Rasmussen, Robert K. --- "International commercial law" [2007] ELECD 98; in Guzman, T. Andrew; Sykes, O. Alan (eds), "Research Handbook in International Economic Law" (Edward Elgar Publishing, 2007)

Book Title: Research Handbook in International Economic Law

Editor(s): Guzman, T. Andrew; Sykes, O. Alan

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843766742

Section: Chapter 7

Section Title: International commercial law

Author(s): Rasmussen, Robert K.

Number of pages: 34

Extract:

7. International commercial law
Robert K. Rasmussen



Commercial law regulates commercial transactions. The various rules and
institutions that commercial law offers enhance the ability of parties to enter
into exchanges and provide a framework for resolving any subsequent
disputes. Of course, the two are related in that the procedures that will be
available to adjudicate future disputes will affect the incentives to enter into
agreements in the first instance. The parties' expectations of what will happen
should things go awry color their willingness to transact as well as the struc-
ture of any deal that they reach.
Commercial law encompasses a number of different areas of law. The rules
provided by contract law interpret and complete contracts; the available
payment systems provide alternative mechanisms for allocating the risks of
nonperformance between the parties; laws facilitating the pledging of collat-
eral and resolving financial distress sort out rights among competing creditors
when a party cannot satisfy all of its obligations.
International commercial law does not differ much from domestic commer-
cial law in the problems that it attends to. The salient differences are the sources
of the applicable rules and the mechanisms that parties adopt to resolve future
disputes. Economic analysis generally posits that the goal of any commercial
law is to facilitate voluntary exchanges that increase social welfare. The rules
that maximize the contracting surplus in a domestic transaction should, at first
approximation, be the same rules that maximize the contracting surplus in an
international transaction. The efficient rule on ...