The Legal Business: Elements, Classes, and Ineffectiveness

Posted on Oct 27, 2024 in Law & Jurisprudence

Theme 6: The Legal Business

Definition and Types

As a first step in studying legal business, we must clarify two concepts: legal fact and legal act.

A legal fact is any event that gives rise to legal consequences. Legal facts may be involuntary (e.g., birth or death) or voluntary. A voluntary legal fact involves the will of the subject and is called a legal act.

Legal acts can be lawful (respecting the law) or illegal (violating the law, e.g., a crime). Lawful acts can be further divided into those that do not seek a direct legal end (e.g., planting) and those that do, which are legal businesses.

Legal Business Concept

A legal business is the human act of manifesting will, which produces the desired legal effects for the person involved, provided that the requirements of the law are met.

Classes

By Reason of its Object

Businesses on rights
Heritage businesses, which are further divided into:
- Act businesses: Suppose an economic disruption in the estate of a person (e.g., establishment of an easement).
- Obligational businesses: Create a personal right for the parties (e.g., a sale).

By the Number of Declarations of Intent

Unilateral: Contain a single declaration of will (e.g., a will).
Bilateral: Contain two or more declarations of intent (e.g., a deposit).

For the Sake of Business

Reasons: The cause (purpose) is tied to the business; if it is null, so is the business.
Abstract: Only requires the completion of the prescribed form for the existence of the business. Even if the cause does not exist or is unlawful, the business can produce effects (e.g., mancipatio).

By the Way

Formal and solemn: A particular way is compulsory for the existence of the business (e.g., a will). The way is required ad solemnitatem, i.e., essential for the validity of the business.
Non-formal: The parties can express their will in any way. The form ad probationem has value, i.e., to prove its existence (e.g., a document).

For the Sake of Enrichment

Onerous or commutative: The enrichment of one party is compensated for its provision for the other (e.g., a purchase).
Free or profit: Acquiring a financial advantage without compensation (e.g., a donation).

At the Moment to Have Effect

Inter vivos: Produce effects during the lives of those who made them (e.g., rent).
Mortis causa: Have effect after the death of who makes them, regulating the fate of their assets or persons under their authority (e.g., a will).

By the Action That They Cover

Strict law: Protected by a strict legal action (e.g., mutual).
In good faith: Protected by an act of good faith (e.g., bailment).

By the Historical Source

Civil law: Governed by jus civile.
Honorary law: Regulated by the ius honorarium.

According to the Source

Civil law: Valid only between Roman citizens.
Law of nations: Can also be taken by pilgrims (foreigners).

According to the Accidental Elements

Pure business: Not subject to any accidental element.
Conditional business: Subject to a condition.
Term business: Subject to a term.
Modal business: Under way.

Elements

There are three kinds of elements in a legal business: essential, natural, and accidental. In addition, the subject’s capacity to conduct business, both legally and to act, are common essential elements. Without these, there can be no legal business. The essential elements constitute its very nature and are the will and the cause.

Natural elements are the concrete contents of a specific and typical business. Even if the parties do not report anything about them, the law’s purpose is understood (e.g., that the seller informs the buyer of the hidden defects of the thing sold).

Accidental elements are those that the parties can voluntarily add, and they become part of the particular business structure. These are the condition, the term, and the mode.

Essentials

The Will

The will is the conscious desire to do business and achieve its effects. It’s the subjective element of the transaction. The way the will was expressed had no relevance in ius civile, since the latter depended on the effectiveness of the act. The problem of the discrepancy between the way (or words) and will (intention of the subject) appeared already in the Republican era and was expressed in a famous case (Causa Curiana – 93 BC) on the interpretation of a clause in a will. The interpretation favorable to the testator’s will won against the form. However, this inquiry would only be admitted in case of doubt, not when the wording of the words was clear. Respect for the will of the subject of business was mainly in ius honorarium, which did not admit business where there was at least true voluntariness of the parties. The magistrate, with his performance, looked to see that there was a real correlation between the statement and will that made sufficient sense. The will does not have to be expressed by the subject himself but can be expressed by another person, whether a broker or representative.

Declaration by the subject: May be express or implied, formal or non-formal.
- Express declaration: Issued directly, permits no other interpretation, may be oral or written.
- Implied declaration: Also called tacit, it follows the behavior of the subject or by a safe induction. (e.g., a person has a claim which could require, but instead of doing so, accepts the payment of interest. From their behavior it follows that, for now, they waive the requirement that capital, if paid the debts of an estate, it appears to have been accepted). Silence has no value unless the law expressly recognizes some effect (e.g., in the in iure cessio).
- Formal declaration: When the law requires a particular form of expression, it is usually oral and symbolic (e.g., grasping an object). Affirmations are those of the ius civile primitivum.
- Non-solemn declaration: No particular manner is necessary. The way may be required for the validity of the business (ad solemnitatem) or proof of its existence (ad probationem).
Declaration by someone else: Either 1) by an intermediary or nuntius or 2) by a representative.
The nuntius (messenger): Is a mere transmitter of the will issued by the person making the business, as would a letter. Nuntius generally acted as the slave and the filius familias.
By representative: Representation is given when a person acts as a “representative” of the other legal business represented. The effects of the business are produced for the represented. Representation can be necessary or voluntary.
- Necessary: When the person for whom the effects of the business are to be produced is unable to act and must be replaced by someone able, as in the case of the curator impuberis and tutor furiosi.
- Voluntary: When a person able to act is replaced by another for the conduct of a trade or a series of businesses. In Justinian law, there are two cases of voluntary representation: the mandate and business management (negotiorum gestio). Taking into account the relationship between representative and represented, it is now generally distinguished between two types of representation: direct and indirect.
  - Direct representation: The representative acts on behalf of the principal, the effects of the business falling on the principal, who is the holder of the credit or the resulting debt. In Roman law, direct representation between free persons sui iuris was originally unknown.
  - Indirect representation: The representative acts on behalf of the principal but in his own name, the effects of the business falling on him, which he then has to convey to the principal. Over time, different forms of direct representation between persons sui iuris were required, such as the acquisition of possession and, through it, property, the law of inheritance fee (bonorum possessio).

The Cause

The cause is the economic-social characteristic of the type of legal business. It is the objective of the business and is the same for every characteristic legal transaction (e.g., exchange of money for something in the sale). The cause must be distinguished from the motives that may have induced the parties to make a concrete business.

Accidental Elements: a) Condition b) Term c) Mode

a) Condition

A condition is an objectively uncertain future fact on which the parties make the birth or cessation of the effects of a transaction dependent.

Classes:

Positive: Consisting of an action.
Negative: Consisting of forbearance.
Casual: When their implementation depends on chance, not the will of the parties.
Potestative: Its implementation depends on the will of the obligated party.
Mixed: Its performance depends partly on chance and partly on the will of the obligated subject.
Precedent (Suspensive): If the birth of the effects of the business depends on them.
Resolutive: If the cessation of the effects of the transaction depends on them.
Unfit or apparent: Those that do not meet certain requirements and may be the conditiones juris (legal terms), which consist of requirements already required by law to produce a specific business purpose and are considered void.
Illicit: They depend on the effectiveness of the legal business of carrying out an unlawful act.
Immoral: They depend on the effectiveness of the legal business of conducting an immoral fact. Both illegal and immoral conditions follow the same regime as impossible conditions.

b) Term

A term consists of signaling a future date on which the commencement or termination of the effects of the transaction depends.

Classes:

As a condition, the term may be initial/suspensive (dies a quo) or final/resolutive (dies ad quem).

Another classification distinguishes four types of term:

Dies certus certus quando: We know it will happen and when (e.g., an important date in the calendar).
Dies incertus certus quando: It is known to occur but not when (e.g., agreed supply of goods when there is someone’s death).
Dies certus an incertus quando: The date is known beforehand, but it is not known whether it will happen or not (e.g., pension from age 60).
Dies incertus an incertus quando: Even the arrival of the event that sets the day is uncertain (e.g., receiving a certain amount of money the day of the wedding).

c) Mode

A mode consists of the obligation imposed on the recipient to give a destination to the goods granted. It was imposed only in legal businesses of donation (donations inter vivos, acts of last will). The essential difference with the condition is that the business under way is not suspended, as in the condition, but rather the execution of the effects of the business is suspended until the obligation is performed.

If the mode is impossible or illegal:

In classical law, it was not set.
In Justinian law, a distinction was made between modus simplex (effectively just a moral prayer), which is not set, and modus qualificatus (without it the disposing party would not carry out the business), which declared the business null. In terms of implementation, as in classical law, only indirect routes could be required (e.g., if the way was to do an act in relation to the deceased, such as building a funerary monument, the magistrate required the recipient to comply with the imposition of fines). In Justinian law, a right of recourse for refund was granted in case of default, or actio civilis incerta praescriptis verbis for compliance.

Item 7: Ineffective Legal Business

Causes of Ineffectiveness

Defects in the formation and declaration of will: error, fraud, duress, mental reservation, simulation, and improper error.

Ineffectiveness of the Legal Business

When a legal transaction has defects, several consequences can occur:

Inefficiency: The lack of legal effect. The business comes to life as valid law, but fails to produce effects due to circumstances external to it (e.g., lack of acceptance of inheritance makes the institution of inheritance by will ineffective, therefore, the will itself).
Disability: Occurs when the ineffectiveness of the business comes from intrinsic defects (affecting its essential elements) for which the law does not recognize the effects. There are two degrees of disability:
1. Nullity: When the defect is the lack of a requirement essential to the business itself. It is null and void, with no need for anyone to ask for it to be declared. The business has no effect from birth; it is said to be null and void ipso jure because the business has never existed.
2. Invalidity: The business was created and exists, but has a flaw or defect that can challenge its validity with retroactive effect. If the appeal fails, the business produces its effects. In Roman law, there was no nullity. The ius civile business could only be valid or invalid.

Grounds for Ineffectiveness

These are vices that affect the legal budgets of the business (capacity of the subject), its essential elements, or an element that, although accidental, once established becomes essential. These are the incapacity of the subject, vices of the will, vices of the case, defects of the object (lack of fitness), formal lewdness, and impossible condition.

Vices of Will

The circumstances and situations that influence the will of the subject of a legal transaction may affect its formation or demonstration.

Vices That Affect the Formation of Will

Error: False knowledge of a fact or an object. Ignorance is a lack of knowledge, while false knowledge leads to action. In legal business, error matters more than ignorance. This error affects the motives that have led a person to conduct business. The real will matches the manifest will. To revoke the business, the error has to fall on an essential budget or business element. Error was only relevant in the field of ius gentium. For ius civile, business was valid even if mistakenly held, subject to compliance with the prescribed forms.
- Error in substantia: Concerns the essential and constant qualities of a thing, according to its economic and social role. (e.g., if you buy vinegar believing it is wine or a free person believing they are a slave, the business will be void. However, this type of error was not always considered essential, meaning that in many cases the business was valid because Roman jurists gave in each case the solution that prevented the wrongful damage (e.g., if someone bought an item thinking it was tin, and it was actually silver, and the seller was aware, the sale would be valid).
- Error in qualitate: Affects the characteristics of the object that do not make up its substance; it is never essential and does not override the business (e.g., if you buy one class of timber thinking it is another). In Justinian law, it is considered a reason for price reduction.
- Error in quantitate: Concerns the amount, extent, or size of the business object. In unilateral business, it produces the nullity of the business, but the target was reduced to the actual dimensions of the thing. In bilateral business, it should be distinguished whether there is agreement or not between the parties despite the error.
- Error in causis: It is irrelevant, except in free business if it is subordinate to the reasons (e.g., if someone named an heir in their will and then mistakenly thinking they were dead, made a second will instituting another person as heir, the second will would be null and the first valid).
Fraud (dolus): Malice, deceit, or pernicious fraud by one party that induces another to consent. For the Romans, there were two kinds of malice: dolus malus and dolus bonus. Dolus bonus is the natural ability to induce the other party to undertake a particular business (e.g., that of a good commercial). This fraud did not produce legal effects. Dolus malus, by contrast, involves an error in the deceived person. In old law, the completed business was invalid for ius civile only when the stipulatio doli clause (promise not to act with fraud at any time) was inserted. In ius honorarium, although the magistrate considered the business valid, he provided the injured party with the possibility of avoiding financial losses that might occur through three means:
1. The actio doli, for the amount of damages suffered, was to be instituted within one year, directed at the author of the intent, and was infamous, meaning that it rested on the convicted note of infamy.
2. The exceptio doli, to paralyze the action by claiming compliance with the business. Given against the heirs and without a fixed term.
3. The in integrum restitutio. Granted against third-party beneficiaries, canceling the effects of the business vitiated by fraud.
Duress (metus): Fear determined by the threat of imminent harm. In the area of ius civile in classical law, businesses held by duress were valid. In ius honorarium, the magistrate also considered them valid, but indirectly denied them effectiveness if several conditions were met:
1. The threat was wrongful, i.e., not based on law.
2. The threatened evil was serious (life, liberty, or physical integrity).
3. The threat was expressed for a given legal business.
4. The threat was able to impress a serious and reasonable person.
If these requirements were met, the magistrate granted three means of protection to the injured party (who did not have to declare the nullity of the legal business):
1. Actio quod metus causa
2. Exceptio metus
3. Restitutio in integrum
4. The actio quod metus causa aimed to obtain financial compensation for four times the value of the goods delivered if exercised within one year, then only simple, i.e., the same value. It is directed against the author of the threat, the owner of the thing, or the third party who has taken advantage.
5. Exceptio metus, to paralyze the action by claiming business compliance.
6. In integrum restitutio, to put the parties in the condition prior to the conclusion of the business, as if it had not been done before.

Vices That Affect the Manifestation of Will

Violence: Physical constraint that removes freedom, called vis absoluta. The business is null and void ipso jure.
Statement iocandi gratia: When declared in jest. The legal business is not born, but compensation may be due if someone gets hurt thinking it would.
Mental reservation: When an individual makes a conscious expression of will different from their real intention. Roman law did not consider this a flaw in the manifestation of will.
Simulation: When the business is said to be done but is not actually carried out because the parties enter into a different business. There are two kinds of simulation: absolute, when the subject will not do any legal business, and relative, whenever there is a legal business other than the one stated.
Improper Simulation: Where the bulk is used for a lawful purpose that, however, disagrees with the cause of the business. There are two main cases:
1. Imaginary business: Born at the hands of the law to fill a legal vacuum, it provides no means to achieve the purpose for which the parties wish. It was taken to the formalities of a typical business, but the parties agree to give their statements a different meaning, aiming for the end pursued (e.g., sale to get the triple emancipation).
2. Trust business: The parties have a business whose effects go beyond the strictly proposed purposes (e.g., creditor cum fiducia). They are usually accompanied by a pactum fiduciae to counter these excessive effects.
Improper or Obstat Error: When a declaration of intent is released in a legal transaction with a good faith belief that one thing is being said when in fact another is truly declared. Also called Obstat error because the statement precludes or prevents the true will from manifesting.
- Error in negotio: Concerns the nature of the business that the parties enter into (e.g., if a person gives another a thing with the intent to donate it and the recipient understands that the delivery is on loan, then the error is essential and there is no gift or loan).
- Error in personam: Concerns the identity of the person engaged in business or those to whom business is conducted. If there is a unilateral business (e.g., a will), the business is void; if the business is bilateral, it depends on the significance that the wrong person has for the other party. If the person is so important that the business is held in response to them (e.g., a loan), the business is void.
- Error in nomine: The name that designates the person or thing. It is irrelevant.
- Error in corpore: The identity of the object (e.g., you want to buy farm “x” and state that you want to buy farm “y”). This error is essential and cancels the business.

Validation, Confirmation, and Conversion

This occurs when a void or voidable legal transaction is transformed into a fully satisfying business by correcting its flaws or defects. There are three means by which validation occurs:

Allowing the indicated time to try to challenge or renounce the pursuit of appropriate action.
Confirmation or ratification (ratihabitio): When it is necessary for the validity of the business to be ratified by a third party and it has not been done (e.g., the sale by persons under 25 without the consent of the curator, which would, in principle, be invalid, is validated if the curator ratifies it post-facto). Normally, ratification has retroactive effects.
Conversion: Occurs when a business that is void for failure to meet the specific requirements of a particular type may meet the same end by other businesses of different types (e.g., the null mancipatio as traditio, two forms of transferring property).

Time

Time has a great influence on law; the legal business is born and dies in time. Moreover, time may have important effects. There are several types of time calculation:

Natural (computatio naturalis): Time is measured mathematically from the very beginning to the end (e.g., a legal transaction entered into on November 10, 2008, at 12 am, in which two years are to be counted for any effects that are expected. The two years will be met on November 10, 2010, at 12 am). This type of computation is used for cases where priority is given preference.
Civil (computatio civilis): Time is counted by days. It is the most common. Applying this calculation to the previous example, the two-year term would expire on November 9, 2010, at 12 pm. In this type of computation, the Romans considered the period to begin with the last day if it was a favorable situation (e.g., the age of 14 years to make a will) and if it was unfavorable, it should have ended that day (e.g., payment of a debt).
Continuous (tempus continuum): Every day is counted.
Useful (tempus utile): Only the days on which business can be conducted are counted, i.e., weekdays.