Federal common law is the body of law that is determined by the federal courts, as opposed to determined by legislation passed by the house, senate or president. Federal and state common law are two distinct bodies of law, and federal common law can only deal with issues that the constitution delegated to the federal government. Although federal law is not codified in statutes, it still must be followed.
The term common law is a term that originated due to the fact that the United States legal system is derived from the English legal system. In both the English legal system and the U.S. legal system, judges hear cases and have the authority to rule on those cases. When a judge hears a case, he interprets the law and/or makes a decision in the case. That decision is written in an opinion.
The opinion that the judge had, and the interpretation of the law that the judge made, becomes binding. In other words, it becomes a part of the law. This binding decision is valid, and other courts must follow it unless or until a higher court rules that the judge's interpretation is wrong.
Therefore, the judge's opinion becomes a form of law, even though it isn't written in any statutes or passed by a legislature. The body of law that the judges made is considered to be common law. Common law is distinct from statutory law, which consists of formal statutes and rules passed by the legislature.
Federal common law deals with issues that the federal government has jurisdiction over. In the United States, certain issues are delegated to the states. For example, each state has the right to make its own laws regarding property within the state. Separation of powers mandates that federal law makers and judges leave this, and other related issues, to the individual state legislature and state courts to determine.
The federal government, on the other hand, has the right to make laws necessary to uphold the constitution. The federal government also has the right to make laws on issues that affect interstate commerce, or the flow of goods and money between the states. Taxes, securities law, and other such related laws are all powers that are delegated to the federal government.
Therefore, federal common law is judge made law on issues that the constitution determines the federal courts or legislature have a right to decide. Federal common law must be enforced by federal courts. Federal law can become codified law if, and when, the legislature passes a law that reiterates or modifies it.
