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The Codification of Commercial Laws

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The Codification of Commercial Laws

with special reference to

the French Ordonnance of 1673

and to Accounting


This paper reviews some stages whereby unwritten laws and usances were recorded within nascent city-states and nations. Collections gave way to less or more formal codification based on international surveys of good commercial practice, entitled Pareres. Other areas of law were covered in the legislation put through by Colbert in the reign of Louis XIV; but the Ordonnance of Commerce of 1673 proved influential over time and across frontiers.

This Ordonnance may be sampled in its many sections. Accountants note that the form and authentication of prescribed Books of Account which featured importantly: Books were to be signed and authenticated by regional Tribunes or Consuls nominated by central government and thus could fulfil the probatory purposes required of them later in the Napoleonic codifications and indeed until the most recent years. Stewardship accounting procedures which can be traced to Roman times were prescribed in the Civil not the Commercial Code.

Persisting differences between Continental European and Anglo-Saxon law may be discovered at this time.

Key-words – Commercial law; Book-keeping requirements; Ordonnance de Commerce 1673.

The Codification of Commercial Laws

with special reference to

the French Ordonnance of 1673

and to Accounting


Legal aspects have appealed little to Anglo-Saxon accountants who have sought nevertheless to develop and impose standards in corporate reporting at national and then at international level. Legal aspects have however been of interest in the theory and practice of accounting in Continental countries which share a common history back to the great codifications under Napoleon with long earlier precedent, Manifold differences in current practice can be explained from a diversity of tradition. The present study is not essentially comparative, but rather explanatory of some of the changes in French law especially. Our narrative is intended as descriptive, leaving the reader to add detail, to find imperfection or to see analogies with other lands or times.

The argument focuses on one particular regulation for the authentication of commercial Books; but legislative procedures from centuries before 1673 are shown as culminating in the many ordonnances of Louis XIV�s reign. Other areas were also subjected to law reform in that reign, each with its special challenges, so that the Commercial Code or Ordonnance is best seen as part only of a legislative programme. Then or soon after, other European rulers were reforming ancient and local laws in an “enlightened” era. Commerce and finance were by tradition and nature less bounded then other activities. But as we describe the efforts of Colbert, Savary and others, before and since, to find precedents and usances in disregard of the bounds of the legislating state, so we must face the paradox of the goals and practices of the so-called Mercantilist era: these aimed to some extent at self-sufficiency; and where international trade was commended on principles to be harmonised, then its purpose was the enrichm ent of one party at the expense of its trading partner. Such reasons of the state were only gradually relaxing their force on the tactics of traders. Commerce was perceived as having also a civilising effect, due partly to the ethics accepted by traders from Canon Law sources. But the acceptance of commerce as a civilising pursuit which was not unfitting to gentry, must also be due to the wider acceptance of improved and “codified” law from 1673.

In the pages which follow, we will suggest the variety of sources of law then available, also the range of areas to which it was to be applied. The laws in France had been diverse until the first writings-down from 1454. Similarly the jurisdictions available ranged geographically and by specialism. New consular jurisdictions had been arranged throughout the country in accord with integrating despotism, providing services to “centre” and offering services also to regional traders such as in authenticating their Books. The codification procedures and the letter of new laws cannot be studied without reference to initiating and incriminating or enabling instances. Of special interest must be the locus of legislation – close to the monarch or to the markets – and the degree of “self-regulation” by traders as laws emerged from their usances and as further cases remained to be tried. Without surprise we will find that the Savary Commission�s enquiries in France were somewhat curtailed, and the replies to “Pareres” from traders abroad were confined to matters of fact not law.

After brief reference to the bases for legislation in other fields, the commercial Pareres will then be examined as a major exercise by legislators determined to innovate as little as possible and to cover their area with minimum reconstruction. Many details in the Ordonnance could be tested for such conservatism. But our interest will concentrate as usual on Book-keeping narrowly defined. The closing of Books was required once every two years, giving the maximum period over which bankrupts� documentation would have to be reconstructed for the Courts. Books and balances as means of information and avoiding bankruptcy are not hinted at in the Ordonnance, even though bankruptcy was endemic at this period! Instead we have procedures prescribed (which could not be adopted by most traders) for the inscription and authentication of each transaction or event!

Ensuing legislation before and through Napoleon could be described to establish the importance of the 1673 Ordonnance. Accountants should be more attracted, however, by the great texts which were written in the aftermath of the legislation. Fuller and more reasoned treatments are there to be found than in the Ordonnance itself or the enquiry which preceded it. But whatever the follow-on pursued, the reader should clarify his expectations of a discourse which will often bewilder the Anglo-Saxon and disappoint those raised within the “Civil law” tradition.


The student of early modern European law must be struck by the variety of sources from which law could be derived, and which would exercise influence differentially by time, country and legislator. Roman law had been studied from the early Middle Ages, and underlay concepts of property, contract and “society” (or partnership) which were being increasingly adopted. Moreover the great codifications by Justinian and other emperors had served to sub-divide and structure new draftings of the law. Attempts by Western emperors to adopt Roman or “Civil” law conflicted with the claims of ecclesiastical or “Canon” law through a system centred in the papacy which was usually located at Rome. Neither the civil nor the canon law systems originated in centres of commerce which therefore were prompted to explorations to meet particular needs.

Some needs in the 17th Century were met through the development of a Natural or rational law applicable for instance to a Law of Nations which was extended to international diplomacy and commerce. But such conceptions had to be related to the widely respected Common Laws in every area. Practice, tradition, prior cases and for merchants in particular accepted “Usances” were the starting point in making any legal decision or in considering any revision or innovation.

Such generalities may be tested in application to various codes and courts of specific competence. In each country, courts developed with unusual names but with competences in areas such as Criminal law, Civil cases, Forest Law or the Law Merchant, etc. Consistencies and imitation were the easier where arenas were thus defined. Moreover at the level of forms and phrasing, uniformities were introduced by notaries who were often trained in leading European law schools and bore therefrom detailed formularies (Robinson et al , 1985, p.176-7). Just as documents drafted by local notaries were acceptable elsewhere, so account Books drafted and acceptable in one city were equally valid when presented elsewhere, according to Genoese Decision 38 (Jouanique, 1984, p.341). Such interactions make it difficult to follow codification in one country only, and for commercial law alone.


Monarchs in modern times sought order in the diverse laws throughout their realms. Enquiries for this purpose anticipated the wider “statistical enquiries” in which Colbert took an initiative, especially for newly conquered provinces (v. Forrester, 1990, p.298). As early as 1454, Charles VII ordered an investigation into the laws currently in force in the twelve Parliaments apart from Paris. In 1560, the Third Estate of the realm petitioned for a survey, summary and purging of laws together with reforms of procedure (Robinson, et al, 1985, p.338). Comparable steps were urged in 1614 by the Estates General in their final session before 1789 (op.cit p.350). A characteristic of these initiatives was the rivalry between deliberative and judicial bodies. Paris and its Parlement was long favoured, but before 1673 the Council set up by Louis XIV was permitted to receive representation and complaints rather than consult the Paris Parliament formally (Bornier, 1729, Intro). Whatever the sources of law, au tocracy had its way!

Explanation may be sought in the diversity of origins noted above for the variety of terms used in regulation. Differences of use and meaning may subsequently be found for Ordnances, Arrets, Statuts etc, but in the 17th Century one may suspect that there was confusion among law-makers and subjects! Further confusion arose from a multiplicity of languages, as Latin was relegated to legal, academic and ecclesiastical purposes. Italians too had had their periods of supremacy but yielded now to the Dutch for commerce and accounting and to the French for diplomacy and accounting in legal mould. It is with these last that we are concerned.


Legal decisions on commercial matters had been collected diligently and internationally, even though civic disputes inhibited the establishment of consistent law and effective systems. Among the most important collection was that for the established to ensure justice in Genoa from 1528 (Rote de Genes). An appeal system provided a check on initial judgements. The commercial decisions and grounds were published by Belloni in 1582 with a further edition in Venice in 1606.

Such collections provided some base for codifying current and country-specific laws. There were many others, both before and after the Pareres enquiry of the 1670s. The resulting Ordonnance prompted copious texts, not least on accounting practice. The Decisions of the Rote de Genes were praised and accepted into the mid-18th Century, only to be forgotten in comparison with the French commercial legislation (op.cit p.347).


The law to be described relied for its enforcement on officials of varied origin. Municipal or corporative authorities in the Hanse towns differed from the Tribunals of Commerce which may have originated in seasonal Fairs but which offered continuous services in later nation-states. Antecedents of territorial or city-based officials are found not only in fairs but also in the Provostships of Merchants in Paris (Magliulo, 1980, p.16). In 1563 Michaelo de l�H�pital urged Charles IX to establish by edict Consulships throughout France. A century later, in 1669, Louis XIV acknowledged that the Consuls had been modelled on the “Conservateurs” of the Lyons Fairs who coped with fraud and bankruptcy. The continuation of tribunes of fairs in the Tribunes of Commerce is otherwise supported (Hamal & Lagarde, 1966, p.59).

From about 1600 AD, a separate system of Councils and Chambers of Commerce was being established – to be informed by government and to inform centre of mercantile interests (Magliulo, 1980, p.18ff; Mariage, 1951, p.38) The good behaviour of the Chambers was secured by the nomination to them of those favoured by court! By 1706 a parallel system of Lieutenants of Police for civil policy and Counsellors with other duties had been established which served Seventeenth Century needs, and would secure the authentication of Books required also under the Napoleonic Code of Commerce, Title 2, art. 11. Continuities of system and procedures were very great.


Incompatibility between the areas covered by written and customary law prompted reforms, especially through L and Jean-Baptiste Colbert. The former worked through the Parlements, and by 1667 had reformed civil procedures, including enforcement rights for commercial and civil debts. Forest Law was codified in 1669; and in the following year, an Ordonnance on criminal law and procedure followed. Much later came a Marine Ordonnance. A comprehensive reform of law and law courts was thus attempted when Colbert�s Code Marchant of 1673 is added to the above list. Specific areas of accounting in particular were not treated within the codes and systems which one might expect today.


Nowhere among the many articles of the 1673 Ordonnance does one find prescriptions for stewardship accountability. The importance of the semi-public area may be measured by the audit fee of half a million livres charged at the Paris Chamber of Accounts for the Farmers� General reckoning for 1776 (Bosher, 1970, p.122). The Code Merchant did not apply to such accountability.

The formalities of accounting and audit for these purposes appear in the Civil Code of 1667, and were carried forward into Napoleon�s Code de Procedure Civile (1806, 4th Title on the “Rendering of Accounts”). Articles 527-52 can only be summarised here. They covered first the locations of hearing and of trusteeship. Title XXIX of the 1677 Code is boldly headed “Of the rendering of Accounts”. Guardians, procurators, judicial farmers, sequestrators, guardians and indeed any who administer the goods of others are obliged to render account as soon as their administration (gestion) is finished. . They remain accountable (comptables) until their account is closed, approved (arrete), and until any Rest or balance due is paid, and every supporting voucher has been provided. (Art.i)

Article 2 prescribed how the nearest or other judge should “pursue” the accountant to appear at an examination by the parties concerned of the accounts and vouchers over 14 days was allowed. No written Minutes or Verbal-process was to be made. In case of doubt, the Account and vouchers could be produced at the record office (Greffe), without which a simple act of commandment will be necessary in order to put it at “the instance of the state”(Art.16).

The requirement to make each account uniform is clear (and originating presumably in chancery scriptoria over centuries!) :

“Acccounts are to be written on large (folio?) paper, with 22 lines to the page, and with 15 syllables per page. “

Non-compliance was to have “tax” consequences for each page which contravened (Art.18). Then prescribed was that error in the vouching or accounting could lead to a renegotiation of final balances (Art.21)

Appeal grounds and procedures were then specified, also allowable expenses and joint responsibilities. The Account should contain “effective” receipts and expenses, being closed off by a summary balance with a special chapter of outstanding debts. The accountant should submit this Account at the prescribed day and place, the judges being present. The Account would then be sworn, the vouchers being “cotees & parafees” by the advocat. Claims by creditors had to be submitted by account or voucher through their legal representatives. Art.20 of title 29 of the Ordonnance of 1667 then required that the judgement made on the instance of the Account should contain the calculation of receipts and expenses and will determine the Rest or final due, if any. Revision was only allowed for errors, omissions, false or double entries (Art.21).

This summary suggests the interactions ensuing between commercial and civil law. The formalities of the latter may be discerned intruding into commercial practice, where also criminal procedures could apply on bankruptcy In the longer term, this accounting for trustees under civil law had to affect the accountability and auditing for trading corporations. Commercial law, lacking largely any accountability beyond the requirement to keep proper books, exercised a pervasive influence. The dual influences sought proper evidence in phrasing in identical terms, the requirement in one case being for the certification of loose vouchers and in the commercial case for the authorisation of Books.

Procedures for civil accountability were within the competences of lawyers and notaries. Moreover particular penalties were imposable on royal and tax officials and those holding sums subject to litigation (De Ferriere, 1768, p.377). Meanwhile the Merchants� Code was being prepared specifically for merchants who were usually grouped in guilds. It was intended to improve the uniformity of law throughout France and to reduce the costs of litigation through a developed consular service (already described. ) One effect was to reduce traders who found their dignity within guilds to quite formal registration and listing. A “personality” of this type must have been seldom welcome (cf. Mariage, 1951, p.11).


Much work on legal revision had been set in motion before Colbert, as Chief Minister of Louis XIV turned to commerce. Councils of Commerce had been summoned even by Louis XI and Henry IV. From 1664 Colbert had met fortnightly with such a Council, but was able to expect specific reforms from a Commission of 13. It was presided over by his uncle, and included men of great competence such as Pussort, Banker Belliongani and Jaques Savary. The contribution of the last was so great that the Ordonnance is commonly described as Le Code Savary.

Sections of the Ordonnance were covered by thirteen Titles which included 122 Articles. These begin with 8 articles on apprenticeships, and three on Agents of Change and “courtiers”. Title III deals with Books and Registers. Partnerships , companies or “societies” are covered under Title IV, and Bills of Exchange in 32 articles under Title V. Interest on exchange features next in 8 articles. Bankruptcy and business failure are covered in 13 articles,. Title XII regulates the Jurisdiction of Consuls in fifteen articles – Clearly general and particular interests must be aroused; but before illustrating the preparation and outcome of the Commission�s work in one area, one may note some omissions which appear surprising today. For example, no attention was given to such important matters as loan interest, colonial companies, manufactures or long-term contracts (Mandrou, 1973, p.111). But one should note that their work was extended beyond the 1673 Ordonnance, especially in assuring the pres ence of Consuls and commercial courts throughout the realm. The commission, as the student of today, faced the problem of “mapping” the rules accepted in transnational fairs and trading centres onto territorially defined operations. The Ordonance regulation followed the Pareres inquiries.


The enquiries made by the Savary commission were not of the Parlement or other lawyers throughout France nor indeed of prior collections of law, although commentators on the 1673 Ordonnance would gloss its text with many precedents. Instead questions on acceptable and actual practice were sent out to the main commercial centres of Europe. The most famous universities were also consulted on weighty matters of commerce . (Marperger, 1729, Intro.) The nature of the enquiries is best exemplified, after acknowledgement of the probable imperfections in replies and of the difficulties in reducing all to some acceptable standard.

Marperger (op.cit p.145) suggested that the Pareres were an unreliable method, in so far as those answering gave insufficient attention to the case, and then “write whatever they think the enquirer would prefer and could be useful”! Such problems could not be eliminated by inquiring on facts rather than the law, which good judges should always be able to distinguish. The distinction is not of course long sustainable. Claude Irson (1687, cap. vii) in expounding the new Code wrote:

“Some rules are only justified by usage which has often the force of law by the common consent of all those who practice the method. The strongest proof one can have is the existence given by the most celebrated bankers and traders of the principal commercial centres of Europe, when consulted on the non-compliance of these laws. Their evidence is still more weighty in so far as it is uniform, even from different countries: it gives very just grounds for their sentiments; and the terms used are precise”

Irson went on to exemplify the Pareres enquiry method by the Question posed to the “Traders of Lion” on the validity of Books of Account which were made up late and showed gaps. It was further asked whether the “Messieurs of Venice, the Bankers of Turin, the Bankers of Florence, of Genoa and of Milan” would express similar views. Such questions illustrate the enquiries resulting in the important legislation on Book-keeping as evidence. A tradition commencing long before 1673 may be traced through the Commercial law of that year till current times.


We have pointed out above that the vouching, totalling and rendering of accounts to some superior was covered in the Civil Code rather than in the Code designed for sole traders. Savary�s Pareres III dealt with Partnerships: Should profit be divided equally and annually with the owner�s son? Can he demand a salary? Can a son demand interest? (This was found to be only conditionally enforceable) Article 6 of the Code required the registration of widow�s interests (Marperger, 1709, p.201-210). But the Ordonnance was little concerned with the problems of control and the rights and duties of joint-stock holders even though companies of this type had been established in the 17th Century. Consequently where time-spans of accountability to others are not featured, periodicities of balancing take second place to the reliability of event or transaction recording. Indeed the possibilities of periodic or continuous review of balances and liquidity were presented rather by the commentators such as DelaPorte, 16 94, rather than in justification of the legal prescriptions.

Title III of the Ordonnance prescribed the books and registers to be kept by traders and merchants. Wholesalers and retailers were required by Art. 1 to keep a book (sic) for all their trade, bills, dues and moneys for expense. The possibilities of differentiating particular sequences and types of trade were thereby apparently postponed. Art. 2 prescribed that a journal be kept by money-changers and bankers as evidence in case of dispute. Art. 8 required merchants to make an inventory every two years.

Further articles are characterised by the insistence that the books should be kept and certified in a prescribed manner – signed on first and last page by the Consul or mayor, and with each page “paraphrez et cottez”. Those becoming bankrupt with books improperly kept were declared to be fraudulent (art.11). Non-compliance was to be taken as evidence of fraudulent purpose.

The utility of such records and the need for their authentication will be described later; but immediately we may point to the manifest purpose of meticulous recording between bi-annual inventories. These were intended not to provide a base for some income tax but rather to simplify the documentation and settlement in cases of bankruptcy. The inventories featured moveables and immoveables and the “Active” and “Passive” debts (Ord, 1673, art.viii) which were very much the substance of credit-worthiness for bankers or traders at Fairs.

The form and content of accounts submitted under Civil Law was paralleled by prescriptions for commercial Books and Inventories. Precedents for such precision could be traced to the Pragmatic Sanction of 1549 required Spanish bankers to keep at least a bank account, and this was repeated in Madrid three years later, in order that the royal authority could control bankers� and merchants� operations (Hernandez, 1985, p.19). In 1571 the Duke of Alba required traders in the Spanish Netherlands to keep accurate records and to submit them fortnightly to the tithe collectors. In France the Edict of Blois of 1581 prescribed that documents registered should be bound in parchment and continuous, not in sheets held together (Wolfe, 1972, p.264)

The materials on which accounts were kept became important in the years after the Ordonnance. A Council of State Decree (3. iv. 1674; required exclusive use of paper which had been “timbre et marque”, at pain of the books being null plus a �.1000 fine. This was designed to increase the value of the stamped paper-tax, which was farmed out at Frs. 3 m (Cole, 1939, p.309). Marperger (1709, p.250) held that paper which had been stamped and on which duty had therefore been paid was necessary for evidential purposes. Nevertheless by the early 18th Century, Books might be “properly” kept but not generally on such paper; nor perhaps in consequence were they usually submitted for certification (Bornier, 1729). There were grounds for non-compliance other than duty evasion.

Merchants’ Books could be subjected to “theological audit” with particular reference to usury, as known in Genoa until 1554 (Brodrick, 1934, p.6). Again there were fears that traders’ books could be used in the imposition of taxes: These had to be allayed by a decree of the fiscal Cour des Aydes in Montpellier (art.179; Bornier, 1729, p.483). Indeed as early as 1578, merchants’ rights to retain and not disclose their books even for the purpose of naming extracts were upheld by a declaration of Henry III (loc.cit.). Books thereby were guaranteed some privacy, but their use for public and evidential purposes was implied by the authentication procedures required by the 1673 Ordonnance and long after.

This record authentication was one of the diverse functions concentrated in intermittent fairs but provided in many centres within the boundaries of modern states. The Code of 1673 and the institutions by which it was to be enforced were each to prove influential beyond France itself, and through the Napoleonic reforms proved durable! As recent instances, one may read of Italian companies queuing today to have their Books authenticated at nominal charge. The French Plan Comptable of 29th Nov, 1983 required that Journal and Inventories be maintained in book form, and be certified by the Tribunal of Commerce. On 20th July 1984 the Minister of Justice was asked whether Books certified by the Mayor�s Office instead would retain their probatory value. Also queried was the value of records produced by data-processing equipment(Journal Offic. deb. AN (Q). 2/vii/84). On 26/iv/84, the same Minister responded to a question that two basic rates applied to the “visa, cote et paraphe des livres” includ ing 112F!


Contrasts between Continental and English practice must be apparent, especially when the only comparable prescription of Book-keeping is to be found in a 1697 English statute for London Stock-brokers. No more than 100 brokers were to be licensed by a City court; no dealings on own account were allowed; and all transactions had to be registered within seven days. Books had to be kept. And any primacy that account Books might have had as evidence over other documentation was eroded by an British king, George I, but in the decree of 21/iii/1720 passed in his capacity as Elector of Hannover!

So the historian and lawyer will turn for preference to the customs and usance written down from the end of the Middle Ages and thus available for study. They have found and will find that in the decrees, the cases as also in the institutions whereby the law was clarified, there is a clear concern not only with justice but also with fact! And in commercial transactions, there was conflict between what was assented to, what was evidence in writing or otherwise and in what was economically enforceable. Rules may be found for the conduct of commerce and banking in the Mercantilist period which were designed to serve the public and private purposes of that time. Book-records had private and informational uses, but still more a public and legal function which persists till the present. Those Books and that law serving an evidential function must surely be accorded importance in the development of a historiography which investigates what actually took place.


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