business juridical relation

04/17/23 Business Law 1

The business juridical relation1. To exist a social relation2. To exist a rule that provides the

juridical relation3. To exist a legal fact or act whose

legal rules link the formation, the modification or the end of rights and obligations


Sources of a Business Juridical Relation

1. Legal facts: - natural facts - human actions

2. Juridical acts: expressions of somebody’s will, made with the specific purpose to create, to modify or to end a juridical relation


Subjects of Business Juridical Relation The active subject: the creditor – the

person who has rights The passive subject: the debtor – the

person obliged to do or not to do something within a juridical relation

Creditor Debtor


Subjects of Business Juridical Relations Merchants - Sole proprietorship Unlimited Liability Companies Limited Liability Companies Holders of social shares Holders of social debentures Employees Independent contractors Trade-unions Bodies of the state with control attributions


Natural PersonsA person is any being whom the law regards as capable of rights and obligations

Legal persons ≠ Natural persons

Legal Capacity: the general aptitude to own and exercise rights ant to have and assume obligations.

The abstract capacity The concrete capacity


The abstract capacity Features:1. Universality2. Generality3. Inalienability4. Legality When does the abstract capacity

begin? When does the abstract capacity

end?


BirthSince the abstract capacity is

granted under law to each human being, it begins at the very moment of birth.

Exception: one may be recognised as a “person” (as a subject of law) even before his (her) birth, in order to be recognised as an heir.


Disappearance Special statement of the court:

disappearance announcement (>1 year) Death announcement (4 years) If the person reappeared, he is put in the

same position as he was before the disappearance: the goods that are in the possession of the heirs will be returned.

One exemption: if the wife (or husband) had remarried, this second marriage will be considered as valid.


The abstract capacity

Limitations:- In order to sanction

somebody- In order to protect somebody


The Concrete Capacity

= someone’s ability to sue or to be sued, and to enter into a binding contract

CC=AC+D

The concrete capacity=The abstract capacity + Discernment


Legal persons A legal person is an entity, such as a corporation,

created by law and given certain legal rights and duties of a human being.

Companies and other legal persons have their own legal personality separate from that of the shareholders or directors or of other companies in the same group.

Even if a company is totally dominated by one shareholder, the company and the shareholder are distinct legal persons. In other words, a corporation is a legal entity with rights, privileges, and liabilities separate from those of the individuals who invest money in it, compose its membership, and run it.


Legal personsConsequences of the separate legal identities of a company and its members:

a company can sue and be sued in its own name; a company can make contracts on its own behalf

(and its members cannot claim the benefit nor be subject to the burden of such contracts).

Indeed, companies usually contract in their own name, and the obligations undertaken by them are not binding personally on their shareholders or directors or on associate companies.


Legal persons – constitutive elements1. Organisation

Internal structure is usually divided into differentdepartments for production, distribution,researches, marketing, etc. Since there is a huge diversity of internal structuresand there are no imperative rules for this matter,any internal structure is allowed by law, exceptthose that are expressly forbidden.


Legal persons – constitutive elements2. Patrimony

= a juridical universality which includes the total rights and obligations with patrimonial character which belong to a subject of law, as well as the goods to which these rights and obligations are referred to.


Legal persons – constitutive elements3. The Goal (the purpose or the object

of activity)

- Has to be lawful. - The purpose of a legal person justifies its

existence as a subject of law.- A legal person may own only those rights

which are meant to achieve the established purpose.


Legal persons – constitutive elements

The speciality of the abstract capacity: any juridical act, which has been concluded for another purpose that the one originally assumed by the legal person, is null and void. Any juridical act concluded outside the object of activity may produce no effect.“A legal person can have only those rights and obligations which correspond to its aim established by law, the setting up deed or the statute”.


Legal personsAccording to the branch of law to which they belong, legal persons are:

legal persons of public law (e.g. the Crown) and

legal persons of private law (e.g. the companies)


Legal persons The name:a) Must have the appropriate suffix (ltd or plc

in UK, S.A or S.R.L. in RO)b) Not the same or similar to another name

on the registerc) Not using offensive wordsd) Not giving a misleading impression about

the scale or nature of the business


Legal personsMemorandum and Articles

the moment of registration is the moment of obtaining the legal personality

Effects:

- Bind each member to the company- Bind the company to each member- Bind the members to one another- Don’t bind the company to a member or anyone else acting

in a non-membership capacity (a director of the company or an employee)


Legal personsShares (interests of the

shareholders in the company, measured by a sum of money).

Debentures (loans giving the right to a fixed return whenever the debenture matures).


Legal persons Insolvency - Priority of creditors:

1. Cost of the insolvency procedure2. Preferential debts (employees)3. Floating charge holders4. Unsecured creditors5. Members


The content of a business juridical relation 1. the active part (which includes the

rights)A right is a juridical possibility or prerogative recognized by law to a natural person as active subject to have within the limits of the law a certain behavior and to pretend to other persons as passive subjects to give, to do or not to do something for him.

2. the passive part (which includes obligations).


The content of a business juridical relation To give = to transfer a real right. It is the

obligation of the seller in a selling contract – to transfer the right of property.

To do = to perform a certain activity, a positive action in favor of the active party.

Not to do = the obligation of the passive subject to abstain from something that he is entitled to do in the absence of such an obligation.


The content of a business juridical relation Patrimonial:1. debt rights = those rights according to which

the active subject (creditor) can pretend to the definite passive subject (debtor) to give, to do or not to do something

2. real rights = those rights according to which their owners can directly exercise their attributes toward goods without the intervention of another person.

Non-patrimonial


The distinction between the debt rights and the real rights

1. Real rights are limited in number and are expressly stipulated by law, wile the debt rights are unlimited. The debt rights are at the mere imagination of the parties, who may create any contract, which fits their interest;

2. In case of a debt right, we know both the active and the passive subject from the beginning (i.e. from the moment the contract has been concluded). In case of a real right only the active subject is known, the passive one including the entire society;

3. in case of a debt right, the correspondent obligation may be “to give”, “to do” or “not to do”, wile in case of a real right, the correspondent obligation is always “not to do”.


Relative rights ≠ Absolute rights The relative right is that right according to

which the definite active subject (the creditor) has the possibility to pretend from the definite passive subject (debtor) a certain behaviour. A relative right is opposable only to a definite person.

The absolute right is that right according to which the established owner has the possibility to exercise the right alone and all the other persons have the general and negative obligation not to do something that could jeopardize the owner’s right.


Absolute rights

The absolute rights are opposable to all persons, “erga omnes”.

It means that everybody is bound to observe the prerogatives held by the owners of these rights.


Real rights The principal real rights do not depend

on any other right; they are self-sufficient, as is the case of property.

The accessory rights depend on a debt right. In this category can be included the mortgage and the lien rights.


The mortgage – as a contract The conventional mortgage is that not imposed

by the law but concluded between parties as an expression on their own interests.

Characteristics:a) accessory character. Its existence depends on the existence of the principal contract. The obligation's execution on the base of the main contract has as effect the ending of the mortgage contract;b) right constituting character;c) solemn character. The mortgage contract concludes only in an authentic form, required by the law for the validity of the contract.


The mortgage – a a rightCharacteristics:

it is a real right. As any real right, the mortgage grants its mortgagor the right to observe the goods no matter who currently has possession over them;

it is an accessory right. The mortgage goes along with the debtor's debt to the creditor and shares its fate;

it is indivisible. Even if the debt has been partly paid, the mortgage over the whole estate continues to exist until the final payment of the debt.

it has an estate character. Unlike the lien that constitutes a real warrantee that has as object mobile goods, the mortgage can be constituted only over real estate (immovable goods).


Mortgage - effects No dispossession of the debtor. The debtor will still be able to exercise all his

prerogatives resulting from his property right. Therefore, constituting a right to mortgage over an object does not lead to making it unavailable.

The object may be alienated, but the third party that receives it, (by selling contract, donation, etc.) will take the object as is, meaning burdened by the mortgage.

The creditor will have the possibility to compensate, by auctioning the mortgaged goods even if these are now under somebody else's property, different from the original debtor.


The lien= a contract whereby a borrower (called the pledger) delivers possession of a chattel as security to his lender (called the pledgee), the chattel to be returned by the lender upon payment of the debt. It is an accessory contract, since he entirely depends upon the existence of the loan contract; whether the borrower returns the loan, the lien is automatically extinguished.


The object of a business juridical relation – the goodsI. corporal goods ≠ non-corporal goods. II. movable goods (chattels) ≠ immovable goods

(real estates).III. goods in civil circuit ≠ goods off the civil circuit.IV. goods individually identified ≠ generally

identified. V. producing goods ≠ non-producing goods.VI. consumable goods ≠ non-consumable goods.


Contracts A unilateral act is an act that involves the

expression of a single will.(e.g., the will, the offer to contract, the

acceptance of a succession).

On the contrary, a contract is an agreement between two or more parties with distinguished interests (e.g., sale contract, loan, mandate or employment contract).


Unilateral contracts ≠ bilateral contracts A contract may involve an exchange of promises

in which two parties agree that each will perform in a certain future.

The exchange of a promise for a promise = a bilateral contract. E.g., in a sale contract, both parties are, in the same time, creditor and debtor, i.e., the purchaser is entitled to receive the goods and is obliged to pay the sale price, and the seller is entitled to receive the price and is obliged to deliver the goods.

If there is no such exchange, the contract is unilateral. For instance, in a loan contract, only the loaner is creditor, being entitled to require the loan, and only the borrower is debtor, being obliged to give it back.


Contracts made by onerous title ≠ contracts made by gratuitous title An act made by onerous title is an act in

which each party obliges himself to the other in exchange of the other's one obligation.

On the contrary, an act made by gratuitous title is one in which one party obliges himself to the other without expecting in exchange any obligation from the other one.


Commutative contracts ≠ aleatory contracts The commutative acts are those in which

the parties know, from the very moment of concluding the act, which will be their mutual obligations (e.g., selling contract).

The aleatory acts are those in which the parties' obligations are dependent on a fortuitous event (the luck!) - e.g., insurance contract or life annuity contract.


Constitutive, transmissive and declarative contracts A constitutive act is one that constitute a

subjective right that doesn't previous exist. For instance, the institutions of a is such a constitutive act.

A transmissive act is one that transfer a pre-existing civil right. So are the most of the juridical acts (e.g., sale contract or exchange contract).

A declarative act is one that consolidates a pre-existing right (e.g., the act by which the common owners divide the common property into shares - the dissolution of the unity of possession existing between common owners).


Consensual, formal and real contracts A consensual act is one enforceable without being

requested any formal conditions for this. A formal act is one enforceable only if there are

observed some additional formal conditions, other than the simple consent. (e.g. a written settlement).

A real act is one that can be enforced only if goods were delivered by the transferor to the transferee. Therefore, deliverance of the goods is requested not only to perform the real act, but to conclude it. Such real acts are loan or deposit contract.


Freedom of contract Civil Code: “Agreements formed legally take

place of law for those who have made them”. These rules are not law, as they only apply to the

persons who have created them. Nevertheless, the consequences of breaking them may be just as unpleasant as the consequences of breaking any rules of civil law.

Freedom of contract is a concept, which means that the law permits people to agree whatever they want to - one with another.


Contractual validity conditions1. the consent of the party who oblige

himself;2. his capacity to contract;3. a certain object which forms the subject-

matter of the commitment;4. a lawful cause in the obligation.

(5) In case of formal acts, there is a supplementary element of enforceability: the form.


The consent= the party’s intent to conclude the juridical

act. The consent:1. has to exist. Any act concluded in the

absence of the consent will be declared null and void;

2. has to be externalized. 3. has to be expressed by a person who intents

to engage himself in a juridical relationship.4. has to be genuine.


Vices of consent1. the mistake;2. the fraud;3. the duress;4. the injury.


The mistake= a false belief relating to one of the elements of

the contract, at least one of the parties being mistaken.

Conditions: must occur at the moment the contract is made. if a party knows and accepts that there is an element

of risk in the transaction, then this is not a mistake. must be sufficiently serious in order to have an effect

in law. mistake as to the substance of the thing which is the

object of the contract ≠ mistake as to the person with whom a party had the intention to make a contract.

It is not accepted for pleading somebody’s ignorance.

business juridical relation

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