Week 1: Introduction

Question 1

Organisation of states. Montesquieu- “trias politica”.

Answer 1

Organisation of states-> 3 different branches of power, sparation of powers.

1. A Legislature
   ->Making the laws of a country.
2. An executive
   ->Governance of the state. Put laws in practice.
   ->Can also enforce the laws, obeying the law: ex. police.
   ->Issue certain type of regulations. ex. law of financial institutions.
3. A Judiciary
   ->Enforcer of the law/legal rights & obligations.
   Different kinds of courts:
   *Civil courts- overlook private relationship
   Example: damages in burglary case.
   *Commercial courts- overlook deals between businesses.
   *Administrative courts-
   Example: rejection of the license.
   *Constitutional courts- overlook the conflict regarding the rules of the state
   *Criminal courts- deals with regarding social norms of behaviour.

Question 2

Name all the courts that judiciary enforces.

Answer 2

Different kinds of courts:
*Civil courts- overlook private relationship
Example: damages in burglary case.
*Commercial courts- overlook deals between businesses.
*Administrative courts-
Example: rejection of the license.
*Constitutional courts- overlook the conflict regarding the rules of the state
*Criminal courts- deals with regarding social norms of behaviour.

Question 3

In case of a conflict between legislature and executive power, which takes the upper hand?

Answer 3

In case of a conflict between legislature and an executive, the legislature takes the upper hand!

For instance, if executive branch comes up with a regulation for a starting capital for a bank and wants to enforce it, but contradicts legislation laws, the regulation CANNOT be enforced.

Question 4

Why do people need law?

Answer 4

After learning how to trade with each other people required trust and protection of their personal interests and reliance on the system.

Thus, 2 categories of law became necessary:
1. Public law- regulates the MARKETS, the system an access to the market.
2. Private law- regulates AGREEMENTS between legal subjects and established business relationships.

Question 5

Types of Public law.

Answer 5

Public law- regulates the MARKETS, the system an access to the market.

*Constitutional law: regulates organisation of states.

*Administrative law: regulates the relation between states and legal subjects, operation of market- various licenses, certification.

*Criminal law: protects society and its values.

*Procedural law

Question 6

Types of Private law.

Answer 6

Private law- regulates AGREEMENTS between legal subjects and established business relationships.

*Law of obligations & contract law:
regulates-
Unilateral (1 subject has obligations)
and/or
Multilateral (several subjects involved)
agreements and obligations between legal subjects.

*Property law: regulates ownership and possession.

*Commercial law: regulates the relationship between businesses.

*Consumer law: regulates a relationship between a company and consumers.

Question 7

What is the trend nowadays between private law and public law?

Answer 7

Nowadays more and more private relationships are being affected by public law. For instance, in one relationship several dimensions of Contract law, Consumer law, Administrative law, Criminal law come together- example: food law.

Therefore, new approach created:
*Functional approach-
instead of looking and separating between public and private laws, the legislature system looks at the utility of it as a separate entity.

Question 8

Sources of commercial (contract) law.

Answer 8

Hard law:
1. Principle sources of commercial law.
2. External sources of commercial law

Soft law:
good practices but not as binding.

Question 9

Hard law: principle sources of commercial law.

Answer 9

1. Contract
   *expresses terms of the agreement.
   *implied terms (even if not put in the contract- customary law)
   *principles of good faith (even if not put in the contract- customary law)

<customary law- uncodified customary law and trade practices)>

2. Uncodified custom and usage (customary law- uncodified customary law and trade practices)
   *informal rules of evidence
   *absence of protest- booking notes etc. B2B relationship
   ex. not responding to the invoice means accepting it.
3. Codified custom and usage (customs that are codified in the legal documents)
   * ICC Uniform rules of collection
   *ICC Rules of multimodal transport
4. Domestic legislation- in each country can be different; not cross-border
   ex. Sales of Goods Act 1893 (UK)
   Code de Commerce (FR)

Question 10

Hard law: external sources of commercial law.

Answer 10

1. International Conventions and model laws; international law:
   *CIGS (UN convention of contracts for the international sales of goods)
   *Unidroit Model Franchise Disclosure Law
2. EU Law
   *Primary EU Law- 4 freedoms:
   > Freedom of goods
   > Freedom of persons
   > Free movement of services
   > Free movement of capital
   To protest cross-border trade: Cassis de Dijon case for syrup/alcohol trade.

*Secondary EU Law: directives and regulations
>Rome I & II
>Brussels I Recast Regulation
>GDPR- general data protection regulation
>Commercial Agency Directive
>PSD I- payment of service directive
>B2B unfair commercial practices in the food supply chain.
!Some regulations apply even outside EU, for example, data regulations!

Question 11

Soft law.

Answer 11

Good practices but not as binding.

1. Voluntary codes of best/good practices/codes of conduct
   ex. Corporate governance codes
   ex. CSR practices
2. Transnational contract law
   ex.
   >PICC- principles of international commercial contracts.
   >PECL &PEICL- principles of (insurance) europ. contract law
   >DCFR- draft common frame of reference.

!You may apply soft law in company as hard law between contracting parties!

Question 12

Hierarchy of norms.

Answer 12

Not every rule has the same value: some rules prevail others.

*Supranational law (several countries) > National law
*Law > ministerial/royal decrees
*Codified law > trade practices
*Specific rules > general rules

Question 13

Why is there a need for regulation?

Answer 13

Principle: Open market economy based on competition and (formal) freedom of contract.

In real life freedom of contract is limited (ex. terms & conditions online), you cannot discuss them.

Thus–> Need for rules to safeguard the functioning of the market (public law).

Compensatory rules for weaker position.

Question 14

Compensatory rules.

Answer 14

The compensatory rules protect parties in weaker contractual position.
Example:
1. Duties to inform (you need to inform about terms and conditions).
2. Right of withdrawal
3. Substantive contractual justice

However, the most efficient way to protect the market is –>
Party autonomy and antitrust regulations.

Question 15

Party autonomy.

Answer 15

Most efficient way to protect the market.
The right to self-govern his own position within the limits of the law.

If you are not willing to enter a contractual agreement you are not obliged to.
Freedom of contract:
*Freedom to enter the agreement or not.
*Freedom to choose the contracting parties.
*Freedom to determine the content of the agreement.

These points are the basic idea of the Civil code and commercial codes.

Question 16

What does freedom of contract (civil code) and commercial codes imply?

Answer 16

*Quid pro quo-
exchange of goods (to get something in the market you have to give something back). Creates prosperity for all, especially parties involved.
*No (re)-introduction of the iustum pretium (“fair price”)-
idea that there is price for every good, French Revolution abolished this doctrine. (even if price is unreasonable)

Question 17

Socialisation of contract law.

Answer 17

Socialisation of contract law=making someone behave in a socially acceptable manner.

However, need for restoring the balance via private law.
Equality on paper does not always mean equality in real life. –> Compensatory rules.

Thus, restrictions of party autonomy appeared.

Question 18

Restrictions of party autonomy.

Answer 18

For restoring a balance in socialisation of contract law ( specifically equality).
*Rules of Public Order- social norms of a specific country.
*Rules of governing validity of a contract.
*Fundamental rights of others (ex. property law)
*Principles of non-discrimination.

Question 19

What happened after restrictions of party autonomy introduction?

Answer 19

Market distortions and unequal bargaining power between subjects.
Example: Potential tenant has less bargaining power than landlord.

Thus, rules were introduced to protect certain categories of people:
*employees (labour law)
*tenants (specific contract law)
*consumers (consumer law).
*SME’s with respect to certain transactions (unequal bargaining power, not their core business, less legal background, financial value).

!All of these rules shape a subjective/transactional-based approach to the commercial law, as opposed to an objective approach!

Question 20

Socialisation of Commercial Contract law.

Answer 20

To protect parties that are more vulnerable, with less bargaining power.

Socialisation of freedom of contract “sensu stricto”:
*Refusal to enter into an agreement. (abuse of rights doctrine)

*Prohibits to enter into an agreement.
ex. insolvent borrowers; SME loans.

*Obligation to enter into agreement.
ex. liability insurance for auto.
ex. access to payment accounts

*Mandatory info. disclosure (inform. paradigm)
ex. Franchising pre-contractual info

*Rules against uniform trade practices.
B2C
B2B - concerning misleading advertising directive. Unfair trading practices in agricultural & supply chain.
P2B- <platform> fairness and transparency providing to users.</platform>

Question 21

Pyramid of law governing explanation.

Answer 21

Multilayered legal system ->
*At corners:
consumer (credit/sales) law
commercial law
contract law
*At the middle:
common rules on (credit/sales) agreement.

ex. loan agreements; sales agreements.

Question 22

Consumer notion. What is needed to be considered consumer?

Answer 22

To be considered consumer, a subject needs to fit 2 criteria:
1. Being a natural person
2. Having aa private-purpose objective.

example:
A.) If you bought a car to use it for private needs.
–>considered a consumer
B.)If you bought a car as a business owner for meetings.
–>not a consumer

Consumer image-
“In legal sense is an avg. consumer who is reasonably well-informed and reasonably observant of circumspect”.