Contracts: commercial law

Ernesto Suárez Puga

® Ernesto Suárez Puga

 Introduction
• Who am I? Where can you find me?
ernestoa.suarez@upf.edu
• Course classes structure (seminars + theory
classes)
• Evaluation (continuous + final)
• Rules at my class: 1. active participation + 2. no
doubts rule + 3. focus on essential elements (no
absurd memorization, please)

® Ernesto Suárez Puga

 Course content
• First part – introduction to commercial law, why is
it important and how it is delimited, specialties of
commercial law contracts.

• Second part – specific kind of commercial law

contracts (collaboration agreements, banking and
insurance law agreements)

• Third part - negotiable instruments (bill of

exchange, promissory note and cheque)

® Ernesto Suárez Puga

 Commercial law?
• What is it?
• Any idea?
• Examples?
• Why do we need to know it?
• The importance of “Qualification”!

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 Commercial law
• Business or commercial law is an special part of
private law.
• Specialty. “Complexing” the simple civil law
notions in order to best adapt them to business
activity needs and specialties.
• Is it the only special part of private law?
• No. For instance, labor law.

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 Commercial law
• Problem? How do we know when to apply
business or commercial law or other parts of
private law such as civil law?

• Practical problem: how and when do we apply

civil code or commercial code? Do they
exclude each other? How do they cohabit in
our private law system?

® Ernesto Suárez Puga

 Commercial law
• As a general rule, they complement each other.
Whenever a commercial law contractual
relationship exists: the commercial code and/or
special commercial legislation applies
preferentially leaving the civil code and/or other
civil regulations as subsidiaries sources of law.
That is why civil law is considered the “common
or basic law of private law.

® Ernesto Suárez Puga

 Commercial law
• Other problems: competent courts, tax
consequences

• Other legal traditions do have the same

problem regardless of the existence of a unified
code or normative text. Some countries have
unified normative text.

® Ernesto Suárez Puga

 But what it is the “crux” of commercial
law?
• All commercial law relates to business or the enterprise activity
• Enterprise?
• any economic activity professionally performed by a subject with legal
capacity (exclusions minors, incapacitated, disqualified individuals) who
manages the activities and whose economics outcome is attributed to.
• Professionally:
• habitually, recurrently,
• diligently,
• normally with indefinite duration
• using a given organization (assets and liabilities)
• Object: providing goods and/or services to the market
• Ordinarily but not necessarily: profit seeking intention (a.e. saving banks or
Wikipedia)

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 Constitutional recognition
• Section 38 Spanish Constitution
• Free enterprise is recognised within the
framework of a market economy. The public
authorities guarantee and protect its exercise
and the safeguarding of productivity in
accordance with the demands of the general
economy and, as the case may be, of economic
planning.

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 Comunitarian recognition

• EU Charter of Fundamental Rights

• The freedom to conduct a business in

accordance with Community law and national
laws and practices is recognised.

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• Therefore as a general rule commercial law
contracts relate to those contractual relationship
directly relating to the enterprise activity
• So even though it is highly controversial,
commercial law contracts encompass the following:
• B2B
• B2C

Excluded contractual relationships: C2C/P2P and

labour agreements

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 Is it always easy to tell when we are
faced with an enterprise activity?

• No way.

• Let’s discuss some current examples…

• Am I performing an enterprise activity?

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What if I own an apartment and I lease it through
airbnb.com … am I performing an enterprise
activity?
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 More examples
• FC Barcelona is an association known by his
famous slogan “more than a club”
• Is FC Barcelona always performing a business
activity?

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 More examples
• I live in a flat located at a horizontal property
regime building which commonly shares a pool.
During our last neighbors' meeting we agreed
that at the beginning of each summer we will
sell the right to access the pool during summer.

® Ernesto Suárez Puga

 Another example
• On my way to UPF I activate UBER on my
phone on a regular basis in order to perform
several transportation services… things are going
so well that I am thinking about doing the same
on my way back home.
• Do I own an enterprise activity?

® Ernesto Suárez Puga

 Other
I have recently installed solar panels at my new home
and I have been recently offered by a local wine
producing cooperative a fix monthly payment in
exchange for the excess of energy that my panels
apprehend.

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 Last one
• Bitmoji offers you the personal emoji services
for free. Is it performing an enterprise activity?

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 Commercial law
• Traditionally, our commercial code
has considered commercial contracts
those which refer to commercial acts.

• In order to legally consider an act as a

commercial one both the commercial
code and the special commercial
legislation uses several criteria.

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• Positive criteria
- Subjective criterion (if one, both or several of the parties of
the act is a business subject it is a commercial act)

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• Objective criterion
• Certain acts are traditionally considered commercial acts
such as stock exchange intermediation or banking activity.

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• Intentional criterion
• For instance an apartment could be the object
of a sales agreement whose buyer might have
different intentions:
- Making said apartment his/her home. (civil
act/contract)
- Making said apartment its place of business.
(commercial act/contract)

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• Criterion based on the location of execution

• Sales agreements performed in public stores

(even if consumer law preferentially applies to
them)

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 Relationship between positive criteria

• Mixed: sometimes those criteria might be

combined in order to determined the
commercial nature of the act.

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 Negative criteria
• Explicit exclusion of:
• Craftsmanship and agricultural acts

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® Ernesto Suárez Puga
 Why?
• Any idea?
• Historical reasons.
• Origin of civil law? Roman law.
• Civil law deeply linked with economy of
subsistence
• Commercial law originates with market
economy

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 Commercial contracts specialties
• No different concept of contractual obligation

• Nonetheless, commercial obligations are based

on its patrimonial value itself not the subjective
interest of the creditor

• Consequence: presumption against subjective

or strictly personal obligations
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Subjective or personal obligation

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 Commercial contracts specialties
• Termination as the natural consequence
• Presumption of essential breach of contract
• No courtesy or additional remedy
terms/periods
• Nonetheless, please remember freedom of
contract

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 Commercial contracts specialties
• Certainty regarding the obligation claimability
• Pure (no conditioned or termed) civil obligations
are immediately claimable.
• Commercial contracts: freedom of contract (special
reference to the late payment normative)
• Defective terms.
• If specific fulfilment action is merely declarative
(10 days term) but if executive (1 day).
• Commercial transactions are presumed to be credit
or differed operations.

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 Commercial contracts specialties
• Default or late payment interest rate
• No proactive claimed requested. Automatic
accrual.
• Specific interest rate (insurance agreements,
commercial transactions). Causes or
underpinnings.
• Interests of interest (anatocismo).

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 Commercial contracts specialties
• Special protection of appearance
• Certainty/transaction costs
• Property rules are substituted by indemnity
rules
• Special protection of acquisition to non
dominos by third parties acting in good faith
• Manager or representative by appearance

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Example

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Example

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 Commercial contracts specialties
• Patrimonial onerosity/onerousness of obligations.
Civil obligations may have different causes.
• Even though the defective regulation of some
contracts establish a free-of-charge presumption…
(guarantee or loan)
• Practice and case law have established the opposite
presumption of onerosity
• Ratio or explanation: legislator wanted specifics
terms and conditions on price
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 Commercial contracts specialties
• Several debtors or guarantors defective regime
regarding the obligation/liability: presumption
of joint and several liability regime
• Remember civil law general rule

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 Collaboration and distribution
agreements
• Agency and distribution agreements

• Both share common features but are different

contracts

• Typical B2B contracts

• Specialization and chain of production/distribution

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 Collaboration and distribution
agreements
• Agency
• Mainly regulated in the specific agency contract act
but special legislation as well for certain kinds of
agency agreements
• A natural person or entity (agent) (business subject)
binds itself to another business subject (principal),
in a continuous or stable manner, in exchange for a
certain remuneration, in order to promote the
principal’s commercial acts or transactions on the
latter’s behalf and with no star del credere unless
otherwise agreed

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Examples

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 Collaboration and distribution
agreements
• Traits of the agency agreement to distinguish it
from other contractual institutions:
1. Independence – employment agreement

2. Tendency to long-lasting relationship –

commercial mandate/ commission

3. Defective no risk assumption – distribution

agreement

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 Collaboration and distribution
agreements
• EU directive influence

• Curiously mainly imperative regulation due to previous fraud and

abuse

• However it still exists a whole ground to freedom of contract for the

following issues:

- Star del credere/guarantee by the agent of the transaction risk or

venture. No presumption of existence. Specific written covenant.

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 Collaboration and distribution
agreements
- Exclusivity or non compete/competition
covenant. However any agent acting on behalf
of several principals or he/she personally
performing the same trade (competing) may
incur in an unjustified conflict of interest
according to the always integrating principle of
good faith.
- Consent and instructions required.

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 Collaboration and distribution
agreements
Freedom of form:

1. With the already mentioned exception

(contractual guarantee), no particular form is
required as a validity o efficacy effect to the
contract.
2. Written or oral.

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 Collaboration and distribution
agreements
The principal’s main duties/obligations

1. Payment of remuneration (fixed,

variable/commission % or mixed) whenever a
transaction has occurred mainly due to the
agent’s efforts or procurement even after
TERMINATION.

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 Collaboration and distribution
agreements
The principal’s main duties/obligations

2. To act loyally and in good faith (respecting for

instance the “reverse” exclusivity agreement)

3. To provide and instruct the agent at any given

contractual moment with the need information,
instructions, documentation and/or costs.
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 Collaboration and distribution
agreements
The agent’s main duties/obligations

2. To act loyally and in good faith (respecting for instance

the exclusivity agreement). Using IP/trademarks properly
and avoiding the erosion of its goodwill.

3. To personally diligently and through its organization

promote the principal’s trade (commissioned transactions).
Subagents require the principals authorization or otherwise
the agent will be liable the subagents acts and omissions.

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 Collaboration and distribution
agreements
The agent’s main duties/obligations

2. To request any information or instruction needed to duly

carry its activity from the principal and follow it unless it
compromises its own independence.

3. Non compete/no conflict

4. Receive any information or request by third parties that are

counterparties to the principals and report them to the
principal.

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 Collaboration and distribution
agreements
Compensation after termination

1. Damages in case of unlimited in time contracts if

termination its unilaterally requested by the
principal and (i) the agent has incurred in duly
proven specific investments which has not ben yet
recovered or assigned to third parties (ii) no
previous breach of the agent.

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 Collaboration and distribution
agreements
1. Clientele/goodwill compensation: Given that the agent
acts on behalf of the principal during the performance
of the agreement and therefore that we may reasonably
conclude that the goodwill generated, if any, should
accrued to the principal trade or activity. Compensation
is due if the agent has procured new clients or
increased transactions with previous clients and the
principal is objectively able to profit from that situation
after termination in form of substantial advantages.
2. Please keep in mind the effect of an exclusivity or non
compete clause.

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