Business Law PDF

Business Law UNIT 8: Distinctive signs and industrial creations 1. Law on distinctive signs Industrial Property Law: Regulates the fruit of the human intellect when it is applicable to the industry ○ Function The Private interest of the author: effort i...

Business Law UNIT 8: Distinctive signs and industrial creations 1. Law on distinctive signs Industrial Property Law: Regulates the fruit of the human intellect when it is applicable to the industry ○ Function The Private interest of the author: effort is rewarded, incentivizing people The General interest: Distinctive signs: grants transparency to the market and the consumer Patents: prevent inventions from remaining secret and not helping social progress ○ How works Grants exclusive right of use → prohibits use by others unless permission is granted by the owner Distinctive signs: logo, name, slogan, etc ○ Function Differentiation and identification of products ○ How Trademarks and trade names grant the owner exclusive right to use them in economic traffic. ○ Types: trademarks, trade name 2. Trademark and trade name. Concept and function. Types. Prohibitions  Trademark ○ Logo, visual representation ○ Protected for certain economic areas (sectors/activities) → “classified by classes” Except for renowned companies (ex. Apple, etc) → protected for all classes” Trade name ○ Name of the company ○ Serves to identify an entrepreneur ○ Protected for certain economic areas (sectors/activities) → “classified by classes” Except for renowned companies (ex. Apple, etc) → protected for all classes” ○ Types Company name (legal) Company name (Identifies as this name) Product name What can a distinctive sign be? ○ Anything except prohibited. Classification of trademarks, main classification criteria ○ Collective trademark: distinguishes products or services from associations. Owner: the association (ex. Lawyer association in spain) ○ Guarentee trademark: common quality characteristics, geographical origin, etc (ex. European quality control sticker) ○ Renowned trademarks: prestige and/or geographic reach ○ European union trademark ○ International trademark Elements of trademark law ○ Birth: registration in the registry ○ Rights: grants the owner exclusive right of use ○ Obligation to use in an effective and real way: loss for NO use: expiration of trademark (you can lose it if you dont use it) ○ Duration: 10 years renewable indefinitely ○ It is an asset Prohibitions for registry ○ Absolute prohibition Lack of distinctive character Containing exclusively designations of species, quality, etc Containing exclusively usual signs or indications in common language Contrary to public order, the law or good customs Reproduction, without authorization, shields, flags of Spain, CCAA, provinces or town halls That may mislead about the nature or origin ○ Relative prohibition (comparison to another) Signs that may be confused with others already registered of the same class (designating identical products or services)  In connection with renowned trademarks and trade names 3. Industrial Creation Industrial creations: They are the result of human activity aimed at solving a technical problem to meet community needs Patent: guarantees the inventor the exclusive enjoyment of the industrial results of his own invention ○ Others can copy your invention, but you have the right to the output of the invention (profits from invention) What is patentable ○ New inventions that imply an inventive activity and are capable of industrial application New: not included in the current state of science inventive activity: does not result from the state of science in an obvious way industrial application: can be used in any kind of industry Elements of the patent right ○ Birth: registration in the registry ○ Rights: grants the holder a monopoly right over the output of the patent invention ○ Obligation to exploit the patent: loss due to NO exploitation (you can lose it if you dont use it) ○ Duration: Limited to 20 non-renewable years ○ It is an asset Who has the right? ○ Inventor ○ If joint invention → right in common ○ Invention within a company “of service”: by contracted employee → owner is the entrepreneur “Mixed”: by non-contracted employee (not working with the purpose of inventing) → owner is entrepreneur but employee is compensated financially “Free”: if previous does not concur → owner is employee Patent exploitation licenses: The licensor grants the right to exploit the patent (exclusively or not) to others ( licensee ) in exchange for compensation ( royalties ) License contractual: By mutual agreement between the parties License mandatory (against the will of the patent holder): ○ Due to lack of exploitation, ○ For reasons of public interest: public health or national defense UNIT 9: Protection of free competition and prohibition of unfair competition  Underlying market principle → protect “free” competition and make it fair ○ free competition = more quality and more competitive price Importance of Competition ○ For consumers Low prices Better quality More choice Innovation Better competitors in international markets 1. Protection of free competition Core Concepts ○ Collusive Conduct: Illicit agreements to fix prices, limit production, or share markets. 3 assumptions An agreement: existence of a collusive practice Restriction of competition Total or partial affectation of the national market ○ Abuse of Dominant Position: Unfair exploitation of a dominant position 3 assumptions Dominant position Abusive conduct ○ - Imposition of unfair prices or commercial conditions ○ - Unjustified limitation of production or distribution ○ - Unjustified refusal to meet the demands Affectation of the national market (in whole or in part) Exceptions Behaviors resulting from the application of a legal rule. Behaviors of “minor importance”: ○ < 10% affected market share of competing companies, except for : Fixing the sale prices of the products to third parties; limitation of production or sales;  Public interest, authorized by the CNMC (National Commission of Markets and Competition) ○ Economic Concentrations: Mergers/acquisitions reviewed to ensure they do not harm competition. Assumptions Operations involving a stable change in the control structure of one or several companies: Merger, acquisition of control The concentration can hinder the maintenance of effective competition in the market. ○ Area of application: Market share > 30% of the market, except for economic operations of little economic significance: (acquired, turnover or assets < €10 million) and €240 million, at least two > €60 million ○ Public Aids: EU law generally prohibits aids that distort market competition, with specific exceptions. Supervisory Bodies: ○ National: CNMC (National Commission of Markets and Competition). ○ EU: European Commission. Sanctions: ○ Administrative fines (up to 10% of turnover). ○ Leniency policy for whistleblowers in cartel cases. 2. Prohibition of unfair competition Main Acts of Unfair Competition: Acts against competitors: ○ Denigration: Harmful statements against competitors. ○ Comparative Advertising: Allowed only if objective and verifiable. ○ Imitation: Prohibited if it leads to confusion. ○ Breach of Secrets: Unauthorized disclosure or use of trade secrets. ○ Induction to Breach Contracts: Encouraging third parties to break contracts. Acts affecting market functioning: ○ Deception: False or misleading information. ○ Confusion: Creating confusion with competitors’ brands or services. ○ Misleading Omissions: Withholding essential information. ○ Aggressive Practices: Harassment or coercion affecting consumer choice. ○ Rule Violations: Gaining an unfair advantage through illegal acts. ○ Sale at a Loss: Misleading pricing tactics.  ○ Economic Dependence Exploitation: Taking advantage of supplier/client dependencies. ○ Illegal Advertising: Ads prohibited by the General Act of Advertising. Unfair Commercial Practices: Misleading Practices: ○ Creating confusion or misrepresenting product standards. ○ Bait advertising and false promotions. ○ Covert advertising disguised as news. Aggressive Practices: ○ Persistent unwanted contact or direct appeals to children. Differences Between Acts: Defense of Free Competition: Governed by LDC, enforced by administrative bodies like CNMC. Unfair Competition: Governed by LCD, pursued in commercial courts focusing on loyalty in the market. UNIT 10: Commercial obligations and contracts. The commercial sale and purchase contract 1. General theory of the obligation and the contract Obligation Defined: ○ A legal relationship between the creditor (active party) and the debtor (passive party), where the debtor must perform an act (giving, doing, or refraining from doing) as demanded by the creditor. Key Elements of Obligation: 1. Subjective: Involves creditor (rights) and debtor (duties). 2. Objective: The act must be lawful, possible, determined/determinable, and have economic value. 3. Legal Link: Enforced through law, contracts, or acts of fault/negligence. Sources of Obligations: ○ Law, contracts, and acts of negligence (fault-based liability).  Types of Obligations: ○ Joint (debt divided among parties) vs. Joint and Several (each party is fully liable for the entire obligation). 2. Extinction of Obligations By Performance: Fulfillment of the obligation extinguishes it. Other Methods: ○ Confusion: When creditor and debtor become the same entity. ○ Setoff: Reciprocal debts cancel each other. ○ Remission: Voluntary forgiveness of debt. ○ Novation: Replacement of one obligation with another. ○ Prescription: Obligation expires after a set legal time frame. 3. General Theory of Contracts Definition: An agreement creating obligations and rights between parties. Essentials of a Valid Contract: ○ Consent: Mutual agreement, free from error, violence, or malice. ○ Object: Must be lawful, possible, and specific. ○ Cause: The benefit or promise exchanged by parties. Form: Typically, verbal or written contracts are valid, but written form is required in specific cases (e.g., insurance contracts). 4. Commercial Obligations and Contract Commercial Contracts: ○ Govern legal relations in entrepreneurial activities in the market. ○ Include sales, insurance, transport, and atypical contracts. Key Features: ○ Presumed to be joint and several unless otherwise stated. ○ Subject to specific rules on payment terms (e.g., max 60 days under Royal Decree Act 4/2013). ○ Overdue payment results in automatic default after the due date. 5. Commercial Sale and Purchase Contract Definition: ○ An agreement where one party delivers goods, and the other pays a price. Nature: ○ Commercial if goods are purchased for resale or profit. ○ Ownership transfers upon delivery. Seller’s Obligations: 1. Delivery: Goods must meet the agreed quality, quantity, and be available at the agreed place and time. 2. Guarantees: ○ Protection against third-party claims (eviction). ○ Free from defects (quality assurance). Buyer’s Obligations:  1. Payment: On agreed terms; defaults result in liability. 2. Reception: Facilitate receipt unless the seller is in breach (e.g., late delivery). 6. Defects in Goods Reporting Time: ○ Apparent defects: At delivery or within four days if concealed. ○ Hidden defects: Within 30 days of delivery. Non-Compliance: ○ Seller may deposit goods in court if the buyer unjustly refuses delivery. UNIT 11: Collaboration and Distribution Agreements 1. Introduction Purpose: Entrepreneurs need effective systems to commercialize and distribute goods or services. Collaboration Types: ○ Focus on commercial collaboration contracts, excluding employment contracts. ○ Key agreements: Agency, Commercial Concession, and Franchise. 2. Agency Agreement Definition: Agent promotes or concludes commercial acts for a principal in a continuous and independent manner, without assuming operational risks unless agreed. Key Features: 1. Long-term: Not a one-time transaction. 2. Independence: Uses its own organization; no employment relationship. 3. Risk Exemption: Agent generally doesn’t bear operational risks. 4. Onerous and Bilateral: Includes remuneration. Parties and Obligations: Principal: 1. Provide marketing materials and information. 2. Confirm/reject transactions within 15 days. 3. Pay agreed remuneration. Agent: 1. Act in good faith and loyalty. 2. Maintain non-compete unless authorized. 3. Promote goods/services without assuming direct sales obligations. Termination and Compensation: ○ Termination Causes:  Expiry of fixed term, mutual agreement, breach, bankruptcy, death/dissolution. ○ Compensation: Clientele Compensation: For agents generating clients that benefit the principal post-contract. Damages Compensation: For losses from early termination in indefinite contracts. ○ Exemptions: Agent breaches, agent resigns without cause, or rights are transferred to a third party. 3. Commercial Concession Agreement Definition: Distributor (dealer) acquires goods from the principal to resell, often with exclusivity in specific regions and after-sales services. Key Features: 1. Distributor acts independently, bearing operational risks. 2. Principal focuses on production, transferring marketing/distribution responsibilities to the dealer. 3. Brand/sign usage offers competitive advantages. Parties and Obligations: ○ Distributor: Purchase minimum agreed quantities. Maintain adequate stock for resale. ○ Principal: Sell products under agreed terms. Honor exclusivity clauses. Provide product guarantees. Termination and Compensation: ○ Termination Causes: Specified in the contract. ○ Compensation: No automatic application of agency agreement compensation rules. Courts may award compensation for abrupt or abusive termination if no proper notice is given. Typically limited to repurchasing dealer's inventory. 4. Franchise Agreement Definition: Franchisor grants franchisee the right to operate a business using its brand, know-how, and support, in exchange for financial consideration. Key Features: ○ Brand/Sign Usage: Uniformity in presentation and IP rights. ○ Know-how Transfer: Substantial and unique operational knowledge. ○ Support: Commercial and technical assistance throughout the agreement.  Parties and Obligations: ○ Franchisor: Provide pre-contractual information (business details, support, franchisee withdrawals). Transfer intangible assets and offer agreed assistance. Supervise franchisee activities. ○ Franchisee: Pay fees (initial, periodic, or variable). Operate business and follow franchisor's instructions. Maintain confidentiality of provided information. Special Provisions: ○ Master Franchise: Main franchisee gains rights to sub-franchise in specific territories. Operates as a franchisor within the assigned region. Contract Requirements: ○ Must be written, specifying rights, obligations, duration, termination, renewal, exclusivity, and financial terms. UNIT 12: Banking Contracts 1. Conceptual Delimitation, Characteristics, and Elements Definition: Banking contracts establish, regulate, or terminate legal relationships for banking transactions (liabilities, assets, or neutral). Key Characteristics: Acts of commerce (Art. 175 CCom). Remunerated financial services (interest or fees). Adhesion contracts (terms set by banks). Atypical agreements (no specific legislation). Include mandatory clauses (e.g., transparency). Special diligence required from banks (case law). Types of Banking Transactions: 1. Liabilities: Banks receive funds (e.g., deposits).  2. Assets: Banks provide financing (e.g., loans, credit lines). 3. Neutral: Supporting services (e.g., current accounts, credit cards). 2. Bank Accounts Purpose: Serve as accounting support for transactions. Current Accounts: ○ Definition: Records monetary movements (deposits, loans, etc.). ○ Key Features: Long-term relationship. Cashier service: Follows customer instructions for payments. No interest accrued (service contract). Allows co-ownership (joint or joint and several liability). Multiple accounts per client possible; separation principle applies. ○ Obligations: Bank: Manage accounts, follow instructions, provide statements. Client: Pay fees and costs. Savings Accounts: ○ Limited treasury services compared to current accounts. ○ Typically for non-entrepreneurs. 3. Liability Transactions (Deposits) Definition: Customers deposit money, and banks are obligated to reimburse under agreed terms. Key Types: 1. Deposits at Sight: Reimbursable anytime; linked to current accounts. Low interest rates (short-term use). 2. Fixed Term Deposits: Funds locked for an agreed period. Higher interest rates (long-term planning). Protected by Deposit Guarantee Fund up to €100,000 per client per bank. 4. Assets Transactions Definition: Contracts where banks provide financing to customers. Types of Transactions: 1. Bank Loan Contract: ○ Lender provides funds; borrower repays with interest. ○ Features: Ownership of funds transferred to borrower. May include collateral or personal guarantees (e.g., mortgages). 2. Credit Opening (Credit Line): ○ Bank provides a credit limit for short-term needs. ○ Features: No transfer of ownership; funds available on-demand.  Includes fees for unused credit. ○ Two phases: Initial (credit availability) and Execution (withdrawals). 3. Bank Discounting: ○ Bank advances payment for customer invoices or commercial bills. ○ Features: "Subject to payment" clause: Bank recovers funds if payment bounces. Discounting entity must attempt collection on due date. 4. Letter of Credit: ○ Guarantees payment for international transactions. ○ Features: Bank pays seller upon receipt of specified documents. Provides legal and financial security for import/export deals. 5. Key Notes on Banking Activity Indirect Financial Intermediation: ○ Banks collect deposits (liabilities) and lend them as credit (assets). ○ Profit derived from the spread between deposit and lending rates. Risk Mitigation: ○ Collateral (real estate) or personal guarantees strengthen repayment security. UNIT 13: Business crisis: legal regime for insolvency 1. Restructuring plans (pre-insolvency alternatives) Insolvency ≠ decapitalization due to losses ○ Insolvency Cannot make payments on debts ○ Decapitalization due to losses Both are consequences of a crisis situation TRLC treatment: insolvency proceedings ○ Pre-insolvency proceedings (Not mandatory but a diligent act to avoid insolvency)  Restructuring plan ○ Insolvency proceedings (Mandatory) Agreements (with creditors) or Winding-Up (liquidation) Restructuring Plan (pre-insolvency proceeding) → Director ○ Any legally viable proposal that could avoid insolvency Ex. payment agreements, contractual renegotiations, sale of assets, capital increase, etc 1. 100% agreement with creditors → situation solved 2. If sufficient creditors agree (not 100%) → judicial approval of the restructuring plan → all creditors regardless of the agreement must follow the plan a. Plan must meet all legal requirements/formalities (expert validation of the plan is mandatory) 3. No agreement or not meeting legal requirements → insolvency proceeding (if you actually become insolvent) 2. Insolvency proceeding Widespread insolvency of debtor, current or imminent ○ Mandatory application for declaration of insolvency ○ Term: 2 months from when the insolvency situation is known or should be known ○ For any natural or legal person, entrepreneur or not Purpose ○ Legal ordering of the insolvency situation, in defense of creditors’ rights ○ Preserving, as far as possible, the economic activity of the insolvent entrepreneur Voluntary VS Necessary procedure ○ Voluntary (still mandatory) The debtor initiates the proceeding ○ Necessary Proceeding initiated by a creditor Debtors will be suspended of their legal possibility to decide in their own equity disposals Effects of the declaration of the insolvency situation ○ Effect on the powers of the directors (debtor) Voluntary: intervened equity disposals → Insolvency receiver appointed (AC) Necessary: facilities suspended → Insolvency receiver appointed (AC) ○ Assets may not be disposed of without judicial authorization ○ As a general rule, the continuity of the business activity is not interrupted  ○ Duty of collaboration with the judge and AC; make the accounting books or any relevant document necessary; the obligation to ○ Integration of creditors in the “list of liabilities” ○ Maintenance of the validity of the contracts ○ Reintegration of assets to creditors that may have been damaged by unreasonable actions by directors (debtor) < 2 previous years. 3. Inventory of assets. Lists of liabilities The receiver (AC) must determine the list of liabilities as well as the inventory of goods and rights ○ In order to organize the payments (legal order) and determine the assets available and their value ○ As well as finding out if there is a possibility to “sell” the business activity of the debtor in case of a winding-up (liquidation) situation Inventory of goods and rights ○ Assets are valued at market price rather than cost List of liabilities ○ Insolvency debts (originated before the declaration of insolvency) Paid according to legal order of priority by debt classes ○ Claims against the entire insolvency estate Salaries of the last 30 days Those that arise after the insolvency declaration The necessary expenses for the insolvency proceeding Have to be paid when due Order by which Insolvency debts are paid ○ Debts with special privileges (mortgages, etc) ○ Debts with general privilege (public law credits (tax), salaries, tort liability, etc) ○ Ordinary debts (those not included in any other class) ○ Subordinated debts (late announcements, sanctions, debts with partners, etc) 4. The solution of the procedure: agreement or Winding-up Possibility of payment agreements with creditors if economically feasible or winding up ○ If feasibility of payments → agreements between debtor and creditors ○ Non-viability of payments → winding-up of the debtor → Opening Winding-up phase Agreement ○ Creditors are called to try and reach a proposed agreement  ○ Requires minimum agreement to be approved by a judge Winding-up (liquidation) phase ○ At the request of the debtor, AC, or creditors; when agreement is not reached or when it is breached ○ Power of the debtor is suspended ○ Legal person → declaration of dissolution ○ Settlement plan: payment according to legal priority ○ Priority solution: sell the productive unit as a whole (to maintain activity, employment, etc) 5. Classification of the insolvency It must be checked if the insolvency was produced by a breach of law ○ Fraudulent or very Negligent Find out if there may be liabilities for third pirates ○ Fortuitous insolvency → no breach of law ○ Fraudulent insolvency → breach of law Fraud or gross negligence in the generation of the insolvency Certain breaches and accounting irregularities Serious inaccuracy in the documentation provided to the procedure Settlement for breach of the payment agreements Legal acts of simulation of fictitious equity situation Judge decides, but receiver (AC) must propose it. → trial Consequences of Fraudulent Insolvency ○ Disqualification of people guilty (minimum 2 years) ○ Possible economic responsibility Only if there is clear evidence that the fraudulent/negligent acts lead directly to the produced damages to creditors due to unpaid debts