The Doctrine of Precedent and its Role in English Law

The value of case law as a source of English Law: Commercial law

Case law in more formal words is referred to as the Doctrine of Precedent, which in simple terms could be referred as the judge made laws. In English law there are various sources of law like legislation or the Act passed by the Parliament being the most important source followed by the common law and International Law. The law made by the Parliament is not very specific but is made in a broader sense to cover a large ambit into it hence there are certain gaps which are bridged by the ‘interpretation of statues’ which is the role of the judicature where they look into the aims and objectives of the Parliament and draw a harmonious construction between the silent area and provide meaning to it by interpreting the objective of the Constitution. In the meantime it appears as a law made by or rather clarified by the Judge which is further used as a reference to decide any case which resembles the facts or just quote a case to make an argument and circumstances to save the time of judiciary. It is also binding on all the lower courts and appellate courts are bound by its own decision. This highlights another doctrine in picture that is Doctrine of Stare Decisis where the decision is binding on the courts to keep the laws in order and uniform. Stare Decisis in Latin means, “let the decision stand”. Common Law was made by inculcating customs generally observed by Englishmen hence the name common has been attached. For students who are seeking in place to navigate this complex legal landscape, a law dissertation help offers the most valuable support in mastering these intricate concepts.

The custom usually followed by the precedent has to be reasonable and pass certain tests for it to be considered by the courts. It should not infringe the rights of other people. Certain criteria’s has to be fulfilled for it to be the reasonable custom and worth using in any precedent:

It must be reasonable

Must not oppose the Statutory Law

It must have existed as a right.

It must be there from time immemorial

The sources of English mercantile law are:

a) Common law

b) Equity

c) Statute law

d) Case Law

e) Merchant law

In eighteenth century Lord Mansfield conducted meetings at Guildhall in the city of London where a panel of merchant Jury use to sit and provided for the commercial expertise. In the leading case of Lewis v Rucker, Lord Mansfield determined the method of quantifying an insurer’s liability for partial loss by first ‘conversing with some

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1. Rupert Cross & J.W Harris, 2004, Precedent in English Law,clarendon press oxford (4th edn.)
2. Salmond’s Jurisprudence, (12th edn.), 199
3. Sources of Business law, New Horizon college,
4. Lewis v Rucker (1761) 2 Burr 1167

gentlemen of experience in adjustments’. These cases could no longer be continued they were sent back to common law courts which faced unnecessary delays and procedural faults unable to fulfil the transactional requirement. Hence in 1892 council of judges recommended the formation of special courts for commercial cases leading to the introduction of special commercial list in the Queen’s Bench Division in 1895.During the 1880’s the main commercial heads were put together to combine the case laws as a source and codify them into four main heads bills of exchange, factoring, partnerships and sales of goods. The codified law was the development in the field of commercial law as it put together hundreds of years of precedents just to give legal clarity in this matter.

In 1970, a special Commercial Court was established. There are county courts for less complex maters of commercial law and torts and the more serious ones goes to the Queen’s Bench Division of the High Court. The Chancery Division deals with cases of companies and insolvency. There are also special company’s courts for speedy recovery of any matter.

In the nineteenth century during the Industrial revolution there was a great increase of trade which lead to the emergence of the law of agreement. Which focussed more on the intention of the parties for the benefit of the businessmen. As quoted by Lords Mansfield in the case of Vallejo v. Wheeler, 1775 gave the ratio as, “In all mercantile transactions the great object should be certainty: and therefore, it is of more consequence that a rule should be certain, than whether the rule is established one way or the other. Because speculators in trade then know what ground to go upon.” The parties are free to make a contract according to its own free will but the intention of the judicature is to enforce the true intentions of the parties. This ratio has been further used in – Jindal Iron and Steel Co Ltd and others v Islamic Solidarity Shipping Company Jordan Inc, 2005 and Golden Strait Corporation v Nippon Yusen Kubishka Kaisha (‘The Golden Victory’) hence we can see that judiciary draws the bridge between the Statute and its application and everything in between is either a an established law or defined principle.

English law is transparent which provides freedom of contract and follows pro-business approach. Duty of good faith is one such example of the English Commercial law. Good faith implies the parties has to inform the other parties of the facts which is not possible for them to understand. It is the standard of behaviour expected from the parties to the contract. English commercial law is built on well-founded principles and provides predictability of outcome, legal certainty and fairness. English law is also governed by the principle of legal privilege where the information exchanged is to be kept confidential.

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5. Lord Irvine, May 2001, “ The Law: An Engine for Trade”, THE MODERN LAW REVIEW Vol 64, NO.3
6. Supra 5
7. (1774) 1 Cowp 143
8. R v Ruby (1800) Peake Add Cas 189
9. HL (Bailii, [2004] UKHL 49, House of Lords, Times 26-Nov-04, [2005] 1 WLR 1363, [2005] 1 All ER 175)
10. VALLEJO V WHEELER: 1774, HL (Bailii, [2007] UKHL 12, Times 30-Mar-07, [2007] 2 Lloyds Rep 164, [2007] Bus LR 997, [2007] 3 All ER 1, [2007] 2 AC 353, [2007] 1 CLC 352, [2007] 2 WLR 691, [2007] 2 All ER (Comm) 97)

Lord Devlin in Kum v Wat Tat Bank Ltd, 1971 stated that the parties can do the business in any form they need and they need not stick to the usual forms and formats which could be outdated. The common law is not bureaucratic.



Section 13(1), Unfair Contract Terms Act 1977, has been the most debated area of commercial law, which deals with the exclusion clause and the reason for it being debated is that if full freedom of contract is provided it will lead to the stronger party using exclusion clause to get rid of their obligations but Judiciary has a separate view on this. In the case of British Fermentation Products Ltd v compare Reavell it was held that it was an efficient clause to exclude the vendor’s liability to the purchaser where it regulates the risk and it does not need to be outlawed but regulated. The court at common law couldn’t have defended the clause hence it took indirect means like rules of interpretation and incorporation on exclusion clause. Cases such as Spurling Ltd v Bradshawand Thornton v Shoe Lane Parking Ltd the courts were able to incorporate the unreasonable exclusion clause by concluding that it had not been incorporated into the contract.

The English courts had developed the legal principles of Equity which was conceived to take over the biasness present in the Common Law system. In the Romalpa case, in 1976, the Court of Appeal was asked to look at the matter where Aluminium foil had to be sold to any company on certain terms mentioned which would allow the purchaser to have the full custody of the object purchased only when he has fulfilled everything that is owned by the owner. The intention was to prevent ownership from passing to the buyer until the price had been paid. The court agreed that the seller could claim the aluminium remaining in the purchaser’s land. This proved a benchmark in protecting the secured credit purchase and sale where the sellers got enough protection against the insolvency of the buyers as well as the formalities of the mortgage deeds. In the Romalpa case it was also held that if any agent is appointed to take care of the principle’s goods it should not make any undue profit from it as it would delve into the principle hence the sale of contract created a fiduciary relationship and profit got by the buyer would belong in equity to the seller

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11. GradesFixer. 2018. The Importance of Business Law and Its Role in Commercial Environment., viewed 1st June 2020,
12. British Fermentation Fermentation Products Ltd v compare Reavell [1999] 2 All E.R. (Comm) 389; [1999] B.L.R. 352
13. Spurling Ltd v Bradshaw ,1956, EWCA Civ 3,, 1 WLR 461, 2 All ER 121, 1 Lloyd's Rep 392
14. Supra n 13
15. Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676
16. Lord Irvine, May 2001, “ The Law: An Engine for Trade”, THE MODERN LAW REVIEW Vol 64, NO.3

Judiciary has played a major role in carving out the commercial law through various already established principle of contracts and weaved the new series of business law. English law model is considered to be the most efficient model in the world. The court procedures has enhanced the speed of the procedures by setting certain precedent and introduction of arbitration, mediation and Alternative Dispute regulations.

Unfair Contract Terms Act 1977,

Cases:

Lewis v Rucker, 1761

Vallejo v. Wheeler1775

Jindal Iron and Steel Co Ltd and others v Islamic Solidarity Shipping Company Jordan, 2005 Golden Strait Corporation v Nippon Yusen Kubishka Kaisha, 2007

Kum v Wat Tat Bank Ltd, 1971

British Fermentation Products Ltd v compare Reavell, 1999

Spurling Ltd v Bradshaw, 1956

Thornton v Shoe Lane Parking Ltd, 1970

Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd, 1976

Articles:

Rupert Cross & J.W Harris, 2004, Precedent in English Law, clarendon press oxford (4th edn.)

Salmond’s Jurisprudence, (12th edn.), 199

Lord Irvine, May 2001, “ The Law: An Engine for Trade”, THE MODERN LAW REVIEW Vol 64, NO.3

QLTS SCHOOL, “Why English Law Governs Most International Commercial Contracts”, Monday, September 12th, 2016

GradesFixer. 2018. The Importance of Business Law and Its Role in Commercial Environment., viewed 3 June 2020,

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