Law for Business

What is required to form a contract (civil and common law?)

Civil law: a mutual intention of forming a binding contract (causa), good faith (bona fide)

Common law: offer, acceptance and valuable consideration (money, goods, forbearance)

What distinguishes a common law contract?

• Good faith is not required (except for employment and insurance)

• Freedom to contract (fairness is not a factor)

• Terms need to be clear, bc common law is based on precedent

What distinguishes civil law?

• Courts can be unpredictable, if not codified and lacking precedent

What distinguishes civil law contracts?

• Terms must be fair (less freedom to contract)

• Terms are usually codified, so won’t be included in contract and less wordy

• Offer and acceptance is already considered a contract

• Due to different country codes, it’s not great for international contracts

• emphasis on formalities

What type of law is used for contracts and why?

common law (except employment)

• because civil law is based on specific national codes, making cross-border contracting more complicated

What is needed for an offer to be valid?

• offer elements must be precise and communicated

• display of intent to be bound

What applies in both common and civil contracts?

• contracts between family members are not recognised as such, unless explicitly communicates as such (bc lack of intent)

• Verbal agreements are also binding

• Mutuality; both parties should be bound to fulfill obligations

• Capacity to contract; inhibition or coercion makes a contract formation invalid

Which contracts must be written down in common law?

real estate and purchase of unique items

What is the mirror-image rule and where does it apply?

If I offer something, you can only accept what I have offered. A counter-offer destroys the original offer

• common law

What is a bilateral contract?

a mutual promise

What is a unilateral contract?

when one party promises something in return for the other party's act; a contract formed when an offer can be accepted only through performance

If a contract offer sounds too good to be true, what should you look for? (provide examples)

Intent or reasonable steps made to fulfil offer/promise

• Carbolic smoke ball

• Pepsi fighter jet

What is a non-compete clause?

A clause that someone cannot work in the same industry or locale for a certain amount of time

What are the general limits of a non-compete clause?

• Against public policy in some areas (has to be reasonable)

• Up to a year in civil law

• Common in the US (common law)

What is caveat emptor and where does it apply?

buyer beware (the duty of the buyer to be aware of a possibility of lying salesmen)

• common law

What is the exception to caveat emptor and why?

real estate, due to latent or patent defects

Common law remedies for breach of contract

Usually money is the expectation

• Damages: compensation, rare punitive damages (can also be money), very rarely liquidated damages

• Forbids reinstatement

• Specific performance

• Injunction

• Rescission/termination

• Restitution

What are Liquidated damages?

compensation in case of loss of money due to other party’s actions (usually not allowed, due to being open to abuse)

Specific performance

You must do what was in the contract. Favoured in civil law, exceptional in common law.

Rescission/termination

parties restored to original positions

Restitution

prevents unjust enrichment, benefits must be returned

Civil law remedies for breach of contract

Equitable remedies are preferred in civil law (fairness rather than compensation)

• Damages: full reparation principle

• Employment: reinstatement

• Specific performance

• Injunction

• Rescission/termination

• Restitution

What jurisdiction are International Services contracts in Luxembourg?

civil law

international arbitration

neutral forums for dispute resolution

International contract law codes

• UCC; commercial law codified by US (includes good faith)

• CISG; UN convention on contracts for the international sale of goods (97 member states)

• Choice of law/jurisdiction

• International arbitration

Choice of law/jurisdiction

Specification of dispute resolution mechanisms and the governing law in the contract (usually chosen as New York bc it’s neutral), or based on cost and understanding

• Example: german company unhappy with US company would not negotiate in California

CISG remedies

• Right to cure

• Right to interest

• Avoidance (rare)

Right to cure

you have to give the offending party the chance to cure non-conformity before suing

right to interest

if a party is overdue on contractual sums, the other party is entitled to interest on it

avoidance of contract

the one-sided right of a party to terminate the contract by its mere declaration

What is employment law?

The body of law that governs the relationship between employers and employees.

Which jurisdiction does employment law fall under?

Always local jurisdiction

What distinguishes common employment law?

• Freedom to contract (broadly)

• Individual bargaining

• Implied terms: duty of mutual trust and confidence (puffing is frowned upon)

• Statutory overlay; minimum wage, anti-discrimination, family leave

• At-will employment (only U.S.)

What is At-will employment and where does it apply?

Employment contract may be terminated at any time, for any reason, unless illegal/discriminatory

• Common law: only U.S.

• UK version: notice-based

What distinguishes civil employment law?

• Comprehensive codification

• Mandatory statutory protections that cannot be contracted away (minimum protections)

• Collective bargaining tradition (unions)

• Higher employee protection by design

• Must be written down

• Just cause required for termination

• Specific courts for employment law (labour courts)

• Remedy for unjust firing: financial comp., reinstatement

• Clogged courts detrimental to competitiveness

• Cannot terminate contract of employee on sick leave

• Cannot fire people in the first two weeks

What are the mandatory statutory protections in civil law?

• regulated rest and working hours

• strict rules on termination

• social security contributions

• employee representation

• extensive rights to leave

What is the Just Cause Doctrine and where does it apply?

Common and civil law

• Burden of proof for termination carried by employer

• Standard for reasonableness required

• Procedural fairness (less formalised in common law)

• Doctrine is not implied in common law employment contracts, must be stated in terms

What is a golden parachute?

For CEOs when they are terminated, leave with a bunch of money (severance pay)

Termination remedies in civil law

• Severance usually

• Back pay, front pay, compensatory

Termination process in civil law

• 2-6 months statutory notice period (warning)

• Procedure: convocation, interview, written decision

Termination and remedies in common law

• Severance not mandatory

• Back pay, front pay, compensatory

• No notice period

• avoid stating reason for termination

What are the employee discrimination types?

Direct discrimination: explicit differential treatment

Indirect discrimination: neutral policy or practice that disproportionately disadvantages a protected group

Harassment: conduct that creates a hostile environment

Retaliation: adverse action against someone who filed a complaint

Direct discrimination

explicit differential treatment

Indirect discrimination

neutral policy or practice that disproportionately disadvantages a protected group

Harassment

conduct that creates a hostile environment

Retaliation

adverse action against someone who filed a complaint

What are protected categories/classes and who qualifies?

categories that are legally protected from (employment) discrimination

• only people able to work (not minors)

What are the traditional protected classes?

Race & colour, Nationality, Religion, Sex & gender

What are the modern protected classes?

• Sexual orientation

• Gender identity

• Age

• Disability 

What are the emerging protected classes?

• Genetic information

• Pregnancy & family status

• Political affiliation

• Appearance (in some places)

Bona Fide Occupational Qualification

A quality or an attribute that employers are allowed to consider when making decisions on the hiring and retention of employees.

Explain stare decisis and why it exists

courts in common law systems are generally bound to follow precedent established by higher courts within the same jurisdiction. Precedent promotes consistency, predictability, and fairness in the application of the law, ensuring that like cases are treated alike.

Business Judgment Rule

protects directors from liability if they act in good faith, on an informed basis, and with the reasonable belief that their decisions are in the company’s best interests.

What distinguishes discrimination protections in common law?

• Most protected area of employment law in the U.S.

• Civil Rights Act

• Americans with disabilities Act

• Equal pay act

• Pregnancy discrimination act

• Class actions are possible/common

• Broader damages

• Jury trials possible - more unpredictable

What characterises jury trials?

common law, more unpredictable

Where are class actions possible?

common law, sometimes civil law

Explain 3 steps in McDonnell Douglas Framework (exam)

• Prima Facie case: employee shows inference of discrimination

• Legitimate reason: employer articulates non-discriminatory reason

• Pretext: employee demonstrates the stated reason is pretextual

describe EU framework for discrimination cases

(lower threshold of proof)

1. Employee presents facts suggesting discrimination

2. Burden shifts to employer to prove non-discriminatory reason

• Handled in labor court (exam)

What did Oliver Wendell-Holmes say?

that business decisions should be based not on what the law abstractly says, but on realistic predictions of how courts, regulators, and enforcement officials will actually behave.

Precedent (exam)

Prior judicial decisions that guide courts in deciding future cases with similar facts; promotes consistency in common law systems.

Explain the reasonable person standard (exam)

Objective legal benchmark measuring whether conduct meets the care and judgment an ordinary person would exercise in the same circumstances.

Define causa (exam)

the lawful purpose underlying a contractual obligation.

Constructive dismissal (exam) and where does it apply?

When an employer's conduct is so unreasonable that it effectively forces an employee to resign; treated in law as a termination by the employer. Both common law and civil law systems.

Applies when:

• an employer unilaterally changes fundamental terms of employment

• creates a hostile work environment

• demotes an employee without cause

• otherwise makes continued employment untenable

FRAND (exam)

Fair, Reasonable, and Non-Discriminatory licensing terms required of holders of standard-essential patents to prevent monopoly abuse.

Material Adverse Change (MAC) (exam)

Acquisition agreement clause allowing a buyer to withdraw if the target suffers significant deterioration in business or financial condition between signing and closing.

Stare Decisis meaning

Latin for "to stand by decided matters"; the principle that courts should follow precedent and not disturb settled law. Closely related to precedent but refers to the obligation to follow it.

Best Efforts

Contractual standard requiring a party to pursue an obligation diligently and in good faith, though not necessarily at all costs; less demanding than "absolute obligation."

Time is of the Essence

Contractual provision making compliance with deadlines a material term; a missed deadline may constitute a fundamental breach justifying termination.

Reasonableness

General legal standard requiring conduct, terms, or decisions to be fair, rational, and proportionate in the circumstances; applied across contract, tort, and regulatory law.

Just Cause

Standard (especially in civil law employment) requiring an employer to demonstrate a real and serious reason — misconduct, incapacity, or economic necessity — before terminating an employee.

Actus Reus

The physical or external element of a crime; the guilty act or unlawful conduct itself, as distinct from the mental state accompanying it.

Mens Rea

The mental element of a crime; the guilty mind or intent required to establish criminal liability (e.g., intention, recklessness, negligence).

Explain natural law theory

Natural law theory holds that universal moral principles exist independently of any government’s enacted laws and can be discovered through human reason. Central among these is the inherent dignity and equality of every person. Therefore, and actor bears moral responsibility for the foreseeable misuse of its product or service, regardless of whether any specific statute prohibits it.

Define positivism

Morality is separate from the law; insists on separating the question of what the law is from the question of what it ought to be. The positivist would note that a service is lawful under federal law, though the company’s clients who misuse the data may face liability under certain statutes.

What would the bad man do? (predictive theory)

The bad man would mitigate the foreseeable:

• predict growing risk on several fronts.

• State attorneys general trends.

• Class action litigation is foreseeable.

Explain the articles of incorporation

Articles of incorporation (US) establish the corporation’s governance rules, including any provisions limiting director liability.

• Who the board is

• Voting rights

• Management structure

• When board meets

• The constitution of a company

Explain articles of association

In civil law jurisdictions, articles of association perform an analogous function but operate within a more prescriptive statutory framework that imposes mandatory governance standards

What is the name of articles of association in Luxembourg?

Acte Constitutif

What is an exculpation clause

a provision in a contract that releases or limits one party's liability for certain damages.

What is the Bon pere de famille standard?

The luxembourg fiduciary duties; Directors must act within their mandate.

What is a shareholders’ derivative suit and where does it apply?

both common and civil law

• a lawsuit filed by a shareholder on behalf of the corporation against directors or other third parties

What is consensus ad idem? what are the primary and secondary elements

Civil law version of mirror-image rule:

• asks whether the parties reached a genuine meeting of the minds on the essential terms (Price, quantity, subject matter)

• Payment terms and dispute resolution may be viewed as secondary

When is a contract binding according to the CISG?

The CISG’s flexibility and emphasis on party conduct favours finding a contract where the parties have begun performing

bona fides

good faith

What is a central obligation under the CISG?

bona fides: requires honest, cooperative conduct

• failure to respond to a modified acceptance is ambiguous and not in good faith

How to prevent cross-jurisdiction dispute (exam)

1. should have clear definitions of key terms and an explicit payment schedule

2. should have incorporated a choice-of-law clause (Swiss law, UK law, or CISG) and a tiered dispute resolution mechanism — negotiation, then mediation, then arbitration — to avoid jurisdictional uncertainty

3. both companies should have implemented internal protocols requiring that only authorised personnel with express authority could confirm orders, modify terms, or commit to delivery schedules, and that any counter-proposals must be accepted or rejected in writing within a specified period

Do gratuitous promises hold as contracts? (both jurisdictions)

gratuitous promises may be enforceable in civil law if supported by a lawful cause, whereas in common law they fail without consideration.

What is adverse action?

Removals, demotions, and suspensions

What is comparator evidence?

A comparator is a tool used by the tribunal to compare treatment of the claimant to someone who should be in the same or not materially different circumstances.

Examples of pretext for discrimination

• refusing to engage in required interactive process

• comparator undermines claims of “universal” and equal treatment

• temporal proximity between complaint and termination suggesting retaliatory motive

When can you fire an employee in Luxembourg?

an employer must demonstrate a “cause réelle et sérieuse” for dismissal and must follow mandatory procedural steps (convocation, formal meeting, written decision)

What is the EU directive against employee discrimination?

the EU Employment Equality Directive

Requires employers to consider reasonable accommodations for employees with health conditions