Common Law Contracts
A Primer for Pure Energy Systems Associates
M. Carter, CFO
Approved by PES Board June 28, 2004
A recommended way of doing contracts for alternative
energy groups, that brings responsibility back to the people and away from
Definition of Common Law and Statutory Law
The seventh amendment reads: “In suits at common law, where the value in
controversy shall exceed twenty dollars, the right of trial by jury shall be
preserved, and no fact tried by a jury, shall be otherwise reexamined in any
court of the United States, than according to the rules of the common law.”
Civil laws are those statutes written and agreed upon by some governmental
entity from the federal to the city levels. Common law is founded upon “common
sense” which is often not written but is based upon tradition and prior cases.
Codification is the attempt to write down and interpret what the common law is
in a particular area. Statutes are usually not based upon the common law in any
While our court system originally was based on common law, the court system
today is largely a statutory court. It will not allow precedents in its courts
before 1938 when common law courts were….well, common. While largely ignored,
the common law courts are still legal in the United States. When any contract is
written it must specify which court system will apply—a particular
statutory/admiralty court or the common law court. This is called establishing
If a contract states something to the effect that ‘it will be adjudicated
under the laws of the State of _________’ it is a statutory contract. The
signers of such a statutory contract will then be beholden to the morass of
legalese that exists on the books that few people other than lawyers and judges
understand. These contracts tend to be shorter than common law contracts because
they do not specify which laws will apply, but shorthand it by saying “according
to the laws of the State of ________.”
That is why specialized lawyers are so important in statutory contracts. You
want a lawyer who thoroughly understands the laws applying to your field of
interest and jurisdiction and how that contract will be interpreted. Often
common terms have entirely different legal meanings and are one of the easiest
ways for loopholes to be created. It will sound innocuous to one party while the
other chuckles behind their hand, knowing the true meaning. Also when crossing
state or national borders and making contracts outside of your locale, what may
be acceptable verbiage in one jurisdiction could mean something entirely
different in another.
In a common law contract everything is spelled out that will apply to that
contract including the precedents it is based upon. It makes for longer
contracts, but there are no hidden laws to worry about. Both parties are
expected to PERSONALLY understand exactly what is written and they are expected
to talk about it until they do understand. Greater responsibility is placed on
the signers to actually read and know what the terms are. Words mean what they
commonly mean and anything that is not clear is defined at the beginning of the
Every contract to be legal must have a provision spelling out what will happen
if one of the parties breaks the contract. This is referred to as a remedy. In a
statutory contract the remedy is spelled out only in the written statutory laws
few understand. In a common law contract the remedies are spelled out very
carefully. Common law contracts are no longer common so they must be even more
careful to spell out the arbitration and jury process that used to be well
known. This makes the common law contract even longer.
Because most people are so used to not understanding legalese they are scared
off by the very length of the common law contract and their eyes glaze over.
Fully half of any common law contract is repeatable in other similar contracts
and will not change much. Once common law contracts are used more and the
precedents become familiar and the types of remedy become familiar, the length
of the contracts will no longer scare people away. Common law contracts are
meant for common, educated, intelligent people to understand.
Showing a common law contract to an attorney who belongs to the bar of any state
will create havoc. Such attorneys are barred from practicing common law. They
may be able to comment on the specific terms at the beginning of the contract,
but they will not understand the common law provisions at all. They were not
trained to and as was stated they are actually barred from doing so. They will
try to write in provisions having to do with statutory law.
There are unbarred attorneys who practice common law, but there aren’t many.
We usually think of unbarred attorneys as sleazy characters who break the law
egregiously, but there are those who purposely give up their bar designation to
practice common law.
Attorneys today are schooled in statutory law and have twisted the meaning of
common law to mean those precedents set in place after 1938. Most attorneys are
not even aware of being restricted by that date and often try to win cases using
precedents from previous years. They will lose every time unless they have newer
cases to back it up. Lawyers will claim we have a common law court today, but we
effectively have a statutory court.
One of our board members lost a case because their lawyer tried to use a
precedent from 1925 as the basis of the case. The judge threw it out as “too
old.” The board member had told their lawyer that previously, but he did not
believe her. Predictably she lost the case.
Common Provisions of a Common Law Contract
A common law contract will sometimes have a full page of definitions of
certain words so that there is no misunderstanding as to what is being referred
to or said. It is very important to read each definition and refer back to it
often while studying the contract.
At Pure Energy Systems we might have a defined word like “Open Source Content“
in our contract. We define it to mean: “includes, but is not limited to data,
documents, plans, descriptions of information and samples, specifications,
diagrams, photographs, videos, software, formulas, compilations, databases, or
any other information contained in these open-source archives.”
PES recognizes the Uniform Commercial Code (UCC) as an attempt to write down or
codify the common law and so we base much of our content on that code. Becoming
familiar with it will greatly enhance your understanding of common law
Instead of making the jurisdiction one of the states and its laws you will see a
statement something like this:
APPLICABLE LAW: This Agreement is governed by the
agreement of the Parties, common law in the original jurisdiction of 1789, and
applicable contract and commercial law as used in time immemorial. This
Contract is a private common law contract as defined in this contract. The
agreement of the parties as expressed by the obligations, terms and conditions
stated herein are the law of the case, in any case arising from the workings
of this contract.
In less legal terms this is saying that the Parties are agreeing to the
common law as defined in the contract and under the original congressional act
of 1789 that established the court system; it also includes the UCC. Common law
also includes people’s inalienable rights (those rights given by God). The
last sentence above means there are no surprises in a court case; the contract
is the agreement and not some obscure law no one but lawyers know about.
Like many statutory contracts, we put in an arbitration clause (otherwise known
as mediation). If there is a dispute we agree to try and work it out rather than
take it to court first. We use the American Arbitration rules just like the
statutory contracts would, except we don’t hire barred lawyers to arbitrate.
Each party chooses someone to represent them and the two representatives choose
a third representative. The arbitrators listen to the dispute and then vote to
decide how to make both parties “whole” (correct the dispute). The majority
vote wins. If one party is still dissatisfied, they can then invoke a common law
jury and court to hear the case.
Each party chooses six willing jurors and the jurors choose a thirteenth person
to be the foreman. The foreman only votes in case of a tie and should be well
versed in common law. The jurors ideally should all ready be familiar with the
case (in direct contrast to statutory court where they want jurors who know
little about the case).
Also in direct contrast to statutory or admiralty courts, no evidence can or
should be withheld. All evidence that is pertinent is presented. Another
interesting difference is that this court can be held in private and all matters
decided and adjudicated can remain private matters and are held in strict
confidence during and after the trial.
The foreman puts into writing the decision of the jury and each party is
expected to abide by it. If one party does not abide by the jurors decisions,
the offended party is then allowed to lien the other party in a
statutory/admiralty court and seeks redress through that court as a last resort.
Of course the contract may be held to a different level of scrutiny by that
court, but as long as all the provisions of the contract were carried out by the
offended party, the judge will almost be forced to award the offended party the
decision of the common law jury.
Statutory/Admiralty courts do not allow cases before 1938 to be used as a
precedent in deciding a case. In stark contrast common law is based on very old
precedents such as the Constitution and the Bill of Rights, the Declaration of
Independence of 1776, the Judiciary Act of 1789, and court cases in a common law
court that are pertinent and public knowledge.
Summary--Parts of the Contract
The first part of the contract covers who the parties to the contract are and
what the contract is for. This is true of either type of contract—statutory or
The second part of the contract is the definitions of terms used in the contract
that may prove ambiguous without an explanation. This is true of any contract.
The third part of the contract is specific terms of the contract. It is the
heart of the contract. This part of the contract will specify what is expected
of each party and when.
The fourth part of the contract will specify the jurisdiction and all the terms
of the common law portion of the contract including what the redress or recourse
is should one party fail to fulfill their part of the contract.
The fifth part of the contract is the general terms which are seen in most any
type of contract whether statutory or common. It will include things like you
have authorization to sign the contract, there are no hidden verbal agreements,
it is all written etc.
Pure Energy Systems prefers to deal in common law rather than statutory law
for several reasons. We are freedom lovers and see that the common man has lost
many of his inalienable rights in the statutory courts where no true justice
exists. Should there be a dispute it is much cheaper to remedy through the
common law courts. The system seems fairer where all evidence can be presented
and those who understand the situation best are asked to participate as jurors.
Rather than award absurd amounts, each party will be made whole by the common
law arbitration and jury method. The common law system is a system of privacy
and individual rights. With a company slogan of "Power to the People"
common law just makes more sense to us, enabling power to the people, not just
in an energy sense, but also in a legal sense, bringing the responsibility right
back to the people, where it belongs.
The statement: "Such attorneys are barred from practicing common
law" is not true. Statutes now control to a greater or lesser degree almost
all legal relationships but lawyers admitted to the bar (at least of the states
where I was admitted) are licensed to practice law generally and in all courts
and cases except for a few specialized tribunals. All courts follow statutory or
common law or equity, etc., as the case requires. If Ms. Carter is saying that
no lawyer would attempt to bypass whatever statutory scheme the state has
adopted, then she is right, [that would be abject incompetence].
-- Grant; July 21, 2006
Page posted by SDA
June 26, 2004
Last updated February 23, 2012