The modern law merchant

The belief that commercial disputes can be resolved by referencing uniform, unwritten trade usages has deeply shaped modern commercial law, despite the historical myth of a unified medieval “law merchant” being long debunked. Contemporary statutes often direct courts to rely on trade customs for interpreting contract terms, defining duties like good faith, or filling legal gaps. Yet this assumes such customs actually exist in coherent, shared form across merchant communities. Evidence from early 20th-century American industries—hay, grain, textiles, and silk—shows otherwise. In these sectors, trade associations attempted to codify customary practices after years of operating private arbitration systems. Rather than uncovering widely accepted norms, they encountered deep disagreements, even on basic terms like “bale of hay” or what constitutes a “reasonable time” for freight charges. In some cases, debates dragged on for decades without consensus. What emerged resembled legislative compromise more than discovery of pre-existing norms. Even in geographically concentrated markets like the New York textile industry, uniformity proved elusive. The codification efforts thus transitioned from reflecting usage to shaping it. These findings raise doubts about the empirical foundation of commercial law’s reliance on unwritten usage. Far from reflecting settled community norms, many of these usages are contested, unstable, or entirely absent. Without robust evidence of uniform practices, invoking “usage” in legal reasoning may be more fiction than fact.

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