The main sources of law are the federal and state constitutions, federal and state statutes. federal and state court decisions, the rules and regulations of federal and state administrative agencies, and the ordinances of local governments. This text emphasizes (1) judicial decisions. also called “case law,” and (2) legislative enactments, also called “statutory law” or “code law.” Administrative law is covered.
Judicial law is created by the courts in the process of deciding disputes that come before them. It is called “case law,” “judge-made law,’ or “common law” and serves as a precedent for the determination of later controversies. It is referred to as the unwritten law, although voluminously recorded and in great part republished in statutory or code form in subsequent years. To give continuity to this system. judges imposed on themselves an unwritten doctrine called stare decisis. which means to stand by or apply the rule of decided cases instead of changing the rule. For example, if a case was tried before a judge involving a legal problem that had never been decided upon before, the judge’s decision was called a “precedent” or an original rule of law. In later cases involving the same problem, other judges might follow the same rule, whether or not they agreed with it, thus adhering to the judicial doctrine of stare decisis. The result was that the precedent became the law. It was called the common law, since it was applied to all persons, and was therefore a law common to all people.
Main Sources of Law In United States
The doctrine of stare decisis is not, however. completely rigid. In any society, the courts must be flexible to meet new expectations and needs. For example, the reason for the original decision may have changed so that the judge would not be bound to follow the decision. The factual situation before the judge might be different from the one in the original case so that the judge would not have to follow the same rule. Finally. the judge might feel that the original decision was wrong and refuse to follow it. The result of these latter decisions is the making of new and conflicting law that creates a certain amount of confusion until a higher court decides which ruling is controlling and hence becomes “the law.” In business law, we see a constant tension between the need for stare decisis so that law can guide business decisions and the need for flexibility and change so that the law meets new business expectations and needs as well as those of the entire community. In the long run, all law is dynamic.
Legislative law, also known as statutory law or code law, is law that is enacted by Congress, and the various state legislative bodies. Legislative law is the primary source of new law and ordered social change in the United States today. Each state has a constitution supplemented by case law and a system of codes. California, for example, has 27 codes: Food and Agricultural Code, Business and Professions Code, Civil Code, Code of Civil Procedure, Commer- Cial Code, Corporations Code, Education Code, Elections Code, Evidence Code, Financial Code, Fish and Game Code, Government Code, Harbors and Navigation Code, Health and Safety Code, Insurance Code, Labor Code, Military and Veteran’s Code, Pena] Code, Probate Code. Public Resources Code, Public Utilities Code, Revenue and Taxation Code. Streets and High. ways Code. Unemployment Insurance Code, Vehicle Code, Water Code, and Welfare and Institutions Code.
THE UNIFORM COMMERCIAL CODE.
In recent years, a great effort has been made to make the laws of the states uniform in certain areas. The most recent example is the Uniform Commer- Cial Code, which has been adopted with variations in all 50 states (see Appen- dix A). The purpose of the code is to simplify, clarify, and modernize the law governing commercial transactions; to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and to make uniform the law among the states- Thus, the itself permits change in laws regulating business transactions while attempting to provide uniform guidance for business decisions. The code is restricted to transactions involving various aspects of the sale, financing, and security in respect to PERSONAL property, which gen- erally consists of moveable things. Except for isolated instances, the code does not apply to real property (i.e., interests in land and those things permanently attached thereto).
Under the code, if the parties express intent to contract, some of the technical requirements for entering into a contract unnecessary. The code provides rules and principles that will become part of the contract if the parties have not otherwise agreed. Although the parties can tailor their contract to suit their needs, they cannot change the code obligations of good faith, diligence, reasonableness, and due care. The student should note in the material on contracts and sales that most contracts must still adhere to the accepted principle that a contract must be certain to be enforceable. The liberality in the area of certainty applies only to the sale of goods, and even in that area exceptions can exist (e.g., the sale of automobiles and installment sales of consumer goods other than motor vehicles.