ANTI-FORMALISM AND
ANGLO-AMERICAN
COMMERCIAL LAW
Professor John Glover
RMIT University
Melbourne, Australia
Introduction
Change in the world’s developed
economies.
Electronic communication and
computers replacing paper-based
records.
Production of services, by value, is
eclipsing the value of goods
produced.
Effect on commercial law.
RMIT University
Slide 2
The significance of title and ownership in
common law jurisdictions.
Reliable means of proving ownership is
an important feature of commercial law
systems.
How do you prove ownership of an
apartment, a car . . . or
shares/securities transferred
electronically?
RMIT University
Slide 3
Electronic title:
US Uniform Commercial Code (“UCC”)
and Uniform Electronic Transactions
Act 1999 –
Title = control of an electronic
document (including through agents).
A vague and indeterminate criterion?
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Slide 4
Can “control” of an electronic dealing
– a momentary sequence of
electrons – ever match the certainty
of documentary titles?
Do electronic transactions have any
hallmarks or distinguishing features?
Surely fraud in an “open” system will
flourish?
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Slide 5
But the UCC electronic title protocol
will doubtless work effectively.
Many thousands of businesses now
rely on the new legal regime for
electronic commerce.
This is the realm of praxis – where
solutions have to work.
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Slide 6
Electronic commerce changes typified in
the UCC’s amended definition of “good
faith”:
Requiring the “observance of reasonable
commercial standards of fair dealing”
in place or mere “honesty”.
More woolly words – or is the benchmark
for commercial interaction changing?
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Slide 7
More about electronic title systems:
Contrasting “closed” systems of
electronic title – where participating
members agree to play by the rules.
Systems of land title registration are
“going electronic” all over the
developed world – these are closed
systems, too.
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Slide 8
How the prevalence of “closed”
electronic title systems make the
UCC’s “open” system based in control
all the more remarkable.
But electronic money is different.
How “DigiCash” or “ECash” has not
become fully negotiable yet – like
notes and coins.
Legal doctrine is causing problems.
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Slide 9
What do these examples show?
• That the form of commercial
interaction is changing;
• Exchange is becoming more fluid;
• The system requires higher levels of
trust and reciprocity between
participants in order for it to work.
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Slide 10
Commercial law has adapted to the
new regime of production and
exchange.
In structural terms:
standards and principles are taking
the place of rules and regulations in
common law commercial law
systems.
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Slide 11
“Mechanical jurisprudence” of rules is in
decline:
e.g., consider the size of the rule-book
needed for regulation of UCC
electronic title.
Rules could not cover all the
possibilities for fraud - requiring
“reasonableness and conductevaluation are the only way that the
system could be policed.
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Slide 12
Ways of teaching commercial law and
argument in commercial courts has
also changed.
Commercial lawyers reason
purposively.
Legal outcomes are preferred
according as they advance or retard
commerce.
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Slide 13
Changes in society and its commercial
law – accompanied by a moral
change?
Is robust individualism dying?
Is there still a capitalist “right to be
selfish”?
Does the law increasingly require
people to make sacrifices and
share?
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Slide 14
Legal norms have a more goodneighbourly aspect.
The idea that justice inheres in
outcomes rather rules for action is
“anti-formalist”.
Max Weber wrote about the
phenomenon in the early 20th
century.
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Slide 15
Weber believed that trusting was
increasingly required by modern
commodity exchange.
Weber said that regulation of
commerce had to be through
categories which expressed
meanings and intention – and not a
“mechanical jurisprudence” of rules.
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Slide 16
Vehicles for anti-formalism differ in
different countries.
In the US, change in commercial law
led by statute.
In Britain, Australia etc caselaw has
been more significant.
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Slide 17
An example of US anti-formalism in
commercial law:
Article 242 of the UCC – the multipurpose “unconscionability” criterion
for disallowing commercial
contracts.
The age of unrestrained self-interest
has passed.
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Slide 18
How the commercial law in non-US
common law countries prohibits
aspects of transactions which are
morally objectionable.
e.g., estoppel doctrine require
commercial actors to be consistent and
not deceive others.
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Slide 19
e.g., the fiduciary relationship and
maintaining the social value of trust.
How this is even efficient –
well-ordered commercial systems
work better if clients trust attorneys,
suppliers can trust distributors etc
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Slide 20
Conclusion
Is this the “reclusive inner morality of
capitalism” – a “moral territory”
where
• commercial actors are regularly
acknowledged to be unequal.
• people regularly promise to act and
do business in the interests of
others?
RMIT University
Slide 21
RMIT University
Slide 22