Economics and Law
→ legal risk?
There is no standard definition, but there are at least two primary/secondary definition sets in circulation
Mcormick, R. 2004 Legal risk is the risk of loss to an institution which is primarily caused by:
(a) a defective transaction; or
(b) a claim being made or some other event occurring which results in a liability for the institution or other loss (for example, as a result of the termination of a contract) or;
(c) failing to take appropriate measures to protect assets (for example, intellectual property) owned by the institution; or
(d) change in law.
Economics and Law
dr R. Strugała WPAiE
How to deal with legals risk?
Knowing rules of law we can try and avoid it or minimize it
Risk linked to defective transactions → rules on contract formation (contract law, consumer law)
Risk linked to liability → tort law, liability for breach
of contract, consumer law
Private law (civil law)
Law of contract
Law of torts
Law of unjust enrichment
Law of trusts
Law of agency
Law of property
Family law – family related issues and domestic
relations including marriage, divorce, child custody, alimony and adoption.
Succession, estate, probate, and testamentary laws
Matters covered (our cours)
dr R. Strugała WPAiE
Subjects of private law (natural persons, entities, capacity to act)
Contract law (interpretation, form, prescription,
consumer protection: information duties, conumers right to withdraw)
Tort law (product liability, vicarious liability)
Private law/civil law/commercial law (notions)
Private law vs public law
Private law = civil law + commercial law
Civil law = tort law + contract law + …..
Natural persons (individuals)
dr R. Strugała WPAiE
→ Capacity (to enter into the contract)
Legal ability to make a binding contract
Individuals vs entieties (legal persons, corporations) Capacity = age + mental state
Lack of capacity as a „vitiating factor”
Natural persons (individuals): capacity to contract
Generally a contract entered into by a person with no capacity is invalid → art. 12 KC (Kodeks cywilny) Legal systems refer to such invalidity using different
terminology and approaches (invalidity, unenforceability) Common feature: no effect (limited effect) of the
contract
Common aim: protection of the person lacking capacity
Capacity to contract: age
• Persons up to 13: incapable of contracting (art. 12 KC)
→ their declarations of intention are void (contracts are void)
→ legal representation is entrusted to parents or a guardian appointed by the guardianship court – they act on behalf of the minors
From the age of 13 (up to 18): patrial capacity to contract (art. 15, 16, 17 KC)
→ parents or „kurator” or guardian appointed by the guardianship court acting as agents (representatives) – their consent is needed for the contract to be valid
→ without consent declarations of intention are void unless legal transaction does not entail any legal disadvantage (how is it interpreted??)
dr R. Strugała WPAiE
Consent of the representative
From the age of 13 (up to 18): patrial capacity to contract (art. 15, 16, 17 KC)
→ for a declaration of intent as a result of which he does not receive only a legal benefit, a minor requires the consent of his legal representative.
→ Consent may be given prior to the contract or after the contract was concluded (suspended invalidity of the contract:
bezskuteczność zawieszona); if the minor enters into a contract without the necessary consent of the legal representative, the effectiveness of the contract is subject to the ratification of the legal representative.
dr R. Strugała WPAiE
Lack of capacity to contract: exceptions
• Persons up to 13: incapable of contracting (art. 12 KC)
→ The „necessaries” exception – contracts for necessaries are directly binding if executed: „small transactions”
From the age of 13 (up to 18): patrial capacity to contract (art. 15, 16, 17 KC)
→ The „necessaries” exception – contracts for necessaries are directly binding irrispective whether they are executed: „small transactions”
→ Other exceptions: „pocket money”, salary, employment contract (16)
dr R. Strugała WPAiE
Mental state: formal (legal) incapacity
Natural person may be incapacitated fully (1) or partially (2):
district Court sentence
• Ubezwłasnowolnienie całkowite (1):
A person who is unable to manage their affairs (e.g. beacause of insanity or addiction), legal representative (opiekun) legal effect:
lack of capacity (like persons up to 13)
• Ubezwłasnowolnienie częściowe (2):
A person who is able to manage their affairs but needs support (e.g. beacause of insanity or addiction),
legal representative (kurator), legal effect: partial lack of capacity (like persons from 13 up to 18)dr R. Strugała WPAiE
„Factual” capacity to contract
Contracts concluded by people who lack the capacity for understanding, taking decisions and expressing intentions, but who are not subject to judicial disability (ubezwłasnowolnienie) – invalidity of the contract depends on whether it has been proven that (art. 82 KC – wada oświadczenia woli, brak świadomości lub swobody):
• the individual was incapable at the time of concluding the contract;
• no such an evidence needed (irrelevant) where a person is formally incapacitated by the court (ubezwłasnowolnienie)
dr R. Strugała WPAiE
Legal persons (art. 33 KC)
• organisations (of people)
• art. 33 KC: legal persons are the State Treasury and organizational units which are assigned legal
personality by specific regulations; art. 33
1KC („quasi legal persons”; „imperfect legal persons”)
• they consitute independent (separate from their
members, e.g. shareholders) entities with their own rights and obligations (liability, ownership…)
• legal persons act through their authorities (e.g.
menagement boards)
Legal persons and quasi legal persons
dr R. Strugała WPAiE
• legal persons:
Joint-stock company (S.A.)
Limited liability company (z o.o.)
• quasi legal persons:
Spółka jawna (general model of partnership) s.j.
Spółka partnerska (professional partnership) s.p.
Spółka komandytowa (limited partnership) s.k.
Spółka komandytowo akcyjna – s.k.a. - limited joint-stock partnership
Legal persons and quasi legal persons
•
legal persons are the State Treasury and organizational units which are assigned legal personality by specific regulations:• quasi legal persons are organizational units which are assigned legal capacity (capacity of being subject of rights and obligations):
• What’s the difference?
Liability for entities’ obligations: can their members be liable?
Exemple (spółka jawna):
Each partner is liable for the partnership’s debts without any limitation – jointly and severally with the other partners and the partnership. Yet his liability arises only when the partnership’s property is not sufficient to cover the debts