The Medieval Law Merchant: The Tyranny of a Construct

Medieval commerce had little space for a specialized law, and merchants had little need for it.

By Dr. Emily Kadens, J.D.
Professor of Law
Northwestern University


The story of a medieval law merchant has a strong hold on scholars interested in private ordering. Despite numerous historical works demonstrating the falsity of the myth, it continues to be discussed regularly in scholarship as if it were an accurate portrayal of the past. This article tests the law merchant story against evidence about the mechanisms of medieval trade. It suggests that medieval commerce had little space for a specialized law, and that merchants had little need for it because of both the well-developed trading infrastructure and the actions of local governments to ensure the protection of legal rights.


Everyone knows that feudalism provided the social and economic structure for Europe during the period from roughly the 9th to the 11th centuries. We learned in school about fiefs and vassals and homage. Serious historians have written books explaining and describing feudalism. We see references, both historical and modern, to feudalism. Therefore, it must have existed.

Only, it appears that it did not, at least not as it has been portrayed over the centuries. Some historians had quietly suspected as much for decades, but it was not until 1974 that a scholar finally pointed out that the emperor had no clothes (Brown 1974). Feudalism, the notion that all of Europe was organized according to a uniform socioeconomic structure during the central Middle Ages, was a creation of 16th-century lawyers (Reynolds 1994, p. 6). Nineteenth- and twentieth-century historians had picked up this convenient concept, though they each applied to it their own somewhat different set of criteria (Brown 1974, pp. 1070–1074). In short order, feudalism became a construct reigning tyrannically over our idea of the Middle Ages.

Once the naked emperor had been exposed, however, historians began to look more closely into the assumption that feudalism’s supposedly required building block elements, such as the fief, homage, and vassalage, were both widespread and uniform across Europe. And what they have found is that these concepts were not nearly so simple, not nearly so well-defined, not nearly so universal, and certainly not so uniform as the early modern lawyers made them out to be. Certainly fiefs and vassalage existed in many places, but even in those places these socioeconomic structures were not everywhere the same. Relying on feudalism as an abstraction long prevented historians from fully exploring the complex reality of medieval social and economic organization.

Lawyers and economists have similarly latched onto their own favorite construct: the law merchant. According to this story, medieval merchants created, without the intervention of the state, a uniform and universal set of commercial customs to facilitate intercity trade. This law merchant tale has become the touchstone for advocates of private ordering, endlessly rehearsed in articles and books on everything from international commercial law, to aviation law, to cyberspace.

Historians have for decades now been sounding the warning that the law merchant emperor has no clothes, but to little avail (Baker 1979; Bart 2000; Basile et al. 1998; Cordes 2001; Decock 2013; Donahue 2004a,b, 2005; Gialdroni 2008; Kadens 2004, 2012; Rogers 1995, pp. 12–20; Sachs 2006, 2013; Scherner 2001; Volckart & Mangels 1999; Wijffels 2005). True, scholars writing about private ordering do sometimes cite these historical studies. In the middle of discussing the existence of the medieval law merchant, they drop a footnote to historical works to the contrary as providing “other perspectives” (Richman 2012, p. 747 n.28). Perhaps the historians get a note acknowledging that “[t]his conclusion has been analyzed and criticized from many angles” (Blocher 2012, p. 597 n.91). When the author suspects the historians have an agenda, he describes them as “critics…[who] contend that this account of the law merchant has primarily been produced by antigovernment ideologues who have distorted the facts (and perhaps fabricated them) in an effort to show that the state is not necessary for legal order” (Druzin 2014, p. 1071 n.84).[1] Yet following this apparently obligatory nod to the opposition, the authors continue with their discussion of the law merchant as if no challenge to the accepted construct could be seriously entertained (see Stewart 2014, p. 535).

This essay takes one more swing at convincing private ordering advocates that this emperor has no clothes. The law merchant as portrayed in the literature on private ordering did not exist. It is time to end the tyranny of this construct. Just as with feudalism, the concept of the law merchant has a history of creation and reinvention. Just as with feudalism, it contains elements of truth in its building blocks, but the resulting abstraction is devoid of historical accuracy. And just as with feudalism, we can talk more perceptively about the medieval commercial experience, and its use of private ordering, without recourse to the law merchant.

A Brief History of the Law Merchant Construct

A common response to historians’ claims that the medieval law merchant did not exist is that it must have existed because the term “law merchant” is an historical one and important men have said it exists. This is a reasonable point and fortunately one historian have investigated, with the result that we have a good sense of how the law merchant story came into being

The idea of a uniform and universal merchant-created commercial law was largely a creation of polemicists in 17th-century England. The notion was not shared before, or for centuries after, in the rest of Europe (Cordes 2001, p. 177).

References to the practice of traders, the privileges or rights (ius) of merchants, the privileges or rights (ius) and customs of fairs and markets, and the customs of merchant guilds can be found in texts throughout the Middle Ages, including some that predate by centuries the supposed flourishing of the law merchant in the 11th or 12th (or 13th or later) centuries (Bart 2000, p. 10). In these early texts, terms referencing the “ius” or “custom” of commerce referred to the right to establish a place of exchange—a market or a fair—and to collect fees from those who used it (id., p. 11). Throughout the Middle Ages, such terms also referred to jurisdictional or procedural privileges from which merchants as a group benefitted. These included primarily the right to offer account books as valid proof in court (Baldus 1584, p. 38v.), and the right to have disputes adjudicated according to a more summary procedure (Mitchell 1904, p. 20; No¨rr 1987, pp. 194–195). Only rarely can such references to custom or practices even be construed as referring to substantive rules.

Thus far, the known evidence indicates that the specific phrase “lex mercatoria,” the “law merchant,” did not appear until the late 13th century, and its use was unique to England (Cordes 2001, p. 173).[2] In this context, law merchant referred to certain procedural variances from the common law permitted in specific English courts hearing commercial disputes (Basile et al. 1998, pp. 24, 27). Merchants engaged in intercity trade were not the only suitors in these courts, however. Local people also brought their disputes, and in such fair and port courts they could use the same procedural rules as the great international merchants (Rogers 1995, p. 25). The law merchant thus referred more to jurisdiction than to the rights of a particular status of litigant (De ruysscher 2012a, pp. 501–502).

Despite the meaning it would take on in the future, this 13th-century “law merchant” did not refer to a uniform and universal merchant-created custom. The famous Little Red Book of Bristol, the late 13th-century book describing the law merchant, focused on the procedure of fair, market, and port courts. It did not, however, discuss substantive commercial law (Baker 1979, p. 300; Cordes 2001, p. 175). The extant court rolls of English fairs from the late Middle Ages occasionally mention the law merchant, but these references, too, are largely either procedural or evidentiary. In only a few instances did a court inquire of merchant jurors or experts about a substantive commercial practice, one of the most significant being the right of an agent to sue in the place of the principal (e.g. Gross 1908, p. 90).[3] Yet the court rolls also demonstrate that many of these supposed merchant rules were not uniform even across England (Baker 1979, p. 300; Sachs 2006, pp. 776–779). On the continent the rules and privileges of fairs and markets varied even more (De ruysscher 2012a, pp. 503–504).

Although the older equivalents to the term “law merchant” had faded from use on the continent by 1500 (id., p. 504), in England the phrase did not disappear. For instance, the 1303 Carta Mercatoria promulgated by King Edward I ordered his officers to do “speedy justice … according to the Law Merchant.” However, the same statute also orders that contractual disputes should be investigated “according to the uses and customs of the fairs and towns where the said contract shall happen to be made and entered upon” (Sachs 2006, p. 781). The 1353 Statute of the Staple held that merchants coming to trade at the markets that held a monopoly over the sale of particular goods (staples) were to be governed “by the law merchant in all things touching the Staple and not by the common law of the land, nor by the usage of boroughs, cities and other towns” (Mitchell 1904, p. 113). While this suggests a substantive law, we have no evidence of one. Just as in earlier texts, these mentions of the law merchant likely referred to jurisdiction and procedural practices. Indeed, mandating that the merchants be governed by a substantive law merchant would seem to fly in the face of the ordinances of the mayors of some of the important staples. These ordinances so heavily regulated the substantive aspects of the sale of goods, including price, quality, and terms of sale and payment, that little would have been left for a substantive law merchant to control (Hanham 1973, p. 164).

One of the first known references to the law merchant as a universal merchant law appeared in 1473, in a case in Star Chamber, when the Roman-lawtrained Chancellor Robert Stillington “asserted that alien merchants should be judged not according to the law of the land, but according to ‘the law of nature which by some is called the law merchant, which is law universal throughout the world’” (Basile et al. 1998, pp. 128–129). As far as we know, no one pursued Stillington’s claim until the early 17th century when the law merchant concept became part of the power struggle between supporters of King James I and supporters of the parliament (id., p. 129). Writing in favor of the King around 1619, the civilian lawyer, Sir John Davies, claimed that the “Law Merchant, as it is a part of the Law of Nature and Nations, is universall and one and the same in all Countries in the World” (Davies 1656, p. 17; Basile et al. 1998, pp. 135–136). As a leading historical work on the law merchant points out, “[d]rawing on the modest fragments of writs, statutes, and reported cases, [Davies] captured the medieval merchants’ limited autonomy from the common law courts, which had been fueled by merchants’ aspirations for a rapid and equitable procedure, and reified his heterogeneous materials as an autonomous body of law” (Basile et al. 1998, p. 137).

And so was born the idea of a uniform and universal law merchant. Stillington and Davies’ contrivance might not have enjoyed such a bountiful afterlife, however, had it not been picked up by Gerard Malynes in his popular commercial manual, Consuetudo vel lex mercatoria, first published in 1622. For Malynes, the law merchant was a customary law shared by merchants of all nations but not established by national law.[4] Although modern readers have taken Malynes at his word, the work had a polemical, and even innovative, intent (Basile et al. 1998, p. 140). As part of the jurisdictional dispute between the civilian and the quasi-civilian courts, such as Admiralty and Chancery, and the common law courts, Malynes made the argument that commercial law belonged to the law of nations and thus should be adjudicated in the civilian courts, whose procedure seemed to him better suited to commercial matters (id.; De ruysscher 2012a, pp. 508–509).

To the extent that Malynes was correct, and certain widely generalized merchant practices did exist, they apparently concerned the use of bills and notes, insurance, banking, shipping, suretyship, and agency, for this is what Malynes covered at length in his work. In contrast, while he had an interest in the substantive law of sales, which he called one of the “three Essentiall Parts of Trafficke,”[5] Malynes devoted only an occasional mention here and there to specific sales issues, including a page-long description of a contract for the sale of cloth (1662, p. 124), a few sentences about limitations on damages (id., p. 127), a short discussion of the South American trade (id., pp. 129–130), and a brief explanation of how futures contracts worked (id., pp. 203–204). Significantly, when discussing contracts he also often made reference to the doctrine of the early modern Roman lawyers (id., pp. 92, 127, 128).

Later commercial treatises followed the same typology of merchant law by discussing the techniques of commerce but not devoting a specific section to the law of sales. Indeed, I have so far found no medieval or early modern English, French, Dutch, Italian, Latin, or German merchant manual that discussed anything that could be construed as a body of customary rules of sales law uniquely applicable to all long-distance traders.

William Murray, 1st Earl of Mansfield

In the courts and the books of legal historians, however, Malynes’ allusion to a sales-based law merchant acquired new life. In the late 18th century, Lord Mansfield seized on the law merchant as a means by which to incorporate commercial practice into the common law (Trakman 1983, pp. 27–28). Nineteenth-century German interest in the history of commercial law also influenced English and American historians, who saw in works such as Levin Goldschmidt’s Handbuch des Handelsrechts evidence of the existence of a uniform and universal body of merchant-created law—although Goldschmidt himself never made such a sweeping claim (De ruysscher 2012a, p. 511 and n.54).

Once authoritative English commercial lawyers, such as T.E. Scrutton, and historians, such as William Maitland, had given their imprimatur to the Malynes version of the law merchant, its existence could scarcely thenceforth be doubted, notwithstanding the tenuous evidence upon which it was based (Basile et al. 1998, pp. 165–166; De ruysscher 2012a, pp. 510–511).[6] Thus in his award-winning work, An Essay on the Early History of the Law Merchant, William Mitchell accepted the prevailing portrayal of a uniform and universal merchant custom even though he had to admit that what custom he had found looked “vague and indefinite” and largely procedural (Mitchell 1904, p. 8).

By the 1920s, the story of the law merchant common today had become well entrenched by pseudo-historical works such as Wyndam Beawes’ book, The Romance of the Law Merchant (1923), and Charles Kerr’s article, The Origin and Development of the Law Merchant (1929) (Gialdroni 2008, 13–16). It was this version of the law merchant story that was picked up after World War II by European and American legal scholars seeking historical justification for their calls for an international commercial law and by advocates of private ordering (id., 17–18).

Some of these works appear authoritative and convincing, with footnotes to historical sources and reputable historians. But in fact the authors are merely citing the “same old sources…with surprising conviction [] as irrefutable truth” (Michaels 2012, pp. 261–262). These citations amount to ephemera (id.). Tracing the footnotes back leads through the usual set of conclusory secondary works and primary sources taken out of context and ends, eventually, with a bare assertion (e.g., Kadens 2012, pp. 1168–1170 n.45).

A Picture of Medieval Commerce

Lord Mansfield was a champion of fusing lex mercatoria with the common law

Perhaps, however, the historiography is misleading in that a law merchant, as described in the modern literature, existed during the Middle Ages in all but name. This section examines the elements of the modern theory in light of the conditions of medieval commerce.

While each author describes the law merchant somewhat differently, all seem generally to agree with the picture painted by the respected scholar, Harold Berman, who produced one of the most cited, thoughtful, and indeed alluring descriptions of the topic (Berman 1983, pp. 333–356; Decock 2013, p. 181). He portrayed the law merchant as an “integrated … body of law,” (Berman 1983, p. 333) that was developed “organic[ally]” (id., p. 355) by a “special class of people,” (id., p. 341) the “professional merchants [] who carried on large-scale commercial transactions” (id., p. 334). The law merchant was a “general body of European law” that “governed intercity trade and overseas trade” and dealt with “sale[s], in the strict sense, but also other aspects of commercial transactions, including transportation, insurance, and financing” (id.). Using this law, traders adjudicated their disputes in merchant courts, the judges of which were “elected by the merchants of market or fair from among their numbers” (id., p. 346). He places, in particular, great emphasis on the “universality” of the law merchant (despite acknowledging that it never actually was universal) (id., pp. 342–343).[7]

A few years after Berman, Professor Bruce Benson popularized the notion of the law merchant as an example of “spontaneous order,” arising without the involvement of the state, and resulting in a transnational system of customary law (Benson 1989, p. 647). He concluded that “[v]irtually every aspect of commercial transactions in Europe was governed for several centuries by this privately produced, privately adjudicated and privately enforced body of law” (Benson 1998, p. 500; Benson 1989, p. 647). This edifice of private ordering came crashing down in the 16th and 17th centuries when the newly emerging nation states imposed commercial statutes on their own merchants and ended the era of universalism (Trakman 1983, pp. 24–25).

The received story of the law merchant conjures up an idyllic image of medieval long-distance commerce. The merchant from a far-off land, his feet dusty from travel, brings his wares to fairs, stereotypically those of Champagne, which somehow seem to have been held in place subject to no local law. At the fair, the merchant does business with other merchants from other far-off lands, for it is presumably long-distance merchants alone who populate, or at least dominate, these fairs. A merchant from, for instance, Bruges brings his cloth made in Ghent, and sells it in exchange for a letter of credit or a bill of exchange, which he uses to buy spices and silks from Italy or the Levant sold by a merchant from Florence. Unable to communicate in any but the most rudimentary fashion, uncertain what law controls or how to ensure the enforcement of their contracts, but anxious to be viewed as honest so that their good reputation will precede them in their dealings with other merchants, the buyer and seller rely on the set of age-old customs known uniquely to long-distance merchants to establish the terms of their deal. Should something go wrong, which apparently would be ascertained almost immediately because the merchants were quickly off to a new port or fair, the parties would go before a court of wise elder merchants, elected by the whole group of long-distance traders attending the fair. These elders, acting, in the romantic phrase beloved by the law merchant advocates, “from tide to tide,” applied the shared customs to adjudicate disputes.

Unfortunately, this vision does not correspond to the historical facts.

To help explain why the law merchant story is inaccurate, it might be useful to keep in mind the chronology of medieval long-distance trade and to note a few key points about the workings of commerce at each stage. For Harold Berman and Bruce Benson, the law merchant originated in the 11th century and continued to develop through the 15th century (Benson 1989, p. 647; Berman 1983, pp. 333, 354), though others refer to the 10th, 11th, and 12th centuries as the age of the law merchant (Druzin 2014, p. 1070). This gives us a roughly five hundred year period to consider, yet those writing about the law merchant have often treated this half-millennium as monolithic, citing, for instance, 15th- or 16th-century evidence to make assertions about a state of affairs they are claiming to have existed in the 12th and 13th centuries. Time does tend to get telescoped in the past. The Middle Ages appear to us as a unity. Granted change did not occur as quickly in the pre-modern world as it does now, but the 500 years between 1,000 and 1,500 is the same span of time as between the years 1515 and 2015. Just as the world is very different now from what it was in the 16th century, it was very different in 1500 from what it was one, two, four, or five centuries earlier.

Over that time commerce and commercial techniques developed a great deal. Focusing solely on the dominant mechanisms of trade viewed at a very high level of generality, three major periods of development are discernible: the early medieval age of part time itinerant traders gave way in the 12th century to the age of fairs, which gave way in the late 13th century to the age of entrepoˆt towns. We will consider the possibility of the invention and use of a law merchant in each period.

Pre-1150 Trade

Contrary to the still influential views of early 20th-century historians, long-distance trade did not die out entirely during the early Middle Ages (Van Doosselaere 2009, pp. 47–49, 52). Even in the 9th and 10th centuries, Italians still sailed the eastern Mediterranean and traded with Byzantium and the Middle East, while Frisian and Breton merchants traded with Scandinavia, Germany, and Britain (id., pp. 48, 52).

Until about 1150, however, this sort of commerce was done on a small scale. Peasants farming land composed more than 95 percent of the population, and they expected to be largely self-sufficient (Davis 1966, p. 3). Most traders were accidental merchants: artisans, farmers, fisherman, or representatives of monasteries who sold their excess products locally or regionally (Postan 1973, p. 140; Van Doosselaere 2009, p. 51). When the trader did pass through a region bringing foreign goods, he mostly sold his wares directly to consumers (Van Doosselaere 2009, p. 58). The towns and villages of Europe were generally too small to support retail shops or middleman wholesalers until the late Middle Ages (Davis 1966, pp. 5–6). In other words, these early medieval merchants mostly did not sell to other merchants. Yet, law merchant advocates assume that merchant customs evolved because traders needed special uniform rules to do business with each other.

In any event, the sellers were probably too unsophisticated to need specialized contract rules. While the Italian traders were more advanced than northern Europeans, even the Italians of this period remained far behind their Arab and Byzantine counterparts in terms of commercial sophistication (Van Doosselaere 2009, pp. 53–55). In northern Europe, “nonsimultaneous commercial transactions were rare, if they occurred at all. Simultaneous exchange had, however, one advantage: There were no disputes over the date of payment, the conditions of delivery, and so on. Differences between systems of law, whether applied locally or according to personal criteria, were therefore no obstacle to trade” (Volckart & Mangels 1999, pp. 436).

Age of the Fairs (Mid-12th to Late-13th Centuries)

From the middle of the 12th until the late 13th century the great international fairs flourished, particularly in Champagne, Flanders, and England. Some of these fairs, of course, originated before this time. They are mentioned in records in the 10th and 11th centuries (Verlinden 1963, pp. 122–126). But in the early period they were largely local and regional affairs, attended by the residents of the neighboring villages and countryside rather than by international merchants. They did not, in other words, begin as spontaneous gatherings of long-distance traders.

These fairs and markets owed their continued existence to their sovereign owners: kings, counts, abbeys—whatever lord had both the right to grant a charter to hold a fair and the power to ensure the protection of the contractual and property rights of buyers and sellers (Davis 1966, pp. 29–30). Indeed, historians believe that the success of the fairs of Champagne rested not on their location between northern and southern trade networks but rather on the Count of Champagne’s strenuous efforts to protect the visiting merchants, both while they traveled and while they traded (Bautier 1953, pp. 116–117; Bourquelot 1865, pp. 1:77–78).

Understanding the lord’s role in the creation and organization of fairs provides an important corrective to the current image of merchant self-regulation. First, fairs did not take place in a legal no-man’s land. They occurred in or just outside towns and villages—places that had law and courts. The lord who controlled the fair administered it by appointing officers who regulated the commerce at the fair, assessed and collected taxes and tolls, and provided justice and enforcement. The regulation included allocating space for sellers, putting, for instance, all sellers of linen in one location, all sellers of grain in another, and within each product grouping placing the sellers from each different town or village together (Moore 1985, pp. 146, 150–151). The regulations controlled the business hours, the public scales, the prices of some goods, and the weights and measures in use. They also required that goods be inspected for quality before being put on sale, and that all sales of cloth (the most important international commodity) be “supervised by an officially approved alnager” (id., pp. 132, 153 (quoted text)).

All of these fair regulations came on top of the separate rules of the merchants’ town guilds, which also circumscribed the freedom to trade. The guilds performed a separate inspection of traders’ goods; they required merchants to sell only goods they owned, which served to maintain the monopoly of the guild members; and they limited the business interactions their own merchants could have with locals (Moore 1985, pp. 97–98, 108; Ogilvie 2011).

Not all fairs had special fair courts (Ogilvie 2011, p. 253), but all fairs provided some court, sometimes the local municipal court, for the resolution of fair disputes. In some cases, the lord appointed the judges, who were not necessarily merchants (Moore 1985, pp. 166–167, 286; Sachs 2006, pp. 693–694). In others, the courts might have been staffed or aided by merchants. The lords who owned fairs created and staffed the English fair courts, which served as courts of general jurisdiction during the pendency of the fair (Sachs 2006, p. 764). These courts heard all matters except those criminal cases reserved to the king (pleas of the crown) and disputes over land tenure (Moore 1985, p. 165). The courts occasionally called upon the merchants in attendance to act as jurors in commercial disputes, just as they called upon villeins to decide cases involving local parties, but this did not make them merchant-run courts (Sachs 2006, pp. 694, 714–716; Gross 1908, pp. 87–88).

In one sense, however the story of merchant-run courts staffed by merchantelected judges is correct. In her extensive studies of English fairs, Ellen Moore has suggested that the great international merchants avoided the fair courts (1981, p. 290). For instance, the 13th-century regulations of the merchant guilds of the Flemish towns mandated that the guild members—which meant all of the merchants of a town trading at the fair—refrain from using the English courts. They were instead to bring their internal disputes before the eswardeur, the member elected by the guild to serve as governor and judge of the guild members during the fair. In disputes with outsiders, the guild exerted its pressure to encourage settlement (Moore 1985, pp. 96–99). Similarly, merchants from the leading English commercial towns had their own internal guild courts presided over by wardens they elected (id., p. 103). In such cases merchant courts existed, but their very existence challenges the notion of a uniform and universal law merchant. Instead, they indicate the parochialism of traders and their preference for their own local law.

The merchant-court assumption runs up against another problem: merchants used, and may in some towns even have preferred, the public courts, both secular and ecclesiastical. The law merchant advocates assume that, in the absence of a “state,” public courts did not exist that could fairly and adequately adjudicate foreigners’ disputes (Milgrom et al. 1990, p. 2). But this assumption is inaccurate. For example, during the early 13th-century heyday of the fairs of Champagne, merchants took contract disputes to the secular or ecclesiastical authorities, which made sense because those were the same authorities before whom the merchants attested their contracts (Bautier 1953, pp. 122–123; Ogilvie 2011, p. 256). Only from 1274 did the gardes de foire, or fair wardens, become the merchants’ preferred court, which might have had something to do with the fact that in 1273 the King of France took over jurisdiction of the fairs from the Counts of Champagne (id., pp. 124–125). At this point, however, the court of the gardes hardly resembled the freewheeling merchant court of the law merchant advocates’ imagination. Rather than being an informal affair, it was a true court, with court officers, notaries, and lawyers (id., p. 126). The gardes were appointed by the lord who governed the fair, and they were not necessarily merchants (id., p. 118 n.2). Active merchants presumably had better things to do during the fair than sit as judges and risk alienating potential customers.

Even the vaunted interdicts later promulgated by the gardes de foire against rogue traders appear to have been first conceived by the Catholic Church, and then only in the early 13th century when the Church wanted to prevent merchants from regions sympathetic to the Albigensian heresy from attending the fairs (Bautier 1953, p. 121). Later the Count of Champagne put the interdict to use in the 1240s to punish some Tuscans for theft (id., p. 122 n.2). By the time the gardes began to use interdicts with any regularity in the 1260s and 1270s to enforce fair contracts, the Champagne fairs had declined significantly in importance as places for international merchants to buy and sell goods (id., pp. 123–125, 135).

A further reason why the image of fair courts governed by judges elected by the international merchants is unlikely to be correct is that the great merchants formed a small minority of the traders at fairs. While the international merchants have long captured the imagination, their numbers were small throughout the early modern period (Ogilvie 2011, pp. 197–198).[8] For example, in the 13th century the town of Ypres was one of the most important Flemish towns sending merchants to the fairs of Champagne, yet a document from 1277 ostensibly signed by “all” of the Ypres merchants attending those fairs contained eleven names (Moore 1985, p. 74). Many medieval towns, even large ones, had no merchants actively engaged in supra-regional commerce (Ogilvie 2011, pp. 199–201).

While small numbers of international merchants could have made it easer to create and spread commercial customs, it also meant that local traders vastly outnumbered foreigners at the fairs. Most European commerce focused upon provisioning the immediate region surrounding the fairs, markets, and towns, and thus most buyers and sellers attending such emporia were local. And merchants were not the only attendees. Fairs and markets were the medieval shopping centers for local peasants, squires, knights, lords, artisans, monasteries, and even university colleges (Davis 1966, pp. 26–28; Moore 1981, pp. 284–285; Moore 1985, p. 76).

The spices, silks, and fine woolens trafficked by the long-distance merchants have tended to attract the attention of historians, and the law merchant assumption seems to be that the foreigners sold these goods only to other traders. Yet, the merchants also sold these wares directly to nobles and ecclesiastical institutions and to wealthy artisans and merchants buying for personal use (Davis 1966, pp. 26–28; Moore 1981, p. 291). Furthermore, most of the goods sold at fairs were necessities, such as foodstuffs, livestock, timber, rough cloths, and salt, often purchased directly from the merchants by the end users (Postan 1973, pp. 93–102). This means that even the greatest of foreign merchants had to deal with humble regional traders,[9] artisans moonlighting as retailers or wholesalers of goods unrelated to their craft,[10] and ordinary consumers. Should we assume that these local people willingly gave up their own law to be governed by a law merchant created by and for foreigners?

To imagine fairs courts run by and for the international merchants, applying a law different from that used to govern the other contracts made at the fair, is to wish away all of these other participants in the fairs. It assumes that some of the merchants’ contracts—those made with other long-distance traders— would be governed by a special court and a special law, while others—those made with local artisans or consumers—would not. It assumes that international merchants who traded at fairs in specific regions, and only in those regions (Moore 1985, pp. 74–75; Ogilvie 2011, p. 202), would have shared customs with merchants trading only in other regions, and this despite the fact that not all fairs sold the same merchandise (Moore 1985, p. 284). And it assumes that the international merchant selling cloth or spices needed different contract rules from the regional seller of livestock or the local seller of bread—both of whom might also be selling on credit (Marshall 1999, pp. 72– 75, 82–83). And even if these assumptions are accurate, can we further be certain that all international traders needed the same set of customs, whether they sold luxury cloth or rough linen, spices or salt, gems or iron, wool or furs, salt or wine, fish or grain or fruit or timber or flax or woad, or any of the other products that moved from one part of Europe for sale in another? Some of these goods traveled by land, others by water. Some were sold in small quantities, others in bulk. Some were sold on futures contracts, others across the counter. Some were sold to wholesalers who re-exported them, others went directly to consumers or to retailers. If a special law were needed for long-distance traders, did that law accommodate the unique conditions of all traders and all products?

Age of the Entrepot Towns

Entrepot Buchanan

Beginning in the late 13th century, Europe entered the third period of medieval long-distance commerce as the major fairs declined as the locus for sales and commerce moved to the entrepoˆt towns: first Bruges, and later Antwerp, London, and Amsterdam. In such cities, merchants could do business all year around rather than just at fair time. However, towns had limitations that fairs did not. At a fair, anyone could sell his or her wares. Local traders had no priority or privileges over foreigners, as they did in towns. In this sense, fair trade was free trade. Town trade was not (Howell 2010, pp. 9–10). There, the fundamental xenophobia and protectionism of the times hedged around the foreign merchants’ ability to trade with barriers and restrictions (Moore 1985, p. 93). A foreigner could not simply wander into a town and trade at will. He needed the permission and protection of the lord, and he usually had to be a member of a merchant guild. Even then, he could not set up a shop (id.), and his ability to conduct other business was subject to extensive regulations in many instances designed to protect monopolistic local guilds and fill the lord’s coffers through taxation (Hanham 1973, p. 174; Nicholas 1987, p. 140; Ogilvie 2011, p. 67).

In other respects, however, the regulation of commerce in towns paralleled the regulation at fairs. The notion that medieval commerce took place in a governmental vacuum is incorrect. While nation states may not yet have existed, local lords and town councils proved ready and able to regulate commerce aggressively. The specific rules, and the extent to which they handcuffed merchants, varied from place to place, but regulations existed everywhere. Most town rules circumscribed the business foreign merchants could do, prohibiting them, for instance, from engaging in retail sales, from selling without a local broker, and from reselling locally what they had bought locally (De Roover 1948, p. 16; Ogilvie 2011, pp. 46–48; Reyerson 2002, p. 105). In some towns, foreign merchants could not live, store their goods, or display their wares outside of the house allowed to their “nation” by the local government, no matter how disadvantageous that was to their trade (Berlow 1971, pp. 16–17; Ogilvie 2011, pp. 73–74).

Most significantly, trade, at a fair or in a town, happened in public, where it took place under the watchful eye of competitors and guild and governmental regulators (Reyerson 2002, p. 151). Each product had its designated market location, some outdoors on squares or streets, some, such as cloth or meat, in large, elaborate public buildings (Harreld 2003, p. 662; Moore 1985, p. 287).[11] In addition, town and fair regulations mandated the times and days on which the goods could be sold and the manner in which they had to be displayed (Stabel 2000, pp. 24–27; Harreld 2006, p. 662). In Flemish cloth towns of the 14th century, for example, an official of the cloth hall would ring a bell when foreign merchants arrived, and the drapers would bring their cloth to the hall. Sales could not start until all sellers were present (Stabel 2000, p. 26). A draper could only sell cloth made in his hometown, and he had to have kept it under his control at all times (id.).

The towns and fairs employed officers to watch over the markets and halls, enforce the regulations, perform inspections, adjudicate disputes, and operate the official scales (Braudel 1982, p. 29; Davis 2011, pp. 81, 88, 98, 100–101; Everitt 1967, p. 486; Nicholas 1987, p. 140). The towns and guilds that produced particular products mandated and enforced quality controls, and goods could not be sold without the proper stamps or tags showing they had passed inspection (Nicholas 1987, pp. 140–141; Stabel 2000, p. 28; Strauss 1976, pp. 98–99). According to some town rules, buyers were required to inspect the goods upon purchase or lose the opportunity to sue for breach of quality. In addition, purchasers sometimes could not compete to underbid each other (Gross 1908, p. 47; Stabel 2000, p. 27). Indeed, in at least one Flemish town, cloth buyers were required to visit the sellers’ stalls in order until they had completed their purchases. The next year, they were to pick up where they had left off in the line (Stabel 2000, p. 28). Many local merchant guilds tried to fix prices and limit quantities that could be bought or sold (Ogilvie 2011, pp. 62–64, 74), and governments on occasion attempted to mandate payment in specie rather than on credit, to impose set exchange rates, or to limit the length of time credit could be extended (Hanham 1973, p. 164; Munro 2000, p. 116; Postan 1973, pp. 8–9; Stabel 2000, pp. 20–21).

Sheep shearing as depicted in Les Très Riches Heures du Duc de Berry

Staple goods, those goods over the sale of which certain markets had a government-mandated monopoly, could be subject to onerous regulation. According to Hanham, the rules of the Calais Staple for English wool,

fixed the price at which the various kinds of wool were to be sold (from which no divergence was permitted), inspected wool before sale, recorded shipments and sale transactions, dictated the times and conditions for the display of wool to intending purchasers, and provided an official broker in whose presence the sale took place. It also made regulations about the terms of sale, which varied in their effect from time to time. Important features of these terms concerned the giving of credit (sometimes forbidden), and the exchange rate that was to obtain in sales. (1973, p. 164)

It is not clear how much space such regulations would have left for a merchant-created, merchant-adjudicated customary law merchant to flourish.

Rather than allowing free agents to wheel and deal with no governmental meddling, the medieval economy was tightly controlled, with matters of quality, quantity, allocation of risk, delivery, price, and sometimes payment routinely determined by regulations. Of course, the lack of adequate bureaucracy meant that these rules could not always be enforced, but they nonetheless existed and merchants were sanctioned for violating them often enough to indicate that the rules had real meaning.

The law thus dominated medieval commerce to an extent difficult to recognize today. Ironically, only when merchants began to trade privately, in houses or inns or warehouses, could they break free of the guild and governmental rules. The regulators still tried to require them to conduct their business according to the rules governing the open markets, but this was difficult to police when sales happened in private (Muldrew 1998, p. 40; Stabel 2000, p. 24). Yet even as late at the 16th century, public sales predominated (Harreld 2003, p. 658). Private sales and the decline of the regulatory, monopolistic merchant guilds were primarily early modern developments (Everitt 1967, p. 506; Muldrew 1998, p. 40; Ogilvie 2011, p. 32).

In other words, increasingly unregulated trade began to occur more and more frequently only in the face of the early modern appearance of national commercial legislation lamented by advocates of the law merchant (Trakman 1983, p. 21). In fact, it appears that the rise of this legislation, which did not in any event regulate sales law, did not significantly affect the growing freedom of commerce, because private trade now occurred increasingly in the shadow of the law rather than directly under its watchful gaze.

Local Law and Custom

That regulations determined a great deal of the commercial process did not, however, mean that customs did not exist. They did. But they were seldom more than local or network specific (Bart 2000, p. 12). English wool merchants, for instance, customarily used one measure of weight in England and another at the staple in Calais, and neither measure was used elsewhere in the wool trade (Hanham 1973, p. 174). In Bruges, Spanish and Italian merchants litigated extensively before the town court about the alleged Spanish custom of paying tax on freightage on Spanish ships (Gilliodts-van Severen 1901, pp. 79–80, 111, 122–124). The cloth merchants of Kent had a custom of rotating their sales trips to London among themselves, with the traveling merchant taking along the cloth of his compatriots to sell on their behalf.[12]

Furthermore, a handful of practices do seem to have been quite widespread. It was common to sell bulk goods, such as wool or fish, by sample, though this approach was not restricted to merchants engaged in foreign trade (e.g., Gross 1908, pp. 91, 102; Hall 1930, p. 28; Moore 1985, p. 115). Merchants in many places in Europe made symbolic gestures to indicate the conclusion of a bargain. Shaking hands, paying a godspenny, or sharing an alcoholic drink were common ways to seal a deal (Gross 1908, pp. 47, 52; Sachs 2006, p. 777). The Roman law and the early medieval Germanic customary laws, however, already evidenced such acts, and they were not limited to long-distance merchants nor to the sale of goods (Pryor 1981, pp. 14–15). Similarly, perhaps the most important contribution of the medieval merchants to European commercial law was the development of legally recognized agency relationships (Gross 1908, p. 90). But the fact that merchants, and nonmerchants,[13] in many places arrived at the same solution to the problem of representation does not require us to assume the existence of a law merchant.

In contrast, apparently widespread customs that looked similar at a certain level of generality could end up differing in the details. Maritime law, which law merchant advocates commonly refer to as the original uniform and universal merchant custom, provides an example (Berman 1983, p. 340; Trakman 1983, p. 8).[14] In the case of shipwreck, most maritime codes “stipulated that freight was only due for salvaged goods” (Frankot 2007, p. 144; Cordes 2001, pp. 168– 170, 182–183). The codes and the practices of the courts in port cities differed, however, in determining how to calculate that freightage.

In Lu¨beck law, two different rules existed: one laid down half the freightage for salvaged goods, whereas the other stipulated full freight. A third rule was available through the Hanseatic statutes, according to which half freightage was due if the ship wrecked in the first half of the journey and a freight pro rata itineris (in proportion to the distance travelled) if the vessel foundered in the second half. (Frankot 2007, pp. 144–145)

Medieval Danzig

In Danzig, the court ruled inconsistently. In one case in 1428–1429, the court had held “that half freight was due when a ship wrecked in or within sight of the harbour, but full freight when the ship had been out of sight of the port.” On the other hand, in 1486, the court ordered half freight in the case of the wreck of a ship from Riga that occurred hundreds of nautical miles away, near Danzig (id., p. 146).

Finally, one might think that if a uniform and universal law merchant governed trade across Europe for four or five hundred years, we should find evidence that courts applied that law. Instead, we find local courts applying local law. The 13th-century evidence from Ypres, for instance, makes it clear that the town aldermen expected contracts made in their town to be governed by its law (Des Marez 1901, p. 96). Burghers of the town inserted clauses to this effect into their contracts, and foreign creditors would have to formally accept that the contract would be governed by Ypres law (id., pp. 23, 96). A similar clause appeared in silk and spice contracts in Montpellier (Ogilvie 2011, p. 301). A charter granted by the English king to the merchants of Aquitaine in 1302 instructed that proof would be made according to the custom of the place of contracting (Sachs 2006, p. 781).

In Bruges, as in some (but not all) other important trading towns, foreign communities negotiated with the local lord the right to use their own law to govern themselves in internal matters, even with regard to civil disputes (De Roover 1948, pp.[15], 18–20; Murray 2005, p. 223; Ogilvie 2011, pp. 253, 258– 259; Paviot 2000, p. 57; Phillips 2000, p. 77). Yet, the Bruges aldermen expected to judge disputes between foreign merchants or between foreign merchants and citizens of Bruges using Bruges law (Gilliodts-van Severen 1901, p. 81). Similarly, the trading privilege the Flemish merchants in Cologne received in the 12th-century made them subject to Cologne law (Kadens 2004, p. 61).[15]

In addition, the medieval merchant identified closely with his native town’s law. Although the general medieval rule was that the law of the place of contracting controlled (Des Marez 1901, p. 22), when a merchant could obtain the benefit of his own law, he would. Even when living abroad, he considered himself subject to the laws of his homeland. As a Spanish merchant who had lived many years in Antwerp wrote in his will, “I am not a Brugeois of this town of Bruges but a member of the Nation of Spain [the Castilian Consulado in Bruges] and as such I can make my will according to the custom of Spain and no one can contradict me” (Phillips 2000, p. 84).

Medieval Bruges

Examples such as these suggest that the medieval merchant did not see himself as some sort of citizen of the universal commercial world. He preferred his own law, but he knew that he would often have to do business using the law of a foreign place. Town statutes and merchant manuals made the same assumption. They told merchants: when you are in our town, you will use our law. When you are in another town, you will use their law. The medieval Kampen town laws said, “We have written this law regarding ships that come to our port with guests or with burghers [of Kampen] and when they come to other ports in other lands, they should abide by the law that is decent and customary there” (Frankot 2007, pp. 136–137). A 13th-century Norwegian commercial handbook observed, “I regard no man perfect in knowledge unless he has thoroughly learned and mastered the customs of the place where he is sojourning” (Ogilvie 2011, p. 371).[16] Not even the Catholic Church, the most powerful and most centralized international institution in medieval Europe, could impose uniformity of practice, despite trying very hard to do so. It is unlikely that an ever-changing and heterogeneous group of merchants could accomplish the same (Decock 2013, p. 181).

If we turn to normative literature rather than court records and statutes for substantive evidence of the law merchant, the results are the same. Merchants were, with clerics and professionals, among the small minority of literate people in the Middle Ages (Hunt & Murray 1999, pp. 50–51; Ogilvie 2011, p. 372). And we know that merchants produced and consumed commercial manuals, both printed books and manuals written in-house for the training of apprentices. We conserve a large number of the former and a smattering of the latter from the medieval and early modern periods (Dahl 1998, pp. 226–227; Denuce´ 1941; Hoock & Jeannin 1991; Ogilvie 2011, pp. 377–378). These manuals contain a great deal of useful information about merchandise characteristics, prices, weights and measures, travel, bookkeeping, bankruptcy, and bills of exchange (Dahl 1998, p. 227). Yet, the manuals do not discuss the existence of a transnational law of the sale of goods or list its rules (Donahue 2004b, pp. 28–29).

In some instances, we might even expect such a list, as in the Libro di buoni costumi of 1360 written by the Florentine merchant Paolo da Certaldo. His “good customs” concerned advice about maintaining a good reputation, acting lawfully and honestly, and keeping accurate records (Certaldo 1945, pp. 79, 109, 144). Such behavior is presumably also what 15th-century Florentine contract language instructing partners to act “in accordance with usage and custom of good merchants” meant (Dahl 1998, p. 196). Yet if the law merchant were truly universal, its contents would hardly be a trade secret not to be set down in writing. And if authors were going to write about every other aspect of commerce, both those obscure and those well known, what reason would they have to ignore the most fundamental aspect of all (see De Roover 1948, pp. 89–90)?

The Early Modern Spread of Commercial Techniques

Gerald Malynes

What the late medieval and early modern commercial manuals do tell us, however, is that certain commercial practices and techniques—such as the use of bills of exchange, partnership mechanisms to limit liability, insurance, fractional reserve banking, and creditor collective action bankruptcy—did eventually spread across Europe. This raises the possibility that Gerard Malynes was correct in 1622 when he framed his book as covering the universal law merchant and then primarily wrote about these very commercial techniques. But, if he were correct that these techniques constituted a uniform and universal law merchant, his was not a medieval law merchant. Although the Italians invented these techniques in the Middle Ages, that does not mean that the rest of Europe adopted them right away, no matter how commercially useful they were.

Bills of exchange “attained widespread use” among Italian merchants in the 13th century (Hunt & Murray 1999, p. 65). But in Bruges, the leading entrepoˆt town of northern Europe throughout the 14th century, the English, Flemish, German, Spanish, French, and Portuguese merchants got along just fine using other means to move their money (Murray 2005, pp. 230, 241–243). The Italians evolved marine insurance in the 14th century, but it took over a century for towns in other parts of Europe to begin to adopt the practice (van Niekerk 1998, pp. 5–7). Deposit banks emerged out of money changing in Italy by the late 12th century (De Roover 1948, p. 27; Hunt & Murray 1999, pp. 64–65), but banks only operated in a few major trading centers outside of Italy until the end of the Middle Ages (De Roover 1948, pp. 203–204; Greve 1999, p. 220; Hunt & Murray 1999, pp. 64–65, 210–211; Munro 2000, p. 143). And even though the large Italian merchant-banking firms of the 14th and 15th centuries developed sophisticated accounting techniques (De Roover 1948, p. 13; Hunt & Murray 1999, p. 157), many other merchants did not even use double-entry bookkeeping,[17] and their accounts were often chaotic and incomplete (Marshall 1999, p. 63).

If one wishes to call the spread of these commercial techniques the law merchant, then the law merchant is not medieval. It is early modern, and the techniques’ general adoption corresponded with the passage of legislation to control them, legislation often demanded by the very merchants who made use of them (Kadens 2012, pp. 1197–1198). And, as law merchant advocates realize (Trakman 1983, pp. 2, 7–9), such merchant practice was only incidentally about law, in that courts had to respond to disputes arising about the commercial techniques already in use. The courts could have based their decisions on what merchants—whether local or foreign—did, or they could, and did, turn to other sources, such as civil or common law or their own common sense (De ruysscher 2012b; Donahue 2004a, p. 32).

Most significantly, however, this version of a distinctively historical law merchant has real no substance, for the invention of new commercial practices, and their generalization among businesspeople with law to follow, is not unique to the Middle Ages. It is what happens in commerce in all ages (Des Marez 1901, p. 30). The 19th-century spread of limited liability and the corporate structure and the contemporary spread of derivatives, the credit default swap, and U.S.- style chapter 11 bankruptcy continue to demonstrate that.

This overview of medieval commerce thus raises significant questions about the validity of the law merchant story. We have not been able to establish when or where it would have arisen, or whose customs it would originally have represented, or how it would have been communicated from one group of merchants to another, or in what circumstances it would have been used. We could, nonetheless, relegate those questions to historical uncertainty if we could show that medieval trade required something like a law merchant to flourish as it did. The next section demonstrates that medieval merchants coped with the challenges of commerce without the need for a uniform and universal law.

Medieval Merchants Did Not Need a Law Merchant

Perhaps the law merchant story is not strictly correct; perhaps, as its advocates have had to admit all along, merchant custom was not quite uniform and not quite universal. And yet, without it, how would merchants have overcome the problems that modern writers on the law merchant believe that law to have solved? These problems can be summarized as, first, overcoming the information deficit and, second, providing security of person and property. Under the first problem fall the arguments that (i) “local customs introduced confusion into transactions,” and the law merchant was “a means towards achieving uniformity of practice in trade” (Trakman 1983, pp. 10–11; Benson 1989, p. 646); and (ii) that the law merchant, viewed as an information distributing institution, helped solve the prisoner’s dilemma by giving merchants an incentive not to cheat and thus ensuring honest trade (Milgrom, North, & Weingast 1990). Under the second problem are the claims that (i) “[t]he fact that the foreigner was often without rights under local law as well as without protection by local rulers made the universality of the merchant’s own law a matter of urgent necessity” (Berman 1983, p. 343); and (ii) that only merchant judges in merchant courts applying merchant custom could fairly, correctly, and quickly, adjudicate commercial disputes and permit the sort of flexibility that commerce needed to develop (North 1997, pp. 30–31; Trakman 1983, pp. 12–13, 15–18).

While each of these contentions has obvious appeal in the abstract, the evidence does not, in fact, demonstrate that the medieval merchants needed a uniform and universal commercial law in order to engage successfully in long-distance trade.

Overcoming the Information Deficit

As one scholar described it, medieval merchants “traveled to fairs and markets all over Europe exchanging goods which they knew little about with people they knew little about” (Benson 1989, pp. 648–649) and, one could add, in places they knew little about (Reyerson 2002, p. 71). How could they have done business under such circumstances if the rules governing their contracts differed from place to place? The question obviously implicates issues of ex post enforcement, which will be treated in the following section. This section focuses on information exchange: How did foreign merchants find contracting partners? How did they know whom to trust? How did they learn the local laws and customs?

First, merchants had time to acquire knowledge of local law. Assuming that medieval merchants did business quickly is to assign a modern time frame to a pre-modern world. To the contrary, medieval commerce often happened slowly (Dahl, 1998, p. 123; Davis 1966, p. 19). Merchants mostly sold on consignment, and they were not always in a hurry to unload their products (De Roover 1948, p. 29). Many goods, such as cloth, could be held for a year or two until a buyer was found willing to pay an acceptable price (Hunt & Murray 1999, p. 158). Letters, which were so important for transmitting information about prices and markets to partners and factors, took weeks or months to travel from one city to another (Dahl 1998, pp. 121, 123, 125–133; Doumerc 1994, pp. 100, 102). The relative slowness of trade left a great deal of time to sit in the inn or mingle at the port or market to gossip and gather data and learn the local ways (Muldrew 1998, pp. 92–93; Ogilvie 2011, pp. 365, 368; Reyerson 2002, p. 145).

In addition, merchants spent time, measured in weeks, months, or years, at foreign trading places (Dahl 1998, p. 132; Fagel 2000, pp. 90–93; Murray 2005, p. 218; Paviot 2000, p. 61). They did not travel long distances, moving at no faster pace than a horse’s gait or the speed of the wind, enduring hardships and dangers along the way, in order to stay at a fair or town for only a few days and then be off across the sea again. Fairs lasted several weeks, and the major fairs, such as those of Champagne and Flanders, operated in a regional cycle, with merchants moving from fair to neighboring fair and expecting to see their debtors and creditors in the next town, the next market, the next fair (Bautier 1953, p. 113; Berlow 1971, p. 10; Des Marez 1901, p. 75; Moore 1985, p. 118). Some Flemish merchants attending the English fairs in the 13th century may even have remained in England for as long as three years (Moore 1985, p. 74). Towns that wanted to limit the residency rights of foreign merchants capped their stays at “three months for non-local merchants in tenth-century Constantinople, forty days for Lotharingian and Gascon wineand woad-merchants in eleventh-century London, six weeks for foreign merchants in Norway in 1316, and forty days for foreign traders in fourteenth-century Lynn and other English boroughs” (Ogilvie 2011, p. 73). In other places, merchants expected to live in a foreign town for a year or more, sometimes even acquiring citizenship.

Thus, the interpretation of law merchant proponents that merchant courts had to decide cases from “tide to tide” because the foreign merchants were in such a rush to move on to the next port of call does not seem to correspond to the reality of the long-distance merchant (Trakman 1983, p. 13), especially when suits at fair courts might be held over for resolution the following year (Gross 1908, pp. 87–88). Instead, this trope may have referred to the regional peasants, artisans, and shippers who did come and go in a matter of days, and who were also subject to the fair courts. Foreign merchants, in contrast, remained longer at fairs and lived in towns long enough to learn the local rules and customs if they needed to and, indeed, that education was part of the reason they travelled abroad (Dahl 1998, p. 193).

Finally, despite the general parochialism of the age, the long-distance merchant was remarkably cosmopolitan. He mastered foreign languages to facilitate his trade (Ogilvie 2011, p. 371). We conserve late medieval books for teaching German and Dutch speakers French, and vice versa (Gessler 1931), and early modern versions that include instructional colloquies in eight languages.[18] Presumably these books, filled with words and phrases relevant to commerce and artisanal trades, were meant to train boys for international business. If so, then their lessons succeeded, for the cache of thousands of early modern commercial letters preserved in the city archives of Antwerp—the largest collection of its kind (Stadarchief Antwerpen n.d., 10-11)—were written in several languages.[19] Spanish merchants wrote to Flemish merchants in French; French merchants and Italian bankers wrote to Castilians in Spanish (Phillips 2000, p. 81). Italians wrote to Flemish merchants in Italian; German merchants wrote to them in Flemish. The men on both sides of the transactions knew the languages necessary to do business.

But for all that foreign merchants might have been able to help themselves by learning languages or spending months or years abroad, they did not do business as Lone Rangers. They lived and worked within an extensive network of allies and facilitators who provided them with information, contacts, credit, references, and commercial know-how (Fagel 2000, p. 103; Murray 2005, p. 191; Phillips 2000, p. 82; Reyerson 2002, pp. 45, 104). The list of intermediaries is long. Foreign merchants sought out the help and companionship of their fellow townsmen, even when they competed with them in trade (Harreld 2000, pp. 179, 184; Jacoby 1984, pp. 174–175; Ogilvie 2011, p. 351; Reyerson 2002, p. 28). In many cities they appear to have chosen or been required to live in a house, inn, compound, or neighborhood with others of their town (Harreld 2003, pp. 659–661; Ogilvie 2011, pp. 73–74). The foreign merchant communities provided newcomers with the requisite attestation of good character and guarantee of suretyship to permit them to trade in the city (Harreld 2010, pp. 22–23; Ogilvie 2011, pp. 101, 288–289); they supported notaries who spoke the foreigners’ language (Stabel 2001, p. 210); they served as credit providers, legal addresses, and references (Murray 2005, pp. 193–194, 226–227); and they introduced the newcomers to brokers and merchants doing business in the town.

Among the locals, the most important people for the foreign merchants were the brokers, innkeepers, notaries, and moneychangers (Murray 2005, pp. 191–192; Reyerson 2002, p. 79). Innkeepers—often immigrants themselves—seemed to have specialized in lodging merchants of particular nationalities (Murray 2000, p. 13; Paviot 2000, p. 61). They provided not only food and shelter, but also warehousing space, a place to conduct business, and credit and reputational references (Everitt 1967, p. 561; Greve 1999, p. 219; Murray 2005, pp. 181, 193–194). As a resident, the innkeeper could explain local customs to his guests and provide gossip and information about the reputation of other merchants who operated routinely in the town (Harreld 2003, p. 661; Ku¨min 1999, p. 164; Murray 2005, pp. 189, 199; Ogilvie 2011, p. 367). Innkeepers also acted as agents, buying and selling for the foreigner’s account, even after he had left town, and standing surety for his debts (Greve 1999, pp. 218–219; Murray 2005, p. 202).

The innkeeper helped his lodgers find brokers, and the brokers, who had also been a fixture of commerce at many fairs, connected the foreigners with buyers or sellers and helped negotiate the deal (Moore 1985, pp. 112–113; Reyerson 2002, p. 92; Vazquez de Prada 1960, p. 1:69). The broker, as a local expert, “gave, by his intervention, a kind of guarantee[] that the transaction would be handled correctly” (Greve 2000, p. 43). Similarly, the regulations of the Flemish merchants trading at English fairs “required that brokers selling to the Flemish merchants wool or any other commodity be prepared to guarantee the quality of the product” (Moore 1985, p. 113). The broker accompanied the foreign merchant to the market or the trading hall and was thus in a position to inform his client of the reputations of potential counterparties (Des Marez 1901, p. 75; Lopez & Raymond 2001, p. 131; Marshall 1999, pp. 34, 41–42; Ogilvie 2011, p. 370; Reyerson 2002, p. 92; Stabel 2000, p. 21). Some evidence suggests that brokers may have specialized to some extent in particular products, which would have improved their ability to advise clients on customs governing trade in those goods as well as on the reputation of traders (Greve 2000, p. 42; Reyerson 2002, p. 177).

Medieval bank

Translators, scriveners, notaries, and moneychangers served similar functions as reputation brokers and “repositories of legal culture and business expertise” (Reyerson 2002, p. 79; Jacoby 1984, pp. 174–175; Ogilvie 2011, p. 370). In the course of doing their jobs, they must also have come to know who had goods to sell and who had money to spend.

All of the business intermediaries with which the merchant engaged help provide him with reputational information and helped him to establish his own reputation, the second ostensible purpose of the law merchant. But the very public nature of medieval business also conveyed reputational information as its by-product (De Roover 1948, p. 199). The notary’s business, in particular, was often conducted openly in the marketplace. The notary brought his writing desk wherever he would be accessible to merchants, and they lined up to wait their turn with him (Reyerson 2002, p. 83). A notarial document had to be witnessed, and the people in line often served that role. Once he had drawn the contract up, the notary was required to read it out to the witnesses. Thus, merchants might learn a great deal about the business being done by others simply by standing around the notary’s desk (Epstein 1994, pp. 319, 323–324). “In this environment a person’s reputation for commercial acumen was public knowledge” (id., p. 316; Muldrew 1998, p. 64).

Many courts, too, conducted their business in public and not in formal courtrooms separated from the hustle and bustle of the marketplace (Sachs 2013, p. 28). The remarkable fact that emerges from the court records is how much the traders knew about the smallest details of each other’s business activities (Epstein 1994, p. 316; Gross 1908, pp. 119–120; Hardwick 2009, pp. 153, 170). The Middle Ages was a time of little privacy. Even the town crier advertised one’s unpaid obligations by publicly summoning debtors to court (Reyerson 2002, p. 146). The assumption that merchants needed a special law or institution to broker reputational information among them misconstrues the way the people of the time lived.

Another ostensible role for the law merchant was to solve the ex ante problem of trust by providing a reputational database that would incentivize merchants to act honestly. While this assumption makes sense, no one has supported it with data about the amount of cheating that took place in pre-modern commerce. Yet the evidence seems to suggest that fraud was not insignificant (Davis 1966, pp. 31–32; Hilaire 2013, 9; Reyerson 1982). For instance, the regulations of the Flemish merchant guilds trading at the English fairs of the 13th century “spell out in considerable detail the varieties of dishonesty on the part of the Englishmen who were selling wool or buying cloth. Wool was often falsely weighed, prepared, or labelled; and purchasers of cloth often misused credit extended to them, or tried to return cloth for no valid reason” (Moore 1985, p. 99). One of the earliest accounts of international merchant groups is really a description of cheating. In 1020, the monk, Alpert of Metz wrote that,

[w]hen one [merchant] has accepted a loan or credit from another, and this one demands it back at the specified time, he [i.e., the debtor] persistently denies and immediately swears to have taken nothing. When one is discovered to have committed public perjury they maintain that nobody can prove this. When the object is so small that it can be concealed in one hand he uses the other hand to swear that it does not exist. (Volckart & Mangels 1999, p. 438)

Writing of Alpert of Metz

Alpert’s observation does not indicate whether such a cheater was banned from further trade with the group. Given the suggestion that merchants routinely behaved this way, he may not have been.

Other evidence suggests that, although a poor reputation might have made it more difficult to engage in trade, it did not make it impossible. An interesting example comes from mid-14th-century Bruges. Tideman Bloumeroot was a German merchant “expelled from the [Hanseatic] League and deprived of all the privileges which went with membership. Henceforth, no Hanseatic merchant was permitted to enter into a partnership with him nor to ship goods in the same vessel. This boycott does not seem to have harmed Bloumeroot a great deal in his economic interests” (De Roover 1948, p. 171). He proceeded to become a citizen of Bruges and to set up shop as a moneychanger. When he died ten years later, he was one of the wealthiest men in town (id., pp. 171–172).

Another limitation of the concept of the law merchant as a type of reputational database that solved the one-on-one prisoner’s dilemma is that this notion does not accurately represent the complexity of a merchant’s decisions about the credit and reputation of his counterparty. We know that the merchants used credit in their commercial purchases (Dahl 1998, p. 254; Marshall 1999, pp. 81–82; Nightingale 1990, pp. 560, 563; Postan 1973, pp. 6, 10, 21). But they likely also used it for daily purchases. The merchant who spent weeks or months in a foreign town did not just interact with the functionaries of the wholesale trade. He had to eat. His clothes had to be washed or mended. He had to buy candles, paper, pens and ink to write the obligatory business letters back to his partners at home (Doumerc 1994, p. 100; Ogilvie 2011,pp. 372–373). He ran a tab at the local drinking establishment, where he also acquired gambling debts (Hardwick 2009, p. 138). Maybe he went to the tailor, maybe the shoemaker. In an age when coins were not always sufficiently plentiful, when the small coinage necessary for daily shopping might not even exist (Davis 1966, pp. 9–10; Willan 1976, p. 84), and when paying in specie was often complicated enough to require the services (and fees) of a moneychanger (Des Marez 1901, p. 30; De Roover 1948, p. 250),[20] the foreign merchant who remained any length of time in a town was going to enter into at least some credit transactions with artisans and shopkeepers (Hardwick 2009, p. 138; Howell 2012, p. 25; Muldrew 1998, p. 95; Munro 2000, p. 117; Nightingale 1990, p. 562). The entire society, from the washerwoman to the king lived their lives enmeshed in a network of credit, and “[e]veryone was in debt, virtually all the time” (Howell 2012, p. 25; Farr 1997, p. 26; Hardwick 2009, pp. 136–137, 173; Marshall 1999, pp. 71–73; Muldrew 1998, pp. 95, 97). Merchants, local and foreign, were embedded in this web of credit and debt (Nightingale 1990, p. 569).

In such a society, just knowing the reputation of the person with whom one transacted was not enough. A merchant had to worry about the creditworthiness not only of the debtors of everyone with whom he did business but also about that of the debtors’ debtors as well (Lopez & Raymond 2001, pp. 422–423). With the slowness and unpredictability of communication and travel, with the constant threat of localized or widespread crop failure, with the ever-present possibility of wars, fires, sudden devaluations of currency, and endemic disease, compounded by the lack of many kinds of personal and real property insurance, the possibility of defaulting on a loan was painfully real (Howell 2010, p. 23). And when one person in the network defaulted, it could trigger a cascade of defaults (Everitt 1967, p. 567; Greve 1999, p. 223; Howell 2010, p. 24).

Even in a world in which reputational information was public and disseminated through many channels, judging the reputation of one’s potential contracting partners did not suffice to protect trade in a world in which too many unmanageable risks threatened to unravel a precariously-extended credit network. Medieval merchants needed more protection than private ordering could afford them, and they looked for it in government intervention.

Protection of Rights and Property

The law merchant advocates correctly diagnose one of the leading risks of intercity trade in the Middle Ages: the foreigner had no automatic legal protection for his person and property, and he could find courts biased against him (Trakman 1983, pp. 10–11). The foreigner was a suspicious character in the Middle Ages, a period so parochial and xenophobic that the peasant from the hinterlands was a foreigner in the neighboring town (Ogilvie 2011, p. 57). Even merchants whose business was based on buying and selling to foreigners did not trust them (Dahl 1998, p. 246; Moore 1985, p. 97). Private ordering alone could not solve a problem this culturally ingrained. Governments had to play an important role as guarantors to get people to transact despite the embedded distrust.

Although lords and town governments often regulated commerce in the interests of their tax revenues and the wallets of the local merchant oligarchy, they had to ensure transparency in the conduct of trade if they hoped to attract repeat visitors (Ogilvie 2011, p. 305). One of the biggest bones of contention arose in weights and measures. Sellers must have had a great deal of incentive to cheat on measurements, because governments early and often issued orders to ensure accuracy (Davis 1966, pp. 7–9). Governments provided official scales and volume measures, paid sworn weighers and measurers, and required the private measures of shops such as taverns and bakeries to be tested and sealed (Davis 2011, p. 87; Gross 1908, pp. 40–41). Towns and guilds took similar steps to ensure that the products for which their towns were known were manufactured to specific standards of quality and size, and they took action against those making counterfeit or defective goods (Hunt & Murray 1999, p. 36; Strauss 1976, p. 98).

When foreign merchants thought they had been cheated at the scales, had been sold goods that did not meet the established standards, or had been victims facing monopolistic price fixing, they complained vociferously to the town aldermen and local lords (Stabel 2000, p. 27). The governments took these complaints seriously because the threat of boycott was real.[21] Some other neighboring town was always prepared to boost its economy by hosting foreign trade. The Hanseatic merchants, for example, decamped from Bruges repeatedly when their demands for better enforcement of the regulations and more lenient tax treatment were not met (Murray 2005, pp. 220–21; Ogilvie 2011, p. 305).

Towns and fairs also had to provide adequate courts to encourage trade. Scholars depicting a medieval commercial world of merchants acting independently of the state assume the absence of impartial enforcement mechanisms, a gap that needed to be filled by private ordering solutions such as group reprisals (Benson 1989, p. 649; Greif 2004, p. 113). Medieval merchants might have been surprised by this assumption, because they turned often to the secular and ecclesiastical courts to enforce their rights. Indeed, the evidence suggests that in some towns foreign merchants had a preference for litigating in local courts (Ogilvie 2011, pp. 261–262). This makes sense—once one recognizes the existence of fully functional public courts during the Middle Ages—because private ordering could not match the coercive power of government (id., p. 263; Sachs 2006, pp. 703–705; Sachs 2013, pp. 22, 24). Only a lord could compel debtors to appear and, as the Count of Flanders did, undertake to arrest debtors anywhere in Flanders if they fled a fair without paying (Davis 2012, p. 367; Gilliodts-van Severen 1904, pp. 51–52).

While scholars have argued that group reprisal provided a private alternative that mimicked this enforcement function, reprisal was in fact a part of the public court system and depended upon government involvement to work (Ogilvie 2011, pp. 272–74; Sachs 2013, pp. 24–25). Merchants also disliked it, and sought to have their community exempted from it whenever possible. Already during the 10th and 11th centuries Italian cities abolished reprisal, and by the 12th-century merchants from Germany, Flanders, and Italy obtained exemption from reprisal in their treaties with certain lords (Ogilvie 2011, pp. 277–278). The Countess of Flanders exempted merchants attending the fairs of Flanders from reprisal in 1252 (id., p. 279); the king of England abolished the practice for English merchants in 1275 (Moore 1985, p. 104); and the system faded out by the 14th century because of the “growing suggestion that it was not advantageous to commercial prosperity nor to the encouragement of credit” (Davis 2012, p. 211). Even where courts ordered reprisals, it is not clear how well it worked. Sometimes the government whose aid was sought in distraining a debtor or the fair which was supposed to be closed to the community of the offender simply ignored the mandate (Bautier 1953, p. 125; Fortunati 2005, p. 151).

Furthermore, contrary to the arguments of the law merchant advocates (Benson 1989, p. 650; Trakman 1983, p. 15), courts hearing commercial disputes did not need be staffed by people who knew the details of commercial practice. Instead judges relied on experts. They called in the brokers who mediated the contract, and they consulted the local inspectors of the particular product concerned (Gilliodts-van Severen 1901, pp. 87, 110–111, 379–380; Gross 1908, p. 28; Lopez & Raymond 2001, pp. 270–271). They occasionally even sought written evidence from a broker in another city about a contract in which he had been involved (Van Houtte 1950, p. 29).

Litigation, however, was never the merchants’ preference. If they had to go to a third party to resolve a dispute, they preferred arbitration (Gilliodts-van Severen 1901, p. 35; Ogilvie 2011, p. 297). We might assume this was because the arbitrators applied the law merchant. In fact, it appears that arbitrators were expected to apply either local law or the law of the hometown of the parties (Ogilvie 2011, p. 297). In addition, public courts also played an important role in arbitration. Once the arbitral decision had been rendered, the parties proceeded to have it enrolled and confirmed by the local court and read into its record in order to obtain the court’s power of enforcement (id., p. 299).

Finally, while merchants used private contractual solutions, such as sureties and pledges, to try to guarantee that they would get paid (Des Marez 1901, pp. 42, 51; Ogilvie 2011, pp. 287–289), governments, too, used their legislative and enforcement power to help improve the security of debts. Already by the 12th century, Southern Europe had a well-developed notarial system in which the notaries’ books served as a public, and enforceable, record of the debts (Ogilvie 2011, pp. 293–295). In Northern Europe, the powerful town councils provided noncontentious jurisdiction: the witnessing, sealing, and recording of contracts to ensure their validity and enforceability (Des Marez 1901; Ogilvie 2011, pp. 295–296). The creditor had only to present the document before the court to enforce his rights (Des Marez 1901, p. 40). Similarly, prior to the second half of the 13th century, at the fairs of Champagne merchants validated their contracts not before the court of the gardes of the fairs, but before town and ecclesiastical tribunals—the same authorities before whom they subsequently brought suit on those contracts (Bautier 1953, pp. 120, 122–123).

Medieval Ghent

In the 1280s, the king of England “provided facilities [at the English fairs] for the formal registration of bonds and subsequent action to enforce the terms of the bond by the mayor or sheriff of the region where the enrollment had been made” (Moore 1985, p. 120; Postan 1973, p. 4). The Flemish towns later developed a “carefully elaborated system of registering all cloth transactions” in order to ensure that debts were paid (Stabel 2000, p. 23; Nicholas 1987, p. 140).

Many towns even took action to ensure that debts their own merchants owed to foreigners were paid. In Bruges and Ghent, innkeepers “could be held financially liable for goods purchased on credit by guests” (Murray 2005, p. 198; Nicholas 1987, p. 142). Flemish innkeepers and brokers had to put up enormous bonds with the cities in which they worked so that if they went bankrupt their foreign merchant clients, for whom they performed local banking and services, would get paid (Nicholas 1987, p. 142; Stabel 2000, p. 23). The Hanse merchants in Flanders negotiated a privilege that guaranteed them priority of repayment in the event an innkeeper went bankrupt (Greve 1999, p. 218; Murray 2005, p. 199). In 1458, the Flemish town of Diksmuide went so far as to issue annuities in order to pay the debts its cloth merchants owed to a German merchant (Stabel 2000, p. 29). The town regulations of London and Norwich in the 13th and 14th centuries ordered residents to swiftly pay their debts so that traders “may not be put off nor hindered in receiving their payment and doing their business” (Davis 2012, p. 207). The towns and lords were not, thus, unaware of the foreigners’ needs for legal rights and security of property, and they also understood that attractive legal conditions helped trade flourish.


So where do these observations leave the law merchant theory? First of all, the concept itself is not medieval. Medieval merchants seem not to have understood themselves to be governed by a uniform and universal customary merchantcreated body of law. Nor did such a law merchant exist avant la lettre. Instead, when merchants could obtain their own law, they much preferred to do so. But when they could not, they followed the law of the places they traded.

Those local laws often left little room for the development of specialized merchant sales customs by mandating so much about the act of sale and purchase, quality, and assumption of risk. Merchants would have had to know about these rules to trade successfully. Consequently, medieval towns and fairs provided a number of intermediaries—innkeepers and brokers, notaries and moneychangers foremost among them—to ensure that this information was adequately available. The law merchant was not necessary either to enable trade in a world of diverse rules or to convey reputational information. The medieval infrastructure of trade had other means of dealing with potential problems the diversity of law and culture created.

Customs existed, mostly localized or network specific, but sometimes more widespread. The most important custom of all was using credit. But this custom implicated all of society, not just the international merchants. And it was enforced not merely through reputation but also through state-provided courts and regulations. Credit brought the merchant into a dense network of obligations everywhere he traded. In such a society, allowing merchants to be subject to a different law and different courts with different enforcement mechanisms would have made little practical sense.

Medieval merchants used private ordering to further their business. They engaged agents and brokers, wrote commercial manuals, formed communities, devised innovate payment mechanisms, and investigated the reputation of potential trading partners. But when one looks at the underlying institutional structures towns and fairs provided to facilitate trade, the use merchants made of public courts, and the regulations governments promulgated to reduce competition and the possibility of disputes, the order looks much less spontaneous.



  1. For other examples of the casual dismissal of the historical studies by proponents of private ordering see Michaels (2013, pp. 261–662.)
  2. Hence the irony in the statement of one of the law merchant’s main advocates that “[i]nitially, the Law Merchant had a less pervasive influence in England than it did on the Continent” (Trakman 1983, pp. 25–26).
  3. The case was heard at the court of the fair of St Ives on April 20, 1311.
  4. Malynes (1662) at the second and third pages of the unpaginated dedicatory epistle “To the Courteous Reader” (“Customary Law approved by the authoritie of all Kingdomes and commonweales, and not a Law established by the Soveraigntie of any Prince, either in the first foundation or by continuance of time.”) (italics omitted).
  5. Malynes (1662) at page 3 of the unpaginated dedicatory epistle “To the Courteous Reader” (italics omitted).
  6. Cf. Ewart (1903), a rare voice challenging the evidence of the law merchant as a body of law.
  7. See also Mitchell (1904, p. 9) admitting that each town had its own mercantile law, and Trakman (1983, pp. 19–20) admitting that the law merchant was not uniform and universal, though in part attributing this to “exceptions.”
  8. Ogilvie (2011, pp. 197–198) estimates that “[a]s late as 1790 … only about 4 per cent of Europe’s GNP was exported across international borders.”
  9. According to Moore, “few hard and fast distinctions actually existed between the commercial activities of the rural merchants at a fair and their urban counterparts” (1985, p. 90).
  10. See Postan (1973, p. 6): “The trade in wine, like that in wool and cloth … , was apparently open to all—vintners, cordwainers, drapers, curriers, saddlers, mercers, even princes, nobles, and ecclesiastics. Some bought for retail, others for resale to merchants.”
  11. After a certain point, retail trade in shops became a regular practice for local sellers. It began with artisans-producers, such as bakers and butchers, who sold first in public on regular market days, and then gradually, as the town population grew, also—but not exclusively—sold from the front window of their workshops (Braudel 1982, p. 62). A town like London might have had non-artisan retail shops in the 13th century, but only in the 14th century did small towns have “at least one genuine retail shopkeeper…[He] dealt in whatever he could get of cloth and linen, drugs and spices, hardware and miscellaneous small manufactures” (Davis 1966, p. 18). For most medieval sellers, however, even in the largest towns, the “place to sell things was in the market” (id., p. 24).
  12. National Archives (Kew, London), C2/JASI/D3/44 (George Dunn v. Francis Richards) (Chancery 1623).
  13. See, e.g., Beaumanoir (1992, pp. 356–357, 1005, 1006) providing examples from 1283 of agency in local sales of timber and other products.
  14. Cf. Shepherd (2005, pp. 252–253) concluding his study of the origin and spread of the famous French maritime code, the Roˆles d’Ole´ron, by observing that the “rules certainly were based on the practices and customs of that community, but there is no basis for concluding that such practices and customs represented a universal body of law or even that the customs and practices extended beyond the local maritime community.”
  15. See also Wijffels (2005, pp. 257–258) discussing a dispute over a maritime insurance policy issued in Antwerp, in which one party argued that an international custom existed, but counsel gave the opinion that “it does not matter… if the customs of Italian and Spanish cities differ [from the principle he has established]. For these are customs from different provinces and cities, which cannot be adduced to the present case, where only the Antwerp custom, the contract’s locus, and to which it refers, should be taken into account. Therefore, the custom of one place or province should not be extended to another place or province, but should only be observed in its own place or province.”
  16. See also B[rowne] (1589, p. 4) instructing that “when you be in the countrey of Spaine or else where … learne what be their civill lawes and customes, and be carefull to keepe them.”
  17. For example, the Sun Fire Insurance Office in London did not use full double entry bookkeeping until 1890.
  18. See, e.g., NOE¨L DE BERLAIMONT, VOCABULARE VAN NIEUS GE-ORDINEERT [VOCABULARY NEWLY REORDERED] (Antwerp, Belg., Jacob van Liesveldt, ed., 1527) (French and Flemish dialogues); NOE¨L DE BERLEMONT, COLLOQUIA ET DICTIONARIOLUM OCTO LINGUARUM [COLLOQUIES AND A LITTLE DICTIONARY IN EIGHT LANGUAGES] (Delphi, Greece, Brunonis Schinckelij, & Cornelij Nicolai, eds., 1598) (later edition expanded to eight languages).
  19. See, generally, the collection of the Insolvente Boedelskamer at the City Archives of Antwerp.
  20. Howell (2010, p. 19): “In combination, the instabilities of coin values, the lack of direct correspondence between prices and the bullion content of coins to which they referred, the variety of coins in circulation, and the difficulties of authenticating their identities created massive opportunities for confusion, fraud, and unearned gain.”
  21. Stabel (2000, p. 19): “Good relations with foreign-trade communities were all important in this. Town and guild authorities immediately reacted when trade got interrupted or when complaints were made by foreign tradesmen. The ever-complaining Hanse merchants, in the end almost the only buyers of Flemish cloth, often caused panic-stricken behaviour among town magistrates, who feared for the future of their industry. Negotiations with foreign trade communities, in particular with the German Hanse were always on the agenda of the representative bodies.”


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Originally published by the Journal of Legal Analysis 7:251 (2015, 250-289), republished by the Northwestern University School of Law – Law and Economics Series No. 16-06, under the terms of a Creative Commons Attribution-NonCommercial 4.0 International license.