Lloyd's Maritime and Commercial Law Quarterly
THE MISALIGNMENT OF COMMERCIAL LAW AND COMMERCIAL PRACTICE
Gonzalo Villalta Puig*
Commercial law is in misalignment with commercial practice. This article reasons that, despite the facilitative purpose of commercial law, the misalignment responds to its concern for doctrinal certainty. It reviews solutions to this problem from both inside and outside commercial law. The article rejects private law-making, creative lawyering, and creating compliance as outside solutions and calls for the flexible application to commercial practice of flexible commercial doctrine as the only—inside—solution.
INTRODUCTION
This article reflects on the misalignment of commercial law and commercial practice. The point of reference for this exercise in reflection must be the purpose of commercial law. Only a purposive definition can allow the distinction of law from practice and, therefore, expose their misalignment. On the assumption that, at its lowest, the purpose of commercial law is regulative,1 it follows that its highest purpose is facilitative. That is, the purpose of commercial law is “to facilitate market transactions in developed market economies”.2
* Professor of Law, The Chinese University of Hong Kong; Convenor, International Association of Constitutional Law Research Group for Constitutional Studies of Free Trade and Political Economy.
The following abbreviations are used: Bradgate: R Bradgate, “Contracts, Contract Law and Reasonable Expectations”, in S Worthington (ed),
Commercial Law and Commercial Practice (Hart, Oxford, 2003), 651; Beale & Dugdale (1975) 2 BJLS 45: H Beale and T Dugdale, “Contracts between Businessmen: Planning andthe Use of Contractual Remedies” (1975) 2 BJLS 45;
Cranston, “Activity”: R Cranston, “Commercial Law and Commercial Activity” in R Cranston and R Goode (eds), Commercial and Consumer Law: National and International Dimensions (Clarendon Press, Oxford 1993), 274;
Cranston, “Doctrine”: R Cranston, “Doctrine and Practice in Commercial Law”, in K Hawkins (ed), The Human Face of Law: Essays in Honour of Donald Harris (Clarendon Press, Oxford 1997), 199;
Devlin (1951) 14 MLR 249; P Devlin, “The Relation between Commercial Law and Commercial Practice” (1951) 14 MLR 249;
Duggan: A Duggan, “Commercial Law and the Limits of the Black Letter Approach”, in S Worthington (ed), Commercial Law and Commercial Practice (Hart, Oxford, 2003), 595; Twigg-Flesner & Villalta Puig: C Twigg-Flesner and G Villalta Puig (eds), Boundaries of Commercial and Trade
Law (Sellier, Munich, 2011).
1. See Cranston, “Activity”, 283: “Law has… underpinned markets by regulating fraudulent, sharp, or objectionable practices”. One example is the regulation of the securities markets.
2. Ibid., 274. For Goode, commercial law is “the totality of the law’s response to the needs and practices of the mercantile community” (emphasis added): see E McKendrick (ed), Goode on Commercial Law, 4th edn (Penguin, London, 2010), 1347. This definition refuses to characterise the “law’s response” as either facilitative or non-facilitative. The law is, simply, a response. It is the aim of this article to assess whether that response is for a facilitative purpose.
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