This essay will argue that UK Business Law has failed to be shaped to good effect as, while the law has witnessed the introduction of cases and legislation, this has not prompted UK Business Law being shaped to good effect. Instead, UK Business Law appears to have been pieced together in a disorderly manner which has left academics and lawyers confused as to the application and clarity of the law. It will be argued whilst the initial emergence of UK Business Law saw a lack of judicial and legislative intervention, the nineteenth century perhaps saw too much legislation and too many cases attempting to develop the law, to over-compensate for the lack of involvement by judges and Parliament earlier on in the evolution. The essay will demonstrate that while there have been several well-decided cases, this has not led to the law being shaped to good effect as the judicial decision-making has been let down by the legislation, resulting in a lack of structured approach to the law. The lack of an organised, systematic structure to the development to UK Business Law is due to a vast body of cases and legislation which have ultimately caused confusion and chaos within the law. In establishing the argument, this essay will examine how UK Business Law has adapted and developed throughout over time both through cases and legislation.
The beginnings of UK Business Law can traced back to the “Law Merchant, or lex mercatoria”, which, “until the sixteenth century”, was “confined in operation to its own special courts, the borough and piepowder courts and the Court of Admiralty”. The Law Merchant has been “developed by medieval merchants to regulate commerce throughout the known world of Europe, North Africa, and Asia”, however is now merely considered “a figure of speech for what we now call mercantile law”. However, Baker rightly criticises the Law Merchant stating that “it was in reality nothing other than a refinement of the common law which had always governed mercantile affairs”, thereby suggesting that the Law Merchant did not help to shape UK Business Law, but rather reinforced principles that could already be found within Common Law. This argument is reiterated by Matthew Hale, who identifies that “the Common Law includes …Lex Mercatoria”, indicating that while initially it may appear that the Law Merchant was independent as its own system of law, it was just a “branch of ordinary English law which happens to govern merchants’ affairs”. This demonstrates that the law in relation to mercantile customs was often misunderstood, due to the lack of judicial decision-making and legislation, which eventually lead the Law Merchants to believe that their concerns suddenly “became the law of the land”. Worryingly, questions even arose as to whether lex mercatoria even had “any real existence as a source of law”, further demonstrating the lack of both understanding and clarity of UK Business Law and re-enforcing the argument that the law has failed to be shaped to good effect. This argument is supported by Sutherland, who identifies the “lack of development in the merchant courts of England”, confirmation that UK Business Law in medieval time lacked creative judicial decision-making and responsive legislative intervention, as development is usually instigated through statutes and cases. The confusion surrounding the Law Merchant has demonstrated that UK Business Law has not been shaped to good effect by creative judicial decision making and responsive legislation, but has instead shown that the law was continually misunderstood. The lack of good effect within UK Business Law can be further supported by the decline of the mercantile courts “towards the end of the medieval period”, thereby demonstrating that the Law Merchant did not contribute effectively to UK Business Law and lacked responsive legislative intervention, which ultimately led to the diminish of the Law Merchant and mercantile courts. Instead, “the future of the English courts merchant lay less with the so-called Merchant Law, which was to force its way into the common law of the future”. This statement provides further support as to the overlap of the Law Merchant and the Common Law, questioning why there was any separation between the Law Merchant and Common Law in the first instance. Despite its criticisms, it is important to recognise that there is a “twenty-first-century Law Merchant”, demonstrating that the Law Merchant itself is still incorporated in UK Business Law, even though it may be illustrated “quite imperfectly”.
While it appears that there was little progress in relation to shaping UK Business Law to good effect whilst locating the Law Merchant, following the incorporation of the Law Merchant into the Common Law, many cases emerged before the courts, thereby facilitating the opportunity for creative judicial decision making. However, UK Business Law is an example of where the law has been subjected to the effective domination of a few judges, such as Lord Mansfield. Although this may be considered to be a downfall of UK Business Law, in Smart v Wolff, Buller J identifies that while judges may give judgements on certain areas of the law, these judgements are “received with great caution, and frequently contradicted”, illustrating that although decisions by great judges are treated with high authority, cases will be judged on their unique facts in an attempt to “serve as a guide for the future”. However, it appears that due to the authority of the judges, this resulted a number of Law Merchant cases being heard before the courts, arguably creating an over-reliance on the development of the law through cases. For example, the judgement of Lord Mansfield in Vallejo v Wheeler helps to create a better understanding of UK Business Law, as it clarified that “in all mercantile transactions the great object should be certainty”. Although this decisions provides clearer understanding of business law transactions, this indicates that prior to the judgement, the purpose of mercantile transactions was unknown and thus the law unclear. Lord Mansfield’s contributions to UK Business Law were also praised in Lickbarrow v Mason where Buller J honoured the judge as being “founder of the commercial law of this country”. While this may demonstrate the shaping of UK Business Law to good effect through judicial decision-making, the law has frequently over-relied on a small number of judges to make big changes to shape the law. Goodwin v Robarts stated that “it is from mercantile usage, as proved in evidence, and ratified by judicial decision in the great case of Lickbarrow v. Mason, that the efficacy of bills of lading to pass the property in goods is derived”, further demonstrating a dependence on the case law. Despite this, the affirmation of Lickbarrow v Mason and the praise afforded to the decision making in the case provides good evidence of positive judicial decision making. Goodwin v Robarts also stated that the Law Merchant can be “expanded and enlarged so as to meet the wants and requirements of trade in the varying circumstances of commerce”. This decision was re-affirmed by Edelstein v Schuler, which acknowledged that “principles do not alter, but old rules of applying them change, and new rules spring into existence”. Further clarification of the Law Merchant was then offered in the case of Bank of Baroda v Punjab National Bank, where it was established that “the law merchant is not a closed book, nor is it fixed or stereotyped”. It is apparent that the cases which were heard after the incorporation of the Law Merchant into Common Law indicate that UK Business Law cases appear to be clarifying the law in relation to Law Merchants through creative judicial decision making, however the cases are not enough to demonstrate the law having been shaped to good effect as they instead highlight where there is a lack of legislation or where legislation has failed to shape the law to good effect.
Following the incorporation of the Law Merchant into Common Law, “Victorian Britain passed a series of Companies Acts making it easy to establish limited-liability private-sector companies”, however, the statutes were received with mixed reactions from business lawyers and academics alike. This is demonstrated by the Joint Stock Companies Act 1844, which Lobban argued “sought to solve the problem of company identity, but in practice complicated it”, which is supported by the Act being “amended on many separate occasions”. The Companies Clauses Consolidation Act 1845, which gave “a kind of limited liability”, is an example of an amendment, even though it has subsequently been argued that the provisions of the Act are not the “modern method”. The development of legislation meant limited liability continued to expand, and in 1855 the Limited Liability Act was passed, meaning that “all firms could receive limited liability through registration and public notice”. Another piece of legislation was the enacted, namely the Joint Stock Companies Act 1856, which “put companies on a new footing, making them clearly distinct from partnerships”. Despite the large body of Parliamentary legislation that was introduced, such legislation resulted in “cautious scepticism”, with legislation perceived as having been enforced “in a hurried, almost accidental way”.
It appears that the beginning of UK Business Law saw little to no legislation or judicial intervention and that, as the years have gone by, judges and Parliament have felt the need to make up for lost time by suddenly implementing large bodies of legislation and a number of cases being brought before the courts, with a rapid increase in “the number of charters and statutes granting limited liability”. Rather than being considered responsive, the legislative intervention was perceived negatively, with the legislation appearing to “sanction the positive attitude towards business associations that the courts of common law and equity showed during the first four decades of the nineteenth century”. Rather than the legislation being deemed responsive, academics were instead left wondering “why Parliament introduced so dramatic a reform so suddenly”. Despite these attitudes, the implementation of legislation continued and in 1862 “a new Companies Act was passed which consolidated recent legislation, and put the hitherto haphazard law on a new secure footing”. However, the legislation continued to be regarded as “too liberal”, with “some of the protections and provisions introduced in France” considered a more preferable alternative. MacNeil identifies that “uncertainty existed in respect of the requirements of the enabling rules in the Companies Act 1862”, thereby not directly addressing certain issues, enabling “the possibility of the law being tested”. Rather than the legislative intervention being responsive, it was instead a “decisive break”, perhaps suggesting that the legislation had been demanded by business law for a number of years. However, despite the criticisms towards the legislative intervention, it “is still the principal British Companies Act”.
The lack of the law being shaped to good effect is further illustrated in Salomon v Salomon, which “did not overturn any of the previous authorities yet is widely regarded as marking an important turning point in the recognition of limited liability and separate corporate personality”. The case highlights both the uncertainty within UK Business Law and illustrates that judicial decision making was not creative, it merely provided clarifications to the law where the legislation had failed to do so. Both the legislation and cases in relation to the birth of the limited liability company illustrate the confusing nature of UK Business Law depicting that the law has not been shaped to good effective by judicial decision making and responsive legislation, but rather has been pieced together and often misunderstood.
The continuing dense body of legislative intervention resulted in the demand for codifying and consolidating measures to be introduced to address and minimise confusion that had arisen, instead of merely “roaming over a vast number of authorities to discover what the law was, extracting it by a minute critical examination of the prior decisions”. The Bills of Exchange Act 1882 was one of those consolidating measures, the principles of which “derive directly from the practice of businessmen and that is the reason for its enduring success”. While the Act itself may have been praised, prior to the Act, “bills of exchange were not easy to integrate into the law”, thereby indicating the lack of approachability to UK Business Law. This is further illustrated by bills of exchange being “operated by merchants since the thirteenth century”, suggesting that they were long overdue new legislation, especially considering they were a “central feature of commercial transactions”. Sir Mackenzie Chalmers’ work can be perceived as helping to integrate “key mercantile customs into its structure”, which “proved an immediate success both in England and in Scotland and quite soon it was adopted in many parts of the Empire”. The Act has certainly received judicial support, with Mackinnon LJ regarding the Bills of Exchange Act “as the best drafted Act of Parliament ever passed”. However, such support further demonstrates that there had been a lack of responsive legislative intervention prior, which forced judges to make amends through codification and new legislative measures. A further example of codification is the Marine Insurance Act 1906, which “created an environment in which some legal uncertainty could survive”, thereby clearly not helping the law to achieve certainty in application as “uncertainty persisted for such a long time”. Nevertheless, the Act was criticised as it “contained within it the possibility that issues relating to the common law would have to be re-visited at some point in the future”, demonstrating that UK Business Law was failing to be shaped to good effect as the legislation did not provide substantial clarification and lacked “complete codification” of the law. While the introduction of consolidating and codifying acts “marked the end of active campaigning for codification of commercial law”, the legislation was not so interventionist as to enable the shaping of UK Business Law to good effect as the law still lacked clarification. Rather, “the history of attempts at codification in nineteenth century Britain is the history of a movement which largely failed”, suggesting that while several codifying instruments were implemented, these were not as successful as was once hoped.
To conclude, the lack of timely, structured interventionist legislation, alongside the case law, has undermined the ability of UK Business Law to be shaped to good effect as the law has frequently remained uncertain and confusing. While the initial evolution of UK Business Law lacked both legislative intervention and judicial decision making, the birth of the limited liability saw a change of perspective from both judges and Parliament. Despite UK Business Law witnessing a mass introduction of legislation and the emergence of cases, this does not adequately demonstrate the law being shaped to good effect. Although there have been several statutes enacted striving to clarify, codify and enforce new law, the intervention cannot be considered responsive, but rather lagging, piecemeal and lacking any real structure. This theme has also been depicted through judicial decision-making which, although more effective than the legislation, has not demonstrated the ability to shape the law to good effect. Ultimately, while the law has attempted to shape the law to good effect through legislation and cases, this has not been fulfilled.