In Europe in the Middle Ages, the Law Merchant was comprised of two branches, maritime law and commercial law. Both applied to merchants, who formed a separate class. The laws differed from the common law, grew from the customs of merchants and were originally administered in either the same or in similar courts, separate from ordinary courts.
Simple rules were needed by merchants, acceptable to traders from many countries. The laws were private international law.
Customs for maritime law in England were based on the Rules of Oleron, France, 1160, brought back from the Second Crusade. They are traced to the sea laws of Rhodes and Phoenicia, were adopted by seaports, and later inserted into the Black Book of the Admiralty.
The Law Merchant developed in the early 11th century. Traders could negotiate contracts, partnerships, trademarks, and other acts of buying and selling. Like the jus gentium (law of nations) of early Rome, the law merchant was different from existing rules that varied from place to place because it was uniform in international use.
Law Merchant Courts
The history of the tribunals that administered the Law Merchant falls into three periods. First, the maritime law and commercial law was administered in local courts, up to the reign of Edward III, 1327. Second, the rise of the Court of Admiralty for maritime law in the mid 14th century. Third, the decline of the special commercial law courts as they were absorbed into the common law.
The courts were the courts of the fairs, important towns, and the Staple.
Pie Powder Courts
For centuries in the Middle Ages, much of the trade was conducted at trade fairs, held around holy days. The word fair is from the Latin word “feria” meaning holy day. Originally fairs were sponsored by churches to raise funds. In England, fairs started following the Norman Conquest of England in 1066.
Traveling merchants set up their wares in temporary tents. To attract a crowd, entertainment included singers, dancers, musicians, jugglers, magicians, acrobats, stilt walkers, fools, and archery tournaments. Food, refreshments, and drinking were available. Money changers exchanged foreign coins for local coins for a fee. Workers were allowed time off for the fair.
The license for the fair included the right to hold a pie-powder court to settle disputes.
According to a 1483 statute of King Richard III, An Act for the Trial of Matters at Courts of Piepowder in Fairs:
“it hath been all times accustomed, that every person coming to the said fairs, should have lawful remedy of all manner of contracts, trespasses, covenants, debts, and other deeds made or done within any of the same fairs, during the time of the said fair, and within the jurisdiction of the same, and to be tried by the merchants being of the same fair.”
Some trade fair locations included Stamford, Nottingham, St. Ives, and Leicester in England; Champagne, Saint-Denis, and Lyons in France; Germany, Italy, Flanders, and Antwerp, with merchants from all of Europe. For several days or more, goods were bought and sold, orders were given and taken, payments and contracts were made. Then the merchants moved on to the next fair location.
The name pie-powder court was derived from the dusty feet of the participants (from French pied poudré, “dusty foot”), because the merchants traveled on dusty roads and courts were often held outdoors at fairs. The court was comprised of three or four merchants who made quick decisions about trade disputes, often within hours or tides, enabling participants to move on quickly.
So-called half-tongue juries were made up of half local merchants and half foreign merchants. For speed, judgments were oral, written affidavits and cross-examinations were not used. They also ruled on crimes committed at the fair.
Towns had a Merchant Guild, made up of merchants, who sometimes arbitrated disputes, but mostly acted as a protective trade union. As early as 1154, merchants settled disputes in Milan, Italy.
The fairs of Champagne ended when King Philip IV began taxing the fairs and no longer allowed judgments by merchant courts. Italian merchants then traveled in convoys to fairs in England using new navigational instruments and improved maps to venture beyond the Mediterranean into the Atlantic.
King Philip then targeted the wealth and power of the Knights Templar to escape debt, by controlling the new Pope from France.
For more convenient customs collections, the Ordinance of the Staple in 1353 designated some ports as Staple Towns. They were the only places where important goods of wool, leather, lead and tin were traded. They included York, Bristol, Newcastle, Westminster, Canterbury, Dublin, and Cork. In Staple Courts, headed by the mayor and two constables, the Law Merchant was used, not common law.
Common Law Courts
As commerce increased in the 14th and 15th centuries, large traders became distinct from small traders. Some held monopolies, and it was felt that some regulation was needed. Domestic merchant powers had practically ceased in the 16th century, but some merchant fair courts survived. Domestic merchants were treated the same as non-merchants under common law, by Common Law Courts.
In England, domestic merchant powers were finally abolished by the Municipal Corporations Act of 1835. In 1807, France enacted the Code of Commerce, one of five codes of Napoleon. In Germany, a Uniform Commercial Code was published in 1861.
Magna Carta and the Law Merchant
Article 41 of the Magna Carta, enacted by King John in 1215, authorized merchants to “enter or leave England unharmed and without fear” and merchants “may stay or travel within it [England], by land or water, for the purposes of trade, free from all illegal exactions, in accordance with ancient and lawful customs”.
Notaries and the Law Merchant
The Knights Templar, founded in 1119 after the First Crusade, developed banking systems, credit and notary services. Notaries prepared, sealed and authenticated commercial documents and were recognized internationally.
The notary made copies of the contract for the buyer and the seller and kept a copy in the notary protocol. Decisions of arbiters were registered with a notary. Merchants also used notarized contracts to hire agents to represent them.
Official state and church notaries were used since Ancient Rome to write, certify and store documents. In the 11th century, lay notaries emerged in Italy.
From the mid 13th century notarial contracts were common in Italy. In 1245, one notary in Marseilles, France drafted more than a thousand commercial documents. From 1326 in Champagne, France, fair contracts were required to be in notarial form.
Notaries introduced a legal phraseology, stylus mercatorum, to commercial documents, bringing uniformity.
Surviving Customs of the Law Merchant
The medieval Law Merchant has left a legacy in modern commercial practices.
A bill of exchange payable to the bearer on demand was used by merchants as early as the 13th century, but not seen in common law courts until 1603.
After Columbus landed in 1492, as European countries began to explore and colonize the New World, colonial companies were formed, the first was the Dutch East India Company in 1602. The liability of each member was limited to his contribution and share certificates were transferable. Colonial companies were refined into the modern corporation.
Common Law kept certain rules of the Law Merchant, including the law of negotiable instruments, protest of a foreign bill of exchange, bills of lading, international carriage, no warranty of title in a sale of goods, and the use of earnest money to bind a bargain. The law allowed money and land of a debtor to be attached.
Many contracts include a mediation or arbitration clause where disputes are settled outside of court.
End of the Law Merchant
Foreign trade remained governed longer by the Law Merchant as customary international law. By the end of the 17th century, the Law Merchant was absorbed into the ordinary courts of law and equity. Merchants could turn to arbitration or the courts of law.
In 1622, merchant Gerard de Malynes wrote the treatise Consuetudo vel Lex Mercatoria or the Ancient Law Merchant.
The complete incorporation of the Law Merchant in England with the common law began in 1756 by chief justice Lord Mansfield, founder of commercial law in England.
In the U.S., the Law Merchant was codified in the Uniform Commercial Code (UCC), a body of law that governs mercantile transactions, adopted by the states.
Find a Medieval Fair or Renaissance Fair
See a list of medieval and renaissance fairs to find one in your area.
1. Jousting Knights at Texas Renaissance Festival by Clinton & Charles Robertson, Texas [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
2. Medieval tent by Tux Paint (http://tuxpaint.org/) [GPL (http://www.gnu.org/licenses/gpl.html)], via Wikimedia Commons
3. Knights Templar, Grand Master Jacques de Molay, nineteenth-century color lithograph by Chevauchet [Public domain], via Wikimedia Commons