Tracing, value and transactions

Tracing is generally understood to be the process of following value from one right to its exchange product. It is for the claimant to show either that there has been a ‘direct substitution’, or a string of such substitutions evidencing an unbroken chain of value; if able to do so, it is thought that he can ‘transmit’ his claim from the right substituted to its product. This burden has, however, been made increasingly difficult to discharge by the development of complex payment mechanisms involving multiple payment instructions and interceding periods of indebtedness.

This article argues that concepts of value are conceptually and practically misleading. Identifying and determining the content of transactions are normative processes that depend, not upon identifying the precise mechanisms by which a particular change in legal relations is sought and executed, but rather upon the manifested intentions of the transacting parties. This allows us to deal straightforwardly with complex payment structures, clearing and credit, and to focus instead upon the role of transactions in the justification for a resulting claim.