2.2.4 The Sources Thesis
Institutional rules are rules that exist (are valid) because they were created by a
person or a body that had the power to do so. Nowadays, most legal rules are such
institutional rules. However, the sources thesis claims thatalllegal rules are
institutional rules. Only rules that stem from a validity source, and which are
therefore institutional rules, would be legal rules. This means that a court that is
to apply the law should only consult validity sources such as legislation, case law,
and treaties to find legal rules. If one adopts the sources thesis, it matters what
counts as a validity source because it is necessary to find such a source for every
valid legal rule.
In the Netherlands there was a constructor who built a house for a person called Hubertus te
Poel. Hubertus had pointed out a piece of ground where the house could be built. What the
constructor did not know was that this ground belonged to the brother of Hubertus, Heinrich
te Poel. As a consequence, Heinrich became the owner of the house that was built. (The
owner of ground also owns what is built upon the ground.) When Hubertus could not pay
for the house, the constructor wanted his money from Heinrich, who had become richer
because the house belonged to him.
Morally speaking, it was obvious that Heinrich should pay for the house. (The more so
because it looked as if Hubertus and Heinrich had conspired to fool the constructor; but that
could not be proven.) However, the Dutch Supreme Court had to answer the question
whether Dutchlaw(as opposed to morality) contained a rule to the effect that if because of
an event one person became richer and another one poorer without a good reason, the
person who became richer should compensate the person who became poorer. According to
the Supreme Court, the Dutch law (of 1959) did not contain such a general rule allowing
compensation for unjustified enrichment. The Supreme Court could not find such a rule
because it confined its search to the validity sources of Dutch law, and because it did not
count reason as a validity source.2.3 Legislation
Legislation is a way to create new rules and to modify or derogate existing ones.
The products of legislation have different names, such as “statute,” “act,” “decree,”
“bylaw,” and many more. Sometimes, a large collection of related laws is called a
“Code” or (in German) aGesetzbuch.
Legislation is both a source of origin and a validity source of law. Part of the law
has been created or codified in the form of legislation, and therefore legislation is a
source of origin of the law. For those legal rules that have come into existence as a
result of legislation, and which are for instance not merely codified customary law,
the legislation is also the validity source.
The English Sale of Goods Act, for instance, contains valid English law, because the rules
in this Act were created by means of legislation. Legislation is the validity source for the
rules contained in this Act.
In order to be able to create law (we will, for the remainder, ignore modification
and derogation), an institution (or, less common, a person) must have the
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