William of Ockham Goes to Commercial Law Class
posted by Nate Oman
A lot of legal argument consists of mastering the reasons for and against various recurring dualisms in the law. For example, there is the well-worn dichotomy between rules and standards. Rules provide ex ante certainty and easy resolution of disputes ex post. Standards reduce the incentives for parties to engage in undesirable but rule-skirting behavior ex ante and provide greater substantive fairness ex post. Another example is substance vs. procedure. For example, in administrative or corporate law should judges scrutinize the substance of the decisions that were made, or should they confine themselves to looking only at the procedures used to reach the decision?
A key to understanding the U.C.C., and with it commercial law, is another distinction that students have a harder time wrapping their minds around. I call it the divide between realism and nominalism. During the middle ages scholastic philosophers debated whether or not universals had actual existence independent of any particular instance of the universal, or whether ultimately all that existed was the particulars themselves. The U.C.C. makes a lot more sense, I believe, once you recognize that it in so far as it is possible, it is aggressively committed to nominalism.
What do I mean? Llewellyn, Gilmore, and the other drafters of the U.C.C. had the Legal Realists’ hatred of legal abstractions. Accordingly, they strived as much as possible to divorce the adjudication of commercial disputes from the manipulation of conceptual legal essences. For example, pre-U.C.C. law dealt with the question of risk of loss by determining when “title” passed from seller to buyer. Llewellyn dispensed with the concept of title and instead provided a set of specific rules governing specific situations. Article 9’s treatment of the sale of accounts provides another example. Definitionaly, the Code creates a series of rules by which the sale of accounts is governed by rules that ordinarily deal with the creation and enforcement of security interests. The sale of an account, however, is not the same thing as the creation of a security interest. Determining the difference between the transactions, however, does not hinge on deductions from the attributes of a sale but rather from concrete provisions of Article 9.
Explaining this conceptual distinction is a fun exercise, and provides a nice way of injecting jurisprudential discussions into teaching the U.C.C. It also helps to drill an extremely important rule of thumb into the heads of students: If you are trying to resolve a legal dispute by drawing implications from the nature of legal concepts like title, security interest, perfection, attachment, or the like you are on extremely unstable ground. Go find a code section.
It’s law as William of Ockam would have done it.
October 29, 2006 at 10:13 am
Posted in: Contract Law & Beyond, Legal Theory
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