Private Law Notes

PRIVATE LAW - INTRODUCTORY PART: LEGAL SYSTEM AND LEGAL RULES

• Private law is studied in a comparative perspective, limited to civil and common law (Western traditions).

• Historically, law was national, with lawyers trained in a manner more akin to modern comparative law studies.

• Law was based on learned individuals solving legal problems, with Roman Law (Corpus iuris civilis) as the primary legal framework.

• The first university was founded in Bologna to train legal experts in Roman Law.

• The Peace of Westphalia led to the rise of nation-states, with each monarch holding absolute power (regio and ius religio).

• The French Revolution, driven by the bourgeois class, aimed to limit the aristocracy's power and establish legal limits on the monarchy.

• Written documents codified laws, restricting the monarch's absolute power and making legal solutions accessible to all.

• Judges were meant to apply the law algorithmically, but interpretation is necessary, making the concept of self-application incorrect.

• In the U.K., the bourgeois class achieved power through a slower process, resulting in a constitutional monarchy and a legal system based on tradition and judge-made law.

• The Western legal tradition includes two sub-families:

  • Common law

  • Civil law

• Legal sources differ: judges' decisions (common law) vs. written statements (civil law).

• Convergence exists as both systems seek favorable precedents.

• Civil law areas, such as euthanasia, rely heavily on case law, while common law increasingly incorporates written laws.

• Private law governs relationships between private individuals and companies domestically.

• Private international law addresses cross-border issues (e.g., a French company operating in Mexico).

• Public law involves government intervention in disputes, such as fines for parking violations.

• Public law operates with a hierarchy.

MAIN PARTS OF PRIVATE LAW

• Property law: Governs ownership, transfer, and rights associated with tangible and intangible assets.

• Family law: Deals with marriage, divorce, child custody, adoption, and related issues.

• Contract law: Addresses agreements, obligations, and remedies related to contracts.

• Commercial law: Focuses on business and commercial transactions, including sales, leases, and negotiable instruments.

• Torts: Addresses civil wrongs and injuries, providing remedies for harm caused by negligence or intentional acts.

• Private law forms the core of the legal system in the Western legal tradition, underpinning a capitalist economy.

• Capitalism relies on a free market, with private property at its heart.

• Private law enables exchange through contracts, protects property rights, and facilitates wealth transfer.

• The liberal view is essential in understanding private law's role in establishing societal institutions.

• Mandatory rules cannot be overridden by agreements, while default rules can be set aside by the parties involved.

• Public law typically consists of mandatory rules, whereas private law emphasizes parties' autonomy and default rules.

• Default rules reduce transaction costs by providing standard terms that parties can modify.

• Mandatory rules protect prominent interests, such as child protection (e.g., marriage age) or weaker parties.

• Mandatory rules exclude some things from contracts (e.g. cocaine)

LEGAL NORM

• A legal rule becomes a legal norm when promulgated by an authorized entity.

• Legal rules differ due to their enactment by recognized authorities and the imposition of legal effects for non-compliance.

• Legal rules are structured with two parts:

  • IF CLAUSE: Specifies the conditions or facts that trigger legal consequences.

    • Legal facts are relevant to the law and can be:

      • Autonomous legal facts: Actions where parties willingly engage and determine outcomes (e.g., writing a will/testament).

      • Heteronomous legal facts: Actions with consequences imposed by law, not determined by the subject (e.g., torts, like disregarding traffic lights).

      • Material facts: Events where the parties' will is irrelevant, but the law attaches consequences (e.g., birth or death).

  • EFFECT: Describes the legal consequences of the conditions being met.

• Legal rules should be:

  • General: Apply to everyone without unjustified discrimination. If differential treatment exists, a specific explanation is required.

  • Abstract: Apply to facts, not specific individuals. (e.g. stealing in general)

• Rules derive legitimacy from a hierarchy of power (Constitution, statutes, customs).

• A constitutional court ensures laws conform to the correct process and can repeal non-conforming laws.

• EU law is above national law due to legal competences; EU directives and regulations apply to every country.

• Regulations enacted by the EU automatically apply to every country (federal system).

• Directives are more general, requiring each country to enact them within a timeframe.

• When no specific legal rule exists for a situation:

  • Common law systems: Judges can create new law based on legal system principles.

  • Civil law systems: Apply analogy, using similar cases to guide decisions (e.g., applying ship regulations to early commercial flights).

• Analogy: Applying similar norm to the current case, when there actually isn't one about the case.

• General principles provide guidance when no similar norm can be found.

• Legal principles describe values rather than prescribing specific conduct and derive from rules.

• Dignity is a value that you can find behind many legal norms.

• Principles are balanced, with the legislator or judge weighing conflicting principles, whereas norms are either applicable or not.

• Example: Balancing freedom of speech and personal dignity in defamation cases.

ANTINOMIES

• Antinomies are conflicting legal rules applicable to a case.

• Rules do not have contradiction.

• Three criteria resolve antinomies:

  • Different Levels: Higher-level law prevails (e.g., Constitution over statute).

  • Constitutional adjudication deals with this (Supreme Court, Constitutional Court).

  • Same Level:

    • Time-Based Criteria: Newer law prevails (later enactment repeals earlier law).

    • Speciality Principle: Specific rule prevails over general rule (derogation).

INTERPRETATION OF THE LAW

• Interpretation is essential as legal rules are not self-applicable.

• Applies general, abstract statements to specific situations to find what rule it applies itself to.

• Criteria for interpretation:

  • Grammatical

  • Systematic

  • Historical (less relevant due to societal change)

  • Teleological (scope of the norm)

SUBJECTIVE RIGHTS AND LEGAL SUBJECTS

• Legal systems rely on subjective rights and legal subjects (soggetto di diritto e diritto soggettivo).

• Rights include freedoms, powers, and immunities enforced by law.

• Remedies enforce rights through claims.

• Categories of Rights:

  • Patrimonial Rights: Have economic content (evaluated economically). (i.e. right of property)

    • Can be disposed of

  • Non-Patrimonial Rights: Freedom of speech, right to life.

    • Cannot be disposed of (easily)

  • Rights in Rem: Enforceable against everyone (inter omnia). (i.e. Usufruct, Servitudes)

    • Follows the good

  • Rights in Personam: Towards specific subjects (right to credit). (i.e. sell a book, you owe me the money)

    • Does not follow the good

• Disposable/Non-Disposable Rights: Relate to the ability to transfer or exploit rights.

• Rights have time limits (prescription in civil law, statute of limitations in common law), except for property ownership, life, and dignity.

LEGAL SUBJECT

• Legal Subject: Enforces rights against others.

• Legal Subjectivity: Ability to be right holders; have rights and duties.

• Distinction between natural persons and legal persons.

• Legal Persons: Entities (companies) accumulate wealth longer than individuals.

  • Types:

    • For-Profit Organizations: Aim to distribute profits to shareholders.

    • Non-Profit Organizations: Reinvest profits in causes (no shareholders).

    • Incorporated Organizations: Have corporate veil, shareholders aren't liable.

    • Unincorporated Organizations: No corporate veil, members are liable.

• Boundaries of legal subjectivity are changing: climate change and technology.

  • Climate Change: considering natural resources legal subjects

  • Technology: self-driving cars implications of A.I. making a mistake

• Capacity to Act:

  • Power to conduct autonomous legal acts.

  • Exceptions:

    • Minors: maturity + nature of the contract

    • Mentally Impaired People:

      • Full Incapacitation:

      • Partial Incapacitation:

CONTRACTS AND OTHER SOURCES OF OBLIGATIONS

• Contract: Agreement creates legal obligation between debtor and creditor.

• Debtor has performance obligation; creditor can enforce remedies.

• Contracts facilitate trade, organize businesses, and enable consumer purchases.

• Types of Performances:

  • DARE: Giving something (e.g., money).

  • FACERE: Providing a service.

  • NON FACERE: Refraining from an activity (e.g., confidentiality).

• Sources of Obligation:

  • Contracts.

  • Torts.

  • Other.

• Contracts formed:

  • Orally.

  • Written

  • By Conduct

• Roman Law: Contractus (cum-trahere) meant "to bind" parties.

• Civil Law: Pacta sunt servanda (agreements must be kept); donations are contracts.

• Common Law: Contract is a bargain for exchange of something.

• Draft Common Frame of Reference: Contract creates binding legal relationships.

• Codice Civile: Contract establishes, regulates, or extinguishes patrimonial legal relationship.

• French Civil Code: Contract creates, modifies, transfers, or extinguishes obligations.

• Contract is a source of obligation.

  • Sale contract example: Seller delivers; buyer pays.

FUNCTIONS, CONTENTS AND CHOICE OF CONTRACT LAW

• Party Autonomy/Freedom of Contract:

  • Best judges of own interests.

  • Arrange own interests within any contract.

  • Mandatory limit of freedom of the contract.

• Limits to Freedom of Contract:

  • Contradictory to law or morality.

  • Party incapable or irrational.

  • B-to-B contract antitrust limitations might be enforced.

  • EU contract law impose on B-to-C limitations.

• Sources of Contract Law:

  • Uniform Contract Law:

  • EU (consumer) Contract Law:

    • Article 114 of the Treaty on the Functioning of the EU

  • National Contract Laws:

    • Choice of law clause.

• Question of Jurisdiction:

  • Convention of 30 June 2005.

  • Brussels regulation.

• Arbitration Clause:

  • Private judicial proceeding.

  • Two arbitrator or Refer to private institutions.

• Question of Proper Law:

  • Hard law choice.

  • Soft law choice:

CHOICE OF CONTRACT LAW

• Soft Law examples:

  • Unidroit Principles of International Commercial Contracts (PICC).

  • Principles of European Contract Law (PECL).

  • Draft Common Frame of Reference (DCFR)

• Restatement (second) of Contract:

• Choice of Contract Law:

  • American laws apply on US territory.

• ART3 OF ROME REGULATION: FREEDOM OF CHOICE

• ART 6 OF ROME REGULATION: CONSUMER CONTRACT

• US legal system, contract law is regulated by state-level.

  • B-to-B transactions → UCC - uniform commercial code

  • B-to-C transactions → common law and special statutes

• UNIFORM COMMERCIAL CODE:

  • It is restrictive to contracts for the sale of goods.

CONTRACT TERMS AND THEIR INTERPRETATION

• CONSTRUING A CONTRACT

• Contract: An agreement reached through the exercise of free will, indicating mutual consent between parties. Understanding how this will is interpreted is fundamental to contract law.

• Interpretation is fundamental because the parties' intentions must be understood to give effect to their agreement.

• Example: The rule "You cannot host parties in your apartment" might be interpreted differently depending on the context. If there is Eurovision, and you invite a large group of friends over, does this violate the rule? The interpretation depends on the intention and scope of the rule.

• Intention: The principle that "Intention per se is the only important and effective thing" reflects the principle of self-determination, where the subjective intent of the parties is paramount.

• Expression: Conversely, the view that "Any promise binds the promisor, whether or not intended by him/her" suggests that the outward expression of intent is what matters, regardless of subjective intention.

• Objective theory: This relies on the "principle of rational communication" and the "principle of reliance on someone else’s promise," focusing on how a reasonable person would interpret the agreement.

• Legal certainty is crucial in contract law. There must be a predictable and reliable basis for enforcing agreements.

• Different legal systems apply different courses of action, and both subjective and objective approaches are applicable in Western law.

  • Subjective Test: Examines what the parties actually intended. This approach seeks to ascertain the actual, personal understanding of the parties involved. The EU system tends to favor a subjective approach.

  • Objective Test: Focuses on how a reasonable person would interpret the contract.

First case common law

• Udall vs Hill LTD 1972.

• Basic nutrition facts not what udall expected.

• Is fair average related to mink as well?

• Udall claim for damages was dismissed.

• What matters is how a general person would understand, so the normal animal.

• Civil law jurisdictions:
  keen to strike a balance between the objective and the subjective test.

• Common law jurisdictions:
  keen to acknowledge solely an objective test, albeit variously moulded.

Implied terms gaps

• Legal gaps: Legal gaps can arise in a contract when parties fail to address certain aspects or eventualities during the negotiation and drafting process.

• Reasons for Gaps:

  • Unforeseen Issues: Parties may not anticipate all possible issues that could arise during the contract's term.

  • Oversight: Sometimes, parties simply overlook specific details or fail to include necessary provisions.

  • Unclear Intentions: When the intentions of the parties are not clearly defined, gaps can emerge.

• Express terms: Those expressly contained in the parties’ agreement. These are the terms explicitly written or stated in the contract.

• Gaps are implied terms: These are terms that are not expressly stated but are implied by law, custom, or the parties' intentions. They fill in the gaps left by express terms.

• Default Rules:

  • Contract for Sale: For instance, if a contract for sale does not specify where the goods must be delivered, default rules under contract law will apply to determine the place of delivery.

  • Rules of Thumb: Most contract law consists of default rules, which provide standard terms that apply unless the parties agree otherwise.

• Civil Law Approach:

  • Business Efficacy: In civil law, implied terms are often filled in a way that gives the contract business efficacy, meaning the interpretation should make practical sense for the transaction.

  • Custom: Courts may consider custom and usage in the relevant industry or trade to determine what terms should be implied.

• Examples of default rules

  • Time of Performance: If a contract does not specify a date for performance, a reasonable time is implied.

  • Payment Terms: If the contract is silent on payment terms, the default rule may be that payment is due upon delivery.

• How Courts Fill Gaps:

  • Reasonable Person Standard: Courts often use the perspective of a reasonable person to determine what the parties would have intended had they considered the issue.

  • Fairness and Equity: Courts may imply terms to ensure fairness and equity between the parties, especially where one party has significantly more bargaining power.

• Importance of Default Rules:

  • Efficiency: Default rules reduce transaction costs by providing standard terms that parties can rely on without having to negotiate every detail.

  • Predictability: They provide predictability and certainty in contractual relationships, allowing parties to understand their rights and obligations even when the contract is silent.

• In summary, implied terms and default rules play a crucial role in contract law by filling in gaps, promoting fairness, and providing predictability when parties fail to address