Common Law

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on June 08, 2023

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Common law is a series of unwritten laws based on past precedent. Courts create common law by trying different types of cases and establishing a precedent for rulings in such cases.

This process differs from that of civil law, where laws are created based on statutes passed by legislative bodies, or regulations, which are created by the government's executive branch.

History of Common Law

Common law originated in England in the 12th century and is based on the concept of Stare Decisis (pronounced Starry Desi-sis), which is the idea that in an equal and fair society, similar cases should have similar outcomes.

Common law played an important role in integrating the tribal societies of England into a collective that was governed under a central authority.

Feudalism was a hallmark of the Middle Ages in England since all land was sovereign. Local courts also came under the king's control.

Common law was developed to eliminate variations in local courts decision-making regarding cases that were brought before them.

Hence common law is also referred to as case law because it sought to establish commonality among cases in different jurisdictions.

In addition to establishing precedents, common law helped standardize English customs of that time, contributing further to the unification of disparate territories.

The rise of a trade and mercantile class brought about another change in the common law.

While its sole purpose earlier was to regulate society by protecting property, the law's scope was expanded to include capital.

Thus, trading markets and relations between various actors in it also became an important component of common law. Common law was imported into the United States by English colonists.

Over time, however, the country has developed a varied system of laws in which several sources contribute to law-making.

In addition to common law, other sources of legal jurisprudence include constitutional law and statutory law.

Civil law is also practiced at the state level. In contrast to common law, civil law is derived from the Roman system of civil code.

Federal, state, and city legislatures are responsible for making laws, also known as statutes, that govern civil life in this system.

Common law can be modified into civil code at the state level by amending it with a statute. In general, a federal setup ensures that state law supersedes federal law in most cases.

But, in some overarching and substantive instances, common law is used to lay down the law of the land. An example of a common law ruling that set precedent is that of the Brown v. Board of Education case in the United States.

The case banned segregation in all forms. The Supreme Court's ruling established a common law precedent because there were no prior cases involving segregation in public schools before Brown v. Board of Education.

The Brown v. Board of Education judgment is cited as a precedent in court rulings that paved the way for racial integration of American society.

Other countries follow a system similar to that of the United States and have borrowed and adopted variants of common law into their legal system.

Types of Common Law

There are two types of common law:

  • General common law is laws created for situations and circumstances that do not have a precedent in the existing common law. Contract law is an example of common law.

    Federal common law is referred to as general common law and governs areas of dispute where state law is not applicable.
  • Interstitial common laws are temporary laws that are created for interpretations of existing statutes. When Congress makes laws, it does not cover all situations or instances applicable to it.

    It is the task of the courts to "fill in the gap," so to speak, in the interstices of the relevant legislation in order to make it whole. An example of this type of law is the choice to exclude wheelchairs from a "no wheeled vehicles on sidewalk" ordinance.

What Are the Advantages and Disadvantages of Common Law?

As with any legal system, common laws have their own set of pros and cons. The advantages of common law are:

  • Ordinarily, an elected set of representatives in a legislature are responsible for making laws. However, a common law system can elevate judges to the role of lawmakers.

    This can be an advantage because the judges are not beholden to popular sentiment and practice while making laws.
  • It is easier and quicker to enact common law than civil law because the latter requires considerable debate and consensus as it passes through a bicameral legislative system. the presence of a bureaucratic system can further cause delays.

    In contrast, a common law system can be speedy and efficient because it depends on deliberation and analysis by fewer groups of people and is not subject to bureaucracy.
  • Through the use of precedents, common law systems represent a chain of thought regarding a particular issue. The precedents and reasoning that connect these thoughts parallel the thinking and the issue's role in society.

    As such, common law is remarkably consistent and logical in its handling of cases.

The disadvantages of common law are as follows:

  • Common law systems provide little oversight for law-making authorities in the judicial branch, who are not appointed through the election and cannot be removed unless for misconduct.

    An example of this absence of oversight is the tenure of Supreme Court Justices, who are appointed for life, in the United States. Their appointment has become a matter of political grandstanding and is considered to set the tone of judgements for years to come.

    The Justice's ideologies are supposed to determine whether a court leans either towards the right (favors conservative causes and approach to judgements) or left (favors liberal causes and approach to judgements), instead of being impartial.
  • Because they heavily rely on past rulings, common law systems can become outdated. Society is constantly in a state of flux and past rulings, which may have seemed right then, may no longer apply in new cases.

    Several Supreme Court judgements have been overturned after they have become outdated. For example, a 1979 ruling in the Nevada v. Hall court case ruled that states lacked sovereign immunity from private lawsuits filed in another state.

    However, the court overruled its own 1979 judgement in the Franchise Tax Board of California v. Hyatt case in 2019.The court's ruling stated that the founding fathers intended states to have immunity and, therefore, state courts were also included in their original vision.

Common Law FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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