Business Law Introduction

Business Law

• Business Law is taught at Kedge Business School, BBA 1, in 2024/2025.
• Part 1 includes an Introuction and History of Business Law.
• Part 1 is divided into two chapters: Introduction to business law and History of business law.

Introduction to Business Law

• Business law studies the rules applicable to companies, the relationships they maintain, and rules applicable to "business life."
• François-Xavier Lucas considers business law not a discipline.
• In some countries like the former USSR, commercial law was absent
• Business law incorporates sub-disciplines like company, bankruptcy, banking, financial, family property, fiscal, and accounting law.
• It is suggested that virtually all legal disciplines are related to business law.

Question 1: What is Company Law?

• Company law is a branch of private law studying commercial companies.
• It controls a company's formation, operation, and dissolution,

Question 2: What is Banking and Finance Law?

• Banking and financial law regulates banking activities (credit institutions).
• The banking market has a monopoly on deposit of funds, the granting of credits and the means of payment.
• Only professionals with approval can exercise banking activities
• Banking law has national and international sources.
• At the national level, the Monetary and Financial Code is the main source, also Civil Code and the Commercial Code.
• At the international level, the European Central Bank originates directives and issues opinions on banking matters.

Question 3: What is Family Property Law?

• Family property law governs pecuniary relations between family members in marriage, PACS (civil solidarity pacts), divorce, or death.
• This law can affect the business assets of a person involved in such an event.
• Spouses can choose their property ownership regime when marrying
• Without a specific regime or manifestation of will, the legal communion of property regime applies, where goods purchased during marriage belong to both spouses.
• Spouses can modify their property regime during marriage through an agreement signed by public instrument in front of a Notary.

Question 4: What is Fiscal Law?

• It covers all laws related to taxes.
• It focuses on the framework surrounding a government's ability to raise and spend money and encompasses:
• Taxation: The legal rules and principles governing how the government collects revenue.
• Budgeting: The legal processes for creating and authorizing government spending plans.
• Public Debt: Government borrowing and debt management.
• Fiscal Policy: Legal aspects of using government spending and taxation to achieve economic and social goals.
• Financial Accountability: Legal requirements for transparency and oversight of government finances.

Question 5: What is Accounting Law?

• Accounting law regulates creating, establishing, and presenting public and private organisations’ accounts.
• Accounting law is the system used to record, summarize, analyze, and categorize financial transactions and is used to determine damages in legal cases.

The Absence of a Legal Definition of the Company

• There is no legal definition of the word 'company'.
• "Company" a legal fiction conferring legal personality on an economic entity consisting of persons who pool property, rights, capital or services with a view to an object determined by their agreements.
• Jurisprudence has filled the definition void.
• The Court of Cassation ruled in three judgments on March 12, 2002, that a company is characterized by the exercise of an economic activity.
• An association that does not seek profit but carries out an economic activity is a business.
• A company is comprised of 3 actors: Capital Providers, Managers and Employees.
• An employee doesn't qualify as an entrepreneur because they do not bare the risk of economic activity and is in a subordinate relationship with their employer.

The Indifference of the Legal Form of a Company

• A business can be operated by a natural or legal person.
• A company is a legal person.
• A company is an artificial person, and it depends upon natural persons: the directors, officers, and shareholders.
• The most important features of a company are a separate legal entity and limited liability.

History of Business Law

• This section covers the history of Business Law

The Existence of Trade Rules Since High Antiquity

• Commercial law development is not recent.
• Banking-type activities have existed since High Antiquity.
• The banking activities at the time included safekeeping of deposited money, credit and currency exchange.

Trade Rules within the Three Great Monotheistic Religions

• Judaism differs from Christianity and Islam.
• Lending at interest forbidden to one's brother in the Old Testament.
• A Jew can lend at interest to a Non-Jew.
• Christianity and Islam suggest If you lend money, you should not expect profit in return.
• Lending at interest is considered a very serious sin in Islam.
• The main lenders are the churches in Christianity.

An Embryo of Commercial Law in Roman Times

• There was a distinction between jus civile (civil law) and jus gentium (commercial law).
• Many Roman citizens used credit.
• Rules to secure transactions were necessary.

Business Law in the Middle Ages

• Middle Ages is where Business law originates from.
• Fairs were held in Champagne and Flanders during the Middle Ages.
• Relations between merchants had to be regulated.
• New institutions appeared and examples included bill of exchange and the current account.

Question 1: What is the Bill of Exchange?

• A bill of exchange is a written document for a supplier to give to his customer, to order him to pay a specific sum of money, on a determined date (the deadline).

Question 2: What is the Difference Between a Bill of Exchange and a Cheque?

• Bills of exchange may not have a provision at the time of its issue that the settlement deadline must exist at time of.
• Checks involve banks while bills of exchange can can also involve banks.
• Checks are payable on demand while bills of exchange can specify payment is due on demand or at a specified future date.
• Bills of exchange generally do not pay interest, making them in essence post-dated checks.

Question 3: What is a Current Account?

• The current account is the banking device used by a bank's customer for daily purchases, withdrawals and deposits.

The Creation of Consular Jurisdictions in the 16th Century

• The first real French commercial jurisdiction was the jurisdiction of Marseilles merchants in 1455.
• Royal legislation in the 16th century created the consular jurisdictions.
• Consular jurisdictions were designed as "special jurisdictions".

The Codification of Business Law

• Business law was initially customary.
• It was codifed in two main stages.
• Ordinance of Colbert codification on land trade of 1673 was First stage of codification.
• Special commercial law (Maritime law) shaped by ordinance of 1682.
• The Napoleonic codification lead to the creation of the Commercial Code in 1807 as the Second Stage.

The Appearance of Banks in the Middle Ages

• Banks first appeared in the Middle Ages.

Question: In Your Opinion, Which Country Will Host the Bulk of European Banks?

• Italy

The Existence of Business Criminal Law in Modern Times

• Penalties for "bankrupts" used to be particularly harsh in early modern times.
• The death penalty was issued if the "bankrupt" had committed fraud.
• Pope Pius V pronounced a death sentence to a fraudulent banker in 1570.

The Ordinance of March 1673

• The ordinance of March 1673 is the ancestor of the Commercial Code of 1807.
• The limited partnership (société en commandité) already appeared there.
• The Ordinance of Colbert also created the general company which became the general partnership (société en nom collectif).

The Timid Development of Banking Activity in France during Modern Times

• The banking sector developed timidly in France during modern times for two reasons.
• The first was the Revocation of the Edict of Nantes in 1685, which led to many of Europe's top bankers who were Protestant not settling in France because of the Protestant climate.
• The second reason was mistrust since the failure of Law's system.

Question: What was the « Law System »?

• King Louis XV's great-grandson, who was 5 and too young, could not take care of Kingdom affairs
• The Prince-Regent, Philippe d'Orléans, then appealed to a Scottish adviser, John Law, in order to imagine solutions to absorb this debt.
• John Law's solution was to use "fictitious" paper money instead of metallic money and the system failed.
• Holders of paper money demanded its conversion into gold.
• The system caused a much greater economic crisis in the Kingdom.

Criticisms of Commercial Law in the 18th Century

• Merchants were not satisfied with "Colbertian" commercial law even though if it was viewed as a masterpiece.
• Louis XVI listened to this dissatisfaction and decided to revise it but the French Revolution came too quickly.

The Relative Intangibility of Commercial Law Under the French Revolution

• The French Revolution did not completely wipe out commercial law.
• Commercial courts have been retained.
• This maintenance was surprising because the French Revolution advocated for equality.

Question: Why did the commercial courts appeal to revolutionaries?

• The judges of the commercial courts were elected and not appointed, which corresponded to the democratic vision of the French revolutionaries.

The Consecration of the Principle of Freedom of Trade and Industry

• The decree of Allarde consecrated the freedom of trade and industry.
• This fundamental freedom is not obsolete.
• Some jurisdictions continue to invoke it.
• It was recalled that this general principle of law enjoyed constitutional value in another judgment of November 14, 2018.

The Creation of the « Banque de France »

• It was created in 1800.

Question 1: What were the original missions of the Banque de France?

• Two main missions:
• To be a regulatory body in the market of discounting and renting money.
• Support a new currency: the Franc Germinal.

Question 2: What is the Discount?

• A discount, is a short-term loan allowing a company to be paid for an invoice issued before its due date.
• A company will assign its customer receivable to its bank, which will grant it a cash advance corresponding to said receivable, minus certain costs.

The Napoleonic Commercial Code

• Napoleon Bonaparte created the Commercial Code in 1807.
• Some current commercial companies were already covered by this Code.
• Example: The limited partnership (société en commandite simple)
• Since then, the size of this book has grown considerably.

Question: What is the « société en commandite simple »?

• It is a form of company generally chosen by people wishing to start a business without having the necessary funds.
• The limited partners (associés commanditaires) are passive, contributors of capital
• The general partners (associés commandités ) are active, manage the société en commandite simple

The Creation of the Public Limited Company

• The Commercial Code of 1807 had provided for a "revolutionary innovation": the creation of the public limited company (société anonyme).

Question: What is the « société anonyme »?

• The public limited company (société anonyme) is designed to bring together very large masses of capital.

The Concern Arising From the Creation of the "société anonyme" in France

• The "public limited company" (société anonyme) was a "worrying" company and was subject to government authorization until 1867.

Critics of the New Commercial Code

• Many analysts considered the Commercial Code of 1807 unsuited to deal with certain "scandalous" commercial practices even though If was Considered a Masterpiece.
• Certain aspects of business life were almost totally ignored.
• Example was group law
• Cambacérès virulently attacked the Code of Commerce.
• Cambacérès found the penalties for merchants far too severe.

The Development of Commercial Courts in France

• France had 245 commercial courts in 1809.
• The number of commercial courts was reduced after the Napoleonic defeats because French territory was reduced.

The Relaxation of Business Criminal Law in 1838

• Business criminal law became more humanized in the 19th century.
• The incarceration of the "bankrupt" became optional.

The New Commercial Code of 2000

• The legislator created a new Commercial Code on September 18, 2000.
• That Code replace the previous work of 1807.

The New Commercial Code of 2000

• The aim of the chancellery was to bring together, within a single code, all the legislation applicable to companies.

The European Will to Standardize Commercial Law

• Merchants operating within regional organization want harmonized commercial law to facilitate exchanges because of European unification.