Community practices community practices can also

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Community Practices. Community practices can also develop into law. Perhaps the best example is the ‘law merchant’ (or lex mercatoria ). Originally, national laws were poorly equipped to deal with the particular problems that the merchants, particularly those dealing outside their own countries, faced. As a result, the merchants of Europe evolved their own customs and rules for the way trade and commerce was to be conducted—and enforced those rules through their own local mercantile courts, which were quite separate from the formal national law courts of the countries involved. Eventually, mainly in the 18 th century, most of these rules were formally recognised and became a formal part of the law in the various countries in which, until then, they had only applied by mercantile custom. Such incorporation came about in two ways. First, the courts recognised the practices as forming part of voluntarily undertaken obligations (and therefore enforced them as part of the contracts that the merchants had with one another). Secondly, and more importantly, the governments of those countries accepted that the rules should be recognised and formalised and passed them into law. In that way the merchants’ rules about methods of payment were formalised (in England) in the Promissory Notes Act 1704 (UK) and the Bills of Exchange Act 1882 (UK). Similarly, many of the rules about the buyer’s and seller’s rights, duties and responsibilities in sale of goods contracts were incorporated into the Sale of Goods Act 1893 (UK) and many of the rules about mercantile agents were incorporated into the Factors Act 1890 (UK). 6
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CO5119:03 Business Law SUBJECT MATERIALS >> SCHOOL OF LAW JAMES COOK UNIVERSITY However, irrespective of how the rules became law they all had had one common characteristic—they were not simply rules of behaviour; they were rules of behaviour that were legally enforceable because they came directly or indirectly from the sovereign body, and it had the power and authority to enforce them. This also meant that rules that were not legally enforceable could not be laws. Consequently, all of those rules that govern polite ways of behaving, or which regulate how games are played are not laws—because they are not legally enforceable. It also means that the rules do not need to be just or fair or morally defensible. All that is required is that the sovereign body must have decided that the rules should apply and, if it has, they will be part of the law. 1.2.2 The Qualities of Good Law As was seen above, ‘law’ is simply a body of generally accepted ‘rules of behaviour’ that a particular society, acting collectively, accepts as appropriate for its own self-governance. Therefore ‘law’, as we know it, depends very much on the community accepting the rules. If the community does not accept the rules, the members of that community will invariably do something to change them. That may come about in various ways: the sovereign body (parliament, the congress etc) may identify the need for change and change the law itself;
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