Llewellyn s Heirs

• Author: Douglas G. Baird
• Position: Harry A. Bigelow Distinguished Service Professor of Law, University of Chicago Law School

Harry A. Bigelow Distinguished Service Professor of Law, University of Chicago Law School.

Many of the ways in which we think about commercial law were foreign to lawyers trained a century ago. They grew up steeped in a world of Langdellian formalisms. A chattel mortgage, chattel trust, trust deed, and factor's lien were discrete elementary particles in the commercial law universe. Heavy reliance on concepts such as "consideration" or "title" were indispensable for any well-functioning commercial law. We can celebrate Llewellyn and his commercial code because he did so much to move us away from abstract formalisms towards the commercial world itself. But what mountains are left for us to climb? By Professor Rasmussen's account, very few. In his paper, Robert Rasmussen joins the ranks of commercial law's dreary post-lapsarians. We have learned the lessons of public choice theory and once learned they cannot be forgotten.¹ In this dark and fallen world, the uniform law process can be defended, if at all, only as the best among number of bad choices.

Professor Rasmussen ends with only a glimmer of hope. With respect to some articles of the Uniform Commercial Code, the National Conference of Commissioners on Uniform State Laws ("NCCUSL") may be better than the alternatives. Consumer advocates and academics are likely to have a stronger voice in the uniform law process than in the state legislature. Moreover, the state legislature is not likely to function particularly well. In contrast to corporate law, there is no way to harness the forces of regulatory competition.

Jurisdictions cannot compete for commercial contracts in the same way they compete for corporate charters. Those involved in shaping uniform laws are less likely to bend to the political winds than Congress. After all, unlike elected members of Congress, those who drive the uniform law process are mere amateurs in the art of rent extraction.

In the abstract there is nothing wrong with Professor Rasmussen's call for assessing the work of NCCUSL by focusing on the art of what is possible, nor can one take issue with his qualified and begrudging support of the process. But Professor Rasmussen's account may slight what is possible in the uniform law process. Before we assess the recent and, by Professor Rasmussen's account, unhappy experiences with statutory reform, it is worth reexamining where today's commercial scholars lie relative to Llewellyn. An interesting paradox is at work. Our own generation's giants in commercial law-scholars such as Lisa Bernstein, Robert Scott and Alan Schwartz-are at once Llewellyn's greatest critics and his true heirs. In finding fault with Llewellyn, they too often fail to understand that they stand on his shoulders. They are the ones in today's academy most concerned with how the law works in action.² By contrast, many involved in uniform law process, particularly those in the failed effort at a comprehensive revision of Article 2, have been too quick to assume that they are Llewellyn's heirs. They rely on primitive intuitions about what is "fair" in commercial law. They seem to think that casual empiricism, coupled with a high-minded cynicism about large firms and institutional lenders, tells them everything they need to know about commercial reality. Llewellyn, however, began by renouncing such smugness.

We should pay more attention to this great peculiarity of our own age, and we should begin assessing Llewellyn distinctive virtues. Understanding Llewellyn's virtues is no easy task. As Alan Schwartz has shown, Llewellyn lacked the tools in empirical methods and economic analysis that are second nature to us.³ Some of his specific ideas about commercial law were wrong. Moreover, Llewellyn himself did little to endear himself to modern readers. His off-putting prose style was a mannered mix of precious erudition and colloquialisms. It does not wear well. Equally important, his view of commercial life took shape in the first part of the last century. Robber barons and itinerant peddlers dotted the commercial landscape. Sinclair Lewis's The Jungle, an expos of Chicago meatpackers, had just appeared. Snake oil salesmen still provided doctors decent competition. The great con men were in their prime.⁴ As a result, from our vantage point, Llewellyn's account of the commercial world overemphasizes such primitive forms of mischief.⁵ We should not, however, let any of these flaws obscure Llewellyn's great strengths and his ability to harness them in the cause of law reform.

In the strategic battle to shape the law, Llewellyn took Sun Tzu to heart. He knew the terrain, he knew his enemies, and he knew himself.⁶ Over these dimensions, too many of those now engaged in law reform consistently fall short. In this paper, I review each in turn.

I The Terrain Of Commercial Law

The common law was property-based. A reader of Blackstone will find little devoted to contracts and even less to commercial law. The problems the common law lawyer faced were in the first instance problems relating to property. Most of the problems were reduced to questions of the rights of a discrete individual against another. How does A convey Blackacre to B? Did A trespass upon B's land? Ownership of personal property turned on whether an unbroken chain of voluntary transfers connects the current possessor with the original owner. The law of tort grew out of the writ of trespass. We ask whether A injured B or B's property. The law of contract in turn grows out of tort. We understand commercial transactions by looking at A's bargain with B against a background set of clearly defined property rights.

Among the many sins of Christopher Columbus Langdell was his failure to see that this conception of the law was much too narrow.⁷ When property rights are pre-ordained and everything else turns on the interactions of one individual with another, many important questions are never asked. As long as you assume that property rights have a predetermined shape, you never have to worry about how legal rules bring various institutions into existence. You can worry about a discrete marketplace transaction between A and B without ever asking about the legal rules that brought the market into being in the first place. Moreover, by focusing on a discrete transaction and the narrow legal rights associated with it, one never has to worry about the forces outside the law that also loom large in commercial transactions.

One of Llewellyn's great strengths lay in his understanding that commercial law must be shaped by the world in which it operates and the forces at work there.⁸ Llewellyn turned to the law merchant and focused on its rules, particularly those centered around norms that emerged in a well-functioning market.⁹ These norms imposed obligations that do not exist in the case of one-shot deals, but granted benefits as well. Llewellyn advanced an idea of good faith with a higher threshold than mere honesty in fact, but at the same time, he believed that those who met the heightened standard of good faith desired greater rights than a discrete rights-based approach would allow. To be sure, it is easy to find fault with Llewellyn's ideas about good faith. One can, for example, join Grant Gilmore and reject the idea that promoting the good faith purchaser in all his guises in fact promotes commerce.¹⁰ A balance always needs to be struck between the duties we impose on original owners and those that come later. How it should be struck is far from self-evident. Moreover, Llewellyn's conviction that protecting good faith...