Commercial Law: Origins, Sources, and Business Transactions
Concept of Common Law
Main origins founded in social and economic factors in the Middle Ages.
- Merchants started a new system of special rules that became custom, recorded in writings.
- There is a mutual relationship between the civil and the code of commerce, based on a general to special relationship.
Hierarchy of Sources of Law
Contained in the civil code, statutes, customs and PGD.
- The Law:
- Commercial code: body of regulations from XIX century, whose main value is to organise and unify all the concepts and common legislation in a single text.
- Regulates the acts of commerce that encompasses all classes of mercantile matters and not only acts, and commercial code refers not only to the code.
- Special legislation coexists as the set of rules aimed at governing economic activity conducted by entrepreneurs.
Constitution and Power of Economy
The state maintains the power to regulate all commercial law matters, in order to protect the unity of the market – This authority in commercial law is granted by constitution.
Customs, Uses and Practices
Custom has the force of law and is not contrary to moral standards.
- Merchants developed new rules to regulate the activities of professional trades.
- Conditions:
- Relevant uses are a result of repeated conducts in business trade.
- General awareness of the existence of that reiterative conduct.
- The role of customs is to complete regulation – Filling gaps, also they are an important interpretative tool.
General Principles
Unwritten sources of law that form the basis of the legal system, they uphold a considerable usefulness for constructing legislation and filling gaps.
- These principles are developed by the case law at the court of justice.
Community and International Law
Adherence by Spain to the European Union in 1986, sources there are: primary law, secondary law and supplementary law.
Business and Business Premises
Definition of Business
Organized collection of capital and work intended for manufacturing goods/services to meet the market demand.
- Concept: activity and functional organisation, an instrument through which the entrepreneur achieves his aims.
Business as a Traded Object
A business is a valuable object which can be transferred inter vivos (sale, lease) as a whole, or mortis causa/mortgage.
Theories:
- Atomistic doctrine: enterprise has different components (negotiated separately).
- Unitary theories: autonomous subject, a living organism, sold as a whole.
- Eclectic position: contract entitled “transfer of an enterprise” but components transferred separately.
Business Acquisition and Sale
Buyer and seller sign a unique contract in order to transfer the property, they specify the price as a whole, although each element of the enterprise has its own specific value.
Rules: contracts have to be transferred with the consent of buyer, seller and third parties involved.
- Credits do not require consent by debtor.
- Novation of debts – Replace the original debtor with a new one.
Obligations of the Seller:
- To advise the buyer how the enterprise works.
- To refrain from competition in order to protect company’s clients.
Lease of a Business
One of the parties undertakes to give the other the use of a business for a specific period of time and at a certain price.
Obligations:
Lessor:
- Deliver the subject matter of the contract.
- Perform during the lease any repair required.
- Maintain the lessee in the peaceful enjoyment for the whole term of the contract.
Lessee:
- To pay the price.
- Use the thing subject as the orderly entrepreneur.
- Pay any expense arising from the public deeds.