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The common law has a long history. It originated in England during the reign of King Henry II (1154—89). Before that time, English law, like the law in other parts of the world, consisted of local customs which varied from place to place. To consolidate his grip on his kingdom, Henry II introduced a system of centralised administration of ‘the King's law’ by ordering judges to go ‘on circuit’ to the towns and villages of England to deal with disputes among his subjects. These judges developed a ‘common’ set of rules and procedures which gradually came to be written down by their clerks and the lawyers who worked in these courts. This written body of law became known as ‘common law’.

Common law was supplemented by law administered by the church, that is, ‘ecclesiastical law’. This was the law governing important aspects of human relationships such as birth, death and marriage. This law has now been almost entirely replaced by legislation. The possibility of any church administering law in Western societies is a distant one. Whilst religion may influence policy and broader societal trends, there is a traditional separation between church and state in common law countries, such as Australia, England, and Canada.

Until well into the nineteenth century, in both England and Australia, the common law continued to be the main source of law. Society was able to function reasonably well with little legislation. However, with the industrial revolution and the massive social changes it brought in its wake, there was a need for increased government intervention in the financial relations between people. Changing social attitudes also meant that the state was called upon to regulate practical issues that were once the province of the church or social standards. This included changes such as women’s rights to property, the vote, and divorce. There was also a revolution of the means of communication, which provided the means to do this. From the 1830s onwards, the making of laws by parliament became the key instrument for intervention and legislation quickly became the dominant source of law.

The common law continues to be the main source of law only in the diminishing areas of human activity unregulated by legislation. For instance, until recently the law of torts (civil wrongs) was mostly common law, though with the Civil Liability Act 2002 (Tas) and important legislative inroads such as compulsory motor accident insurance and workers compensation legislation, the common law is less influential.

Until 25 years ago the law of contract, that is, the law which enforces business transactions, was almost wholly common law. But, because judges found it too difficult to develop principles of common law to protect consumers, parliaments had to step in with legislation. Today legislation such as the federal Consumer Law have modified the common law of contract to create such protection. But even where legislation prevails, the common law continues to play an important function in the interpretation of legislation. There are also examples of legislation incorporating common law principles, such as with the Civil Liability Act 2002, which includes the common law tests for breach of duty.

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