbia University to evaluate statistical information on the contribution of slavery to Britain’s welfare and to obtain a vivid picture of the attitudes of slave owners and of the inhumane condition of plantation slaves. I will also discuss the background and text of a landmark decision by Lord Mansfield on the ownership rights of foreign owners of slaves who resided in England when the decision as rendered. I am indebted to Edmund Heward’s biography of Lord Mansfield for the background of this discussion.
In a recent BBC presentation, Professor Blackburn summarized his findings on the contribution of slave-based trade with the Americas to the fast-industrializing economy of eighteenth-century Britain.73 One of his findings was that:
Slave-owning planters, and merchants who dealt in slaves and slave produce, were among the richest people in 18th-century Britain….
Liverpool merchant bankers, heavily involved in the slave-based trades, extended vital credit to the early cotton manufacturers of its Lancashire hinterland.74
Some of these planters contributed to Britain’s economy by building highly expensive homes, investing in canals and “of course, many spent their ill-gotten gains on gambling, prize fights and riotous living.”75 According to Professor Blackburn, plantation slavery thrived thanks to the consumer revolution discussed in the preceding section. When Britain and the Netherlands widened their consumer markets in the seventeenth century, “farmers and manufacturers hired wage workers as the best way to expand output and sales. The fact that farmers had to pay rent, and that labourers needed a job if they were to feed their families, was the germ of a new economic system—what we now call capitalism.”76
As also described in earlier sections, the slave plantation colonies of the Americas supplied highly desirable commodities to England and also to the nations with whom the likes of Samuel Storke traded regularly. In addition, and as also just discussed, the vitality of the trans-Atlantic trade, “including slaving, allowed merchants and bankers to supply credit.”77 This was particularly helpful to some manufacturers such as the early cotton millers, whose mill might have cost them, say, £1,000, but whose payment of wages may have required ten times that amount and whose sales revenues from the colonies might not have been available for a year or more. “[T]his is where the merchants’ credit came in.”78
Consequently, Blackburn estimates that profits created by the low cost of slave labor could have generated enough profits to cover a third of Britain’s overall investment needs.79 He refers to a study on the investments of 23 London merchants heavily involved in the slave trade which shows these merchants alone “ ‘played their part in building roads and bridges … [and] in (other) maritime undertakings, especially whaling….’ ”80 His conclusion, then, was that: “Enslaved people on the plantations of the Americas made a large contribution to British prosperity.”81
In Volume II of his monumental A History of Britain, Professor Schama notes that despite the expectation of eighteen-century English statesmen and policy makers to have their rising colonial empire populated by tradesmen and farmers, it was overwhelmingly populated by soldiers and slaves.82 He then asked the question: How did Britain end up with the wrong empire? His response was vintage Schama:
From the beginning the British Empire was habit-forming. The general encouragement of addiction was its specialty: a quiet smoke, a nice cup of tea, a sweet tooth (and, a bit later, a pipe of opium)—exotic rarities converted into consumer cravings, exceptional wants turned into daily needs. Where profit beckoned, distaste could be overcome. King James I may have published tracts against the filthy weed Nicotiana tabacum … but the first settlement the Virginia Company established to grow it still bore his name….83
Sugar was another story. In medieval Europe, “its high price and exotic origin meant that it was considered as either a spice or a drug.”84 But before it could be merchandized in large volumes it needed “highly concentrated, task-specific applications of manpower.”85 And here, he gave us a painfully vivid account of what it meant to work as a slave in a Caribbean sugar plantation:
For the cane was an unforgiving and volatile crop. It could not be farmed and harvested in a single growing year…. But once it had reached maturity, the cumbersome grass needed to be harvested quickly to prevent the sugar going starchy. Once stripped and cut, the cane in its turn had to be speedily taken to the ox-powered vertical crushing rollers before the sucrose concentration of the juice self-degraded. Every subsequent stage of production—the boiling of the juice, the arrest of the boiling process at the precise moment for optimum crystallization, the partial refining in clay-stopped inverted cone moulds, the lengthy drying process—demanded the kind of strength, speed and stamina in tropical conditions that indentured white Europeans or captive Native Americans were ill equipped to provide….
So, where to turn for a labor supply that was strong, disease-resistant but obedient, like the cattle that turned the crushers? Where else, of course, but where the Portuguese were already making money from the commerce in ivory, gold and humans—West and Central Africa.86
Chapter 13 of Edmund Heward’s short biography of Lord Mansfield87 supplies helpful background information for one of Lord Mansfield’s most important decisions on slavery. Heward notes that “[t]he 18th century was the great age of the English slave merchant … [as centered in] London, Bristol and Liverpool. [Of these], Liverpool had only one slave ship in 1709 [but it had] … 100 [such ships in constant use] in 1770.”88 Further, [i]n 1768, the English [ships] carried more than half the 100,000 slaves shipped … [worldwide].89 In the eyes of many well-bred Englishmen (quite likely including Lord Mansfield during most of his adult life) it was a respectable trade.90 The following paragraphs summarize Heward’s account of some of the cases that preceded and followed Lord Mansfield’s landmark decision in James Sommersett’s Case.
The “Quakers were the first to … [publicly ask] for the abolition of the slave trade but … [their] movement did not gain any strength until the end of the 18th century”91 when other religious groups and incensed members of the population joined them in a movement for the abolition of slavery. One such a person was Granville Sharp, a young worker at the Tower of London who one day in 1765 after visiting his brother William’s medical office, “stumbled over Jonathan Strong, a poor negro … [slave] waiting for treatment…. [who] (seemed ready to drop).”92 Sharp took Strong to his brother’s office and found out that he had been the property of a David Lisle, a lawyer from Barbados who in a fit of temper beat him with a pistol so badly that he could barely move and was nearly blind. After this beating, Lisle concluded that his slave was no longer valuable and left him to die in the streets.93
However, after intense medical care, Strong was able to do menial work as an errand boy for an apothecary. He remained in that job for two years when David Lisle accidentally found him and noticing that he could still do some useful work had him kidnapped and sold him to a James Kerr, a Jamaican planter who arranged for his shipment to the West Indies as his slave.94 Granville Sharp procured a writ from the Lord Mayor of London that freed Strong only to be sued shortly thereafter by Kerr for depriving him of his property. Kerr’s claim was accompanied by letter opinions from respected lawyers who cited King’s Bench decisions that held that slaves from the West Indies who came or found themselves in England or Ireland either with or without their master were still his property.95
Granville Sharp took up the study of law and learned of an opinion by Blackstone in his Commentaries on the Laws of England which stated that: “The spirit of liberty is so deeply implanted in our constitution … that a slave or negro the very moment he 764lands in England falls under the protection of the laws and with regard to all natural rights become eo instante a freeman.”96 Relying on this opinion, Sharp hired Blackstone as Strong’s attorney only to find out shortly thereafter that Blackstone had changed his mind and now believed that the prevailing rule was contrary to his earlier opinion.97
Sharp continued to collect opinions by judges and practitioners in favor of Strong’s freedom. One of these opinions was by the highly respected Lord Chief Justice Holt (whom we will encounter shortly as an early architect of the English law of negotiable instruments), who stated “that as soon as a negro comes into England he becomes free.”98 Sharp circulated his research memorandum among “well known lawyers in London” and as more lawyers became acquainted with this memorandum, “[t]he lawyers for the plaintiffs Lisle and Kerr took fright and discontinued the action.”99
By now, Sharp was a well-known and respected advocate for slaves’ rights and as such was contacted by a Mrs. Bankes who reported that Thomas Lewis, a freed slave who lived in her house, was also kidnapped by his former owner a Mr. Stapylton who placed him on a vessel bound for Jamaica. Sharp brought criminal proceedings for assault against Stapylton and his accomplices. Stapylton’s defense was that he was still Lewis’s owner.100
At the request of Stapylton, the case was transferred to the King’s Bench where, according to Edmond Heward, “Lord Mansfield was clearly anxious not to give a decision … which would have such far-reaching social consequences”101 given the large number of former plantation slaves living in England and Ireland. Nonetheless, Mansfield was able to avoid the substantive law issue of Stapylton’s ownership and ordered Thomas Lewis’ freedom because Stapylton had failed to prove that he was Lewis’s owner.102
The preceding judicial proceedings were a prelude to Lord Mansfield’s determination of ownership rights over errant slaves in the James Sommersett’s case.103 Sommersett was a slave who had been brought to England by his American owner, Charles Stewart. While in England, Sommersett escaped and wasn’t captured until two years later by Stewart, who placed him on a slave ship to be sold in Jamaica.
Stewart claimed that American law had granted him the ownership of Sommersett. In a separate court document and prior to rendering judgment, Mansfield urged the parties to agree on a settlement. He identified the case as not involving the validity of a sale of a slave, but the contents of a purported slave owner’s property rights in England and under English law regardless of the law in America. He acknowledged the consequences of not recognizing Stewart’s right of ownership under American law in his court: No less than 14,000 slaves resided in England with a legal status as uncertain as Sommersett’s. Nonetheless, since the parties had not settled, his 765obligation was to do justice regardless of the consequences of his decision. In his words: “fiat justitia, ruat coelum”104 (justice be done, though the heavens fall). He then held that:
[T]he return [defendant’s answer] states, that the slave departed and refused to serve; whereupon he was kept, to be sold abroad. [Nevertheless] [s]o high an act of dominium must be recognised by the law of the country where it is used. The power of a master over his slaves has been extremely different in different countries. The state of slavery is of such a nature, that it is incapable of being introduced on any reasons, moral or political, but only by positive law…. It is so odious, that nothing can be suffered to support it, but positive law. Whatever inconvenience, therefore, may [be said to] follow from this decision I cannot say that this case is allowed or approved by the law of England; and, therefore, the black must be discharged.105
As concluded by Heward, this decision did not spell the end of slavery, but was “a very important landmark in the road to its abolition.”106 Because of it, 14,000 to 15,000 slaves were in fact freed.107 Heward also pointed out that despite Mansfield’s 1772 decision, blacks were still hunted and kidnapped on the streets of London, Liverpool and Bristol more than a decade later.108 In fact, in another case that reached the King’s Bench in 1783, it appeared that 133 slaves were thrown overboard by the master of the vessel and some of his crew following the calculation that if the slaves died a natural death during what was apparently a rough voyage, the loss would be sustained by their owners. But if they were thrown overboard, supposedly to save the ship from the perils of the sea, the loss would fall on the insurers (underwriters) of the slaves.109
There is no question that slavery was a crucial part of Britain’s commercial emergence. Yet, both Britain and the United States attained their highest levels of economic development following the abolition of slavery and as their societies and marketplaces increasingly treated their citizens, residents and visitors as equal before the law. This is why Mansfield’s final rejection of slavery as odious and wanting justification in religion, morality and decency and finding its justification only in positive law was very significant. Because, as you will find in Chapters 22 and 23, he often did not hesitate to treat unjust or inequitable laws inferior to “natural justice.” Yet, the fact that even such a natural justice jurist found the slave trade tolerable during a significant part of his judicial career reflected a moral blindness that prevented him from applying to the master-slave relationship the same standards of natural justice he applied to disputes between ordinary merchants.110
This moral blindness posed fundamental issues concerning the sustainability of a commercial marketplace whose welfare depended in significant measure on the 766productivity of slavery. How long could such an inhumane, life-destroying policy last? Unfortunately, as apparent in the present and following chapters, it could last for an inhumanely long time. As stated to me by a Cuban descendant of Caribbean slaves, “No evil can last a hundred years, nor is there a being that can withstand it” (“No hay mal que dure cien anos, ni cuerpo que lo resista”). On the other hand, as just stated, evidence abounds on the benefits of inclusiveness and equal treatment in commercial marketplaces and beyond. We witnessed the effects of an equal treatment policy in those medieval fairs that adopted the principle of “Peace of the Marketplace.”111 We witnessed the even more dramatic effects of the General Agreement on Tariffs and Trade (GATT) policy of equal treatment of goods and services in helping war-ravaged segments of humanity gain unprecedented standards of living.112 On the other hand, Chapter 24 will demonstrate how highly skilled Roman jurists were not able to come up with a viable “nuclear” secured transaction for centuries because of the unequal treatment of slaves and small farmers especially in foreclosure and repossession proceedings. I will re-visit these issues at the conclusion of Part II of this chapter.
According to the English legal historian Theodore Plucknett, by the reign of Edward I (1239–1307), the institutional elements of England’s judiciary were in place, except for a court of equity.113 The main common law courts were: (1) the Court of Common Pleas, where the bulk of significant litigation was decided and where many of the most used forms of action (about which more later) were developed;114 (2) “[T]he King’s Bench which had a jurisdiction in error [appeal] from the Common Pleas, and [with] an original jurisdiction over the pleas of the Crown”;115 (3) “Above the King’s Bench … was the King’s Council, ready to supply from the reserves of royal discretion at its command any defects of jurisdiction which might occur in the lower courts….”116; (4) The Court of Exchequer Pleas, or Court of the Exchequer, which was part of the King’s Council. It dealt with equitable disputes that involved an unjust or wrongful application of the common law as was alleged, for example, had been done by the King’s Bench in Slade’s Case (about which more later).117
As will be apparent in our forthcoming discussion of Slade’s Case,118 the above courts had their own rules of pleading, procedure and occasionally, their own substantive law. Still, the core of the administration of justice in England was in the hands of a small and tightly knit group of judges and lawyers. Thus, in 1783, when Lord Mansfield decided the James Sommersett Case, “there were twelve Common Law Judges—on the King’s Bench, Common Pleas and [Court of] Exchequer…. [and the number of practitioners before these courts was equally small, and included] 12 767Serjeants and 17 King’s Counsels; [all in all] there were less than 350 men at the Bar.”119
As noted by Professor Lawrence Friedman of the Stanford University Law School in his by now classic History of American Law,120 the royal central courts handled the legal problems of a tiny group of people:
Leaf through the pages of Lord Coke’s reports compiled in the late 16th and early 17th century; here one will find a colorful set of litigants, all drawn from the very top of British society—lords and ladies, landed gentry, high ranking clergymen, wealthy merchants. Common law was an aristocratic law, for and of the gentry and nobility. The masses were hardly touched by this system and only indirectly under its rule.121
The guild-like atmosphere of these courts resulted in more uniform pleadings and methods of proof, but also in an excessive reliance on technicalities especially when interpreting contracts. These technicalities also made it easier to reach unfair and occasional corrupt results by blaming the unjust holdings on the rigidities of trial and appellate practice.
On the other hand, the English judiciary was one of the first in the modern world to attain a full measure of independence. The Act of Settlement of 1701122 consolidated the independence and law making power of England’s judiciary. Judges were entitled to “hold [their] office[s] during good behaviour at fixed salaries, and … should only be removable by His Majesty upon an address to both Houses of Parliament.”123 You will find indications of this independence when we discuss in a later section how the King’s Bench Court created a new form of action on assumpsit to avoid the anachronistic features of the actions of debt and covenant in Slade’s Case. You will also find strong indicators of independence and of competing jurisdictional powers in the forthcoming discussion of the Earl of Oxford Case.
The English courts’ independence and their struggle for increased jurisdictional powers explains the fact that until the consolidation of the Constitutional Monarchy in the nineteenth century,124 high courts found themselves frequently acting as umpires 768in disputes between the Crown and the Parliament. In one of these occasions, Lord Chief Justice Coke (one of the advocates in the 1602 Slade’s Case) famously reminded King James I (1566–1625) of Bracton’s (England’s most renowned medieval lawyer) admonition: “The King is subject not to men but to God and the Law.”125 But what was that law and where was it found? According to Theodore Plucknett, this was a “fundamental” law which limited both the Crown and Parliament and:
The nearest we find to an explicit definition of this fundamental law is the assertion of the paramount law of ‘reason’. For the rest, the common lawyer’s ‘reason’ is left in as much uncertainty as he [Coke] himself ascribed to the Chancellor’s equity…. [Still] [h]is doctrine is certainly based largely upon mediaeval precedents….126
Whatever Coke meant by the law of reason, it was clear that his doctrine favored the supremacy of the common law over other sources of law.
The English judicial version of equity served largely to prevent or suspend the application of common law rules that led to unjust results. For a considerable time, the King was the first provider of equity because, in the words of William Blackstone, he was the “fountain of justice.”127 In this respect, he resembled the Roman emperors and their “rescripts” or replies to requests by their subjects for corrective actions to injustices attributable to the trial judges (iudices), especially in land disputes (as will be discussed in Chapter 23).128 Unlike the Roman emperors, the English king relied on his Chancellor (a member of the King’s Council) to correct the injustices perpetrated by the common law courts. As of the fifteenth century, this function was lodged with the Court of Chancery.129
The enforcement of land use rights was one of the Court of Chancery’s most important subjects. The Earl of Oxford’s Case in Chancery,130 a landmark decision by this court illustrates its power to undo what it perceived as an injustice by the King’s Bench. The dispute before these two courts involved the sale of valuable London real property by the master of the Magdalen College of Cambridge to Queen Elizabeth in 1574. This sale was followed by Queen Elizabeth’s transfer of the same property to a Benedit Spinola in payment of a debt that Magdalen College owed him. Thus, the reason behind Magdalen College’s sale to the queen was to circumvent a statutory 769prohibition of sales and long-term leases of college properties by masters and fellows of the colleges.131
In 1580, following Queen Elizabeth’s transfer to Spinola, he sold the subject property to the Earl of Oxford, who spent considerable sums in developing and increasing the market value of this property. However, once the master of Magdalene College became aware of the significant increase in the value of the property conveyed to the Queen and reconveyed to Spinola and the Earl of Oxford, he attempted to regain it from the latter by alleging that the Earl of Oxford’s acquisition violated the statutory prohibition against transfers of college property.
As noted by Professor Gary Watt of the University of Warwick School of Law,132 who refers to this case as “the foundation stone of Equity in modern English law,” the Master’s attempt to regain the property triggered a battle between the common law courts, led by Lord Chief Justice Coke, and the Chancery Court, led by Lord Chancellor Ellesmere. “Coke was committed to upholding the wording of the statute [that forbad the sale of college property] and to denying exceptions based upon a Royal prerogative. [And] Ellesmere was committed to ensuring that the College did not take unconscionable advantage of the strict letter of the law by denying [the Earl of] Oxford’s right to proper compensation for the loss of [his title] … [as] he was [also] committed to upholding Royal prerogatives, not least because the Court of Chancery had itself developed from the ancient Royal prerogative of mercy.”133
Among the precedents relied on by the Lord Chancellor was Peterson v, Hickman. This was a case where a husband leased his wife’s property and the lessee, unaware of his voidable title, built up the property at great cost. When the husband died, his wife voided the lease, but was compelled by Equity to “yield a Recompence for the Building and Bettering of the Land.”134 Lord Ellesmere also relied on the Hebrew Bible:
The Law of God speaks for the Plaintiff.
By the Law of God, He that builds a House ought to dwell in it; and he that plants a Vineyard ought to gather the Grapes thereof; and it was a Curse upon the Wicked, that they should build Houses and not dwell in them, and plant Vineyards and not gather the Grapes thereof.135
To which he added:
And yet here in this Case, such is the Conscience of the Doctor, the Defendant, That he would have the Houses, Gardens and Orchards, which he neither built nor planted: But the Chancellors have always corrected such corrupt Consciences, and caused them to render quid pro quo; for the Common Law itself will admit no Contract to be good without quid pro quo, or Land to pass without a valuable Consideration, and therefore Equity must see that a proportionable Satisfaction be made in this Case.136
In addition, Ellesmere invoked Cicero’s maxim that summum ius (strict law) can easily turn into a summa iniuria, (the greatest injustice).137 Thus, “The Cause why there is a Chancery is…. [t]hat it is impossible to make any general Law which may aptly meet with every particular Act, and not fail in some Circumstances”138 And yet, law and equity “both aim at one and the same End, which is, to do Right; as Justice and Mercy….”139
Professor Watt summarized the result of the dispute as follows:
[T]he jurisdictional dispute … was referred to King James I. Keen to preserve his Royal prerogatives in the face of Coke’s campaign against them, the King determined the matter in favour of the Court of Chancery and thereby established the rule which maintains equity’s preeminent status to the present day: where equity and law conflict, equity shall prevail.140
The absorption of the equity jurisdictions by most common law courts in England, the United States and Commonwealth countries vindicated Ellesmere’s view that law and equity could function best when each partook of the other’s best features.
Lord Ellesmere’s holding supports commercial legal institutions such as the protection of the good faith purchaser of real property. It also supports the recovery of quasi-contractual rights such as those born from the Earl of Oxford’s contribution to the value of the property. In due course, equitable transactional and remedial practices came about that resulted in considerable assistance to commercial transactions and to the viability of their markets. Consider for example the contribution of equitable remedies such as “equitable estoppel” and “preclusion.”141 These remedies have made an invaluable contribution to the entire field of commercial contracts and especially to the smoother operation of instruments of payment and credit such as commercial and standby letters of credit and checks.
In Chapter 23, we will discuss how the equitable remedy of preclusion is being used countless times every day around the world to discourage the tardiness and sloppiness of banks when examining and returning letter of credit documents.142 The 771same is true with the payor banks that hold checks without paying for them or returning them beyond their so called “midnight deadline.”143
The English forms of action were lineal descendants of the Roman formulary procedure.144 No less a common lawyer than Bracton was amenable to an indefinite expansion of the common law using the Roman law as a model. He counseled that there should be “as many forms of action as there are causes of action. [And that] [t]here ought to be a remedy for every wrong.”145
Recall that during the Roman formulary procedure Praetors drafted formulas instructing the iudex on the elements of a valid action and on the admissible defenses or exceptions to that action.146 Often the names of these actions reflected the transactions in dispute, such as a pledgee or mortagee’s (action on the pledge) actio pignoraticia or a seller’s (action on the sale) actio venditi. In some instances, the actions were named after the Praetor willing to grant the remedy (e.g., the Actio Publiciana in rem was named after the Praetor Publicius).147
The English forms of action were anonymous, less transparent and more rigid. They relied on labels as opaque as: “Debt,” “Covenant,” “Assumpsit,” “Trespass on the Case,” “Trover” and so on. As noted by the late Professor Max Radin of the University of California at the Berkeley and Hastings law schools: “For each action a separate writ had to be obtained, and the use of the wrong form of action meant the loss of the plaintiff’s case, regardless of the justness of the claim….”148
Assume, for example, that H, the lawful holder of a Bank of England promissory note, sent it by mail to C in satisfaction of his debt, but the envelope was stolen by T. H instructed the Bank of England to stop payment on the note. However, T had endorsed the note for value to BFP (plaintiff), a bona fide purchaser of it. The Bank of England’s clerk (the defendant) refused to pay BFP. In this form of action, the defendant argued that the plaintiff’s action was for “trover”—a derivation from the French “trouver” (“to find and keep”) something that belonged to the plaintiff—which did not entitle him to the relief he sought. In an action on trover, plaintiff was suing “not for the money due upon the note; but for the note itself, the paper, the evidence of the debt.”149
It was this type of pleading that prompted Lord Mansfield’s scolding that neither the negotiations nor the property rights of merchants should depend on subtleties and niceties such as just described, but upon “rules easily learned and easily retained because they are the dictates of common sense drawn from the truth of the case.”150 Recall that this formalistic rigor was in sharp contrast with the Praetor’s flexibility and equitable powers. Indeed, as pointed out by Frederic William Maitland (1850–1906), 772widely regarded as the modern father of English legal history, despite their Roman inspiration, the forms of action are distinctively English:
[B]ut … [they are] also, in a certain sense, very Roman. While other nations of Western Europe were beginning to adopt as their own the ultimate results of Roman legal history, England was unconsciously reproducing that history; it was developing a formulary system which in the ages that were coming would be the strongest bulwark against Romanism and sever our English law from all her sisters.151
I interpret Maitland’s reference to Romanism as the version of Roman law found in a medieval continental civil law heavily influenced by scholastic and abstract definitions, classifications and canonic law maxims such as “pacta sunt servanda.” As noted earlier in this book, this was not the practical, factual and problem-oriented Roman law that was often found in the Praetorian formulas.
On the other hand, the early English Writs were sui generis. They were not documents “directly instituting litigation.”152 They resembled administrative commands “to an alleged wrongdoer or to some inferior jurisdiction to do justice in a particular manner in such wise that the King shall no more hear complaints concerning it.”153 The justice requested was mostly in the form of restitution. However, by the end of the twelfth century, a new form of writ resembling Praetorian formulas began to be used and it was the one apparent in the seventeenth- and eighteenth-century pleadings that we discuss in the present and subsequent chapters:
[It] begins with the summons, and the defendant is called on to explain his action…. If the old model emphasises the failure to do what is due, the new one rests on a positive misdeed. The misdeed, moreover, is frequently described in the writ as being a breach of peace.154
Still, the forms of action used during the seventeenth and eighteenth centuries were capable of producing rules that could govern future cases only when in the hands of great judges. Among these were: Popham, J. in Slade’s Case,155 Chief Justice Holt’s in Hussey v. Jacob,156 and Lord Mansfield’s decisions in Pillans and Van Mierop v. Rose,157 Miller v. Race,158 and Price v. Neal.159
The extraordinary quality of these decisions stands in sharp contrast with many other decisions by common law courts that were so technical and fact-specific that they could only occasionally be used as precedents or as guides to the enforceability of transactions. The casuistry was such that Jeremy Bentham (1748–1832) criticized this after-the-fact method of law making as “dog law”: “When your dog does anything you 773want to break him of you wait till he does it, and them [sic] beat him for it … this is the way judges make law for you and me.”160
Plucknett reminds us how Jeremy Bentham, whom he refers to as “the prophet” of the new era of liberalism, legal reform and the passionate advocate of legislation and codification, was disappointed as a student at Oxford with William Blackstone’s lectures on the common law while “he … listened with admiration to the judgments of Lord Mansfield.”161
Sir Francis Buller’s (a colleague of Lord Mansfield at the King’s Bench Court) assessment of Mansfield’s accomplishments has withstood the test of time:
Within the last thirty years the commercial law of this country has taken a very different turn from what it did before…. And I should be very sorry to find myself under a necessity of differing from any case on this subject which has been decided by Lord Mansfield, who may be truly said to be the founder of commercial law of this country.162
As you will discover when reading Chapter 21, Mansfield’s views also influenced the development of United States commercial law. Professor Karl LLewellyn’s and U.C.C Article 2’s reliance on usage of trade when interpreting commercial contracts, as well as on good faith when judging the manner in which commercial contracts are performed, reflect Mansfield’s views. The same can be said about Mansfield’s preference for a liberal interpretation of commercial contracts and for the need for the courts’ collaboration with merchants when shaping a market-sensitive commercial law. For Mansfield knew that “[B]usiness men have a passion for adding clauses and have no time or inclination to consider the effect of their additions on the contract.”163 Hence, as concluded by C.H.S. Fifoot (another of Mansfield’s twentieth-century biographers):
He realised that the merchant was more competent than the lawyer to prescribe the form of a charter party or to direct the incidence of paper credit. [Hence] [t]he function of the judge was not to dictate, but to interpret and sanction.164
This approach to commercial law decision-making separated Mansfield from many other common law judges. It is easy to see why Bentham admired him: With his knowledge of commercial facts, Mansfield could draft rules and principles capable of guiding the parties ex ante, i.e., prior to entering into troublesome transactions. He was also in a position to discern who were third parties acting in good faith and thus 774deserving of protection. Therefore, the commercial law Mansfield made reflected standard as well as best practices.
Theodore Plucknett makes an important clarification for the civil law lawyer unfamiliar with the Anglo-American jury system. In its origin, the jury was a politically as well as a legally representative institution.165 It represented the interests of the local community in the administration of justice and was often consulted as a “fact knowing” body.166 Representativeness, however, is not necessarily consistent with objective fact knowing. Because as members of the community they were likely to be close to the transaction in dispute, the jury was prone to being biased in favor of one of the parties when extrapolating from the facts they thought they knew. Plucknett suggests that by 1468, a jury trial was for all intents and purposes in modern form, a fact-finding body:
[A] body of impartial men who come into court with an open mind; [and] instead of finding the verdict out of their own knowledge of the events, the parties or their counsel in open court present their evidence to the jury, and witnesses were examined upon oath.167
A century later, trial records show not only an examination, but also the “cross-examination of witnesses in the presence of the judge, the parties, their counsel and the jury.”168
Georgetown University Law School Professor James Oldham has published very helpful materials on Mansfield’s juries obtained from Mansfield’s trial notes.169 First, he called attention to the distinction between “special” and “merchant” juries. He corrected the impression that the terms “merchant jury” and “special jury” were synonymous.170 While many of the special juries impaneled in trials before Lord Mansfield were comprised of merchants, such a status was not a requirement.
The special jury was selected by attorneys for both sides after each side struck twelve names “from a list of forty-eight freeholders. Those remaining twenty-four”171 persons would be the jurors who tried the case.172 Accordingly, Mansfield’s merchant juries were a species of the genus of special juries, i.e., they became merchant juries after the pool of special jurors (including merchants) had been selected.
In any of these capacities he could ask them a question about a standard practice in a given sector In any of these capacities, he could ask them a question about a standard practice in a given sector or sectors such as, say, the acceptability of promissory notes issued by banks as a means of payment. Based on their responses, he 775could confidently state in Miller v. Race that bank notes are “constantly and universally, both at home and abroad, treated as money, as cash; and paid and received, as cash; and it is necessary, for the purposes of commerce, that their currency should be established and secured.”173 Or, the standard practice in question could be considerably narrower, such as, what is a reasonable time in the horse trade for returning horses with defects that were only latent at the time of purchase?174
The understanding of commercial practices that Mansfield gained from his merchant jurors and consultants transcended the findings of facts in a given case. As he learned more about the relevant practices, he was able to formulate principles that governed a broader spectrum of disputes in the sector in question. For example, from learning about the practices on horse sales, he derived the principle that: “A warranty extends to all faults known and unknown to the seller. Selling for a sound price without warranty may be a ground for an assumpsit, but, in such a case, it ought to be laid that the defendant knew of the unsoundness.”175 And it was from his knowledge of the practices on fact disclosures by insureds in insurance contracts that he formulated the governing principle of good faith disclosures in insurance contracts in general:
The governing principle is applicable to all contracts and dealings.
Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain, from his ignorance of that fact, and his believing the contrary.176
He was also able to identify when a higher standard of good faith (uberrima fides) required certain disclosures prior to entering into insurance contracts. These disclosures often depended upon a party’s actual or imputed knowledge of the relevance of his disclosure to the other party’s decision to insure or to become an insured party.
Chapter 22 discusses in detail the famous English Slade’s Case (1602). Thus the present discussion is only introductory. In Slade’s Case, the defendant made an unfulfilled executory promise to buy a crop of wheat and rye at a future time. This promise was enforced by the King’s Bench even though the seller had not delivered the commodities to the promisor-buyer when he sued the buyer. As described by Professor David Harris Sacks of Reed College, this promise was executory because it promised the performance of “Acts or dispositions intended or capable of taking full effect only at 776a future time; its opposite is ‘executed,’ or where the act or disposition has already occurred and the right or property has already been transferred.”177
Under the medieval common law, claims seeking the payment of a debt required a writ of debt and proceedings before the Court of Common Pleas, where it could be decided on the basis of an archaic, one-sided and thus uncertain “wager of law.” If the defendant decided to take a decissory oath in open court that he did not owe the alleged debt and this oath was supported by a group of his witnesses, he won the lawsuit. By comparison, the procedure before the King’s Bench Court for claiming a breach of promise differed sharply. It was based on an action of assumpsit (at times referred to also as indebitatus assumpsit), which alleged that the defendant had been guilty of a tortious deceit by his failure to pay after promising to do so.
The final judgment in Slade’s Case was delivered in 1602 by the Lord Chief Justice of the King’s Bench, John Popham. It held that:
[E]very contract executory imports in itself an assumpsit, for when one agrees to pay so much money, or to deliver any thing, thereby he assumes or promises to pay, or deliver it, and therefore when one sells any goods to another, and [the other] agrees to pay so much money on such a day, in that case both parties may have an action of debt, or an action on the case on assumpsit, for the mutual executory agreement of both parties import in itself reciprocal actions on the case, as well as actions of debt.178
By juxtaposing the buyer’s and seller’s executory promises on equal terms, Slade’s Case held, then, that the seller’s promise to deliver the wheat and rye by a certain date in exchange for the buyer’s promise to pay for it was deceitfully breached when the buyer refused to pay the amount he promised to pay when he promised to pay it.
As illustrated by the executory promises of Samuel Storke’s consignments and joint ventures, England’s ability to grow and develop economically during the seventeenth and eighteenth centuries depended upon the countless numbers of future promises of commercial loans and of investments made by its tradesmen and bankers. You will find many other examples in Chapter 21 of the omnipresent executory promises in the plentiful commercial and consumer credit of the seventeenth and eighteenth centuries.
Chapters 22 and 23 discuss English and United States substantive contract law extensively. However, little space is left in those chapters for a discussion on English negotiable instruments law. Given the importance of this law for English economic development, the remainder of this chapter will be devoted to it.
Unconditional promises of credit and payment were among the most commonly used executory commercial promises used in seventeenth- and eighteenth-century 777England. The enforcement of these promises did not depend on future acts or events such as the timely arrival of a vessel or the availability of crops. They were typically expressed in instruments that the English merchants had imported from the continent, especially from Italy, and which some judges and doctrinal writers referred to as commercial “specialties.”179 The two principal specialties were the “promissory note” (or just plain “note”) and the “bill of exchange” (also known as “draft”).180 In the note, the maker promised to pay a sum of money at a designated time and place to the payee of the note or to his endorsee or bearer. In the bill of exchange, the drawer ordered the drawee to accept and pay at a future time or pay when the order was presented a specified amount to the designated payee or to his “order.”181
In contrast with the promissory note, which was at its inception a two-party instrument (i.e., a maker and a payee), the bill of exchange was from its inception a three-party instrument (drawer, drawee (acceptor-payor) and payee).182 Usually, it presupposed the existence of an account that the drawer had with the drawee and, for centuries, this account was referred to in the “value clause” of bills of exchange. In this account relationship, the drawer had provided money, valuable property or reciprocal credit to the drawee with which he would pay for the draft or reimburse or credit himself after paying. But the draft could also be a two-party instrument at its inception: The drawer could designate himself as the drawee, in which case he would be the party accepting liability for future payment or for payment at sight to the payee, and this liability could be claimed also by his endorsees. Or he could designate himself as the payee, in which case he would still be the party ordering the drawee-acceptor to accept and pay him.
If the law of promissory notes and bills of exchange could eliminate or sharply reduce the maker’s or drawer’s defenses based on the absence of the above-mentioned conditions, these instruments would be much easier to collect than ordinary contractual (conditional) obligations. As unconditional promises, they could be treated by courts as “independent” or “abstract” promises of payment whose enforcement was insulated from defenses and equities rooted in the underlying transactions. Their easier collection enabled the payee and subsequent endorsees or holders to convert them into cash or valuable property quickly and inexpensively. This ability, which we refer to in our day as “liquidity,” makes these instruments desirable to their payees and transferees, especially those who acquire their rights by endorsement (in the case of “pay to the order” instruments) or delivery (as in the case of “bearer” instruments).
A transfer of a promissory note or draft that complies with the requirements of the law of negotiable instruments upgrades the status of transferees from that of assignees to that of holders of independent rights of enforcement. Their legal status is superior to that of assignees because as assignees, they would be subject to the same defenses and equities as their transferor-assignors. In contrast, when transferees acquire their 778rights by “negotiation,” they become holders in due course or “holders for value” and thereby acquire remedial rights superior to those of their transferors.
The concept of negotiation in negotiable instruments law contradicts the Roman maxim “no one can transfer what he does not have” (nemo dat quod non habet) because, as just noted, the endorser or transferor of an “order” or “bearer” instrument conveys independent and thus more liquid rights than those of the original payees or their previous endorsers.
Hussey v. Jacob,183 a 1696 decision by Chief Justice Holt of the King’s Bench, illustrates the effects of negotiation as contrasted with a mere assignment of a right to payment of a bill of exchange (the names of the parties and some of the less relevant facts will be changed to facilitate an understanding of the impact of this decision). Winner, a gambler, won a certain amount of money when gambling with Loser. In payment of this debt, Loser drew a bill of exchange on himself (ordering himself to accept and eventually pay) the bill of exchange to Winner or to his order. Winner endorsed the bill to Stranger (a stranger to the gambling transaction). Stranger presented the bill for acceptance and payment to Loser. Loser accepted to pay at a future time. According to an anti-gambling statute in force at that time,184 a gambling obligation was null and void. Nonetheless Stranger sued on assumpsit and won. C.J. Holt held:
If such a note was given to the winner or order, and the winner indorsed it to a stranger for a just debt, and the person upon whom the bill was drawn accepts … [the bill] in the hands of the stranger, the acceptor would be liable.185
The law in France up until the twentieth century was different. Recall the description of this law in Chapter 11 by Henry Diedrich Jencken (1828–1881), the London barrister who authored a succinct, highly accurate comparison of English, French and German negotiable instruments law available during the early nineteenth century.186 French law based the enforceability of the bill of exchange on the above-described highly conditional contract of purchase and sale of foreign exchange (contrat de change), which was always suspected of hiding a usurious loan.
As a Code de Commerce contract of exchange, once the bill of exchange was delivered to its payee, this contract was deemed executed and whatever rights were transferred to third parties were the result of an assignment (not a negotiation) of the rights that had been acquired by the original payee. Consequently, as an assignment (Cession de la Creance), the assignee’s rights were subject to the terms and conditions of the underlying contract of exchange as well as to related defenses to such an illegal 779cause because of usury or other violation of the law or public morality.187 Clearly, this characterization impeded the negotiability of the bill of exchange.
Despite Chief Justice Holt’s visionary support for the independence of the promise of payment of the bill of exchange in Hussey v. Jacob, in Clerke v. Martin (a 1702 decision by the King’s Bench), he opposed the negotiability of the promissory note.188 In this case, the plaintiff brought an action on various counts. One was upon indebitatus assumpsit (of Slade’s Case fame) for money lent to the defendant; another was “upon the custom of merchants, as upon a bill of exchange….”189 It alleged that the defendant gave a promissory note signed by him to the plaintiff in which he promised to pay a certain amount of money to the plaintiff or his order. A verdict including damages was given for the plaintiff. The defendant moved to arrest judgment, alleging that this promissory note was not a bill of exchange within the customs of merchants, and therefore “the plaintiff, having declared upon it as such, was wrong; but that the proper way in such cases is to declare upon a general indebitatus assumpsit for money lent, and the note would be good evidence of it.”190 Chief Justice Holt agreed and cited Horton v. Coggs, which held that “such a note was not a bill of exchange within the customs of merchants.”191 A subsequent (1704) opinion by Chief Justice Holt described the promissory notes involved as:
[O]nly an invention of the goldsmiths in Lombard Street, who had a mind to make a law to bind all those that did deal with them; and sure to allow such a note to carry any lien with it were to turn a piece of paper, which is in law but evidence of a parole contract, into a specialty: and besides, it would empower one to assign that to another which he could not have himself….”192
Professor James Byrne of George Mason University School of Law, a world-renowned expert on the law of negotiable instruments and letters of credit, quotes Chief Justice Holt’s subsequent recollection of a conversation he had with two prominent merchants concerning his Clerke v. Martin decision:
[H]e [Holt] had desired to speak with two of the most famous merchants in London, to be informed of the mighty ill consequences that it was pretended would ensue by obstructing this course [of the negotiability of promissory notes]; and that they had told him, it was very frequent with them to make such notes, and that they had looked upon them as bills of exchange, and that they had been used for a matter of thirty years, and that not only notes, but bonds for money, were transferred frequently, and indorsed as bills of exchange.193
Holt asked his interlocutors why they would not want to achieve the same results they sought with their promissory notes by using lawful negotiable instruments such as bills of exchange drawn on themselves and naming their suppliers or lenders the payees of such bills. While he does not refer to their reply to his suggestion, the die was cast in favor of the negotiability of promissory notes. If you are interested in knowing why, please identify the users of promissory notes in the preamble and first “Whereas” of the 1704 Statute of Anne:194
An Act for giving like Remedy upon Promissory Notes, as is now used upon Bills of Exchange, and for the better Payment of Inland Bills of Exchange.
Whereas it hath been held, That Notes in Writing, signed by the Party who makes the same, whereby such Party promises to pay unto any other Person, or his Order, any Sum of Money therein mentioned, are not assignable or indorsible over, within the Custom of Merchants, to any other Person; and that such Person … cannot maintain an Action, by the Custom of Merchants, against the Person who first made and signed the same….
Therefore to the Intent to encourage Trade and Commerce, which will be much advanced, if such Notes shall have the same Effect as Inland Bills of Exchange, and shall be negotiated in like manner; be it enacted….
That all Notes in Writing … shall be made and signed by any Person or Persons, Body Politick or Corporate, or by the Servant or Agent of any Corporation, Banker, Goldsmith, Merchant, or Trader, who is usually entrusted by him, her, or them, to sign such Promissory Notes….195
The reference to the Body Politick or Corporate in the above list reflects the significance that promissory notes and their liability format had attained by the turn of the eighteenth century in England: Clothed as government bonds, promissory notes had become important instruments with which to finance public expenditures. The date of the Statute of Anne is also significant. Notice in Chapter 11 the date when Judge Karl Einert persuaded German legislators to abandon the Code de Commerce’s contract of exchange rationale for their bill of exchange legislation and adopt one that would truly make it and the promissory notes negotiable instruments. It was not until May of 1849 that Judge Einert’s draft of a negotiable instruments law was adopted by most delegates to the National Assembly of the Confederate States of Germany.196
In contrast, a century and a half earlier, the 1704 Statute of Anne made it possible for England to become a leading financial center for private and governmental borrowers. I should add that England’s facilitation of negotiability was not confined to payment and credit instruments; it did the same, although more gradually, for documents of title such as ocean bills of lading.197 In its 1794 decision of Lickbarrow v. Mason, the House of Lords established that the consignor-shipper’s right to stop the goods before they reached the consignee was subordinate to the rights of the 781consignee’s endorsee holding such a bill. In addition, the special verdict of the jury found that by the “custom of merchants a bill of lading was transferable by endorsement, and capable of transferring title to the goods.”198
With English law’s facilitation of the negotiability of bills of exchange and promissory notes, the Crown becoming a major borrower, and bankers such as the House of Rothschild underwriting the bonds issued by English and other governments, England, as well as the Netherlands and Germany, developed active marketplaces for fixed interest bearer bonds.199 This was not the case with France as well as other countries whose private law had been inspired by the Code Civil and Code de Commerce. Please recall that Article 1131 of the Code Civil stated: “An obligation without a cause, or upon a false cause, or upon an unlawful cause, can have no effect” (L’obligation sans cause, or sur un fausse cause, or sur une cause illicite, ne peut avoir aucune effet). And as was discussed in Chapters 8–10, usury or other possibly “illegal” or “immoral purposes” continued to hover menacingly over commercial promises of payment well into the twentieth century.200 Accordingly, if Hussey v. Jacob were to have come up before the French Tribunal de Commerce at the same time that it came up before the King’s Bench, the stranger or endorsee who purchased the bill of exchange would not have been able to enforce it because of the illegality of its underlying gambling obligation.
Toronto University Professor John Munro’s recent study entitled Usury, Calvinism, and Credit in Protestant England highlights the dramatic economic consequences of not having to worry about a defense of usury (and about the illegality of causa) in the development of England’s financial markets:
The consequences of legalizing interest payments, but with ever lower maximum rates, had a far-reaching impact on the English economy, from the 16th century to the Industrial Revolution. The first lay in finally permitting the discounting of commercial bills. Even if medieval bills of exchange had permitted merchants to disguise interest payments in exchange rates, the usury doctrine nevertheless required that they be non-negotiable, [and be] held until maturity, since discounting would have revealed the implicit 782interest. Evidence for the Low Countries and England demonstrates that discounting, with legal transfers either by bearer bills or by endorsement, with full negotiability, began and became widespread only after the legalization of interest payments in both countries. The importance for Great Britain can be seen in the primary role of its banks during the Industrial Revolution: in discounting commercial bills, foreign and domestic, in order to finance most of the working capital needs for both industry and commerce.
Fully immune to the usury laws, this Financial Revolution permitted the English/British governments to reduce borrowing costs from 14% in 1693 to just 3% in 1757, so that the British economy could finance both ‘guns and butter’, without crowding out private investments.201
__________________________
1 See supra § 8:9(C)(4).
2 E. Wyndham Hulme, The History of the Patent System under the Prerogative and at Common Law, 12 L.Q. Rev. 141–42 (1896).
3 See C. Knick Harley, Trade: discovery, mercantilism and technology, in I The Cambridge History of Modern Britain 175–203 (Roderick Floud et al. eds., 2004).
4 Daniel Defoe, The Life and Adventures of Robinson Crusoe (2010) (1919), http://www.gutenberg.org/files/521/521–h/521–h.htm.
5 Daniel Defoe, The Complete English Tradesman 240 (Dodo Press 2013) (1726) [hereinafter Defoe, English Tradesman].
6 Id. at 240–41 (citation omitted).
7 See supra § 6:3(F)(3).
8 Defoe, English Tradesman, supra note 5, at 242.
9 Defoe, English Tradesman, at 1 of the Introduction.
10 See generally supra ch. 6 (on the guilds).
11 Defoe, English Tradesman, supra note 5, at 244.
12 Id. (citation omitted)
13 See supra ch. 8 (for the discussion of the bourgeois and land gentry on French Codification).
14 See, e.g., § 8:3.
15 See generally Merchant Adventurers, Encyclopaedia Britannica Online, (on a company of English merchants known as the Merchant Adventurers), http://www.britannica.com/EBchecked/topic/375700/Merchant-Adventurers.
16 See generally Encyclopaedia Britannica Online, East India Company, http://www.britannica.com/EBchecked/topic/176643/East-India-Company.
17 Bank of England, History Timeline, at 1 (The beginnings), http://www.bankofengland.co.uk/about/Pages/history/timeline.aspx.
18 Id. at 2 (Early business—the Bank moves).
19 Id.
20 Wyndham Beawes, Lex Mercatoria Rediviva (1773) (which is also described as a complete guide to all men in business), available at http://babel.hathitrust.org/cgi/pt?id= njp.32101076400819;view=1up;seq=38.
21 Id. at 26.
22 See supra § 10:2.
23 Beawes, supra note 20, at 352.
24 The need for a judicial determination of the civil or commercial nature of transactions is illustrated by the French court decisions, see § 10:8 (for excerpts). In England, anyone referred to as a tradesman, shopkeeper or handicraftsman could perform acts of commerce without having to prove that his transaction was part of a legislatively or administratively sanctioned exhaustive list of such acts, or that he kept approved accounting books and records or used special contractual formats when so required by the Code Civil.
25 By positivistic I mean a version of law that views it as nothing more than “the command of the sovereign” in the famous expression by the 19th century “Analytical” legal philosopher John Austin. See Bix, Brian, “John Austin”, The Stanford Encyclopedia of Philosophy 3 (Edward N. Zalta ed., spring 2013) (on “Austin’s views” of the law), http://plato.stanford.edu/archives/spr2013/entries/austin-john/. In this book you will find references to other positivistic legal philosophers such as Hans Kelsen (see 3:7(B)) and to the United States appellate judge Richard Posner, who as you will find in chapter 23 does not seem comfortable with the “moral overtones” of the doctrine of good faith.
26 See supra § 9:2(E)(3)(c).
27 Id.
28 See Defoe, English Tradesman, supra note 5, at 177–88 (Of Honesty in Dealing, and Lying).
29 Id. at 177.
30 See Britannica, Merchant Adventurers, supra note 15.
31 Id.
32 Id.
33 See Britannica, East India Company, supra note 16.
34 Id.
35 See C. Knick Harley, supra note 3.
36 Id. at 179.
37 Id. at 181–182.
38 Id. at 184.
39 See infra § 14:3(A)(2)(c).
40 C. Knick Harley, supra note, at 186.
41 See Brankica Radonjic, The Navigation Acts 1650–1969 (David W. Koeller, 1996–1999), http://thenagain.info/webchron/usa/navigation.html. This publication describes the Navigation Acts enacted by the English Parliament from 1650 to 1696 as:
The Navigation Acts were passed by the English Parliament in the seventeenth century. The Acts were originally aimed at excluding the Dutch from the profits made by English trade. The mercantilist theory behind the Navigation Acts assumed that [the boundaries of] world trade … [were] fixed and the colonies existed for the parent country.
42 See supra § 14:3.
43 See William I. Roberts, IIII, Samuel Storke: An Eighteenth-Century London Merchant Trading to the American Colonies, 39 Bus. Hist. Rev. 147–70 (No. 2, 1965).
44 Id. at 148–49.
45 Id. at 149 (citations omitted).
46 Id.
47 Id. at 149–50.
48 Id. at 154.
49 Id. at 155.
50 Id. at 154.
51 Id.
52 See infra § 22:4(C) (for a discussion of the availability of commercial and consumer credit in eighteenth century England).
53 Roberts, supra note 43, at 155.
54 Id. at 155 n.31 and accompanying text.
55 Id. at 155 n.32 and accompanying text.
56 Id. at 148: “Most of the credit Storke extended in the colonial trade resulted … from Storke’s own initiative in sending consignments to his colonial correspondents.”
57 Id. at 157 n.38 and accompanying text: “Storke apparently had ordered that the cloth not be sold for less, and two years later consignment was still unsold.”
58 See, e.g., id. at 155 n.32 (on the half a dozen or so price advances on European goods in the colonial market).
59 Id. at 157.
60 Id.
61 Id. at 153.
62 Id. at 170.
63 Id. at 148.
64 Id. at 157 (for an instance of a fixed price directive).
65 See supra §§ 20:2 (A)(1 & 2).
66 Defoe, English Tradesman, supra note 5, at 187 n.26.
67 See NASA, A Brief History of Measurement Systems, https://standards.nasa.gov/history_metric.pdf.
68 Id.
69 See Neal McKendrick et al., The Birth of a Consumer Society 24 (1983) (citation omitted).
70 Id. at 58 (citation omitted).
71 See Robert C. Allen, The Great Divergence in European Wages and Prices from the Middle Ages to the First World War, 38 Explorations Econ. Hist. 411–14, 433 (2001). See also Robert C. Allen, The High Wage Economy in Pre-industrial Britain 8–10 (2006), http://www.helsinki.fi/iehc2006/papers2/Allen77.pdf.
72 See infra § 20:2(F)(2).
73 See Robin Blackburn, Enslavement and Industrialisation, bbc.co.uk, http://www.bbc.co.uk/history/british/abolition/industrialisation_article_01.shtml.
74 Id.
75 Id.
76 Id.
77 Id.
78 Id.
79 Id. (on “Profit margins”).
80 Id. (citation omitted).
81 Id.
82 Simon Schama, II A History of Britain 405 (2001).
83 Id.
84 Id. at 410.
85 Id.
86 Id. at 410–11. While Professor Schama intends to highlight the horrible plight of African slaves, some readers may think that he is suggesting that only Africans and not Caucasians or Native Americans were suitable as slaves. I do not believe that this was his intent, but if it was I could not endorse these statements.
87 See Edmund Heward, Lord Mansfield 139–49 (1998) (Freeing the slaves 1772).
88 Id. at 139.
89 Id.
90 Id.
91 Id. at 140.
92 Id. (citation omitted).
93 Id.
94 Id.
95 Id. at 141.
96 Id. at 142.
97 Id.
98 See Smith v. Brown and Cooper, 91 E.R. 566 [K.B. 1705] (2 Salkeld 666). See also Heward, supra note 87, at 145 (as cited by Francis Hargrave a lawyer for the abolitionists in the James Sommersett’s case).
99 Heward, supra note 87, at 142.
100 Id. at 143.
101 Id.
102 Id.
103 James Sommersett v. Stewart 20 State Trials 1 [K.B. 1772], cited in id. at 143 n.9.
104 Id. at 146 (emphasis added).
105 Id.
106 Id. at 147.
107 Id.
108 Id. at 147 (citing F.O. Shyllon, Black Slaves in Britain 174 (1974)).
109 Id. at 147–48 (citing F.O. Shyllon, at 184).
110 For one of these standards, see infra § 22:7(B).
111 See supra ch. 6.
112 See § 5:1 (on the principle of the peace of the marketplace); see also Kozolchyk, Grand and Small Scheme.
113 Plucknett, infra note 122 at 155.
114 Id.
115 Id.
116 Id.
117 See infra § 20:3.
118 Id.
119 See Bernard L. Shientag, Lord Mansfield Revisited-A Modern Assessment, 10 Fordham L. Rev. 345, 346 (1941) (citation omitted).
120 See Lawrence M. Friedman, History of American Law (2d ed., rev. 1985).
121 Id. at 25.
122 See The Official Website of the British Monarchy, The Act of Settlement (for a description of the purpose of this Act, enacted in 1701): “to secure the Protestant succession to the throne, and to strengthen the guarantees for ensuring parliamentary system of government [including an independent judiciary],” http://www.royal.gov.uk/historyofthemonarchy/kingsandqueensoftheunitedkingdom/thestuarts/maryi iwilliamiiiandtheactofsettlement/theactofsettlement.aspx%. Thus, in Plucknett’s words: “the complete independence of the [judiciary] bench was therefore permanently established.” See Theodore F.T. Plucknett, A Concise History of the Common Law 61 (1956).
123 Plucknett at 61.
124 In England’s constitutional monarchy, day-to-day power is exercised by Ministers of the Cabinet, and by Parliament. The Official Website of the British Monarchy defers to a description by Walter Bagehot (1826–77):
One of the most important writers on the subject of constitutional monarchy….
‘The nation is divided into parties, but the crown is of no party. Its apparent separation from business is that which removes it both from enmities and from desecration, which preserves its mystery, which enables it to combine the affection of conflicting parties….’
[T]he Sovereign had three rights: ‘the right to be consulted, the right to encourage, the right to warn’. See The Official Website of the Monarchy, History and background, http://www.royal.gov.uk/MonarchUK/HowtheMonarchyworks/History%20and%20background.aspx.
125 Plucknett, supra note 122, at 49 (citation omitted).
126 Id. at 51.
127 See William Blackstone, Commentaries on the Laws of England: A Facsimile of the First Edition of 1765—1769, 3 The Founders’ Constitution 60 (1979), http://press-pubs.uchicago.edu/founders/documents/a1_8_9s1.html.
128 See infra § 24:3(B)(2).
129 As pointed out by the Encyclopedia Britannica, as a court of equity under the lord high chancellor it began to develop in the 15th century. In our day, it “comprises the Chancery Division of the High Court of Justice. [Although courts of equity have by now been absorbed by common law courts], [c]ourts of chancery or equity are still maintained as separate jurisdictions in certain areas of the commonwealth and in some states of the United States.” See Encyclopaedia Britannica Online, Court of Chancery (2013), http://www.britannica.com/EBchecked/topic/105336/Court-of-Chancery.
130 The Earl of Oxford’s Case in Chancery 21 E.R. 485 (1615).
131 The Ecclesiastical Leases Act 1571, 13 Eliz. 1, c. 10.
132 Gary Watt, Earl of Oxford’s Case (1615), in The New Oxford Companion to Law 351 (2008), available at http://www.griffith.edu.au/%y(2)6ddata/assets/pdf_file/0012/188688/early-intervention.pdf.
133 Id.
134 The Earl of Oxford’s Case in Chancery 21 E.R. 485, 486.
135 Id. at 486.
136 Id.
137 Id.
138 Id.
139 Id.
140 Watt, supra note 132, at 352.
141 Professor Max Radin’s defines equitable estoppel (also known as estoppel “in pais” in his dictionary) as:
[W]hen any one by words, acts or abstentions, has induced someone to act as though a … relationship existed or had a certain character, this existence or character may not thereafter be legally denied….
See Max Radin, Radin Law Dictionary 115 (Lawrence G. Greene ed., 1955). Civil law lawyers will recognize in this version of estoppel a Roman version of bad faith known as “Venire contra Factum Proprium,” discussed in infra § 22:10(D).
The equitable remedy of preclusion is but a variety of estoppel in pais as just defined.
142 See, e.g., UCP 500 Sub Article 14(e):
If the issuing bank … fails to act in accordance with the provisions of this Article and/or fails to hold the documents at the disposal of, or fails to return them to the presenter the … Bank … shall be precluded from claiming that the documents are not in compliance with the terms and conditions of the Credit.
143 See U.C.C. § 4–302 (a)(1).
144 See Glossary, “praetor.”
145 Plucknett, supra note 122, at 354 (citation omitted).
146 See supra § 4:2(A)(2).
147 See Berger, Dictionary, at 344.
148 See Radin, supra note 141, at 135 (Forms of Action).
149 See Miller v. Race 97 E.R. 398, 400 [1758].
150 See Hamilton v. Mendes 2 Burr. 1198, 1214 [1761].
151 Plucknett, supra note 122 (citing Frederick Pollock & Frederic Maitland, 2 The History of English Law before the Time of Edward I, 558 (1898)).
152 Id. at 355.
153 Id.
154 Id. at 366.
155 Slade v. Morley, 76 Eng. Rep. 1074 [K.B. 1602].
156 Hussey v. Jacob, 91 E.R. 301 [1696].
157 Pillans and Rose v Van Mierop and Hopkins, 97 E.R. 1035 [1765].
158 Miller v. Race, 97 E.R. 398 [1758].
159 Price v. Neal, 97 E.R. 871 [K.B. 1762].
160 See Jeremy Bentham, Truth vs. Ashurst, cited in Jeremy Bentham 3 Critical Assessments 248 n.11 (Bhikhu C. Parekh ed.,1993), available at http://books.google.com/books?id=iOOm8F5_sBcC&pg=PA248 &lpg=PA248&dq=jeremy+bentham+dog+law.
161 Plucknett, supra note 122, at 73.
162 Heward, supra note 87, at 104–05 (citing Justice Buller, in Lickbarrow and Another v. Mason and Others, 2 Term Rep. 63, 74 [1787]; 100 E.R. 35, 40).
163 Id. at 103.
164 Id. at 101 (citing C.H.S. Fifoot, Lord Mansfield 118 (1936)).
165 See Plucknett, supra note 122, at 127–29. The representativeness of the jury, especially as a sign of race, ethnic and gender inclusiveness persists especially in the United States. See, e.g., Jeffrey B. Abramsson, We, the Jury: The Jury System and the Ideal of Democracy: with a New Preface 99–102 (1994) (Jury Selection and the Cross-Sectional Ideal): “In the United Sates Today, it is common to describe the ideal jury as a ‘body truly representative of the community.’ ” Id. at 99.
166 Plucknett, at 126.
167 Id. at 129–30.
168 Id. at 130.
169 See generally James Oldham, English Common Law In the Age of Mansfield (2004) (introductory chapter).
170 Oldham, at 22.
171 Id.
172 Id. at 22–23.
173 Miller v. Race, 97 E.R. 398, 459 [1758].
174 See § 23:4(D)(2)(a) (on Mansfield’s horse warranty decisions).
175 See Stuart v. Wilkins, 99 E.R. 15 [1778] where Lord Mansfield agreed with plaintiff David Stuart that James Wilkins had offered to sell him a mare for a certain “large” price (£31, 10 s) that Stuart had paid him such a sum assuming that the mare was sound only to discover upon delivery that the mare “was unsound, and was afflicted with a certain malady … called the windgalls….” Id.
176 See Carter v. Boehm, 97 E.R. 1162, 1164 [1766].
177 David Harris Sacks, The Promise and the Contract in Early Modern England: Slade’s Case in Perspective, in Rhetoric and Law in Early Modern Europe 47 n.25 and accompanying text (Victoria Ann Kahn & Lorna Lutson eds., 2001).
178 Id. at 33 n.27 and accompanying text.
179 See Boris Kozolchyk, Commercial Letters of Credit in the Americas 590–91 (1966) (for a discussion of the meaning of commercial specialties—as distinguished from contracts under seal, among other formal contracts).
180 See supra § 11:2(D)(2) (on French commercial codification); see Kozolchyk, Negotiable Instruments 22–2, 22–11 (for a comparative analysis of the rights and duties of the parties to these instruments).
181 Kozolchyk, Negotiable Instruments.
182 Id.
183 Hussey v. Jacob, 91 E.R. 301 [1696], cited in W.S. Holdsworth 3 A History of English Law 166 n.3 and accompanying text (1926).
184 Id. at 166 n.4 and accompanying text (on the statute of 16 Charles II, c.7).
185 Id. at 166 n.4.
186 See Henry Diedrich Jencken, A Compendium of the Laws on Bills of Exchange, Promissory Notes, Checques, and other Commercial Negotiable Instruments of England, Germany and France (1880) [hereinafter Jencken, Compendium] (his classic monograph). See also § 11:2 (D)(2), (Henry Diedrich Jencken’s Comparative Analysis of European Nineteenth Century Negotiable Instrument Laws).
187 Id.
188 Clerke v. Martin, 92 E.R. 6 [1703]; 2 LD. Raym. 757, 758, in James E. Byrne, Negotiability: The Doctrine & Its Application in U.S. Commercial Law 16–17 (14th ed. 2005). I will be restating segments of the transcript of this decision from this remarkably didactic textbook which I used in my commercial law classes for a half a decade.
189 Byrne, Negotiability at 16 (citing Clerke v. Martin, 92 E.R. 6).
190 Id.
191 Id. at 17.
192 Id. at 18 (citing Buller v. Crips 87 E.R. 793 [Q.B. 1704]; 6 Mod. Rep. 29).
193 Id.
194 See id. at 20 (citing The Statute of Anne 3 & 4 Anne, c. 9 [1704]). This statute was absorbed and thus repealed by the Bills of Exchange Act of 1882 (C.61), S. 96.
195 Id. (emphasis added)
196 See supra § 11:2(B).
197 I say more gradually because the underlying transaction defenses of lack of privity of contract and lack of agents’ powers to issue bills of lading continue to plague English bills of lading well into the twentieth century as will be discussed later in this chapter. See infra Section…. .
198 Kozolchyk, Evolution and Present State, at 169.
199 See supra ch. 11.
200 Consider, for example, the effect of a ruling as general as that by an appellate court in Rouen in 1973:
The agreement that gives birth to an obligation whose cause is illicit is tainted with nullity that any interested parry may invoke…” (La convention qui donne naissance a une obligation dont la cause est illicite est attainte d’une nullité que tout interessé peut invoquer…)
Rouen 2, Oct. 1973, D.1974, 378
Accordingly, if the agreement in question is paid by means of a promissory note or bill of exchange France Ratified the Geneva Convention on Bills of Exchange and Promissory Notes in 1936. See United Nations Treaty Collection, http://treaties.un.org/Pages/LONViewDetails.aspx?src=LON& id=547&lang=en. Article 17 of the Geneva Convention states: “Persons sued on a bill of exchange cannot set up against the holder defences founded on their personal relations with the drawer or with previous holders, unless the holder, in acquiring the bill, has knowingly acted to the detriment of the debtor.” See The League of Nations, Geneva Conventions on the Unification of the Law relating to Bills of Exchange, art. 17 (1930), available at http://www.jus.uio.no/lm/en/html/treaties.and.organisations.html#274. Query, is illegality or illicitness a “personal” or a “real” defense, as it is in most laws I am familiar with?
201 John Munro, Usury, Calvinism, and Credit in Protestant England: from the Sixteenth Century to the Industrial Revolution (Abstract) (Univ. of Toronto, Dept. of Econ., Working Paper No. 439, 2011), available at http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/439.