Académique Documents
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Business Law
Syllabus
Part 1
Table of Contents
TABLE OF CONTENTS _________________________________________________________________________ 2 PARAGRAPH 1.1 WHAT IS LAW? ________________________________________________________________ 6 PARAGRAPH 1.2 ORIGINS OF LAW _______________________________________________________________ 8 1.2.1 The different schools ________________________________________________________________ 8 1.2.2 Origins of Dutch law ________________________________________________________________ 8 1.2.3 Sources of law _____________________________________________________________________ 9 1.2.3 The legal systems ___________________________________________________________________ 9 PARAGRAPH 1.3 FIELDS, TYPES AND AREAS OF LAW___________________________________________________ 11 1.3.1 National law vs. international law ____________________________________________________ 11 1.3.2 Areas of law ______________________________________________________________________ 11 PARAGRAPH 1.4 CIVIL LAW ___________________________________________________________________ 13 1.4.1 Introduction ______________________________________________________________________ 13 1.4.2 Essential Civil law definitions ________________________________________________________ 14 PARAGRAPH 1.5 INTERNATIONAL LAW (RECOMMENDED LITERATURE) ______________________________________ 18 1.5.1 Introduction ______________________________________________________________________ 18 1.5.2 Treaties _________________________________________________________________________ 19 1.5.3 Other sources _____________________________________________________________________ 21 PARAGRAPH 1.6 INTERNATIONAL ORGANISATIONS (RECOMMENDED LITERATURE) ______________________________ 23 1.6.1 Intergovernmental organisations _____________________________________________________ 23 1.6.2 Supranational organisations _________________________________________________________ 23 1.6.3 The United Nations ________________________________________________________________ 24 QUESTIONS CHAPTER 1 WEEK 1A ______________________________________________________________ 27 QUESTIONS CHAPTER 1 WEEK 1B ______________________________________________________________ 30 CHAPTER 2. PROPERTY _____________________________________________________________________ 32 PARAGRAPH 2.1 WHAT IS PROPERTY? ___________________________________________________________ 33 PARAGRAPH 2.2 OWNERSHIP _________________________________________________________________ 34 2.2.1 Characteristics ____________________________________________________________________ 34 2.2.2 Rights and limitations ______________________________________________________________ 34 2.2.3 Limited rights (Recommended literature) _______________________________________________ 35 2.2.4. Liens ________________________________________________________________________ 37 PARAGRAPH 2.3 DETENTION AND POSSESSION ______________________________________________________ 39 2.3.1 Detention ________________________________________________________________________ 39 2.3.2 Possession _______________________________________________________________________ 39 PARAGRAPH 2.4 ACQUISITION AND LOSS __________________________________________________________ 40 2.4.1 Transfer _________________________________________________________________________ 40 2.4.2 Inheritance _______________________________________________________________________ 40 2.4.3 Fixture __________________________________________________________________________ 40 2.4.4 Occupatio ________________________________________________________________________ 41 2.4.5 Finding __________________________________________________________________________ 41 2.4.6 Prescription ______________________________________________________________________ 42 2.4.7 Loss of property ___________________________________________________________________ 42 PARAGRAPH 2.5 TRANSFER ___________________________________________________________________ 44 PARAGRAPH 2.6 RETENTION OF TITLE ____________________________________________________________ 47 QUESTIONS CHAPTER 2 WEEK 3A ______________________________________________________________ 48 QUESTIONS CHAPTER 2 WEEK 3B ______________________________________________________________ 49
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Why does law even exist? The purpose of law can be described as a means to order and protect the interests of human beings in their interactions or relation(ship)s with each other, while at the same time maintaining the underlying ethical principles or values. Another purpose of law is to maintain
1
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Business Law Syllabus Part 1 Revision 2 the rules, in other words to exercise supervision on adherence to the rules and to make sure that conflicts are solved via the judicial system. Therefore part of the law consists of rules regarding litigation and the competencies of those involved in upholding the law. If law as we see it today would not exist, the law of the strongest would apply. This would inevitably lead to an arms race and economic inefficiency. Economic inefficiency means that resources that could be used for the advancement of society are now used to, for example, produce weapons.
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There is general consensus about the fact that there are two guiding principles, based upon which legal rules or laws are created: Efficiency: it doesnt really matter what the content of the rules is, as long as there are rules. A good example of this are traffic rules; it doesnt matter whether we drive on the left or right side of the road, as long as there are rules that determine which side of the road we use. Ethics/justice: the rules are based on principles about fundamental human values, such as rules that prohibit murder, rape, abuse, et cetera. Sometimes rules are the result of a combination of efficiency and ethics. The law is therefore a collection of rules, based on social norms, human values and effective regulation with regard to the behaviour of human beings who are part of a society and with regard to the organisation of the human society.
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The Code Napolon (the French Civil Code) was finished in 1804. In 1809, during the French occupation of the Netherlands (approximately 1795 1815), Napolon introduced the aforementioned Code in the Netherlands. The Code Napolon was later used as the basis for the first Dutch Civil Code (1838). In 1992 a completely revised version of the Dutch Civil Code was introduced. Roman law French law Dutch law
When referring to the legal system, capital letters (majuscules) will be used Civil Law
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Business Law Syllabus Part 1 Revision 2 Scandinavian Civil Law and Chinese Civil Law. The introduction into China of Western legal texts probably started around the year 1839.3 The basic difference between the systems lies in the order of importance of the sources of law. In a Civil Law system, codified law is most important. Jurisprudence is important as well, but does, at least in theory, not have the same status as codified law. In a Common Law system, jurisprudence is the most important source. This does not imply that no codified law exists. Religious Law can be Sharia (Islamic), Halakha (Jewish) or Canon law (Christian). Written law, in the sense of religious texts, is the most important source of religious law. The most widely used religious law is, without a doubt, Islamic law. It consists of Sharia and Fiqh (Islamic jurisprudence). Most countries use Islamic Law as a supplement to either Civil Law or Common Law. In these mixed countries (i.e. bijuridical) Islamic Law commonly applies to family law. Please note that the exact balance between the sources of law varies from country to country.
Civil Law Common Law Bijuridical (Civil and Common Law) Customary law Fiqh
3
4
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Business Law Syllabus Part 1 Revision 2 Administrative law governs the relationship between civilians and public authorities, acting as the executive power of the state. It determines the limitations for the different state institutions when executing their tasks and the rights civilians can enforce with regard to the executive tasks of the authorities.
Private law mainly governs the legal relations between private persons and legal entities. Private law can be divided into: Civil law governs a large variety of topics ( Paragraph 1.4). 5 Commercial law governs certain business and commercial transactions. By now, most commercial law has been incorporated into the Civil Code. The relevance of Commercial law therefore diminishes and it is very likely that Commercial law will eventually disappear as a separate area. Commercial law includes rules regarding carriage by land and sea; merchant shipping and certain payment methods.
Competition law promotes and maintains market competition by regulating anti-competitive conduct. Please note that Competition law also has public law aspects. Competition law, or Antitrust law, has three main elements: o Prohibiting agreements or practices that restrict free trade and competition between businesses. This includes in particular the repression of free trade caused by cartels. o Banning abusive behaviour by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. o Supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to measures to offer licences or access to facilities to enable other businesses to continue competing. Schematic 1.1 Private Law
Private person Private person Private person Legal entity Legal entity Legal entity Private person Public authorities acting as civilian or company Legal entity Public authorities acting as civilian or company
Public Law
Public authorities Public authorities Public authorities Public authorities Private person Legal entity
Schematic 1.2 Private Law Commercial law Competition law Civil law Public Law State law Administrative law Penal law Tax law
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Property law
Possession, detention, ownership and transfer are all part of this sub-area ( Chapter 2).
Tort law
Law governing wrongful acts.
Contract law
Deals with topics such as offer and acceptance, the legal status of negotiations, breach of contract, force majeure.
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Good faith
What is good faith? A state of mind consisting in (1) honesty in belief or purpose, (2) faithfulness to ones duty or obligation, (3) observance of reasonable commercial standards of fair dealing in a given trade or business, or (4) absence of intent to defraud or to seek unconscionable advantage.6 In a Civil Law system, the term good faith usually refers to (1).
B.A. Garner, 2006. Blacks Law Dictionary. 3 edition. St. Paul: Thomson/West All translations are taken from: The Civil Code of the Netherlands; H. Warendorf, R. Thomas, I. Curry-Summer; Kluwer International BV, 2009
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Reasonableness and fairness also governs the legal relation between the parties involved. This means that the parties have to act reasonably and fairly towards each other. As a result of this, the parties have certain obligations towards each other, even if their contract doesnt explicitly state this.
Example: A car dealer has the obligation to deliver a car with enough petrol in the petrol tank to allow the buyer to reach a petrol station. Even if there is no clause in their contract that deals with this issue, the car dealer has this obligation, simply because it is reasonable and fair.
Article 6:248 DCC: 1. A contract not only has the juridical effects agreed to by the parties, but also those which, according to the nature of the contract, apply by virtue of law, usage or the requirements of reasonableness and fairness. 2. A rule binding upon the parties as a result of the contract does not apply to the extent that, in the given circumstances, this would be unacceptable according to standards of reasonableness and fairness.
Legal facts
The participants in legal relationships acquire their rights and obligations as a result of events that are significant from a legal point of view. Those events are legal facts, which can be described as events that have one or more legal consequences. The American book Blacks Law Dictionary8 contains the following definition: A fact that triggers a particular legal consequence..
Example: At birth a baby is already given certain rights, such as the right to nourishment. Birth is therefore a legal fact. Example: A sales contract obliges the seller to transfer the property. A sales contract is therefore a legal fact. Example: A driver who causes a traffic accident typically has the obligation to pay damages to the person who is injured in the accident. A traffic acciden t is therefore a legal fact. Example: When a person dies, his rights and obligations end. Death is therefore a legal fact.
Legal facts can either be human acts with legal consequences or bare legal facts, meaning facts that do not necessarily involve any human action. Legal facts that involve human actions can be divided into two groups; juridical acts and factual acts ( Schematic 1.3).
B.A. Garner, 2006. Blacks Law Dictionary. 3 edition. St. Paul: Thomson/West
rd
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Juridical acts
A juridical act is any human action that intends to achieve a certain legal consequence. Juridical acts can be unilateral and multilateral. Juridical acts are typical for Civil Law jurisdictions.9
Example: A person selling his bike has the obligation to deliver the bike to the person who bought it. This obligation was intended. The person who bought the bike has the obligation to pay the price. This obligation was also intended. More importantly, both parties intend to achieve the legal consequence of these two obligations, namely a transfer of ownership. Closing a contract of sale is therefore a juridical act. Example: A (last) will grants certain rights and obligations to the persons mentioned in the will. Those rights and obligations were intended by the deceased (before he died). In other words, the one who writes the last will intends to achieve this legal consequence after he dies. Making a last will is therefore a juridical act.
Factual acts
Factual acts can be described as human acts that do not intend to achieve a certain legal consequence. Tort is one of the most important examples of a factual act. Breach of contract is another example of a factual act.
Example: A man, parking his car, unintentionally crashes his car into the car of his neighbour, which is parked in front of him. The neighbour obtains the right to claim damages. The man did not intend to damage his neighbours car and he certainly did not intend to create a right to clai m damage for his neighbour. The law however clearly states that his neighbour has the right to do so. Since the law creates a legal consequence that was not intended by the man who parked the car, this action (which the law calls tort) is a factual act. Example: A car dealer delivers a car that is not functioning properly. As a result of that the buyer loses control over the car and smashes it into a lamp post. The car is completely destroyed and the buyer suffers severe injuries to his head. The buyer is now entitled to claim damages from the car dealer. This breach of contract by the car dealer (he did not live up to his contractual obligation to deliver a properly functioning car) creates the right to claim damages; a legal consequence which was not intended by the car dealer. It is therefore a factual act.
Relative rights
A relative right is a right that can only be effected in relation to one or more specific persons. The right to claim damages is a right that can only be enforced against the person who caused the damage. The right to receive a bike one has bought can only be effected to the person who sold the bike. One cannot claim damages from just anyone or ask anyone else to deliver the bike. So, in other words, it is a right that can only be exercised within the scope of the legal relation between two (or more) specific persons.
http://definitions.uslegal.com/j/juridical-act/
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LEGAL FACTS
Juridical act
Factual act
Unilateral
Multilateral
Lawful act
Breach of contract
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10 11
http://www.britannica.com/EBchecked/topic/291011/international-law/233501/General-principles-of-law http://www.transnational.deusto.es/IP2010/docs/What%20is%20PIL.pdf
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Business Law Syllabus Part 1 Revision 2 Since there is no overall legislature or legislative body in the international political system, the rules, principles, and processes of international law must be identified through a variety of sources and mechanisms. This can make international law appear difficult to maintain and enforce.12 The sources of international law are: Treaties Conventions and regulations Jurisprudence (of International Courts of Justice) Customs Legal principles
1.5.2 Treaties
Conventional international law derives from international agreements, called treaties, between nations and/or international organisations. The scope of these international agreements or treaties is almost limitless. The only notable exception is that treaties should not conflict with the rules of international law regarding basic standards of international conduct or the obligations of a Member State under the Charter of the United Nations. Some rules of international law are recognised by the international community as absolute, so no derogation is allowed. A treaty is called bilateral when only two parties are involved in the creation of the treaty; a treaty is called multilateral when more than two parties are involved in the creation of the treaty.
Characteristics
A treaty contains mutual rights and obligations for the parties that close the agreement. The treaty is binding for the parties that close the treaty, based on the principle of pacta sunt servanda. In case of a national legal conflict, there is a judicial system to enforce compliance with an agreement. In case of international conflicts, no mandatory judicial system exists. Therefore, if the parties fail to settle and do not voluntarily submit their conflict to a mediator, an arbitrator or an international court, the only means a party has at its disposal to force another party to comply are diplomatic, economic and (sometimes) military sanctions.
Content of treaties
Treaties can create rules that apply to all the inhabitants of the countries the governments closing the treaty represent or can consist of rules that govern the relationships between the governments involved. They can also order the governments involved to create laws that apply to the inhabitants of the countries they represent. There are three types of treaties:
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http://library.law.columbia.edu/guides/Researching_Public_International_Law
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Business Law Syllabus Part 1 Revision 2 Trait-contrat: governs the relationships between the parties involved; mutual rights and obligations (contract-like); e.g. delivery of products Trait-loi: creates new (general public) laws that apply to the inhabitants of the countries of member states (law-like); e.g. European Convention on Human Rights Trait-constitution: establishment of international organisations; e.g. United Nations Charter
The second category of rules is part of the law that is in effect in a country that is a party to the treaty. This category is directly effective, which means that it is binding for everyone, including civilians, legal entities, and even governments (local, regional and national). These rules create rights and/or obligations that can be invoked by everyone before a national court of law. It is up to a judge to decide whether or not a rule is directly effective. When such a rule is directly effective, it takes precedence over national law.
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Business Law Syllabus Part 1 Revision 2 treaty is incorporated into their national legal system (so that everyone can invoke the rules of the treaty): 1. Monism (Incorporation system): A treaty is directly applied or self-executing (in a sense that no national act is required to make the treaty part of the national system). If a national rule is in violation of an international rule that is directly effective, the international rule takes precedence. Judges can use both national and international law. 2. Dualism (Transformation system): The rules of a treaty are only applied after a national act is made in which the rules of the treaty are included, so an additional act is required to make the treaty part of the national system. The rules of the treaty are, in other words, transformed into national law. Judges only use national law. If national law is in violation of international law, the most recent law prevails. Screening of subsequent law is therefore required in countries that have a dualistic system in order to prevent violation of international agreements.
Business Law Syllabus Part 1 Revision 2 a fourth layer has been added to the national structure of the judicial system (Court of First Instance, Court of Appeal, Supreme Court). As a result of this the rulings of the European Court of Justice are binding within every Member State of the European Union. Not only rulings of this court in individual cases are important, but also the so-called preliminary rulings.
Customs
A set of customs, developed over the years, which regulate how countries should deal with each other. Customary law and conventional law are primary sources of international law. Both have equal authority. Customary international law comes into existence when states regularly and consistently follow certain practices out of a sense of legal obligation.
Legal principles
Another source of international law identified by the ICJs statute is () the general principles of law recognized by civilized nations. These principles essentially provide a mechanism to address international issues not already subject either to treaty provisions or to binding customary rules. Such general principles may arise either through Civil law or through international law. Perhaps the most important principle of international law is the principle of good faith. It governs the creation and performance of legal obligations and is the foundation of treaty law.13 Other relevant legal principles are: pacta sunt servanda and freedom of contract.
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http://www.britannica.com/EBchecked/topic/291011/international-law/233501/General-principles-of-law; Another important general principle is that of equity/impartiality, which permits international law to have a degree of flexibility in its application and enforcement
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http://topics.law.cornell.edu/wex/international_law As long it is with regard to a matter over which sovereign power has been transferred
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Intergovernmental organisation
Supranational organisation
Supranational organisation
Transfer of sovereignty
It has the power to make or initiate studies and reports on these issues. It also has the power to assist the preparations and organisation of major international conferences in the economic and social and related fields and to facilitate a coordinated follow-up to these conferences. With its broad mandate the Council's purview extends to over 70 per cent of the human and financial resources of the entire United Nations system.
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http://www.un.org/Docs/sc/unsc_functions.html To a very limited extent the Member States have transferred their sovereign power to the Security Council
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Question 2
Imagine you have your own company in the Netherlands and you want to close a deal with a very big company from Bombay (India). Why would it be important for you, as director of the company, to negotiate about the applicable law? Which law would you prefer and why?
Question 3
Sylvia buys a second hand car from a dealer. It turns out the car was involved in a traffic accident. The car dealer did not mention this to Sylvia. The car does not function properly so Sylvia wants to return the car and she wants her money back. a. What type of law and which area of law govern the lawsuit against the car dealer in which Sylvia demands her money back? b. Which parties are involved in this lawsuit? No explanation required.
Question 4
John has to pay taxes to the amount of 20,000 over the last year. The authorities send him a notice that he is required to pay the money within three months. John disagrees with the amount of money he has to pay. After an official request, in which John asks for a reduction, is denied, he decides to take his case to court. After losing the case John comes up with a cunning plan to evade taxes. He falsifies his tax return and states that his income was a lot less than originally assessed, as a result of which he would only have to pay 4,500 in taxes. Unfortunately for John his plan is discovered, and he is brought before a court of law, where he is fined for falsifying an official document. a. What type of law and what area of law govern the lawsuit John files against the tax authorities? b. Which parties are involved in this lawsuit? No explanation required. c. What type of law and what area of law govern the lawsuit against John in which he is fined for falsifying an official document? d. Which parties are involved in this lawsuit? No explanation required.
Question 5
The municipality of Rotterdam decides to buy a building in which it will house juvenile delinquents after they have served their prison sentence. The juvenile delinquents will receive temporary housing
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Business Law Syllabus Part 1 Revision 2 and in-house rehabilitation training. The municipality buys the building from a company that until recently used the building as a warehouse. What type of law and what area of law govern the contract between the municipality of Rotterdam and the company?
Question 6
Eric destroys his neighbours fence, because he is angry. On an almost daily basis his neighbour plays very loud music until late at night; Eric wants revenge. a. What type of law and what area of law govern the lawsuit against Eric in which he is fined for destruction of property? b. Which parties are involved in this lawsuit? No explanation required. c. What type of law and what area of law govern the lawsuit against Eric in which he is ordered to pay his neighbour (compensatory) damages? d. Which parties are involved in this lawsuit? No explanation required.
Question 7
Having turned 18, Mary has obtained the right to vote for a member of parliament to represent her. a. What type of law and what area of law gave her the right to vote? She has started university recently and applies for a student grant or scholarship to support her education. b. What type of law gives her the right to apply for a student grant/scholarship? She is now also allowed to close a contract of insurance for herself with an insurance company. c. What type of law and what area of law govern her contract of insurance with the insurance company? One day she decides to write a letter to a local newspaper, giving her opinion on abortion. d. What type of law gives her the right to express her opinion on abortion freely? One day, when Mary is denied a specific job because she is a woman, she decides to file a lawsuit against the company that offered the job, stating that they committed gender discrimination. e. What type of law prohibits this?
Question 8
Mark ignores a red traffic light and speeds across a busy intersection. He loses control over the car and slams into another car. His car overturns and slams against a traffic light, which is completely demolished as a result of the accident. The traffic light is owned by the municipality of Rotterdam. a. What type of law governs the lawsuit against Mark in which he is accused of causing a traffic accident? b. Which parties are involved in this lawsuit? No explanation required. c. What type of law and what area of law govern the lawsuit against Mark in which he is ordered to pay damages for the damage he caused to the other car? d. Which parties are involved in this lawsuit? No explanation required.
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Business Law Syllabus Part 1 Revision 2 e. What type of law and what area of law govern the lawsuit against Mark in which he is ordered to pay damages for the damage he caused to the traffic light? f. Which parties are involved in this lawsuit? No explanation required.
Question 9
a. The right to claim damages is an absolute/relative right, because.......... b. The right of the owner of stolen goods to retrieve those goods is an absolute/relative right, because........ c. The right to claim delivery of the goods you have ordered over the phone is an absolute/relative right because...........
Question 10
a. Accidently dropping your friends Blackberry (result: broken phone) is legally irrelevant/ a legal fact/ a juridical act/ a factual act, because.......... b. Selling your phone on E-Bay is legally irrelevant/ a legal fact/ a juridical act/ a factual act, because........... c. Cycling to school is legally irrelevant/ a legal fact/ a juridical act/ a factual act, because.............. d. Dying as a result of a traffic accident is legally irrelevant/ a legal fact/ a juridical act/ a factual act, because.............. e. Throwing a stone trough your neighbours window is legally irrelevant/ a legal fact/ a juridical act/ a factual act, because.......... f. Crossing the street to do some shopping is legally irrelevant/ a legal fact/ a juridical act/ a factual act, because.............. g. Dying as a result of a gunshot to the head is legally irrelevant/ a legal fact/ a juridical act/ a factual act, because.
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Question 2
Imagine you have your own company in Holland (Civil Law system) and you want to close a deal with a very big company from England (Common Law system). Why would it be important for you, as director of your company, to know, when closing this international deal, whether the English company is based in a Common Law country or a Civil Law country? Which system would you prefer and why?
Question 3
Can a municipality never be a civil or legal entity and perform juridical acts? Explain and also give an example.
Question 4
The municipality of Nijmegen sells and delivers immovable property (houses) to a real estate agent. Which area of law is applicable and why?
Question 5
Sam buys a laptop at Media Markt. It turns out the laptop is badly damaged, but the seller did not mention this to Sam. The laptop does not function properly so Sam wants to return the laptop and he wants his money back. a. What type of law governs the lawsuit against Media Markt in which Sam demands that he gets his money back? b. Which parties are involved in this lawsuit? No explanation required.
Question 6
Jasper is a first year IBMS student, fortunately receiving a monthly studiefinanciering (study grant). He also borrows money from the government because he is renting a room on the Oostzeedijk in Rotterdam. Years after successfully finishing his studies, he has to pay his debt, which amounts to 10,000. The authorities send him a notice to inform him that he is required to pay the amount of money within six months. After an official request in which Jasper asks for a reduction is denied, Jasper decides to take his case to court. After losing the case Jasper comes up with a plan to get some extra money. He is now working as an accountant for PriceWaterHouseCoopers and he knows how to rewire a percentage of the companys money to his own account. After five months he has
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Business Law Syllabus Part 1 Revision 2 gathered enough money to repay his debt. Unfortunately for Jasper his plan is discovered, and he is brought before a court of law, where he is fined for fraud and theft. a. What type of law gives you the right to apply for a grant/scholarship? b. What type of law governs the lawsuit Jasper files against the tax authorities? c. Which parties are involved in this lawsuit? No explanation required. d. What type of law governs the lawsuit against Jasper in which he is accused for fraud and theft? e. Which parties are involved in this lawsuit? No explanation required.
Question 7
Monday morning a terrible accident occurred. A car collided with two young bikers at an intersection. There is a lot of chaos at the intersection. That morning Mister Barnes, a 45 year director of a real estate company, was driving towards the intersection. He noticed the chaos too late and manoeuvred to the right to avoid the accident. Unfortunately he hits Rob Brown, a 17 year old student, who was driving there on his scooter. In addition to this, Barnes crashes into a lamppost, which is completely destroyed. Rob was on his way to school, heading towards the intersection (the traffic light was green), but he was a bit preoccupied because he had a very important exam that morning. His dream is to become a professional football player. The Dutch football club PSV has already seen Rob play and they have said they are very much interested in him. Barnes says he did see Rob but could not avoid him anymore. Rob was driving at average speed on the bicycle path on the right hand side of Barnes. He was not wearing a helmet and didnt have his lights on. Barnes car is damaged and due to the accident Barnes has missed a very important business deal worth two million Euros. Robs scooter is damaged and he has sustained severe physical injuries (a concussion and loss of one leg). Both parties want to claim damages from each other. Barnes states that Rob should have worn a helmet and that he should have had his lights on. Rob states that Barnes should have paid attention, that Rob is not liable for Barnes damage and that Barnes should pay for his medical costs. a. What type of law governs the lawsuit against Barnes in which he is fined for destruction of public property/causing an accident? b. Which parties are involved in this lawsuit? No explanation required. c. What type of law governs the lawsuit against Barnes in which he is ordered to pay Rob (compensatory) damages? d. Which parties are involved in this lawsuit? No explanation required. e. What would be the answer to the previous two questions if Rob would be ordered to pay?
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Chapter 2. Property
Paragraph 2.1 What is property? Paragraph 2.2 Ownership Paragraph 2.3 Detention and possession Paragraph 2.4 Acquisition and loss Paragraph 2.5 Transfer Questions Chapter 2
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18
The Civil Code of Qubec (Canada) uses the word patrimony to describe all property and debts of a person
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Droit de suite
Droit de suite is another characteristic of ownership. Ownership of corporeal property remains with the owner even if owner doesnt have direct control over it. For example: if a car is stolen, the owner remains the owner of the car, even if the thief starts using it and even if the thief takes the car with him to another part of the world.
Droit de prfrence
Even if someone else claims certain rights with regard to the property, the owner has priority (in the sense of preference) because he has higher ranking rights.
Example: The owner of a car lends it to his neighbour, who is allowed to use it for as long as he wants, until the moment the owner needs it again. However, after three weeks the neighbour goes bankrupt. In case of bankruptcy, the neighbour normally woul dnt be able to return the car, since all the goods that were in his possession at the moment of bankruptcy are handed over to the trustee who presides over the settlement of the bankruptcy. The creditors of the neighbour will all submit their claims and will want to be paid from the revenue of the sale of, among other things, the car. The owner of the car, however, is allowed to retrieve his car, because his rights as owner are higher in rank than the rights of the creditors of the neighbour.
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Limitations
There are basically four main categories of limitations to the comprehensive right of ownership. 1. Abuse of rights The category abuse of rights is primarily based on jurisprudence. There are several standard judgments dealing with this specific category.19 Two essential rules derived from jurisprudence are that 1) you are not allowed to use your right without reasonable interest and with the sole purpose of annoying someone else and 2) if there is a disproportionately small advantage versus a disproportionately large disadvantage (consideration of interests), your ownership rights may be restricted. 2. Nuisance It is a fact of life that the quiet enjoyment of property (mainly immovables) is sometimes interfered with. Interference can be in the form of loud noises, vibrations, foul odours, smoke, dust, gases, excessive light, high temperatures and so on. The question is whether interference always constitutes nuisance. The answer to this question is: no. In the Netherlands there has to be interference (annoyance/disturbance) plus a wrongful act (art. 5:37 jo art. 6:162 DCC). There will only be a wrongful act if the interference is substantial and unreasonable. 3. The law The law also imposes certain limitations on ownership. There are situations where you need permission to use your property in a certain way. For example: you need permission, in the form of a permit, from the local authorities (the municipality) to start a restaurant in your home. You are also not allowed to simply build a house on a plot of land that you own and you are not allowed to paint the outside of your house bright pink. 4. Expropriation The last category is expropriation. Expropriation may be necessary for the construction of roads, railroads, canals, public utilities et cetera. Because expropriation has far-reaching consequences and, possibly, a large impact, two requirements have to be met. The first requirement is that expropriation is only allowed if it is done in the public interest. The second requirement is that there shall be a pre-defined reasonable indemnification (due compensation).
For example: Berg en Dalse Watertoren (HR 13 maart 1936, NJ 1936, 415 en HR 2 april 1937, NJ 1937, 639) & Amotiearrest (HR 17 april 1970, NJ 1971, 89)
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Business Law Syllabus Part 1 Revision 2 authority with regard to the property. Limited rights are divided into limited rights on property in general and limited rights on things. Limited rights can also be divided into rights of enjoyment20 and liens (or security rights). Servitude The first limited right that can only rest on things is servitude, also called easement. Servitude is a right of enjoyment. It can be described as an encumbrance imposed on an immovable thing in favour of another immovable thing. The first thing is called the servient thing (or property) and the second thing is called the dominant thing (or property).21 In practice, servitudes can be a right-of-way, a servitude of support, a servitude of light and air or rights regarding artificial waterways. More varieties do exist. Servitudes have a specific, limited purpose. Emphyteusis The second limited right that can only rest on things is emphyteusis, also called leasehold. Emphyteusis is a right of enjoyment. In the Netherlands, emphyteusis is often used in the city centre of larger cities such as The Hague and Amsterdam. Emphyteusis gives the holder the right to hold and use the immovable thing of another person. Usually the lessee has to properly maintain the property and he has to pay taxes. In addition to the aforesaid, the lessee may have to pay (a small amount of) rent. The duration of emphyteusis can be extremely long; it is not uncommon for emphyteusis to last more than twenty years.22 Termination of emphyteusis by the lessor is very difficult. Superficies The third limited right that can only rest on things is superficies a right of enjoyment. Superficies allows you to own or to acquire buildings, works or vegetation in, on or above an immovable thing owned by another person. Superficies is an exception to the rule of article 5:20 DCC that states that the owner of the land is also owner of buildings, works and plants durably attached to the land. Superficies prevents acquisition by fixture. Apartment rights The fourth category of limited rights that can only rest on things is apartment rights. Apartment rights are rights of enjoyment. As the name already indicates, apartment rights are (only) relevant for apartment buildings/apartment complexes. The owner of an apartment (or flat) is co-owner of the whole building and has an exclusive right to use his own apartment. In addition to that, he has a right to use the common parts of the building. The apartment owners are organised in an owners association.23 The rights and obligations of the owners can be found in the deed of division and if applicable in regulations issued by the owners association. Usually a monthly fee has to be paid to the owners association.
20 21
Genotsrecht In Common Law terminology: servient estate and dominant estate 22 See for example article 1197 of the Civil Code of Qubec 23 In Dutch: VvE Vereniging van Eigenaren
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Usufruct Usufruct is a right that can rest on property in general. Usufruct is a right of enjoyment; as usufructuary you have the right to use/enjoy and derive profit or benefit from someone elses property. Fruits in this context is not limited to natural fruits: civil fruits are included as well. The best examples of civil fruits are rent and interest. In the Netherlands one can even have usufruct on a house, which means that one can use and live in the house. The main obligation of the usufructuary is to properly maintain the property.
2.2.4. Liens
Pledge24 and mortgage are both liens (or security rights). They can both rest on property in general. The difference between the two types of liens is that, in the Netherlands, mortgage can only rest on registered property (aeroplanes, ships, buildings) whereas pledge can rest on all movable nonregistered property (for example the inventory of a caf). The purpose of a lien is to provide security (usually payment security) to a creditor. If the debtor doesnt fulfil his obligations, the creditor can sell the property on which the lien rests and settle his claim(s) with the proceeds. The biggest advantage of a lien is that holders of a lien have priority in case of bankruptcy of the debtor. They are, in other words, secured creditors25. Pledgees and mortgagees have the right of immediate execution, which means that they can sell the property without interference from a judge. Pledge and mortgage are inconceivable without a corresponding obligation/claim. Consequence of the aforesaid is that if the obligation/claim ceases to exist, the lien will also (automatically) cease to exist. Pledge and mortgage are indivisible rights: both rights dont (partially) cease to exist if part of the obligation is fulfilled. Only when the obligation is fulfilled in its entirety, the liens (automatically) cease to exist. Pledge There are two types of pledge: one requires the property to be brought under control of the pledgee or a third person agreed upon by the parties, the other one simply requires a deed or registered document. The reason why two types of pledge exist is that it would, for instance, be rather inconvenient to have a pledge on the inventory of your restaurant with the requirement to bring it under the control of someone else. The major downside of the second type of pledge is that the pledgee has no control over the property on which the pledge rests. There is, therefore, a risk that the property suddenly disappears.
24 25
In some jurisdictions, pledge is commonly referred to as chattel mortgage In Dutch law, the word separatist is often used
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Mortgage Nearly everyone, at some point in life, has to deal with mortgage (or hypothec26). Buying a house without previously obtaining financing is rare. Banks or other financial institutions, however, wont be very keen on providing financing for your house if they cant establish a mortgage on the house in case you fail to pay the (monthly) fees. From a mortgagors perspective, the main benefit of a mortgage is that the mortgagor can use or continue using the property; he doesnt have to bring the property under the control of the mortgagee. The main advantage for the mortgagee is that the value of immovable property is relatively stable. It is also much easier to verify whether another lien (mortgage) rests on the property.
26
Depending on the jurisdiction, hypothec is either a type of mortgage or used as a synonym for mortgage
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A holder cant promote himself to possessor or owner.28 Holders dont receive special protection by law.
2.3.2 Possession
Possession is the detention of property for oneself; a person has effective control combined with a suggestion of entitlement. A pretention of ownership, one could say. It is important to note that there can only be one possessor at the same time. It is usually the owner who has possession. Possession can be in good faith or in bad faith. Good faith requires that the possessor reasonably considers himself as person entitled. Once you possess something in good faith, you automatically continue possessing something in good faith (good faith remains good faith). There are several benefits to being a possessor: you are considered as person entitled, you are entitled to receive both natural and civil fruits, you can execute possessory actions to recover possession of the property and you may even acquire ownership via prescription ( Paragraph 2.4.6).
27 28
Also called detentor This rule, which also applies to possession, is derived from Roman law: nemo causam possessionis sibi ipse mutare potest
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2.4.1 Transfer
The most common way in which people acquire property is by transfer, such as a sales contract or a gift. Please note that not all contracts transfer ownership.
2.4.2 Inheritance
One can inherit property from someone who has died. The heirs inherit the exact same rights the person who died had, including if applicable any limited rights ( Paragraph 2.2).
Example: If you inherit your uncles boat, but his neighbour was granted the right to use that boat for ten years, and that time period has not yet expired, you will acquire ownership of the boat, but you will have to allow the neighbour to use the boat until the period expires.
2.4.3 Fixture
To understand what fixture is, one first has to take into account the following: Article 3:4 DCC: 1. A component part of a thing is anything commonly considered to form part of that thing. 2. A thing attached to a principal thing in such a manner that it cannot be separated therefrom without substantial damage to either, is a component of that thing. Article 5:20 DCC: 1. To the extent the law does not otherwise provide, ownership of land comprises: (a) () (b) () (c) () (d) () (e) buildings and works forming a permanent part of the land, either directly or through incorporation with other buildings or works, to the extent that they are not part of an immovable thing of another person; (f) plants growing on the land.
29
Please note: if one, in this context, acquires property, one becomes owner, so one could also use the term acquisition of ownership 30 Compare articles 711 717 of the Code civil franais
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Business Law Syllabus Part 1 Revision 2 There are two basic situations of acquisition of property by fixture. The first situation is that a thing becomes immovable by attaching (affixing) it to an immovable thing.
Examples: If you plant a tree in your neighbours garden, your neighbour will acquire ownership of that tree by fixture. If you install a bath in someone elses house using cement, the owner of the house becomes owner of the bath by fixture. If you build a house on someone elses land, that other person becomes owner of the building.
The second situation is that a movable thing is attached (affixed) to another movable thing that is regarded as the prominent object (also called the principal thing).
Example: If you install two bicycle tyres on your bicycle, and these tyres are someone elses property, you will acquire ownership of the tyres by fixture. The bicycle is clearly the prominent object.
For both situations, the degree of attachment is important. If something can easily be removed, acquisition by fixture is highly unlikely. In case there is no prominent object, the owners of the different parts that were attached to each other will become co-owners of the whole (combined) thing. The same rule applies if separate components, owned by different people, form an entirely new object.
2.4.4 Occupatio
Res nullius If you find a thing you dont immediately acquire it unless the thing is movable and clearly belongs to no-one. In that particular case, the thing is a res nullius. One acquires a res nullius via occupatio (appropriation).31 Bar some exceptions, finding a res nullius becomes increasingly difficult. Susceptible to occupatio are: animals (land, sea and air), shells, minerals et cetera, but also things that were abandoned/given up by the previous owner.
2.4.5 Finding
Lost things How can you acquire ownership of things you find, but are not a res nullius? You first have to report the find to the authorities (municipality or police). Consequence is that you usually have to deposit the thing. After that, you have to wait one (1) year. If, during that year, the o riginal owner doesnt claim back the thing, the finder acquires it. If the original owner does reclaim the thing, the finder is entitled to a finders fee. Please note that the aforementioned only applies to lost things.
31
J.H.A. Lokin, 1999. Prota Vermogensrechtelijke leerstukken aan de hand van Romeinsrechtelijke teksten . 5 edition. Groningen, page 105
th
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Business Law Syllabus Part 1 Revision 2 Treasures Discovering a treasure is everyones dream. Treasures are things of value that have remained hidden for a long time so the owner becomes untraceable. The question is: do you acquire ownership if you find a treasure? Yes, in the Netherlands the person who finds the treasure immediately acquires ownership of one half of the treasure; the person in or on whose property the treasure was found acquires the other half.32 There is no co-ownership if you discover the treasure in or on your own property. Regardless of where the treasure was found, you are required to report it to the authorities.
2.4.6 Prescription
Prescription is acquisition of property by lapse of time. There are two types of prescription: acquisitive prescription and extinctive prescription. Acquisitive prescription is only possible in case the acquirer acted in good faith. Extinctive prescription is possible even if there is bad faith. The main difference between the two types of prescription is the duration (prescription period). The prescription period of acquisitive prescription is either three (3) years or ten (10) years. The threeyear period applies to movable, non-registered things, rights to bearer and rights to order.33 The tenyear period applies to immovable things. Because bad faith is allowed, the prescription period of extinctive prescription is much longer: twenty (20) years.34 It is applicable to all property. Completion of the extinctive prescription period results in expiry of the legal claim (right of action usually revindication) of the owner. Therefore, the owner simply cant reclaim his property anymore. In general, completion of the prescription period leads to the same result for both types of prescription: automatic acquisition of property. Continuous possession is required for acquisitive and extinctive prescription. It is important to realise that possession is one of the main requirements; a holder cant acquire property via prescription.
32 33
The Monumentenwet 1988 contains a few exceptions (article 50 in particular) Article 3:99 DCC 34 Article 3:306 DCC
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Business Law Syllabus Part 1 Revision 2 Death Fixture Giving it up/Abandoning it: if you intentionally throw away something, you give up ownership. Destruction: if your house burns down, you lose ownership of the house. You will now be the owner of the burned remains of the house, but the house as such no longer exists so you no longer own it. Via prescription Expropriation
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Valid title
The title described the reason for the transfer; it refers to the legal basis. Valid titles: Sales agreement: Two obligations: the obligation of the owner to deliver the property to the other contractual party and the obligation of the other contractual party to pay the agreed upon remuneration. Exchange agreement: Two obligations: the obligation of the first party to deliver the property to the second party and the obligation of the second contract party to deliver his property to the first party. Gift: One obligation: the obligation of the owner to deliver the property to other party. The other party, however, has to accept the transfer.35 The law: Tort can be the basis for a transfer of property.
Examples of invalid titles are: Putative title: Both parties are convinced that certain obligations still have to be met, but in reality they have already been met. Sale to someone who has an appointed guardian: Someone who has an appointed guardian is often (legally) incapable of transferring property. The guardian is allowed to annul the juridical act.36 Rent, loan, lease: These types of agreements are not meant to transfer ownership. Title resulting from an agreement that is contrary to the law/public policy (agreement null and void): For example arms trade between private individuals.
35 36
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Delivery
Delivery of property can be done in many different ways, depending on the kind of property that is transferred. Immovable property: Immovable is delivered by drawing up the necessary documents (deeds) and the registration of the transfer in the relevant public registry. Only after these two requirements are fulfilled, the ownership transfers. Movable property: Physically handing over is the most common way of delivering movable physical property is by simply handing it over to the new owner. Constitutum possessorium is used if the former owner wants to keep the property for a short period of time after the transition of ownership took place. This way of delivering property requires a mutual statement (by the former and the new owner) that the property is transferred to the new owner, and that the former owner will now hold the property (for the new owner) for a certain period of time. Traditio brevi manu is used in case the new owner was already holding the property. For this way of delivering property a mutual statement that the property is transferred to the new owner is sufficient. Traditio longa manu is used in case a third party holds the property and will continue to hold the property for a certain period of time after the transfer of property between the former and the new owner took place. A mutual statement is required and in addition to that the third party has to be notified of the transition of ownership. Rights: Rights to bearer (cheques, share certificates, bonds) are delivered by handing over the documents to the new owner. Rights to order (certain claims that explicitly mention the name of the creditor) are delivered by handing over the documents to the new owner plus endorsement.
Authority
Transfer of property is only valid in case the property is transferred by someone who has the authority to commit legal actions with regard to the property. It is usually the owner who has the exclusive authority to perform juridical acts with regard to the property, so someone who has stolen property or someone who has borrowed property cant validly transfer the property. Page 45 of 88
However, sometimes someone other than the owner has the authority to perform juridical acts. This mainly applies to situations where a representative is appointed by the owner. Article 5:2 DCC: The owner of a thing is entitled to recover it from any person who holds it without right. Article 5:2 DCC is about reivindicatio: the owners right of revindication. Revindication is one of the most important rights of the owner. Revindication is even possible if the current possessor or holder is in a state of bankruptcy.
Example: A is the proud owner of a very valuable, 18 century violin, which has been a family heirloom for generations. One day he discovers a scratch on the varnish of the violin. The next morning he brings the violin to B, a renowned repairman. B assesses the damage and ensures A that he will be able to repair the violin. A can collect the violin in a month. After three weeks C, a famous violinist, visits Bs workshop. He tells B he is looking for the violin of his dreams. B, who is a little absent-minded, offers C As violin, thinking it is one of his own. C is impressed by the beautiful sounds the violin produces and decides to buy it. After some negotiating between B and C, they reach an agreement. B hands the violin over to C and C leaves the shop, thinking he is now the proud owner of As violin.
th
In order to facilitate trade, by limiting uncertainty, a few exceptions exist to the owners right of revindication. The aforementioned exceptions result will in a loss of ownership. In the Netherlands, the new owner is protected against the previous owners revindication if he meets the requirements of article 3:86 sub 1 DCC: 1) 2) 3) 4) 5) Movable property Physical delivery Remuneration paid The acquirer acted in good faith The acquirer is willing and able to identify the alienator within three (3) years of acquisition
Looking back at the example with the violin: if C meets all five requirements mentioned above, he will become the new owner of the violin and A will, unfortunately, lose ownership. The only thing A can do now is claim damages from B. However, even if all five requirements of article 3:86 sub 1 DCC are met, the owner of a movable thing, who has lost it a as a result of theft, can on the basis of article 3:86 sub 3 DCC revindicate the movable thing within a period of three (3) years unless the following requirements are met: 1) Acquirer is a natural person 2) Acquirer is not acting in the conduct of a profession or business Page 46 of 88
Business Law Syllabus Part 1 Revision 2 3) 4) 5) 6) Alienator (usually) deals with the public in similar things Alienator uses business premises (such as a shop) Alienator acting in ordinary course of business It doesnt concern money or paper payable to bearer or order
If these six requirements are met, ownership is finally acquired for good.
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Question 4
a. What is droit de suite? b. What is droit de prfrence? c. Give an example of a limitation to the right of ownership on the basis of non-codified law.
Question 6
Albert, a first year student at the Rotterdam Business School, shares an apartment with two of his friends. Albert and his friends live the life of ordinary students: they sleep late, drink a lot and produce a lot of garbage, which they usually throw in their back garden, instead of putting it in a public garbage disposal. After some time they have collected so much garbage, that they are no longer able to see the grass of their back garden. The garbage begins to rot, so Albert and his friends want to get rid of it. They decide to donate the garbage to their neighbour. One night they collect all the garbage and put it in the neighbours back garden. The neighbour is less than pleased when he sees the pile of garbage in his garden the next morning. a. Does a gift or donation constitute a legal basis for transfer of property? b. Has the neighbour become the owner of the garbage? If so, why? If not, who is then the owner of the garbage? c. What would it take for them to legally give up ownership of the garbage? After the neighbour hands the garbage back to them (and gives them a piece of his mind), Albert and his friends decide to throw everything in the public garbage disposal, situated in front of their apartment block. Another neighbour, passing by an hour later, discovers a piece of parchment in one of the garbage bags and takes possession of it. At home he discovers that it is a valuable, 17th century manuscript, worth at least 10,000. A few weeks later, Albert reads a newspaper article about the find and realises the piece of parchment was in one of his garbage bags. d. Can Albert revindicate the piece of parchment, claiming he is still the owner of it?
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Question 2
a. Albert has a very old cabinet at home. The cabinet, however, is damaged, so Albert takes the cabinet to a repairman, called Bob. The cabinet is in the workshop for a whole month. During this month, who is the owner of the cabinet and why? Which characteristic of ownership is relevant here and why? b. Imagine all the trousers of the clothes shop H&M were stolen by Mr. X. Who is, taking droit de suite into account, the owner of the trousers? c. Going back to the case of the cabinet. The cabinet is still in the workshop. Unfortunately, the business is not doing well so Bob goes bankrupt and the bank seizes all his property. Does this mean Albert has lost ownership of his cabinet? Which characteristic of ownership is relevant and why?
Question 3
a. Which rights do you have as an owner? b. Name a few limitations.
Question 4
You are an IBMS student renting a room from Eelco, a private landlord. In the agreement it is stated that you are not allowed to put your music on after 22h00. Eelco, however, does regularly put his music on after 22h00 because the building is his property. Is this allowed, if not, why?
Question 5
a. The Hogeschool hands out free pens with its logo on it. Have you acquired ownership of the pen? b. Taking possession of a set of keys is a way of acquiring property. Yes/no c. Building a shed with wood you stole from your neighbour is a way of acquiring property of your neighbours wood. Yes/no d. Inheriting the right to receive the interest on the money deposited on the bank account of your uncle is a way of acquiring property of that right. Yes/no e. If you find a very valuable and ancient Roman sword in a public garden, will you acquire property of the sword? Yes/no f. Adrian is sitting in a train and sees a Metro (free newspaper) lying on a chair. Adrian takes the newspaper. Did he acquire ownership? Yes/no Page 49 of 88
Business Law Syllabus Part 1 Revision 2 g. In front of a club (Blender in Rotterdam), Bruno spots a bike that still has its key in the lock. Bruno thinks he is very fortunate, because he needs a new bike. He takes the bike and cycles away with it. Did he obtain ownership? Yes/no h. Bruno is fishing in the Kralingse Bos (park in Rotterdam); he catches a carp (fish). Is he owner of the fish? i. Adrian annexes a part of the neighbouring land after noticing no-one is living or using the land anyhow. Did he become owner of the land? j. Adrian finds a diamond ring on the street and reports it to the police. The owner never shows up. Is Adrian owner?
Question 6
a. Explain the difference between possessor, holder and owner. b. How do you determine whether someone is holding or possessing a thing? One month ago, Alex bought a new car. He has the car at home and mainly uses it to go to work. Nina, a very good friend of Alex, wants to go away for the weekend and she asks if she can use Alexs car. Alex agrees, as long as she puts petrol in the car. Nina uses the car to go to Belgium for the weekend. c. Who is owner of the car and who is possessor? Nina and Alex end up in an argument because Nina wants to stay in Belgium for a few more weeks. She is so angry at Alex for not lending the car for a few more weeks that, in her anger, she sells the car to her cousin, Frank. Her cousin does not know that this is in fact Alexs car so he is very pleased with his new car. d. Who is owner, possessor and/or holder?
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Question 2
John is the proud owner of a valuable classic car. One day, when he takes it for a ride, he is involved in a car accident. As a result, the rear bumper of the car is badly damaged. John brings the car to Edward, who is an expert in repairing classic cars. Edward tells John he will be able to repair it, but it will take time. John can collect the car in two months. A few days after John has brought the car to Edward, he shows a picture of the car to Philip, who immediately falls in love with it. After some negotiating, John sells the car to Philip. a. Can John transfer ownership of the car to Philip at that particular moment? How? John and Philip both state that the ownership transfers between them, but they forget to inform Edward. When Philip shows up in the workshop of Edward after the car has been repaired, Edward refuses to give him the car, because as far as he knows John is still the owner of the car. b. Can Philip claim the car from Edward, stating that he is the owner of the car? John calls Edward and tells him that Philip bought the car from him. Edward is now willing to hand it over to Philip. On his way home, Philip is spotted in his new car by Alex. Alex, a multi-millionaire who has a huge collection of classic cars, tells Philip he wants to buy the car right away. Philip is hesitant, but Alex offers him an amount of money Philip cant refuse. Philip only has one condition. He is willing to transfer ownership of the car to Alex immediately, but he wants to drive the car for another month, so that he can at least enjoy his treasure a bit longer. Alex agrees and the car is sold. c. Can Philip transfer ownership of the car to Alex at that particular moment and still drive it for one month? How?
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Question 2
Gilbert is 14 years old and has a bike worth 2,000. He sells and delivers his bike to Henk, an 18 year old, for the price of 1,200. He also delivers the bike to Henk. A week later, Gilberts father asks his son where he left his bike. Gilbert tells his father that he sold the bike to Henk. Gilberts father does not agree with the sale of the bike and goes to Henk and tells him the contract of sell is annulled. a. Has Henk acquired ownership of the bike before het contract of sale was annulled? b. Can you say after the annulment, that Henk has never been owner of the bike? c. What if Henk sold the bike to Isaac, before Gilberts father intervened? Did Isaac acquire ownership of the bike?
Question 3
On an unfortunate day, Julia loses her diamond-studded watch worth 10,000. The next day Karen finds the watch. A week later Karen sells Julias watch to Leo, who knows the watch was lost. Leo takes the watch to a jewellers shop to check if the diamonds are real. The shop gives him a certificate of origin. A month later, Leo gives the watch as a gift to his brother Michael. Leo told Michael that he
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Business Law Syllabus Part 1 Revision 2 got the watch from his father-in-law. Three months later Michael sells the watch to Nick for 8,000. Michael has told Nick that he got the watch from his brother Leo and he also give the certificate of origin to Nick. a. Has Karen acquired ownership of the watch? b. Has Leo acquired ownership of the watch? c. Has Michael acquired ownership of the watch? d. Has Nick acquired ownership of the watch? e. Imagine that Julie finds out that Nick has her watch in possession. Julia revindicates her watch from Nick. Is Nick obliged to give the watch back to Julia?
Question 4
Oliver has a chainsaw in his garden. One day Patrick walks past the garden of Oliver, climbs over the fence and steals the chainsaw of Oliver. He takes it home with him and uses it for a while. After a year, Patrick decides he does not need the chainsaw anymore and puts an advertisement in the local newspaper. Quinton reacts to this advertisement and visits Patrick to have a look. When Quinton asks where the chainsaw comes from, Patrick tells him a vague story that a friend of his had to get rid of his chainsaw. Quinton, however, does not really care about the story and is very happy he can buy a very good quality chainsaw for quite a low price. He pays Patrick 100 and takes the saw with him. a. Has Patrick acquired ownership of the chainsaw? b. Has Quinton acquired ownership of the chainsaw? c. Assume that Quinton bought the chainsaw in good faith. Will Quinton have to give the chainsaw back to Oliver if Oliver revindicates his chainsaw?
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Chapter 3. Insolvency
Paragraph 3.1 What is it? Paragraph 3.2 Who can go bankrupt? Paragraph 3.3 Types of creditors Paragraph 3.4 Procedure Paragraph 3.5 Consequences Paragraph 3.6 Termination Questions Chapter 3
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http://books.google.com/books?id=iqE9AAAAIAAJ&pg=PA4; http://www.thefreedictionary.com/bankrupt Faillissementswet (Fw) 39 Articles 6 BA 40 Provisional enforcement or execution is a decision by the court that there will be no stay (suspension) of execution of a decision, although an appeal is being lodged against it. Normally the lodging of an appeal does lead to a stay of execution. So a defendant, who went into appeal, can still be forced to pay to the creditor. Without the provisional judgment, the defendant would only have to pay after the Judge of the Court of Appeal has made a decision. T. Foster, 2009. Dutch Legal Terminology in English. Deventer: Kluwer, page 155
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http://www.batasnatin.com/law-library/civil-law/obligations-and-contracts/830-suspension-of-payments-insolvencylaw.html 42 http://pinoy-business.com/corporate/284-options-for-entrepreneurs-in-financial-distress-suspension-rehabilitation-andinsolvency 43 http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_lux_en.htm#3.c) 44 http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm; article 214 BA 45 http://www.batasnatin.com/law-library/civil-law/obligations-and-contracts/830-suspension-of-payments-insolvencylaw.html 46 Wet Schuldsanering voor Natuurlijke Personen. See articles 284 of the Bankruptcy Act.
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Business Law Syllabus Part 1 Revision 2 Schuldsanering Natuurlijke Personen (WSNP)) and is as such incorporated as an independent regulation in title III of the Bankruptcy Act. The principal objective of the regulation is to ensure that private individuals finding themselves in a financially difficult situation are not pursued for years on end by the debts they incurred. Another objective of the regulation is to ensure that fewer private individuals are declared bankrupt.47 The aim of the scheme is to prevent private individuals, with or without their own business, suffering from the effects of a debt for a prolonged period. Creditors are also required to cooperate under the scheme. The core of this Act is to provide the possibility to private individuals in a debt position without any prospects to make a fresh start without being chased for life by his creditors. The fresh start is obtained by the liquidation of the assets of the debtor and to save during a period of at the most five years his repayment capacity (earnings less minimum costs of living).48 At the end of the term these proceeds are divided among the creditors and a fresh start is obtained. During this term the debtor has to observe the terms and conditions set out by the law and the so-called restructuring plan (saneringsplan). If the debtor does not comply with these terms the debt restructuring could be revoked and the debtor will be declared bankrupt without getting a fresh start.49 Several criteria apply to the debt restructuring arrangement: Prior to application of the legal debt restructuring arrangement the law imposes mandatory pursuit of an extrajudicial50 phase. On the grounds of a model statement issued by the municipality it must be evident that there have been attempts to reach an amicable settlement. Why these attempts have been in vain must also be evident.51 Only the private individual himself can petition for the applicability of the debt-restructuring act. The court appoints an administrator. The administrator is charged with the supervision over the debtor in the sense that the debtor complies with his obligations under the debt restructuring. In the majority of the debt restructuring cases debt relief social workers are appointed as administrators. In the more complex cases (most of the time if the debtor runs a business) attorneys at law are appointed. The administrator is paid a small monthly fee and receives a subsidy. The monthly fee is to be paid from the proceeds of the estate. The subsidy is only a temporary measure and subject to review. The bankruptcy judge in a debt restructuring supervises the administrator. The fresh start is obtained by the liquidation of the assets of the debtor and to save during a period of at the most five years his repayment capacity (earnings less minimum costs of living). At the end of the term these proceeds
47
http://ec.europa.eu/enterprise/policies/sme/files/sme2chance/doc/report_ned_en.pdf; N.J. Polak, 1999. Faillissementsrecht. Deventer: Kluwer, page 276; R.J. van Galen, E.W.J. Liagre Bhl and R.W. de Ruuk, 1997. Faillissementswet. Deventer: Kluwer, Losbladige Kluwer, inleiding Titel III. 48 Duty of effort in debt restructuring: the debtor who is admitted to the debt should exert maximum effort for his creditors for a period of three years, so that as much money as possible comes into the estate. For three years he will have to make his capacity to repay available to his creditors up to 95% of the applicable support level 49 http://www.cbs.nl/en-GB/menu/methoden/toelichtingen/alfabet/p/personal-debt-restructuring.htm 50 Dutch translation: buitengerechtelijk 51 For further information about the requirements: http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm
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Business Law Syllabus Part 1 Revision 2 are divided among the creditors and a fresh start is obtained. During this term the debtor has to observe the terms and conditions set out by the law and the restructuring plan. If the debtor does not comply with these terms, the debt restructuring could be revoked and the debtor will be declared bankrupt without getting a fresh start. The debt restructuring can also be ended by offering the creditors a scheme of arrangement. Under the debt restructuring act different voting ratios are applicable and under circumstances the judge can even impose a scheme of arrangement on the creditors. 52
Summary
To summarise, the objectives of the three types of insolvency are: 1) The sole objective of bankruptcy proceedings is liquidation of the available equity to distribute among the creditors. 2) The suspension of payments proceedings has a restructuring objective rather than liquidation in order to prevent the latter. 3) The debt restructuring proceedings in court have a double objective: liquidation of the available equity and restructuring of the debt burden. 53
52
M.A.J.G. Janssen et al, 2008. Bankruptcy And A Fresh Start:Stigma On Failure And Legal Consequences Of Bankruptcy . Dutch report, p. 7. 53 http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm
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Staatscourant: Official journal/legal gazette: The Staatsblad, Staatscourant and Tractatenblad contain parts with legislation as well as parts with legal notices and other official texts 55 http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm 56 Reifner et al, 2003; Gerhardt, 2009; Fraude, 2010
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Business Law Syllabus Part 1 Revision 2 1. Preferred creditor a. Preferential creditors 2. Secured creditors 3. Unsecured creditors After the general bankruptcy costs have been complied (e.g. payment of the trustee), the liquidation of assets will be completed. Examples of bankruptcy debts are indebted salarys, indebted rent payments (from the date of bankruptcy).
a. Preferential creditors
It should be borne in mind that certain categories of creditors have a preferential right or priority under Dutch legislation. These type of creditors are creditors with a lien, i.e. mortgagees and pledgees. They are entitled to summary execution and have a high-ranking statutory preferential right.58
57
Preferred creditor: a creditor with a preferential right created by a statutory provision, i.e. the tax authorities and the social insurance board are examples of high ranking preferred creditors 58 M.A.J.G. Janssen et al, 2008. Bankruptcy And A Fresh Start:Stigma On Failure And Legal Consequences Of Bankruptcy . Dutch report, p. 15. 59 http://www.becomingbankrupt.co.uk/types-of-creditor.html
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3.3.4 Significance
A bankruptcy affects both common unsecured creditors and preferred creditors. Secured creditors may exercise their security rights as if there were no bankruptcy. In practice secured creditors are affected by the bankruptcy, since secured creditors tend to prefer a private sale of the secured goods instead of the legally required public sale. The reason for this preference is that the proceeds through a private sale are most of the time higher than through a public sale. In order to sell the secured goods through a private sale the co-operation of the trustee is required.63 The practice has risen that the trustee asks a certain percentage of the sale proceeds for his co-operation. Secured creditors and even third parties are not allowed to exercise their rights if a cooling down period is ordered.64 A suspension of payments only affects common unsecured creditors. Secured creditors and preferred creditors are as a general rule not effected and should in principle be fully paid. The practice, however, is somewhat different, due to inter alia the introduction of the cooling down period and the grown practice that preferred creditors like the tax authorities and the social insurance board under circumstances give their co-operation to a scheme of arrangement. Since the circumstances under which co-operation is given are laid down in policy rules such co-operation could be enforced legally.65
60 61
Concurrente crediteur: Common creditor: a non-preferred, unsecured, deferred creditor http://www.becomingbankrupt.co.uk/types-of-creditor.html 62 http://www.cbs.nl/NR/rdonlyres/0D1B8D1C-ABBF-4A39-8D8E-B5D500BA1EA0/0/insolventietrechtincijfers07.pdf 63 He now manages the the affairs of the debtor (who is now officially incapable and unauthorised) 64 M.A.J.G. Janssen et al, 2008. Bankruptcy And A Fresh Start:Stigma On Failure And Legal Consequences Of Bankruptcy . Dutch report, p. 5. 65 M.A.J.G. Janssen et al, 2008. Bankruptcy And A Fresh Start:Stigma On Failure And Legal Consequences Of Bankruptcy . Dutch report, p. 6.
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http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm
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Business Law Syllabus Part 1 Revision 2 subject of bankruptcies throughout the United States". The Congress has enacted statute law governing bankruptcy, primarily in the form of the Bankruptcy Code, title 11 of the United States Code.67 Federal law is complemented by state law in some places where federal law does not provide a suitable solution or expressly refers to state law. While bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the US district courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, are often dependent upon state law. State law therefore plays a major role in many bankruptcy cases, and it is often not possible to generalise bankruptcy law across state lines. Generally, a debtor declares bankruptcy to obtain relief from debt, and this is accomplished either through a discharge of the debt or through a restructuring of the debt. Generally, when a debtor files a voluntary petition, his or her bankruptcy case commences.
67
http://www.credit-land.com/articles/articles_page_68600_1881780_4.php
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68 69
Dutch translation: failliete boedel T. Foster, Dutch Legal Terminology in English, Kluwer 2009, p. 26. 70 According to articles 20 and 295 BA 71 http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm 72 http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm
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Suspension of payment proceedings end either through withdrawal at the debtors request or by means of an agreement that the court approves. Debt restructuring is completed positively or negatively. If a debtor complies with the debt restructuring obligations (fully informing the receiver, getting as much money into the estate as possible for three years, going to work or, as the case may be, staying at work) the court will grant him a clean sheet in the final judgment. This implies that the remaining debts may no longer be legally collected by the creditors.74 If a debtor does not comply with his debt restructuring obligations, there may be an intermediation with no clean sheet: the debtor will now be in a state of bankruptcy.75 For example, this can happen if the debtor allows excessive new debts to arise during the term of his debt restructuring, or if he tries to disadvantage his creditors. The essential difference between bankruptcy and debt restructuring is that after completion of a bankruptcy the unpaid claims survive and can therefore become collectable again for creditors.76 A bankruptcy ends by means of an agreement, by means of a simplified completion (removal in case of a lack of income) or by means of a distribution to the creditors following verification of their claims.
73 74
http://ec.europa.eu/enterprise/policies/sme/files/sme2chance/doc/report_ned_en.pdf, p. 5. See article 358 of the Bankruptcy Act 75 See article 350 of the Bankruptcy Act 76 Articles 195 BA
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Question 2
The foundation YoungFit offers to her forty-two creditors payment of half of their debt. The week before, one of the big creditors has filed for bankruptcy of the foundation. The board of directors is trying to come to an agreement with this creditor before the court case. They say that if bankruptcy is granted, the creditors will receive a lot less. How is the foundation trying to avoid bankruptcy and if the request of the creditor would be granted, would this method of the foundation be a way to end the bankruptcy?
Question 3
The company H&M is not doing well financially. The board of directors has an emergency meeting to decide whether to file a request for bankruptcy or suspension of payments. They turn to you for legal advice. a. What is the difference between bankruptcy and suspension of payments? What would you advise? b. What is the main advantage and disadvantage of suspension of payment?
Question 4
Mr. Wevers had borrowed a sum of 5,000 from his friend Bart. Unfortunately, Wevers has several outstanding debts with several creditors, including his bank (he has not paid his mortgage for three months), his credit company Visa, his study loan with DUO, Ikea (he had ordered all his furniture there, but only paid half) and his ex-wife, who he still owes alimony. Bart is worried that he will not get his money bank. In addition, Wevers is thinking of submitting a request for bankruptcy or a debt restructuring for private individuals. a. Why should Wevers not ask for a suspension of payments? b. Mention per party the type of creditor. Page 66 of 88
Business Law Syllabus Part 1 Revision 2 c. Lets assume that Wevers has been granted the request of bankruptcy, so Bart now has a claim on a bankrupt. What does this mean for Bart? d. What if Bart had lent the money to Wevers after his bankruptcy was granted (which would not be very wise): can Bart still claim his money back? e. If mr. Wevers would request of a Debt restructuring for private individuals, how long would the procedure take? f. Bart has been waiting for a very long time for his claim. What if the bankruptcy has been terminated and Bart still has not been paid? g. What if mr. Wevers has done the debt restructuring for private individuals and the judge has decided after 3 years he deserves a clean slate. Can Bart still claim his money back? And what could he have done or still do?
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Also referred to as maker rd J.H. Spoor, D.W.F. Verkade, D.J.G. Visser, 2005. Auteursrecht. 3 edition. Deventer: Kluwer, page 3 79 Countries that are party to the Universal Copyright Convention 1971, but are not party to the Berne Convention 80 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society
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Business Law Syllabus Part 1 Revision 2 4) Personal stamp (touch) of the author In England there are only three requirements: it has to be a work, there has to be tangibility and there has to be originality.
A work
Only certain, specific types of works are protected. In the Netherlands there are three categories, based on the Berne Convention:81 literary works, scientific works and artistic works. Literary works and artistic works are categories in England as well, but in addition to these they have dramatic works and musical works as separate categories. A few examples of what is regarded as a work on the basis of article 10 of the Dutch Copyright Act: books, brochures, magazines, geographical maps, designs, sketches, photographic works, films, computer programs, choreographic works, speeches, theatrical performances, sculptures, musical works (with or without words) and so on. One can clearly see that even though England has two different categories, more or less the same types of works are protected. The length, the quality or the artistic value is in principle irrelevant.
Tangibility
Tangibility implies that copyright does not protect ideas, but only the particular (tangible) expression of an idea. The expression must be recorded in a permanent form; this can either be in writing or in any other way.82
Own character
When creating a work, every author uses existing elements (such as certain facts, theories, styles, peculiarities of a language et cetera). To these existing elements, the author adds his own ideas which he then connects deliberately or not in his own way in his work.
4.2.3 Style
Style is not protected by copyright. Therefore, you can compose music in the style of Gershwin, paint in the style of Picasso and write in the style of Tom Clancy. The main issue is: what is considered as
81 82
J.H. Spoor, D.W.F. Verkade, D.J.G. Visser, 2005. Auteursrecht. 3 edition. Deventer: Kluwer, page 75 nd D. Bainbridge and C. Howell, 2011. Law Express Intellectual Property Law. 2 edition. Essex: Pearson Education Limited, page 5
rd
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Business Law Syllabus Part 1 Revision 2 non-protected style and what is considered as copyright protected features? The boundary is largely determined by the following factors: Is the specific combination of style-elements as such original and does it bear the personal stamp of the author?
Can the style-elements be shaped in a different way? These factors were developed in Dutch jurisprudence. Despite the fact that these factors help in determining the boundary, there is still a large grey area. It is eventually up to a judge to decide where exactly the boundary is in each individual case.
4.2.4 Rights
A copyright owner has to sets of rights: moral rights and economic (or exploitation) rights.
Economic rights
As the name already indicates, the goal of economic rights is to give the copyright owner the possibility to make money from the exploitation of the work. Copyright owners have the exclusive right to authorise, restrict or prohibit:83 Copying in any way, shape or form Issuing copies of the work to the public Renting or lending copies of the work to the public Performing, showing or playing the work in public Broadcasting the work or other communication to the public by electronic transmission Adapting the work, such as translating, transcribing or converting
Examples of copying: photocopying, reproduction of a printed page in handwriting, typing or scanning, taping live or recorded music.
Moral rights
The typical thing about moral rights is that they can even be exercised after the author has transferred or licensed his work to a third party. Moral rights can be integrity rights or paternity rights.84 On the basis of his integrity right, the author can object to derogatory treatment (in the sense of mutilation, modification or distortion) of the work that is prejudicial to his honour or reputation. For the latter, the opinion of a right-thinking member of the public is relevant and not the opinion of the author himself.85 The integrity right can only be exercised by the author if the work that is treated in a derogatory way is afterwards published or issued to the public.
83 84
http://www.ipo.gov.uk/types/copy/c-about/c-about-faq/c-about-faq-economic.htm Article 25 of the Dutch Copyright Act 85 nd D. Bainbridge and C. Howell, 2011. Law Express Intellectual Property Law. 2 edition. Essex: Pearson Education Limited, page 29
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The paternity right involves that the author is entitled to be identified as such. This is not an automatic right because it has to be asserted. This also works the other way around: authors have the right not to have works falsely attributed to them.
Article 12 and article 13 of the Dutch Copyright Act rd J.H. Spoor, D.W.F. Verkade, D.J.G. Visser, 2005. Auteursrecht. 3 edition. Deventer: Kluwer, page 156 88 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights 89 Agreement on Trade-Related Aspects of Intellectual Property (TRIPs), annex C1 of the Marrakesh Agreement Establishing the World Trade Organisation, Marrakesh 15 April 1994, article 61 90 http://www.rijksoverheid.nl/onderwerpen/ict/legaal-downloaden-en-fair-use 91 http://www.copyright.gov/title17/92chap1.html#107
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Business Law Syllabus Part 1 Revision 2 copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors. Despite the fact that fair use is non-existent in the Netherlands, Dutch courts can use general legal rules and principles to determine that a certain situation does not constitute infringement.92
Parody
A parody is the imitation of another work in an altered form to achieve a comical effect. From a social and cultural point-of-view, parodies are usually allowed.93
92 93
J.H. Spoor, D.W.F. Verkade, D.J.G. Visser, 2005. Auteursrecht. 3 edition. Deventer: Kluwer, page 221 Article 18b of the Dutch Copyright Act 94 http://www.wipo.int/wipolex/en/national.jsp 95 Bureaux Internationaux Runis pour la Protection de la Proprit Intellectuelle
rd
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96 97
This will usually be a legal person natural persons, however, can also be the owner of certain trade marks BOIP Benelux Office for Intellectual Property 98 http://oami.europa.eu/ows/rw/pages/index.en.do
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A sign
A sign can consist of words (including personal names), designs, letters, numerals, shape or packaging. The following is included: word marks, figurative marks, sound marks, three-dimensional marks and colours99.100 Registration of smell as a mark is extremely difficult, but possible in theory.
Graphical representation
A trade mark has to be clear, precise, self-contained, easily accessible, intelligible, durable and objective. These criteria were first mentioned in Sieckmann v. Deutsches Patent- und Markenambt101 and are therefore often referred to as the Sieckmann-criteria.
Capable of distinguishing
A trade mark can be distinguishing because it has an original or a fantasy name. If the trade mark does not have an original or fantasy name, distinctiveness can be built up by the trade mark holder. An example of this is Apple. In addition to this, distinction through use is possible.102 Registration is refused if there are absolute or relative grounds of refusal. The absolute and relative grounds for refusal are included in the Community Trade Mark Regulation (CMTR).103 In October 2008 the Trade Mark Directive was issued.104 This Directive the successor of Directive 89/104/EEC105 contains many provisions that were also included in the CMTR.106 Article 7 CMTR: Absolute grounds for refusal 1. The following shall not be registered: (a) (); (b) trade marks which are devoid of any distinctive character; (c) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service;
99
http://www.ipo.gov.uk/pro-types/pro-tm/t-law/t-pan/t-pan-207.htm http://oami.europa.eu/ows/rw/pages/CTM/FAQ/CTM1.en.do, and; http://www.boip.int/nl/pdf/regulations/beneluxverdrag.pdf 101 European Court of Justice C-273/00, judgment of 12 December 2002, paragraph 47 55, as confirmed in: European Court of Justice C-104/01, judgement of 6 May 2003, Libertel Groep BV v. Benelux Merkenbureau, paragraph 1 of the Courts ruling 102 For example: European Court of Justice C-108/97 and C109-97, judgment of 4 May 1999, Windsurfing Chiemsee Produktions- und Vertriebs GmbH v. Boots- und Segelzubehr Walter Huber and Franz Attenberger, paragraph 2 of the Courts ruling 103 Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark; 104 Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks 105 First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks 106 The developments are accurately described in: http://www.whoswholegal.com/news/features/article/12862/developments-european-trademark-law
100
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Business Law Syllabus Part 1 Revision 2 (d) trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade; (e) signs which consist exclusively of: (i) the shape which results from the nature of the goods themselves; (ii) the shape of goods which is necessary to obtain a technical result; (iii) the shape which gives substantial value to the goods; (f) trade marks which are contrary to public policy or to accepted principles of morality; (g) trade marks which are of such a nature as to deceive the public, for instance as to the nature, quality or geographical origin of the goods or service; (h) (); (i) trade marks which include badges, emblems or escutcheons other than those covered by Article 6ter of the Paris Convention and which are of particular public interest, unless the consent of the competent authority to their registration has been given; (j) trade marks for wines which contain or consist of a geographical indication identifying wines or for spirits (k) which contain or consist of a geographical indication identifying spirits with respect to such wines or spirits not having that origin; (l) trade marks which contain or consist of a designation of origin or a geographical indication registered in accordance with Council Regulation (EC) No 510/2006 of 20 March 2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs (1) when they correspond to one of the situations covered by Article 13 of the said Regulation and regarding the same type of product, on condition that the application for registration of the trade mark has been submitted after the date of filing with the Commission of the application for registration of the designation of origin or geographical indication. Article 8 CMTR: Relative grounds for refusal 1. Upon opposition by the proprietor of an earlier trade mark, the trade mark applied for shall not be registered: (a) if it is identical with the earlier trade mark and the goods or services for which registration is applied for are identical with the goods or services for which the earlier trade mark is protected; (b) if because of its identity with, or similarity to, the earlier trade mark and the identity or similarity of the goods or services covered by the trade marks there exists a likelihood of confusion on the part of the public in the territory in which the earlier trade mark is protected; the likelihood of confusion includes the likelihood of association with the earlier trade mark.
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107 108
Similar to article 51 paragraph 1 sub (b) of the CMTR More examples can be found here: http://en.wikipedia.org/wiki/List_of_generic_and_genericized_trademarks 109 European Court of Justice C-375/97, judgment of 14 September 1999, General Motors Corporation v. Yplon SA, paragraph 27
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Priority right
A priority right or right of priority is a right that is limited in time, namely twelve months from the date of filing the first application at, for example, the Nederlandsch Octrooibureau.116 The purpose and benefit of a priority right is that the one who has such a right is allowed to file a subsequent application in another country (or other countries) for the same invention. The patent will then be effective in that country (or those countries) from the date of first filing. The date of first filing is called the priority date. The priority date shall count as the effective date of filing. This implies that the prior state of the art that is taken into account for examining the novelty and inventive step claimed in the subsequent application is not everything made available to the
110 111
http://www.epo.org/applying/basics.html A (non-verified) English version can be found at: http://www.ivir.nl/legislation/nl/patentact1995.html 112 http://www.epo.org/about-us/organisation/member-states.html 113 Article 4 EPC 2000 114 Washington, 19 June 1970; for the full text: http://www.wipo.int/export/sites/www/pct/en/texts/pdf/pct.pdf 115 http://archive.epo.org/epo/pubs/oj010/03_10/03_sup10.pdf 116 Article 87 EPC 2000
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Business Law Syllabus Part 1 Revision 2 public before the filing date of the subsequent application but everything made available to the public before the priority date (the date of filing of the first application).117
Novelty
To avoid being regarded as part of the state of the art the invention must not have been made available to the public in any way, anywhere in the world, at any time before the priority date.119 Novelty is destroyed if the invention becomes part of the state of the art; it becomes part of the state of the art if it is made available to the public, either by publication in a scientific journal, a local newspaper, a speech, a lecture et cetera before the priority date.120 Novelty requires that the invention has never (ever) been available to the public so if you wish to apply for a patent you have to be extremely careful not to reveal your invention to the public before the filing date in any way. Disclosures made in confidence are the main exception to this rule.
Inventive step
There is an inventive step if the invention is not obvious to a person skilled in the art. A person skilled in the art is someone with above-average knowledge in a particular field (not necessarily an expert, however). The definition of obviousness is included in the EPO Guidelines:121 Article 11.4 EPO Guidelines for Substantive Examination: () whether before the filing or priority date () it would have been obvious to the person skilled in the art to arrive at something falling within the terms of the claim. () The term "obvious" means that which does not go beyond the normal progress of technology but merely follows plainly or logically from the prior art, i.e. something which does not involve the exercise of any skill or ability beyond that to be expected of the person skilled in the art. ()
117 118
Article 89 EPC 2000 Article 52 EPC 2000 and article 2 of the Dutch Patent Act 1995 119 nd D. Bainbridge and C. Howell, 2011. Law Express Intellectual Property Law. 2 edition. Essex: Pearson Education Limited, page 71 120 Article 54 paragraph 1 and 2 EPC 2000 121 Guidelines for Examination in the European Patent Office, Part C Chapter IV; Entire document can be found at: http://documents.epo.org/projects/babylon/eponet.nsf/0/7ffc755ad943703dc12576f00054cacc/$FILE/guidelines_2010_co mplete_en.pdf
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Business Law Syllabus Part 1 Revision 2 The EPO uses the so-called problem-and-solution approach: Article 11.5 EPO Guidelines for Substantive Examination: In order to assess inventive step in an objective and predictable manner, the so-called "problem-and-solution approach" should be applied. () there are three main stages: (i) determining the "closest prior art", (ii) establishing the "objective technical problem" to be solved, and (iii) considering whether or not the claimed invention, starting from the closest prior art and the objective technical problem, would have been obvious to the skilled person.
Example: A machine for producing sausages consists of a known mincing machine and a known filling machine disposed side by side. In this case there is an obvious and therefore non-inventive combination of features. Example: A mixture of medicines consists of a painkiller (analgesic) and a tranquilliser (sedative). It was found that through the addition of the tranquilliser, which intrinsically appeared to have no painkilling effect, the analgesic effect of the painkiller was intensified in a way which could not have been predicted from the known properties of the active substances. In this case there is a non-obvious 122 and therefore inventive combination of features.
The person skilled in the art has to be a skilled practitioner in the relevant field who possesses average knowledge and ability and who is aware of what was common general knowledge in the art at the relevant date.123
Industrial application
The invention is made or used in any kind of industry, including agriculture.124 The word industry has to be interpreted broadly and can include all manufacturing, extracting and processing activities. One could say it includes all physical activity of technical character (which means it belongs to useful or practical arts instead of aesthetic arts).125 A recently developed additional criterion is that there has to be some profitable use for which the substance can be employed.126 Industrial application does not necessarily imply the use of a machine or the manufacture of an article.
Examples: A process for dispersing fog or for converting energy from one form to another are considered industrial application.
122
Examples taken from: Guidelines for Examination in the European Patent Office, Part C Chapter IV-45, page 364 and page 365 123 EPO Guidelines for Substantive Examination, Part C Chapter IV-33, article 11.3 124 Article 56 EPC 2000 125 EPO Guidelines for Substantive Examination, Part C Chapter IV-16, article 5.1 126 Boards of Appeal of the European Patent Office, decision of 11 May 2005, case number T 0870/04, point 4 of the Reasons for the Decision
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Exceptions to patentability
Even if all the requirements of patentability are met, there are a few situations where registration will still fail. Article 53 EPC 2000 contains these exceptions to patentability. First of all no patent will be granted for inventions of which the commercial exploitation would be contrary to the ordre public or morality. No patents are granted for plant or animal varieties (or biological processes for the production of plants or animals) either, with the exception of microbiological processes or the products thereof. Finally, no patent will be granted for methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body, with the exception of products, in particular substances or compositions, for use in any of these methods.
127 128
Article 53 Dutch Patent Act 1955 nd D. Bainbridge and C. Howell, 2011. Law Express Intellectual Property Law. 2 edition. Essex: Pearson Education Limited, page 85 129 Article 70 Dutch Patent Act 1995
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Question 2
Patrick, who is an artist, gives permission to his publisher to publicise 13 of his own paintings in the form of a calendar. A third party, Harry, buys a few of these calendars, cuts out the reproductions of these paintings and sticks them on chipboards and sells these to consumers. Harry says that the rights of the creator is exhausted by selling his painting as a calendar, he (Harry) therefore can use his picture. According to Harry, Patrick as a copyright holder cannot control the change of ownership of the copy anymore, because Patrick publicised his work and Harry can now reuse it without asking permission. a. Could you argue for Patrick that Harry is copying his work? b. What if Patrick has also made a small film, which you as a student want to use in your ppt presentation for Business Law. Can you use parts of a the video in your ppt (or prezi) presentation? c. What are the remedies Patrick can use? d. What if Harry thought of making a parody of the calendar by adding nazisoldiers on every picture? Would this be allowed or not?
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Question 2
In Thailand, Carel buys five containers full of perfume. The bottles have a shape similar to a Greek god. On the bottles there is no label and no name. The package of the bottles is plain white cardboard. At arrival in Rotterdam a French company called Eaudelille, seizes the bottles, on grounds of infringement of her trade mark. Eaudelille has registered the bottle and the scent as a trade mark in the Benelux. Eaudelille has requested the judge to destroy the whole cargo of Carel and to prohibit further promotion of the perfume in his commercial paper. a. Can you register a shape of a bottle and a scent as a trade mark? Can scent be protected by copyright? b. What is the advantage of a trade mark on the bottle and the scent compared to a copyright? c. Could Eaudelille ask for destruction of the whole cargo of Carel if he has purchased the perfume legally in Thailand and did not know of the registration of Eaudelille? d. Would Carel have a better legal position if he had purchased the perfume in Germany? e. Is Carel allowed to put a picture of the bottle in a commercial paper? What if he had bought the bottles in Germany? What about the copyright? f. Would it be an option for Carel to empty the bottles of perfume, fill them with clear Greek water instead, and sell them?
Question 3
The Dutch inventor Wallace has invented a kind of a metal which can carry a thousand times its own weight. He asks for patent. More and more companies are using his type of metal. Gareth buys in Taiwan many refrigerators of the brand Super. The refrigerators contain elements of Wallaces metal.
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Business Law Syllabus Part 1 Revision 2 Gareth transports the refrigerators to Holland. In Holland Wallace seizes the refrigerators because Super had never asked for permission to use the metal. a. Gareth hopes to find a failure in the patent of Wallace and wonders what the requirements are. Could you name them and has Wallace fulfilled them all? b. Which requirements of trade mark do not have to be fulfilled for patent? c. What kind of patent can Wallace obtain and for how long? d. What are the disadvantages of applying for a patent? e. Suppose that Wallaces metal is composed of two kinds of materials and another manufacturer makes the same metal, but with a slightly different composition, namely with three types of other materials. Based on which argument could you say that there is still an infringement on Wallaces rights? f. What if another company has improved the metal, into a stronger and lighter type? They want to use this metal in products, but Wallace refuses to give permission. Does the company need his permission?
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ChangeLog
Revision nr.
Chapter 1
Chapter 2
Chapter 3
N/A N/A N/A
Chapter 4
2011 2012 : Document first used as Business Law Syllabus Block 1 Rev0 First issue N/A N/A Rev1 Rev2 Updated EU part moved to B2 + Correction of spelling/grammar Correction of spelling/grammar N/A First issue First issue Correction of spelling/grammar Correction of spelling/grammar
Rev3
Rev4
Picture of legal No changes No changes First issue of entire systems replaced + chapter Correction Paragraph 1.4.2 Rev5 International part No changes No changes No changes deleted Rev6 Document adjusted to be used for IBL EN 2012 2013 : Document renamed to Business Law Syllabus Part 1 New Revisions Rev0 Minor corrections/ additions Minor corrections/ additions Certain paragraphs removed Information added
With special thanks to the following IBMS students (Y1 2010 2011):
Milou Donkersloot Stefan den Ouden Suzanne van der Kraan Aline Krijger
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