Principles of law - Economics and management

Università Cattolica del Sacro Cuore

Principles of law

Introduction to comparative private law

Giulia Basile 2022-2023

Principles of law 2022-2023

Lecture 1 introduction to private law

Private law traditionally includes relations between private persons (example: closing a contract for the ownership of a house). Private law implies an horizontal relationship with the private persons, which means that they have the same rights.

What is not private law?

• Public law: it includes relationships with the government. It involves two or more subjects that are in a relation of subjection (citizens) and power (institutions). The fields of public law are criminal law, fiscal law, administrative law and constitutional law.
  • Therefore, to know if it is private law, we have to look at the position of the subjects. If they are in a horizontal relationship, it is private law, whereas if they are in a vertical one, it is public law.
• International public law: it is represented by the law among countries, regulating relationships between them. It can be based on conventions (written rules such as Schengen treaty) or customs (customary law: ex. not attacking other countries because it is against international peace, feel as duties).
• International private law: private law (relationship between private persons) that regulates cases of transnational relationships among private persons. (e.g.: a German man marries an Italian in the US; an Italian company sells its product to a German one). It defines which law system should preferred applied in case by case.

There could be some conventions among countries. In Europe there is a uniform law for some fields: customer protection.

What is law?

• Legal rules can be enforced, whereas behavior rules cannot be enforced. It is possible because it stands for an authority. Meaning that you can’t do things outside…, and you can have also protection if you don’t get what it is your right to have.

Something is legal if a law allows that behavior.

(Moral rule: say what is good and what not: lying is bad) Morality changes over time. (Common feeling of what is bad and what is good).

Morality is under the law and moves the law: when we stop finding something moral, the public opinion changes and it runs the parliament, so the law changes.

Morality is faster than law (homosexual relationship and euthanasia) because law needs time, it should be fixed and certain. Need of certainty.

Morality reflects the opinion of the most people in a certain period of time. The main opinions run the laws.

As the parliament considers the majority of the population, the law is overlapping with the moral rules at least to the main features (killing, discriminating).

What is legal is also conformed with justice.

Difference between law rules and other rules: come from an authority that have the power to enforce them.

Importance of law rule: being equal and certain: feature of a democratic country.

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Branches of private law

Private law is divided in branches:

• Civil law: all legal relations between private persons (family, inheritance).
• Commercial law: economic operations pertaining to commerce, industry and professional activities.
• Employment law: all the individual and collective relations pertaining to the subject of work.

It has two different systems:

• Codified law systems: the law is laid down in codes, these codes are contained in the civil code. It stands from the ancient Roman law system. It spreads around continental Europe. The existence of civil code ensure the certainty of law. Each country has its civil code:
  • Italy: in 1942 entered in force the current Codice Civile, in which are included Civil, Commercial and Employment. The Italian civil code contains 6 books, each of which deals with a wide topic: Individual and family; succession law; property law; law of obligations; employment law; protection of rights. Business contracts are dealt with in book 4, business and companies in book 6.
  • Germany: the German civil code, the Bürgerliches Gesetzbuch, entered into force in 1900 (and in 2002 there was an update: Schuldrechtsreform on obligation). The German civil code is made up of 5 books: general part; law of obligations; law of property; family law; law of succession.
  • France: the French civil code, Code civil de français - Code Napoléon, entered into force in 1804 (in 2016 a reform). It is made of 5 books: persons; goods and different ways to modify property; ways to acquire property; suretyship; rules to be applied to overseas departments and territories of France.

In the codified law system the judge apply the rules inside the civil code.

• Common law systems: not grounded on code. It spreads over countries such as UK, Ireland, USA, Canada (commonwealth). Features: grounded on judicial decisions, do not have a reference book. The judge decide how to solve the case based on the customary law and previous similar case, judicial decision works as a precedent. It is a Case Law and a Case based reasoning: using the same reasoning that moved the first decision to solve the second decision. Based on the previous cases. It originated in England in High Middle Age (King William I). In common law system the judge creates the law.
  • When persons were unhappy with the outcome of common law procedures, they petitioned the King to intervene on their behalf. The King, or rather his secretariat, the Chancery, might ask the Common Law courts to reconsider the case. In fact, is from this that the concept of equity has been developed.

Role of equity in common law

Role of equity in common law: Equity is a particular body of rules and principles that were developed to mitigate harsh (unfair) results due to the application of the law. Focus: obtain fair results. It is a separate branch of law, that is separated from the common law.

Equity is a way to temper the decision that sounded unfair.

The first case is called, leading case, all the following of the same type will be based on it.

Problem: interpret the rules

Problem: interpret the rules. Two ways to interpret:

• Literal meaning: dog cannot enter in the restaurant.
• Teleological interpretation: interpret what the aim of the legislator was. Can the guide dog enter? What was the will of the law? Avoid noise, hygienic problems.

The interpretation could be discussed. Pag. 2

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Problem: lack of legal rule

Problem: do not have a specific law for something. Lack of legal rule. Judge use the mean of analogy. It is used to interpret other rules and finding the one that is similar to our case. Can cats enter the restaurant? No, for the same reasons.

European private law

European private law: uniform law for all the European Countries. There is not a European private law for all the issues of private law, but just for some fields. Sources of European Law:

• Regulation: immediately and directly effective and binding in European countries, do not need an internal law.
• Directives: bounds a country to enact a law, but need an internal laws.
• Decisions: judicial decision in European courts.

Hard law: stemming from one of the sources above (directly if are regulations or decisions, indirectly if are directives). Example: consumer code, delay on payment of business transactions.

Soft law: Drafts that jurists over Europe wrote down to give a common idea on some areas: not bounding, but give an idea.

Drafts on uniform European law: although they are not binding, they work as patterns to solve interpretation or application issues in European Countries. Example: principles of European Contract Law, Draft Common Frame of Reference.

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Lecture 2 subjects of private law

To be subjects means to be an actor, who can enter into the private relations. They are:

• All natural persons.
• Corporate entities.

Natural persons

In order to be a subject of private law, a natural person needs a legal capacity.

I. Legal capacity: it is the eligibility to be entitled of rights (to be entitled to own a house). The fact that I have rights means that I have legal capacity. For this reason, it occurs automatically at birth:

• We consider a person to be born at the moment of its first independent breath. The difference between never been born and been born and died leads to legal consequences.
• We consider a entity to be born at the moment of its establishment.

The legal capacity ends with death. A person is considered died when all the brain activities stop irreversibly.

The legal capacity and the capacity to enter legal transaction

The legal capacity does not depend on the awareness of a person, on his/her capacity to understand and on his/her mental skills. It only depends on the fact that that person is alive.

On the other hand, the capacity to enter legal transaction requires a person to be capable to intend and will. Moreover, to have the capacity to enter legal transaction, the person must have turned 18 (major age).

II. Capacity to intend and will: it is the capacity to be aware of things, perceive correctly the external world and be capable to know which is its own will.

III. Capacity to enter legal transaction: the person is not only 18 and capable of intend and will, on which are his aims (I’m 20 years but also it is capable to act consequently, depending old, I want to own a house, I sign a contract to own that house).

Having the capacity to perform legal transaction means that a person can enter into a valid contract.

Remark of the capacities

It is important to understand the difference between capacity to enter legal transaction and the capability to intend and will.

• Capacity to enter legal transaction: it is a legal notion (it is automatic), that establishes requirements for enter legal transaction The requirements are being 18 (reaching the major age) and not having been declared incapable by the judge.
• Capability to intend and will: it is a natural situation. It is fundamental to inquire case by case, to determine if a person has the capability to intend and will.
  • Even a young person, that cannot have the capacity to enter legal transaction, can have the capability to intend and will.
  • Even an adult, that normally have the capacity to enter legal transaction and has not been declared incapable by the judge, cannot have it for a certain period of time (example: the person is under the effects of drugs).

Problem of proofs in determine if a contract can be consider valid

Problem of proofs in determine if a contract can be consider valid.

Let’s consider the case in which a person signed a contract while under the effect of drugs. Since in that moment the person was not capable to intend and will, the contract should be consider not valid. Therefore, the person have to prove that he was not in his mental skills and that the other person recognize that he was incapable of intend and will and took advantage of the situation.

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Obviously, to prove that the first subject has been exploited, it should also be proved that the contract is not advantageous for him.

In conclusion, the problem of understand if an act is a valid act goes together to the problem of understanding the capacity of intend and will in that moment, even though it is legally capable of intend and will.

Facts, acts, legal transaction and contracts

Legal fact

• Any fact, human or natural, that have a juridical consequence. Any fact to which a legal rule applies. We consider a fact legal when it is relevant in front of the law.
  • Examples: birth of animals that I own: the legal consequence is the increase in the assets of the owner.
  • Death is a legal fact: it happens in nature, not committed by a human being.

Legal act

• Any legal fact, made by a human being, that requires the typical awareness that animals does not have. But a human being does not need to have the capability to intend and will, but just a low level of awareness.
  • It is not something occurring in nature, but made by a human being, because it involves a kind of mental process.
  • The effects of the legal act are not totally up to the human being that makes the legal act. The effects depend on a legal path: reporting on the police some illegal situations that I saw; what happens to the persons that I saw does not depend on my will, but it is an automatic consequences.

Legal transaction

• It needs the capability to understand and will. It is a human act that can be defined as the expression of a will, and the consequence is in compliance with the wish. The achievement is what I wished. (I entered a contract to own an house). They are specific acts: performed by human being capable of intend and will, and the consequences are wanted by the performer and can be achieved. The illicit acts can’t be consider legal transactions. The will is the most important thing. The will is the most important thing, because you get what you wanted. The consequences are totally depending on the persons, not on the law.

They are the field of private autonomy: depends on the persons will. They can be unilateral (die and I dispose that a asset goes to a person) or plurilateral (marriage and contracts). Typical legal transactions are contracts, marriage and will.

Contracts

• Any legal transaction with economic content, agreement among two or more parties in order to create, to change or to extinguish a legal-patrimonial relationship.

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Incapable

There are some natural persons that are not capable to enter legal transaction. The incapables to enter legal transaction are:

• Minors, unless they have been declared emancipated.
• Adults under disabilities. They have serious incapability such as usual mental disorder or are in a less serious situation.

These people need protection: not having the capacity to enter legal transaction is a measure to avoid that those people do something to damage themselves.

To protect the incapables, the governments have established some remedies:

• Minor age.
• Emancipation.
• Disqualification.
• Disability.
• Supporting aid.

The purpose of these remedies is not to punish them, but to protect them and be sure that these people won’t doing anything to damage themselves.

Minor age

They can’t enter legal transaction, but they still have the legal capacity. Their transaction must be carried out in their name and interest by their parents or, when missing, by a guardian appointed by the court. The effect of the performance of the guardian falls directly into the sphere of the minor.

Emancipation

This type of protection is given to minors who have reached the age of 16 and have proven to be mature enough. The grade of maturity is often measure by the marriage. The emancipated minor can enter some legal transaction:

• Acts of management: they are transactions that can be carried out alone by the emancipated and do not increase or decrease the assets of the emancipated in a relevant way.
• Acts of disposition: they must be carried out by the emancipated with the aid of a guardian. These transactions can consistently increase and decrease assets of the subject.

Disqualification

The disqualification is the remedy for the most serious situations regarding adults’ disabilities. It is applied to people that are usual mental disordered (ex. from the birth, increase with age or manifest in age - Alzheimer) and cannot take care of their own interests. As for the minors, their transaction must be carried out in their name and interest by a guardian appointed by the court. The effect of the performance of the guardian falls directly into the sphere of the disqualified.

• To be recognized as a disqualified, the subject must be declared disqualified by a court. It can be asked by the closest people of the disqualified.

Disability

It is given to people that has mental disorder problems, but less serious than a person that has been disqualified. It is usually given to people under usual use of alcohol or drugs who expose themselves or their families to serious economic risks. Persons under disability have the same capability to exercise rights as emancipated persons: they can freely undertake acts of management, but for acts of disposition the aid of a court appointed trustee is required. Also in this case, the closest people of the subject can sue the court.

If a person get worse, his condition can pass from disability to disqualification and vice-versa.

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Supporting aid

It is a measure for mental disordered or disabled adults, even temporarily, who are not able to take care of their own interests. In this case even the person can sue the court, because he has the mental can’t take care of his interest. skills to recognize that he Unlike disqualification and disability, the effects of the supporting aid are not fixed. The court decide case by case what the person can do alone and what the person should do with the guardian or the guardian should do on behalf of the person asking for supporting aid.

How do the court decide when and which type of remedy to give? The court decide on the basis of:

• The disease.
• Amount of interest that the subject is likely to damage.

But generally speaking, the court always prefer the lightest protection, to allow the person to be more free possible.

Careful not to confuse

Statutory disqualification

It is a punishment for persons jailed for serious crimes (more than 5 years). The aim of this measure is to push the person at the edge of society and deprive the person of undertaking any legal transaction. Their (economic) transaction must be carried out by a guardian appointed by the court (like minors). But they can get married and carry out personal transaction.

Difference between legal incapability and natural incapability

Legal incapability: protection for incapables to enter into legal transactions.

Natural incapability: incapable but not under the protection, it is like the step before getting the legal incapacity. Pag. 7

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Lecture 3 personality right

Individual and inviolable rights, of which the person cannot be deprived, at least in a democratic country. Example: personal freedom, right to life, right to express, right to not be killed or injured, right to express, right to health, right to religio