Understanding Entrepreneurship: Legal Definitions & Classifications
Legal Definition and Features of an Entrepreneur
1. Where is the legal definition of entrepreneur laid down? Which are the main features?
The legal definition can be found in Article 1 of the Commercial Code. An entrepreneur operates as a sole trader, carrying on their business alone, acting completely on their own account. This means they make the main decisions concerning that economic organization and, with the hope of profit, take on financial risks associated with the activity, assuming unlimited liability for their acts.
Criteria for Classifying Entrepreneurs
2. Which are the different criteria for classification of entrepreneurs?
- The entrepreneur may be a natural person or a legal person. This includes individuals engaged in business and diverse types of more complex forms of business organizations.
- The size of the entrepreneur: Small, medium-sized, and large companies.
- A third classification is made according to business ownership: It is common to distinguish between state-owned companies and commercial companies in private hands.
Legal Definition and Borderline Cases
3. Describe the legal definition of entrepreneur and name which cases are on the limit of that definition.
An individual wishing to start a business may operate as a sole trader, carrying on their business alone, acting completely on their own account, and assuming unlimited liability for their acts. Cases on the limit include civil and professional entrepreneurs.
Capacity to Engage in Business
3.1 What are the requisites to have the capacity to engage in business? Can a minor or emancipated minor found a business on their own?
Any person who is of legal age and has free disposal of their assets shall have the legal capacity for habitual practice of commerce. An emancipated minor does not have the legal capacity required to become a sole trader since their power to dispose of goods is restricted. Notwithstanding, Article 5 of the Commercial Code establishes an apparent exception to the general rule, for it entitles minors and incapacitated adults to continue through their guardians a business inherited from a deceased person.
Effective Regular Practice of Business
3.2 What is the meaning of effective regular practice of business? When does the legal presumption of effective regular practice of business exist?
Regular exercise of commerce involves combining efficient and orderly work and capital in order to provide goods and services to the market. The legal presumption exists when the person attempting to become a sole trader advertises to the public by any means an establishment intended for running a commercial business.
Additional Requirements Shaped by Case Law
3.3. Which requirement is not mentioned by law but has been shaped by case law? Why is it important? From what point of view, could the minor and the emancipated minor be an entrepreneur?
A sole trader has to act moreover on their own behalf. Otherwise, agents or factors might accordingly be also deemed sole traders, even if acting on the principal’s account.
Minors and incapacitated adults can continue through their guardians a business inherited from a deceased person.
Prohibitions, Incompatibilities, and Incapacity Cases
4. Point out the prohibitions, incompatibilities, and incapacity cases provided by law.
Public Law prohibitions, both absolute and relative, are stipulated by Articles 13 and 14 of the Commercial Code. This special legislation provides content and updates cases according to each occupation or position – namely, judges and magistrates, certain governmental members and public administration authorities, and civil servants in relation to activities connected to their department’s responsibilities.