The business juridical relation

1.

2.
3.

To exist a social relation To exist a rule that provides the juridical relation To exist a legal fact or act whose legal rules link the formation, the modification or the end of rights and obligations

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Sources of a Business Juridical Relation

1. Legal facts: - natural facts

- human actions 2. Juridical acts: expressions of somebodys will, made with the specific purpose to create, to modify or to end a juridical relation

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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

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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
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Natural Persons
A 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

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The abstract capacity

1.
2. 3. 4.

Features: Universality Generality Inalienability Legality When does the abstract capacity begin? When does the abstract capacity end?

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Birth
Since

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.
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Disappearance
Special statement of the court: disappearance announcement Death announcement 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.

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The abstract capacity

-

Limitations: In order to sanction somebody In order to protect somebody

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The Concrete Capacity

= someones ability to sue or to be sued, and to enter into a binding contract

CC=AC+D The concrete capacity=The abstract capacity + Discernment

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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.
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Legal persons

Consequences 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.

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Legal persons constitutive elements

1.

Organisation

Internal structure is usually divided into different departments for production, distribution, researches, marketing, etc. Since there is a huge diversity of internal structures and there are no imperative rules for this matter, any internal structure is allowed by law, except those that are expressly forbidden.
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Legal persons constitutive elements

2.

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.

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Legal persons constitutive elements

3.

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.
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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.
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Legal persons
According to the branch of law to which they belong, legal persons are: legal persons of public law and legal persons of private law

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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 register c) Not using offensive words d) Not giving a misleading impression about the scale or nature of the business

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Legal persons
Memorandum 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 Dont bind the company to a member or anyone else acting in a non-membership capacity (a director of the company or an employee)
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Legal persons
Shares

(interests of the shareholders in the company, measured by a sum of money). (loans giving the right to a fixed return whenever the debenture matures).
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Debentures

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Legal persons

Insolvency - Priority of creditors:

1. Cost

of the insolvency procedure 2. Preferential debts (employees) 3. Floating charge holders 4. Unsecured creditors 5. Members

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The content of a business juridical relation

1.

2.

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. the passive part (which includes obligations).
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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.

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The content of a business juridical relation

1.

2.

Patrimonial: 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 real rights = those rights according to which their owners can directly exercise their attributes toward goods without the intervention of another person. Non-patrimonial

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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.
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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 owners right.
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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.

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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.

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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.
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The mortgage as a right

Characteristics:

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).
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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.
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The object of a business juridical relation the goods

I.

II.
III. IV. V.

VI.
VII.
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corporal goods non-corporal goods. movable goods (chattels) immovable goods (real estates). goods in civil circuit goods off the civil circuit. fungible non-fungible goods. goods individually identified goods generally identified. producing goods non-producing goods. consumable goods non-consumable goods.
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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).

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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.
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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.
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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.
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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 preexisting 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 preexisting 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).
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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.
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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.

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Contractual validity conditions

1. 2. 3. 4.
(5)

the consent of the party who oblige himself; his capacity to contract; a certain object which forms the subjectmatter of the commitment; a lawful cause in the obligation. In case of formal acts, there is a supplementary element of enforceability: the form.
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The consent
= the partys 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.
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Vices of consent
1.

2.
3. 4.

the the the the

mistake; fraud; duress; injury.

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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 somebodys ignorance.
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The fraud
= a cause of nullity of an agreement if artifices made by one party are such that it is obvious that, without these artifices, the other party would not have contracted. It will not be presumed, and must be proved.

The artifices may consist of lies, making false documents or even of silence. A fraud can also consist of doing nothing to alert someone of a damaging fact. The fraud must be deliberate and it must proceed from the other party. Two main elements: the intentional one (which consists of the will to fraud the other party) and the material one (which consists of the activities performed in order to lead the other party into mistake).
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The object

The object of a contract is the subject matter of content of the contract, the duty, which each party has to perform. It is the legal activity the parties have agreed to undertake.

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The nullity of the juridical acts

The nullity is a sanction, which deprives the act of its effects. In case of an act defectively concluded, the nullity applies from the moment of that conclusion restore the parties in the position prior of their agreement. It is just as no act has been concluded between them. This effect of nullity is known as restitutio in integrum of the parties. The nullity is retroactive, and parties will be put back in the positions they were in before the contract. This requires the parties to restore anything they received on the ground of the contract.
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The nullity
a) Absolute nullity is a nullity imposed in the general interest. It can be invoked by anyone having an interest in the matter, such as the parties, third parties, the public prosecutor, etc. The absolute nullity can be invoked in case of absence of (or illegality of) cause or object, lack of consent, or failure to observe formal requirements where these are required (in case of formal acts). b) Relative nullity is a protective nullity: only the person whom the law intends to protect (or his representatives) can bring an action for relative nullity. It can be invoked in case of mistake, fraud, duress or injury. The protected person can however decide to confirm the contract.
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Between absolute nullity and relative nullity are three main differences:
1. Anybody may claim to make null and void a juridical act. Law draws no limits in enforceability of the right to sue. By the contrary, only interested persons may avoid an act (e.g., the party whose consent was affected by one of the vices of consent); 2. The absolute nullity can be claimed anytime; there are no limits in time for claiming an act to be null and void. As far as the relative nullity is concerned, a party who benefits from nullity can claim the avoidance of the act only within a specific limit of time, which normally is 3 years; 3. An avoidable act can produce its effects until its avoidance is claimed. Thus, it is up to the party who benefits from the nullity to claim the cancellation of the act. But, if the party ratifies the act by covering its defects, then the act is valid and produce its effects.
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Principle of compulsory force of the act

in Latin: pacta sunt servanda According to this principle, agreements lawfully formed take place of law for those who have made them. So, the contract is mandatory for the contracting parties. Furthermore, the principle of compulsory force is effective even upon the court of the law. For instance, the court solves the litigation between parties according to the legal provisions and also based on the convention existing between the litigants.
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The principle of irrevocability of the act

According to this principle, the parties cannot revoke the contract except by mutual consent or on grounds allowed by the law. This principle restrains the contracting party to revoke his promise. There are some exceptions, meaning acts that can be however revoked.

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The principle of privacy of the act

Only the contracting parties can sue on the contract. Conventions have effects only among the contracting parties; they do not affect third parties, nor do they create any benefits (advantages) for third parties. A party is a person who concludes the act. It is considered as well an interested party (habentes causam) a person who is recognized either as having enforceable rights or as being liable for duties created by an act where he is not a party (e.g. the heirs). Third parties are persons who are completely away from the contract.
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