Spanish Commercial Law: Sources & Company Legal Structures
Spanish Sources of Commercial Law
1. Source: Commercial Law
Article 2 of the Code of Commerce states that commercial matters are governed by its provisions, encompassing not only the Code itself but also any applicable law. Commercial law, as the primary source of state discipline, includes written rules (codified or not) regulating commercial matters. These include legal provisions (laws, legislative decrees) and administrative arrangements (decrees, ordinances, resolutions). Commercial rules are divided into two groups:
- Matters regulated exclusively by commercial law (e.g., bill of exchange, corporations).
- Matters also covered in Civil Code (e.g., trading, mandate, deposit), where commercial law delimits its scope.
Commercial law can also be categorized into general law (Code of Commerce) and special commercial laws, which modify or supplement it. Special laws are abundant due to the inability of codes to regulate all dynamic economic processes.
A) Code of Commerce
Originating in Spain in 1829, a new Commercial Code was promulgated in August 1885, effective January 1, 1886. It comprises 955 articles in four books: I. Merchants and Commerce in General; II. Special Trade Contracts; III. Maritime Trade; IV. Suspension of Payments, Bankruptcies, and Prescriptions. The Code has been criticized for being anachronistic, technically deficient, and outdated. It presents an overly simplistic idea of contractarian institutions and conceives commercial law as merely a number of commercial transactions, making its application difficult.
B) Special Commercial Laws
Special commercial laws are of two types:
a) Replacing parts of the Commercial Code: e.g., Law of Corporations (SA), Law of Exchange and Checks, Banking Legislation, Insurance Legislation.
b) Governing commercial acts not included in the Commercial Code: e.g., Limited Liability Company Act (SL), Competition Defense Act, Patent Law, Trademark Law.
C) Non-State Legislative Provisions
2. Source: Trade Usage
Trade usage refers to effective behavioral reiteration in the trading process, i.e., repeated, uniform, and constant practices and rules by traders. There are two types:
* Conventional Interpretation: Represents typical contract contents, professional practices implied in legal acts to interpret or supplement the parties’ will.
* Regulatory Usage: An objective rule imposing itself on the parties’ will, applied by courts. Proof of usage must be provided by the invoking party, as an exception to iura novit curia.
Mass Recruitment and New Sources of Commercial Law
The repetition of contracts in trade has led to general clauses and conditions set by employers or industry groups. Some argue these constitute a new source of law, but they are only effective when part of a contract, requiring mutual consent (Law 7/1998 on General Contracting Conditions).
Types of Companies & Legal Personality
Companies are primarily divided based on the liability element:
General Partnership
Partners respond personally to debts. It operates under a partnership name, where partners share rights and obligations proportionally, responding to social debts with unlimited, subsidiary, and joint liability if assets are insufficient. Partners can contribute goods, labor, or industry.
Constitution: Public deed registered at the Companies Registry. Section 125 of the Code of Commerce requires the deed to include partners’ names, which must appear in the company name. Section 126 details how the company name is formed.
Internal Legal Relations: Relationships between partners and the company, including collective rights and duties. Duties: Fulfill promises to the company, use funds for company benefit, and compensate for damages. Prohibition of competition. Rights: Participate in management (or appoint stewards), share profits and losses according to contributions.
External Legal Relations: Company’s relations with third parties. Representation by authorized administrators. Liability for debts rests with the company’s assets, then with partners (unlimited, solidary liability).
Limited Partnership
Two types: simple or by shares. Two types of partners: general (manage and have unlimited liability) and limited (limited liability, usually to the amount contributed).
Constitution: Deed specifying rules, registered in the Commercial Register. Section 145 of the Code of Commerce requires similar content to general partnerships, including limited partners’ names. Section 146 states the company name includes general partners’ names. Section 147 prohibits including limited partners’ names (doing so incurs unlimited liability).
Internal Legal Relations (Limited Partners): Obligations: Meet capital contribution (not work), indemnify the company, participate in losses up to their contribution, not include their name in the company name, not participate in administration. Rights: Share profits proportionally, be informed about administration and accounting.
External Legal Relations: Representation by general partners. Liability: Company assets first, then general partners (unlimited, solidary liability), limited partners (limited liability, unless their name is included or they interfere in management).
Limited Partnership by Shares
General partners have unlimited liability, while limited partners’ liability is limited to their capital stock. The name includes the general partner’s name followed by “Sociedad Comanditaria por Acciones” (S. Com. por A.).