Customary commercial law, credibility, contracting, and credit in the high Middle Ages

Hayek (1973, 83) pointed out that: “It is in the … law merchant, and the practices of the ports and fairs that we must chiefly seek the steps in the evolution of law which ultimately made an open society possible.†A large literature has examined this medieval Lex Mercatoria, or Law Merchant, much of it supporting Hayek’s contention, but there also is a growing literature criticizing the Law Merchant story. One criticism is that during the high Middle Ages, and even the late Middle Ages, non-simultaneous trades were virtually nonexistent, so issues such as credibility of promises and enforcement of contracts were not relevant. Some critics go so far as to argue that the Law Merchant literature is grossly inaccurate, and that those who have written about the system have intentionally misused evidence in order to support a particular political view. Some of these criticisms are addressed in this chapter. The medieval Law Merchant was customary law, and many of the criticisms of the literature reflect a misunderstanding of customary law. Therefore, this concept and its implications for interpretation of historical evidence are explained. Aspects of trade in the high Middle Ages are then discussed, stressing the roles of contracting and credit while simultaneously emphasizing some characteristics of the Law Merchant that apparently have not been adequately explained, given recent criticisms. Finally various relationships between the medieval Law Merchant and other legal systems are examined, as these relationships also are significant sources of misunderstanding underlying some criticisms.