Lloyd's Maritime and Commercial Law Quarterly
THE CONCEPT AND IMPLICATIONS OF A MARKET IN COMMERCIAL LAW
Roy Goode*
I regard it as a particular honour to have been invited to deliver the annual Lionel Cohen Lecture here on Mount Scopus at this fine law school. Lionel Cohen was a man of many parts: a prominent participant in Jewish affairs; an adornment to the English legal profession, in which he became elevated to the House of Lords a mere eight years after first taking his seat on the Bench; a distinguished public figure who chaired two Royal Commissions and a committee on company law whose report led to major new legislation; a brilliant golfer and card player; and a very good friend of the Hebrew University of Jerusalem. I am indebted both to the Dean of the Faculty of Laws for extending the invitation and to my fellow trustees of the Lionel Cohen Trust for supporting this visit by my wife and myself, in splendid defiance of that well-known rule of equity which precludes a trustee from benefiting from his own trust!
My theme tonight is the relationship between the market and the law, in particular the legal tools of market development and in turn the influence of market operations and practice on the development of commercial law.
In most western legal systems contract is perceived as an essentially bilateral relationship in which one party takes the initiative in making contact with the other and the rules governing that relationship are settled by the parties themselves within the limits permitted by law. But establishing individual contact is tedious and time-consuming, and from an early age traders came to see the advantages of a market in which putative sellers and buyers could be brought together, directly or through intermediaries, for the transacting of business. Ranging from the primitive bazaar to the international trade centre, all markets have a common purpose, to facilitate exchange by some form of institutional structure and club rules. Yet, since each exchange on a market is effected by a bilateral agreement, lawyers tend to assume that such an agreement is no different in character from a private dealing, and that a market is at bottom no more than the aggregate of a set of bilateral contracts. This is the assumption underlying the treatment of contract law in our textbooks, which draw no distinction between market and off-market contracts and, indeed, do not mention market contracts at all except by passing references to purchases in market overt and to the computation of damages for breach of a sale contract by reference to the market price.
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