Vanderbilt Journal of Transnational Law

First Page



This Article examines whether the incorporation of commercial norms into commercial codes is an appropriate law-making strategy. Most commercial codes, including the Uniform Commercial Code, regard common business practices as an important source for courts to consider when resolving contract disputes. Yet some scholars criticize this incorporation strategy, arguing that reliance on commercial norms is often inappropriate and may distort the true nature of the parties' agreement. Reliance on commercial norms does restrict the ability of contracting parties to allocate part of their agreement to extra-legal means of enforcement. Nevertheless, this Article asserts that those costs may be outweighed by the benefits of incorporating commercial norms into commercial codes.

The Article looks to international commercial arbitration as a source of evidence for evaluating the appropriate role of commercial norms in resolving contract disputes. This evidence is helpful to answering the question whether the costs of relying on commercial norms outweigh the benefits because international arbitration is consensual, resembles adjudication in public courts in important ways, and is a highly competitive business. The author finds that, generally, international commercial arbitration relies on commercial norms to resolve such contract disputes. Although the evidence presented is not conclusive, it does suggest that the benefits of reliance on trade usages (but not prior dealings between the parties) exceed the costs from any distortion of the parties' agreement.