Question

Distinguish between civil law and common law? Why is this important in international lending?

Answer 1

Civil law: The principles of law and justice are written or codified into a set of referable arrangement which acts as primary source of law. It is prevalent is all European counties.

Common law: This is law that is based on the historical decisions of courts and judges and law tribunals. This is more prevalent in the United States.

In countries which follow Civil law, if the standard procedure codified into the law that does not allow international lending, then in any circumstance a business operating from these regions cannot indulge in international lending since it becomes illegal.

On the other hand in common law countries there is no standard procedure with regards to international lending, then there may be a case for international lending to be legal based on past judgements that have been ruled by various courts.