Legal Design and the Evolution of Commercial Norms

The Uniform Commercial Code determines the content of most commercial law default rules by incorporating common merchant practices. The success of this incorporation strategy depends on the likely efficiency of evolved commercial practices. In this Article, I use the best available theory of cultural evolution to analyze how and why Commercial practices evolve. This analysis confirms that the incorporation strategy is far superior to a system in which lawmakers rely predominantly on individual analysis and experimentation to design commercial law. But the analysis also demonstrates that common commercial practices, and the laws incorporating them, are unlikely to be optimal, in the sense that they cannot be improved at any cost. There is good reason, then, to explore supplemental strategies for enhancing the efficiency of individual commercial practices on a selected basis. The viability of such strategies will depend on their costs and likely success in improving on commercial practice. Copyright 1997 by the University of Chicago.