Business Law Midterm Flashcards
Trias Politica - French philosopher Montesquieu
A legislature
- responsible for making the country’s law
An executive
- Responsible for the governance of the state (executing the laws legislature creates)
- Can also enforce the laws (police)
- Issue certain types of regulation (e.g., law on financial institutions)
A judiciary
- Enforces the law/legal rights and obligations
-different kind of courts:
For instance:
- Civil courts: overlook private persoon relationships (e.g., damages in case of burglary)
- Commercial courts: overlook deals between businesses or private persons and businesses (e.g., money laundering)
- Administrative courts: overlook administrative law (e.g., rejection of an license)
- Constitutional courts: overlook the conflicts regarding the rules of the state
- Criminal courts: (e.g., deals regarding the societal norms of behaviour).
The hierarchy of the trias politica?
- A legislature
- An executive
- A judiciary
Two categories of law?
Public Law: rules that regulate the markets, the system, the state and access to the market.
Private Law: rules that regulate agreements between legal subject and establish business relationships
Common Law vs. Civil Law.
Common Law:
Origins and Development: Common law, also known as case law or precedent, is a body of law that is based on judicial decisions of courts and similar tribunals. It evolved in England from the Middle Ages onward.
Primary Features: The key characteristic of common law is that it is judge-made law. Judges create legal principles through their decisions in courts (case law), and these decisions must be followed by other courts in the same jurisdiction in later cases. This principle is known as stare decisis, which means “to stand by things decided.”
Role of Judges: Judges in common law systems have the power to interpret laws within the bounds of the precedent. Their interpretations are binding in future cases.
Legislation: Statutory laws also exist in common law systems but have traditionally played a less central role than in civil law systems. However, in modern times, statutes have become more important in common law jurisdictions.
Countries: Common law systems are found in countries that were British colonies or have been influenced by the British legal system. Examples include the United States (except Louisiana), the United Kingdom (England and Wales), Ireland, Canada (except Quebec), Australia, New Zealand, India, and several other Commonwealth countries.
Civil Law:
Origins and Development: Civil law is the most widespread system of law in the world, rooted in Roman law and particularly the Corpus Juris Civilis of Emperor Justinian. It was further developed in continental Europe and is also known as Continental European law.
Primary Features: Civil law systems are based on comprehensive sets of written statutes and codes. Judges apply the law to cases; they do not create law. Their decisions may be considered persuasive but not binding on subsequent cases.
Role of Judges: Judges in civil law systems act more as investigators and apply the law to the facts of the case. Their role is not to interpret the law but to apply it.
Legislation: In civil law systems, the central source of law is statutory, not judicial. Codes and statutes are designed to cover all possible scenarios and are updated when necessary.
Countries: Civil law systems are prevalent in continental Europe, Asia, and Africa. Countries with civil law systems include France, Germany, Japan, China, Russia, and most of Latin America.
Freedom of contract implies:
- Freedom to enter into agreements/or not enter;
- Freedom to choose the contracting parties;
- Freedom to determine the content of the contract.
Party autonomy
the right of a subject to self govern his own legal position within the legal limits. For instance, if you don’t want to enter into a contractual agreement with someone, you are not obliged to.
Quid pro quo
“Something for something” is the exchange of goods (to get something on the market, you need to give something back). This creates prosperity for all, especially for the parties involved, even if the price would be ridiculous.
There should be a compensatory rules, to ensure equality not only on paper, but also in real life, for parties that are in a weaker contractual position such as:
- Duties to inform (material freedom of contract)
- Right to withdrawal (material freedom of contract)
- Substantive contractual justice
Socialisation of Contract Law
“Make (someone) behave in a way that is acceptable to society”
Thus, some restrictions to party autonomy were created:
1. Rules of Public Order - social norms of specific country (very high moral standards e.g., human trafficking, profit made from financial abuse, sexual abuse)
2. Rules about the validity of contracts;
3. Protection of the fundamental rights of others (e.g., property rights);
4. Principle of non-discrimination.
Rules to protect certain categories of people:
- Employees (labour law)
- Tenants (specific contract law)
- Consumers (consumer law)
- Small and Medium-Sized companies, start-ups etc. with respect to certain transactions.
These groups usually have unequal bargaining power, less legal background, and are financially vulnerable.
Public Law
- Constitutional law
- regulates organization of states - Administrative Law
- regulates the relation between states and legal subjects; functioning of the market (e.g., various licenses, certifications) - Criminal Law
- protects the society and its values - Procedural Law
- Organizes procedures before courts and tribunals.
Private Law
- Law of obligations & Contract Law
- Regulates unilateral (1 subject has an obligation) and/or multilateral (several subjects involved) agreements and obligations between legal subjects. - Property Law
- regulates ownership and possession (and security rights) - Commercial Law
- Regulates the relationship between businesses - Consumer Law
- Regulates the relationship between businesses and consumers
Sources of commercial contract law: Hard Law
Hard law (necessary to obey)
- International conventions and model laws
– CISG (United Nations Convention on Contracts for the International Sale of Goods)
– Unidroit Model Franchise Disclosure Law - EU Law
– Primary EU-Law: 4 freedoms - Cassis de Dijon Case (1979) - to protect cross-border trade - applies to both individuals and businesses.
1. Free movement of goods
2. Free movements of capital
3. Free movements of services
4. Free movements of persons.
– Secondary EU-law: directives - the member countries first have to implement it into their legislation & regulations - directly applicable.
-GDPR (General Data Protection Regulation) - applies to EU citizens, even when they are outside of the EU - Commercial Agency Directive
- PSD II (Payment Service Directive)
- B2B unfair Commercial Practices in the food supply-chain.
Primary EU-law
4 freedoms:
1. Free movement of goods
2. Free movements of capital
3. Free movements of services
4. Free movements of persons.
Sources of commercial contract law: Soft Law
(Good practice, but it is not binding - not necessary to obey or follow, but can be made into hard law)
- Voluntary codes of best, good practices, codes of conduct
– Corporate governance codes
– Corporate Social Responsibilities (CSR) practices - Transnational contract law
– PICC (Principles of International Commercial Contracts)
– PECL & PEICL (The Principles of European Contract Law (PECL) and Principles of European Insurance Contract Law (PEICL))
– DCFR (The Draft Common Frame of Reference (DCFR))
Hierarchy of Norms
- Supranational Law > National Law:
- Supranational laws are treaties and regulations that are established by international bodies and have effect across multiple sovereign nations. When a country is part of a supranational union (like the EU), the laws created by that union generally have precedence over the country’s own national laws.
- Law > Ministerial/Royal Decrees:
- This indicates that formally enacted laws by the legislative body of a country take precedence over decrees issued by government ministers or, in monarchies, by the sovereign. While ministerial or royal decrees can set policy and have legal force, they must not conflict with higher forms of law.
- Codified Law > Trade Practices:
- Codified laws, such as statutes and codes, are formally enacted and written laws that have been passed through a legislative process. These have greater authority than trade practices, which are customary ways of doing business within a particular trade. While trade practices can inform the application of the law, they do not override codified law.
- Specific Rules > General Rules:
- Specific rules that are narrowly tailored to apply to particular situations take precedence over more general rules. This principle helps to resolve conflicts where a broad rule might otherwise apply to a situation that is already covered by a more specific provision.
To be considered a consumer, a subject needs to fit in 2 criteria:
- Being a natural person
- Having a private-purpose objective/goal.
Consumer image:
Average consumer who is reasonably well-informed and observant
There are two main types of rights:
Real Rights:
- Right in or over an identifiable asset or group of assets
Example: ownership of a good
Personal Rights:
-Claims/rights on a person
Example: right to get back money that you lent to someone.
Ownership:
Real right; Generally ownership is the most important legal right. It can be vested in one person or multiple people (co-ownership)
Ownership; Possessor; Custodian?
Owner: has full legal power over a good (not necessarily physical power)
Possessor: has physical power over a good, can become an owner
Custodian keeps the goods for someone else (physical power) for a certain period of time and agrees to return them to the owner. A custodian can never become an owner.
Real rights of use (easements)
Ground Lease:
getting a certain good for a minimum (e.g., 25 y) and maximum period of time (e.g., 99y), during which the holder can use the good, enjoy its benefits. The holder has to pay a lease to the owner and cannot sell it.
Right of usufruct:
There is a separation of the bare ownership (the owner of the good) from the person who has a right to use it (person with the usufruct) (e.g., you’re becoming the owner if you inherit).
