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Common Law Contracts
A Primer for Pure Energy Systems Associates

by Susan 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 lawyers.

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 form.

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 the jurisdiction.

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 contract.

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 contracts.

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.

Common Precedents

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 common law.

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.

Further Comments

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.

Feedback

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 July 23, 2006