lectures Flashcards
What are the goals of law?
Keep order, uphold justice, favor the market mechanisms
What is necessary to have law?
Humans, society
What are the tools to manage society?
Violence, power, law
What is the connection between law and religion?
Both the law and religion aim to make living together possible.
What is the difference between law and religion?
Religion is for those who believe a certain thing, it does not and cannot apply to everyone. The law is for everyone.
What is pluralism?
The separation between morals, religion and law.
What are human rights?
Rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion or any other status.
What is the connection between the law and morals?
We follow laws naturally because of morals. The law influences morals and morals influence the law.
What is the law based on?
Common good and justice.
What is natural law?
Laws that are based on the morals we have as humans. A natural sense of what is right and what is wrong.
What is positive law?
Laws that are created and enforced by the government or other authorities, as opposed to laws based on natural rights or moral principles.
What are the two concepts of justice?
Commutative justice and distributive justice.
What is equilibrium?
A state in which opposite forces are balanced
What is the difference between commutative justice and distributive justice?
Distributive justice involves ‘treating equals equally’ and focuses on fairness in the distribution of societal resources while commutative justice involves giving people what they deserve and focuses on the fairness in individual transactions.
What is price gouging?
Making prices as high as possible.
Why doesn’t distributive justice always work?
Distributive justice is unsustainable and very complicated. The criterion which we must follow is not always clear and can be subjective.
It is difficult to balance equality/need/merit. Resources are limited
What is the best way to use scarce resources?
In a way that achieves the highest common good.
What is common good?
The benefits or interests of all.
Why doesn’t commutative justice always work?
If you give equal rights to everybody and don’t consider the background of those people it isn’t a just solution. Give more to those who have less so it balances out the people who have more. Equity over equality.
What is merit?
The best solution regardless of any outside factors.
What are the 3 criteria of justice?
Idea of equality, idea of merit, idea of needs
Why can power not be a criteria of justice?
Power has very little to do with common good.
What is a breach?
Not keeping promises.
What is insider trading?
Trading in public companies stock by someone who has non-public material information about the company.
Why should economists study law?
More effective market mechanisms/economy. Laws shape ecconomic behaviour, market, and incentives. More contracts, better working economy.
Laws influence how resources are allocated and economies function
Where does the law come from?
Religious norms, moral norms, legal norms, social/cultural norms
What are the sources of the law?
The constitution, legal acts of parliament, regulations, democracy
Where should the law stem from?
Rationality and human nature.
Who creates the law?
Parliament, in banking - banks, independent agencies
What is autonomy?
The ability to make your own decisions rather than being influenced by someone else or being told what to do.
Who is the adjudicator?
Someone who precedes, judges and arbitrates during a formal dispute or competition.
Explain the three main points of the aristotelian syllogism.
Major premise: the general statement or universal truth that sets up the rule. Minor premise: a specific case that falls under the rule set by the major premise. Conclusion: the logical result derived from the two premises
What is the connection between the law and interpretation?
The law is always imperfect/incomplete. It is not able to capture reality perfectly the way it is, therefore, we constantly need to adjust the law to reality and specific situations.
What is teleological interpretation?
An interpretation based on the goal of the law
What is systematic interpretation?
The interpretation of a given provision considering all the other provisions in the legal system. Choosing a priority. (A blind man with a support dog going into a no pet store → the blind man getting food is more important than the stores hygiene)
What do you do if the law has a gap in a specific situation you’re in?
First you follow the laws words, if that doesn’t make sense, then you follow teleological interpretation, but then you also need to consider systematic interpretation.
What is a gap in law?
A situation that is not regulated, there are no laws for this specific situation
What is an analogy in law?
The application of a rule which covers a particular case to another case which is similar to the first but itself not regulated by the rule
Why can analogy not be applied in criminal law?
When dealing with criminal law, you’re dealing with people’s freedom. People’s freedom comes first.
What are the different types of law?
Civil law, common law, customary law, muslim law, mixed systems
What are the main differences between civil law and common law?
Civil law uses written laws and codes as guidelines. Judges mainly follow the rules as written, with limited interpretation. Common law is built on past court ruling. Judges have more flexibility and shape the law by following or adjusting previous decisions.
What is intergovernmentalism?
Different governments get together to make a decision, but they always maintain their sovereignty.
What is supranationalism?
Supranationalism is when countries work together under a shared organization, giving up some independence to achieve common goals, like in the European Union.
What is a treaty?
A contract among states, where they set the rules of how institutions are designed
What is a competence in regards to legal systems?
The authority given to a particular institution or level of government to make decisions and create laws in specific areas
What are shared competences?
When both the union and the Member States can make decisions.
When can the union step in to help Member States?
The union can only step in if it’s in a better position to do something than the Member States.
What is the principle of subsidiarity?
When in a situation another person, institution or entity is in a better position to do something or make a decision.
What are the 3 legal acts that can be made by the council?
Directive, regulation, decision
+ opinions/recommendations
What is a directive (made by the council)?
A Legal act which is precise enough but not completely binding for member states, member states can implement these laws.
What is a regulation (made by the council)?
A legal act of the EU that are immediately applicable and binding without any mediation
What is a decision (made by the council)?
Binding act with a single target and not general.
What are opinions/recommendations (made by the council)?
Not binding acts, things the union doesn’t want to push you one, but encourage it, pursuing something in a politically viable way - soft law.
What is soft law?
Soft law includes rules and guidelines that aren’t legally binding but influence actions and policies, like recommendations or voluntary codes.
What is public law?
A branch of law that governs how the government interacts with individuals and society. It includes rules on government powers, rights and criminal justice.
What is private law?
A branch of law that governs relationships between individuals or private entities. It regulates rights and obligations without government involvement.
What are relative rights?
Claims and obligations.
What are absolute rights?
Rights and duties.
What is the difference between standards and rules?
Rules are strict requirements and standards are guidelines that allow some interpretation.
When does a lawmaker use a standard and when do they use a rule?
Depending on what their aim is and how important that aim is.
What is meant by ‘ex post’?
Applying a rule or standard after the fact - after an event or action has already happened.
What is meant by ‘ex ante’?
A rule or standard is considered or decided before an event occurs.
What are speculative contracts?
Future contracts.
What is the universal means of payment?
Money
What are the two paradigms of contract law?
Traditional (free will) and modern contract law (unbalance of power).
What is necessary for a contract to exist?
Free will and fairness.
What is rationalism?
Reason and logic.
What is freedom of contract?
Parties are freely bound to enter or not into any contract. The parties can freely decide on the contents of the contract.
In what circumstances can you dismiss a contract?
If both parties agree to terminate the contract.
What makes a contract invalid?
Misrepresentation or fraud, if one party is presumed to lack the necessary judgment due to age or mental illness, threats, mistakes
What is ‘capacity’ in law?
Being mature enough and capable enough to express your free will.
What is duress?
It is the forcing of one’s hand.
What is unconscionability/lack of genuine consent?
The process which leads you to a contract that is unfair due to fraud, threats, immaturity or mistakes.
What is predatory lending/usury?
The lending of money with unreasonably high rates of interest, making the contract invalid.
What is a reason that can override contract law?
If the contract goes against basic moral values.
How would a borrower prove usury in court?
By proving that the borrower was in financial distress, therefore, proving the lender took advantage or proving that the market price at that time was much lower making the contract enforceable on unfair terms.
In the case of lending money, how do we establish what is a fair contract?
We have to compare the interest rate to the market price, if they are similar - the contract is fair.
What is regulatory arbitrage?
Picking the jurisdiction that is more favorable to you when entering a contract.
What is the goal of contract law?
Minimize unfairness, put boundaries on the freedom of parties, ensure that parties can freely negotiate contracts (within reason), enforce the contents of the contract, keep order, help economic transaction
What does quid pro quo mean?
Consideration, a favor or advantage granted in return for something
What is a causa in law?
Purpose or reason behind entering a contract.
When can we say a contract exists?
In common law countries – when there is a quid pro quo. In civil law countries - when there is a causa.
When is it necessary to put contracts in writing?
When the law enforces it.
Why is it necessary to put some contracts into writing?
Gives you more time to think about an agreement to avoid mistakes, as a form of disclosure, gives evidence and avoid misunderstanding
How do civil law and common law countries view contract law differently?
In civil law - the parties within a contract are partners, the seller should have the buyers best interest at heart and disclose all the information. In common law - enemies and should be an arms length away from one another.
What is a consumer?
A consumer is an individual who buys goods or services for personal use, rather than for business or resale (but depends on jurisdiction). Main feature: consumers are weaker and businesses are stronger.
What are the main complexities of disclosure?
Nobody reads them, long and complex, ineffective
Why do people not often use the advantages or return policies?
Are not aware they exist and are too ‘lazy’
What is consumer protection?
The rules and regulations designed to safeguard buyers of good and services from unfair practices.
What are the three remedies if something goes wrong in contract law?
Specific performance (‘Do what you promises’), damages(‘compensate my loss’), the right to dissolve the contract(‘I will walk away from the contract’)
How can a remedy in contract law be enforced?
The government → litigation
How to avoid litigation?
Ex post - anticipate risks, negotiate. Ex ante - credit and credit scores, reputation.
Why should litigation be avoided?
Very costly, in some cases very lengthy and hurtful
What is a class action?
It is a type of lawsuit where one or several individuals sue on behalf of a larger group.
What can you do in case a debtor does not have enough assets to pay you back?
You can seize the person’s property or other goods incase of debts or ‘the law doesn’t help those who sleep” (first come first serve)
Who are surplus spending units?
Subjects that have excess money (households, business firms, the government, foreigners)
Who are deficit spending units?
Subjects who need money (households, business firms, the government, foreigners)
What are financial markets?
Between surplus spending units and deficit spending units.
What are the three main obstacles in financial markets?
Transaction costs, asymmetries of information, diversities in preference (short-term and long-terms)
What are financial intermediaries?
The ones who provide investment services to clients
What are the investment services that solve the problem of transaction costs in financial markets and what do they entail?
Execution of order on behalf of the client (acting on its own name), reception and transaction transaction (FI acts as an agent of the client) of orders and dealing on own account (Direct counterparty of investor)
What are the investment services that solve the problem of asymmetries of information?
Financial advice (go to an FI and they will suggest the best financial instrument and portfolio management (intermediary is put in charge of taking the money from the client and purchasing and selling financial instruments to create a portfolio)
Why must financial contracts be written up?
Prevents the binding of contractual counterparties, information function and evidence
What are the main regulatory strategies in banking and finance contracts?
Disclosure strategy and protective regulation towards the investors
What is the disclosure strategy in banking and finance law?
It requires financial institutions to provide clear, accurate, and comprehensive information to customers and investors. This ensures transparency about terms, risks, fees, and conditions, helping stakeholders make informed decisions and promoting trust in financial markets.
What is the protective regulation strategy in banking and finance law?
Aims to safeguard consumers, investors, and the economy from risks such as fraud, insolvency, or market manipulation. It includes rules like deposit insurance, transparency requirements, and safeguards against unfair practices, ensuring stability and trust in financial systems.
What is the suitability rule in banking and finance law?
Ensures that financial institutions recommend or offer products that are appropriate for a client’s needs, goals, and risk tolerance. This legal standard protects customers by requiring institutions to assess their financial situation before providing advice or services.
What is the product governance regime?
Ensures financial products are designed and distributed responsibly, matching the needs of their target audience and protecting consumers from unsuitable products.
What are sale contracts?
Transfers property rights in goods from seller to buyer for a price (bookstore, shopping, newspaper stand)
What are the differences between movable and immovable goods?
Movable goods are physical items that are typically smaller ones and hold less value than immovable goods. Immovable goods are items attached to land or land itself. Immovable goods have a stronger need for protection, therefore, contracts must be in written form
What are the risks in commercial contracts?
Information asymmetry, the system of warranties and breach of contract.
What are the risks of information asymmetry in commercial law for the buyer and seller?
Risks for buyers - lack of quality or lack of property. Risks for sellers - risk of lower price.
How does civil law and common law deal with information asymmetry differently for commercial contracts?
In common law countries the have a market based approach (up to the parties). Civil law approach - more protective, up to the parties, but with more protective rights and guarantees
What is the system of warranties in commercial law?
Ensures that sellers guarantee certain standards for the goods or services they provide. Express warranties- promises by the seller. Implied warranties - automatic legal protections
What is a lease contract?
An agreement whereby the owner of a property allows another party to use that property for a period of time in return for the payment of the rent. THere is a lessor and leesse.
What are the risks in a lease contract?
Risks as a lessor - damages to the good/property and lack of payment. Risks as a lessee - quality of the good, interference with the possession.
What is a residential lease contract?
The leasing of a house or property. There is a landlord and tenant.
What are the risks and solutions for a residential lease contract?
Since in this case a house is a need, the landlord is in a much more powerful position - asymmetry of power. The law helps the tenant by mandating this contract be in written form, for a fixed time and fixed sum.
What is a building contract?
An agreement whereby an employer asks the contractor to carry and complete building work in return for compensation. There is an employer and contractor.
What is a fiduciary relationship?
A trust-based relationship where one party (the fiduciary) must act in the best interests of another (the beneficiary), prioritizing their welfare above their own.
What are the risks in building contracts?
The quality of the good (bad work of the contractor) and delayed work. Very difficult to quantify damages.
What are torts?
Harm done against someone or something.
What are the two roles in tort law?
Victim and tortfeasor.
What is the difference between tort law and criminal law?
The same fact is observed from different perspectives. Criminal law is in the interest of society, whereas tort law is about a single person.
What is the goal of tort law?
To shift the economic burden of a harm.
When is the shift of losses justified?
When one party’s wrongful act of negligence causes harm to another, making it fair to transfer the burden of loss to the tortfeasor (corrective justice).
How does tort law balance the trade-offs between the cost of care and the acceptance level of risk in society?
Tort law aims to balance the cost of care and the acceptable probability of accidents by finding the lowest possible cost with and optimal level if care and losses, prioritizing compensation over deterrence without pushing society toward overly burdensome standards.
What is O.W. Holmes’ principle regarding loss from accidents?
“The general principle of our law is that loss from accidents must lie where it falls.” Tort law should not intervene unless necessary.
What is the goal of tort law?
To balance the cost of care and acceptable risk while focusing on compensation rather than deterrence.
What are the key factors to justify tort liability?
- Unlawful harm 2. Fault (intention or negligence) 3.Causation.
When is emotional distress sufficient for tort law?
When it injures a person’s mental health, not when it stems from simple statements or minor emotional distress.
What types of losses justify tort law?
Losses must involve a breach of a right protected by law, not merely economic losses (e.g., losing customers to competition).
What is strict liability?
Liability imposed without fault, often used as a risk-allocation mechanism.
What principle justifies strict liability?
“Cuius commoda eius et incommoda” – those who gain the benefits should also bear the costs.
Give examples of strict liability
Defective products (e.g., Samsung exploding phones).
How is fault-based liability different?
Requires proof of intention or negligence (e.g., imprudence or breaking a legal provision).
What are the two types of fault?
Intention and negligence
What is the formula for negligence?
Burden of precaution < probability of harm x actual amount of loss
What is culpa in vigilando and give an example.
Fault in supervision. (e.g. parents failing to prevent their child from causing harm
What is the “but-for” test?
Harm would not have occurred “but for” the action in question.
What is the difference between factual and legal causation?
Factual causation - based on the ‘but-for’ test and legal causation - limits liability to foreseeable, normal consequences
Who is at fault in the case of fault in controlling?
Cheapest cost avoidant (the parents, the pet owners)
What is vicarious liability?
The one that is above is liable for the one that is below (e.g. employer and employee)
Why are remote consequences excluded from liability?
They are unforeseeable, coincidental, or depend on the victim’s actions (e.g., Blues Brothers example).
What is the significance of Donoghue v. Stevenson (1932)?
Established that tort law protects legal rights, not every moral interest, and introduced the “neighbor principle.”
How does tort law act as a political tool?
By redistributing losses, shaping societal norms, and balancing misfortunes.
Why might a government fund for accident victims be problematic?
It creates moral hazard, making tortfeasors more careless as they expect others to bear the costs.
How do employers bear liability for employees?
Employers are liable under vicarious liability because they benefit from employees and are best positioned to avoid harm (cheapest cost avoider).
What justifies liability for defective products?
Strict liability ensures producers bear the costs of harm caused by defects while spreading risks among consumers (e.g., adding costs to the product price).
What is contributory negligence?
When the victim’s own actions contribute to the harm, potentially reducing liability for the tortfeasor.
What is the role of foreseeability in tort law?
It ensures liability only for predictable and normal consequences of actions.
