Buisness law

Business Law - Mme MARIANI

Nature of Business

  • Business is an activity aimed at earning money, requiring reactivity and anticipation for quick development.

  • Business involves calculation and speculation, operating under its own inherent rules.

  • The success of a business depends on offering products clients want to buy, a rule derived from reality.

The Role of Law in Business

  • The necessity of law in business is debated, with some arguing that business can thrive without regulations.

  • Traditionally, business has been governed by lex mercatoria (law of merchants), a mix of business practices and legal dispositions.

  • Business law is a praxeology, focusing on actions and regulating real commercial activity, serving as a guide for actual business practices.

  • It primarily targets merchants, traders, legal entities, and bankers involved in buying and selling goods or services.

French Commercial Code

  • France has a written commercial code since 1807, which presents challenges due to the need for constant adaptation to rapidly changing business environments.

  • The code provides definitions and explanations and offers a framework for analyzing business law within the French legal system.

Stakeholders in Business

  • Three main types of people are involved in business within a market economy:

    • Merchants: Individuals, legal bodies, and institutions (e.g., banks) who must have the freedom to choose their activities and earn money.

    • States, governments, legislators: They create laws that determine which goods and services can be sold and ensure fair competition.

    • Ordinary people (clients/consumers): They seek affordable, secure, and high-quality goods and participate by providing credits.

  • States mediate between producers and consumers to balance their often conflicting demands.

Historical Context

  • Business predates business law, with evidence of commercial activity in ancient civilizations.

  • The Hammurabi Code provides early evidence of commercial taxes but is not a comprehensive legal document.

  • In the Middle Ages, figures like Jacques Coeur (french merchant) and Marco Polo (italian merchant) exemplified business vitality.

  • The Middle Ages saw the development of banking and legal means for payment, along with the concept of lex mercatoria.

  • Commercial law was taught, and regulations consisted of professional customs and case law.

  • Corporations emerged as associations of merchants, promoting their interests and monopolizing education and entry into trades.

  • Regulations developed alongside trades, including bankruptcy regulations and commercial courts composed of trade professionals.

Transition to Modern Business Law

  • The focus shifted to unifying regulations and strengthening royal power over commercial regulations.

  • Philosophers and mercantilists recognized the importance of trade for state wealth, leading to the promotion of business through appropriate rules.

  • In 1683, Savarry compiled customs and rules relating to merchants, commissioned by Colbert. (He ask to Savarry to made the code)

  • The Council of Commerce was created in 1700 to reorganize trade administration, becoming a forum for economic debates.

  • The French Revolution brought the suppression of corporations through the Le Chapelier law ( The Le Chapelier Law (1791) was a French law that banned guilds and workers' associations, effectively prohibiting strikes and unions. It aimed to promote free enterprise and individual labor rights, reflecting the ideals of the French Revolution against corporate privileges) and the establishment of freedom of trade and industries with the Allarde law (The Allarde Law guaranteed freedom of work and enterprise by abolishing all guilds and corporate restrictions. It declared that everyone is free to choose and practice any profession or trade, as long as they pay a small license tax (patente)).

  • So while the Allarde Law opened the door to economic liberalism by freeing up access to jobs, the Le Chapelier Law (passed just two months later) made sure workers couldn’t organize collectively.

  • Napoleon initiated the codification of law, including the commercial code of 1807, which aimed to reduce abuses but did not promote commercial expansion.

  • Jean Marie Pardessus became the first teacher of business law, marking its establishment as a legal matter.

  • The teaching of commercial law became institutionalized, with treaties and commentaries on the commercial code.

  • Specific rules grew during the 12th century alongside the strengthening of royal power.

  • Commercial law adapted to trade practices but was poorly designed initially.

  • The development of capitalism and specific legislation led to the emergence of modern business law, with commercial law becoming a subset.

Borders and Territories of Business Law

  • Business law focuses on regulations closely linked to business activities.

  • Commercial law is considered part of private law, relating to legal transactions by traders among themselves or with third parties in their professional activity.

  • The scope of commercial law involves defining to whom it applies and in what circumstances.

  • French law uses both objective (focused on commercial acts) and subjective (focused on traders) approaches.

  • Article L. 110-1 of the commercial code lists commercial acts, while Article L. 121-1 mentions traders.

  • Commercial law is distinguished from civil law, providing specific regulations for the needs of trade.

  • Business law is broader than commercial law, covering industry and economic activities from production to consumption.

  • Business law is uncertain due to the heterogeneity between industrial and commercial activities.

Business Law in the French Legal System

  • Commercial and business laws are technically special laws that intervene when civil law does not provide specific provisions.

  • Commercial contracts must comply with conditions set out in the civil code.

  • Commercial law is an exceptional law regarding the civil code, which is considered a common law.

  • Business law originates from the practice of traders, with speed, proximity, adaptability, and security as key objectives.
    Evidences

  • Civil code requires written proof for certain questions. Business law uses every kind of evidence.
    Formalistic nature

  • Business regulations are formalistic, justified by the need for security; many commercial contracts are subject to significant formalism.

Objectives of Business Law

  • Speed: Trade rules should not slow down economic activities.

  • Proximity and adaptability: Business rules must be appropriate to the practices of traders.

  • Security: Business rules must secure deals and settlements to prevent a domino effect.

  • Mandatory maintenance of accounts secures business and deals.

Sources of Commercial Law

  • Legal and regulatory sources, including both national and international laws.
    Trades is shifting, moving, it is supposed to have an international vocation. Trades needs also security.
    However the diversity of legal rules might respect this double perspective : movement and security.

  • Case law, with judges interpreting and applying the law.

Legal and Regulatory Sources

  • Liberal National Sources:

    • The civil code reproduced provisions from ancient documents like the Savary code
      Decoding :

    • adaptations by legal means such as removing company rules from the commercial code to create special regulations and modifying bankruptcy provisions.

  • International Sources:

    • International conventions, states make agreements by themselves btw themselves.

    • The creation of supra national authorities e.g. EU/ RGPD.

Legal unification technics are of two kinds and also have two different fields.

Examples of international conventions:
* Convention of Bern (1890)
* Convention of Warsaw (1929)
* Treaty of Rome (1957)

Case Law Sources

Since judges are needed, in the French legal general frame their role is less important in commercial law than in civil law because formalism

  • When the judge have to decide a case regarding business law, it is often question to led in a large degree of freedom to decide (pouvoir souverain des juges du fond).

  • Alternative Dispute Resolution (ADR)

  • judges are professional, business man themselves and not professional of law

  • Commercial court (counsellor jurisdictions).

  • 121 commercial court.

Commercial court specific powers:

Jurisdiction:
The first specific question that must be noted is inside a commercial court, there is a distinction btw th court itself and the president of the court. there a re two functional powers.

Territorial competence/location
It is the application of a common principle that applies to all jurisdiction in France : the competent jurisdiction is the one from the place where the defendant is located. When it is a question of company, of legal bodies, the principle is : the competent court is the one from the place where the effective management and administrative bodies of the entity are located.
This questions are regulated by the civil procedure code, this code provide another solution, specifically for traders. Btw traders and only when it is specified in a contract, in apparent manner, it is possible to bought a clothed in a contract for instance, to avoid the rules of competence, especially the rule about territorial competence. Btw traders, it is possible from the beginning of the business in the contract to chose the jurisdiction which seems the more adapted. Otherwise, particularly when it doesn’t only concern traders, this article must be considered as unwritten. The fact that traders are able to choose their own jurisdiction is a sign of their specificity.

Procedure:

In front of the commercial court, the procedure is also quite specific. Two kinds of procedure:

  1. The ordinary procedure:
    it is simpler than before the ordinary court (judicial) and present essentially three characters :

    • The free representation of the parties

    • Simplicity of the legal request;

    • The judge may rule as amicable composure (Amicus curiae)

    • The commercial code decide with a decision which may be contested in appeal

  2. The special procedure (the injunction procedure):
    it applies only on the recovery of certain debt. This procedure is only possible in certain situations. It will be applied for certain amount of money or for contractual reason. When it is for contractual reason, it is possible whatever the amount of money.

Real Sources of Business Law

  • Practice, customs, arbitration, and doctrine contribute to business law.

Practice

  • Business activities which now are regulated by laws where before only practice, ex : franchise.

Customs

Customs = a normative source of BL

  1. Conventional customs and actual customs : Rules must be specified in a convention, a contract.

  2. Legal/Mandatory customs : in the field of BL, normative value of customs which do not go against the law; if such customs deviate from a rule, those customs form a true legal norm.

Arbitration

Is a way to decide a dispute without regular judge.

  • In business, the dispute may be very technical in facts, so they may require an expertise, a specialist.

  • Arbitration is often chosen bc it has a quick, informal, discreet procedure but often expensive.
    Arbitration= express by inclusion of an arbitration clause

  • Long considered as dangerous and somehow void, such clause has been permitted in FR since a 1925 law but only in business matter. This clause is still void in civil law, as a rsult, is is only possible in the area of business act and disputes btw pro. As a result, a professional cannot propose such clause when the other parties is not itself a trader, this clause has no effect at all.

Doctrine

  • French authors right only about French law.

Aim of Business Law

The originality of BL implied that its field of application must be precise, one should not neglect the commercial activity itself

  • Autonomy of BL for most authors is a necessity. Autonomy means that BL is totally different from civil law. *
    What is a commercial act ?