BUSINESS LAW

INTRODUCTION IN LAW

The term law has several meanings, as follows:

1. Firstly, law means all legal rules adopted by the state authority, in order to
regulate human behaviour within the society. In this case, the term law refers to
its object, meaning the social relations which are regulated by the legal rules.
Within this meaning, the law is composed by all legal rules included in normative
acts such a laws, government ordinance, decrees, government decisions etc. As a
consequence, this meaning is known as the objective meaning of the term law or
the objective law. Within this meaning, the term law is translated DREPT.
2. Secondly, the term law means the normative act which is adopted by the
legislative power of the state meaning the Parliament following a prescribed
procedure. Within this meaning law is translated LEGE.
3. The third meaning of law; within this meaning, law means a social science which
studies the rules of human behaviour, the development of the systems of law , the
political and juridical institutions as well as the mutual relations between the
different parts of the social system.

The system of law and the branches of law

All legal rules, in force within a territory of the state are linked together in a
system of rules meaning the system of law. This system is composed by branches of law.
A branch of law includes all legal rules which are connecter by the following 2 elements:

1st element - the object under settlement meaning the social relation regulated by
the legal rules of the branch in question
2nd element - the method of regulating the social relations under settlement

Within a branch of law, the legal rules are linked together according to their
content into juridical institutions. Therefore, the juridical institution consists of legal
rules, which regulate certain specific categories of social relations creating specific
juridical relations. For example, all legal rules that regulate the marriage compose the
juridical institution of marriage.

We should keep in mind that juridical institution is different from the juridical
relation. The juridical relation is a social relation regulated by a legal rule. This social
relation is established between natural or legal persons meaning the subjects of law which
become owners of rights and obligations. Actually, within the same juridical institution,
there are included several juridical relations. For instance, the juridical institution of the
ownership right meaning all legal rules that regulate the ownership right.

The division of law

The law is divided in the following 2 categories:

1. International law
International public law: International public law regulated the relations
between states or the relations between states and international
organizations.
Internation private law: International private law regulates the relations
between natural or legal persons who belong to different states, countries
or who have goods or interests in different countries. Therefore, each time
a juridical relation has in its structure a foreign element (as for example
the different citizenship of the parties, the performance of the contract in
another country and so on) the legal rules of international private law must
be applied.
2. National (Internal law)
Public law: Public law consists of legal rules related to the organization of
the state, the public authorities and the relations between the state or the
public authorities and the individuals.
Private law: Private law consists of legal rules which regulate the
private relations established between individuals belonging to the same
country.

The distinction between these 2 divisions of the national system of law is

made taking into account 2 criteria as follows:

The nature of interests protected by the legal rules:

The legal rules of Public law protects public general interests , the
interests of the entire community , while the legal rules of private
law protect private individuals interests meaning the interest of
the parties to the juridical relations(Example public law-criminal
law, civil law-private law)

The nature of the social relations which are regulated by the

legal rules:

2
 Within public law, the social relations under settlement are mainly
subordination relations established between the state and the
individuals.

Within private law, the social relations under settlement are mainly
equality relations established between natural or legal persons. The
parties to juridical relations of private law are considered equal
from a juridical point of view.

The main branches of public law

The constitutional law-which regulates the organization, the structure and the
powers of state authorities as well as the rights and the duties of the citizens. The
main source of constitutional law is the Romanian constitution which is actually
the fundamental law of the state.
The administrative law-which contains legal rules regulating the organization and
the functioning of the administrative bodies of the state and the public services.
The fiscal financial law-which regulates the relations concerning the
establishment, the approval and the execution of the state budget as well as the
taxes and other charges imposed by the state.
The criminal law-which includes all legal rules regulating the crimes or criminal
offenses and the sanctions applied to the persons who commit them.
The law of civil procedure-which regulates the juridical activity meaning the
activity of justice performed by judges in civil disputes and the execution of
judgements given in such cases.
The law of criminal procedure-which regulates the judicial proceedings in
criminal cases (judicial persons).

The branches of private law

The civil law-which contains all legal rules that regulate the patrimonial and non-
patrimonial relations between natural or legal persons or between the
professionals , the family relations deriving from marriage , adoption, filiation and
so on.
The labour law-which regulates the labour relations between employers and the
employees as well as the social relations concerning the employees protection.

Business law contains all legal rules that belong to different branches of either
public or private law and which are applicable in business relations. Therefore, business
law regulates mainly the following legal relations concerning the performance of
economic activities:

3
 1st category: legal relations of public law established between the state or bodies
of state and the participants to business relations concerning, for example, the
authorization of functioning , the taxes and other charges, the crimes and criminal
offenses related to the performance of activities and so on.
2nd category: the legal rules of private law regulating juridical relations
established between the participants to business relations such as different
categories of contracts (the ownership right, labour relations and so on).

The legal rule

Definition: The legal rules are rules of social behaviour like moral/ religious rules.
All social rules are compulsory or mandatory because otherwise they could not be
qualified as rules but as recommendations.

However, the sanction for the non-observance (non-complies) of each category of

social rules is different meaning the sanction has the same nature as the rule to which its
attached. Unlike all other social rules, the legal rules have a legal juridical sanction. It
means that this sanction is applied within the framework of the society organized as a
state and its application implies in all cases the intervention of the competent bodies of
the state. As a consequence, the legal rules are different in relation to other categories of
social rules because they may be applied and imposed through the power of the state.

As a definition, the legal rule is a general impersonal and compulsory rule of

human behaviour which may be applied and imposed if necessary through the power of
the state. According to this definition, the legal rule has it following 3 essential
characters:

1. The legal rule is general; it means the legal rule provides a model of behaviour
which must be applied by any person.
2. The legal rule is impersonal meaning the legal rule is not directly addressed to a
specific person. Actually, the legal rule represents a unique standard of behaviour
which refers to an undetermined number of persons. For example, art.84 of the
Romanian Constitution which states that the president of Romania cannot be
member of any political party and cannot held any other public or private office.
3. The legal rule is compulsory meaning its provisions may be imposed by different
state means (as for example judge decisions).

The structure of the legal rule

The structure of any legal rule includes the following 3 elements: hypothesis,
command and sanction. The hypothesis is the part of the legal rule which describes the
concrete circumstances when the legal rule is to be applied. The command is the most

4
important element of the legal rule. It provides the behaviour imposed to the subjects of
law under the circumstances described in the hypothesis. The further command may
provide what the subject of law must do, shall not do or what hes allowed to do. The
sanction provides which are the consequences of the non-observance of the legal rule and
the penalties that may be applied and imposed by the competent bodies of the state to
those who do not comply with the command of the legal rule.

Its not necessary to have all these 3 elements of the legal rule in the same article
of law. Sometimes, the hypothesis or the sanction are included in another article or even
in another normative act, but the legal rule must always include the command even
though the command of some legal rules is implied (ex: criminal legal rules).

Examples of legal rules

Gov. Ordinance No. 26 of 2000:

In order to get legal personality, the members of the association should conclude the
constitutive act and the statute of the association in authentic form or in written form
attested by a lawyer under the sanction of absolute nullity.

Criminal Code:

The murder of a person is punished with prison between 10-20 years and withdrawal of
rights.

The sanction of the legal rule may be classified in accordance to several criteria:

1. According to the degree of determination the sanction may be divided into 2

categories as follows:

-absolutely determined when it cannot be modified by the state body which applies it
(ex: nullity)

-relatively determined when the law provides the limits of the penalty and the body of
the state who applies it must choose the concrete sanction for each specific case
taking into account the concrete circumstances of the case (ex: prison for 10 or 20
years).

2. According to the way the sanction are provided and applied the sanctions may be
divided into 2 categories as follows:

-alternative sanctions, when the body of the state which applies it must choose
between 2 or more different penalties (ex: prison or criminal fine)

-cumulated sanctions, when the law provides 2 or more different penalties which
must be applied in the same time (ex: prison and withdrawal of rights)

5
 The classification of the legal rules

The legal rules may be classified according to several criteria:

1. According to their object under settlement the legal rules may be: constitutional
legal rules, civil legal rules, administrative legal rules, criminal legal rules etc. We
should keep in mind that the object under settlement is actually the social relation
regulated by the legal rule.
2. According to their juridical force the legal rules may be: legal rules included in
the constitution, in- laws, degrees, gov. ordinances, decisions, orders and
instructions of ministers. This classification takes into account the position and
the nature of the state body which has adopted the legal rule. Therefore, the
hierarchy of the legal rule corresponds to the hierarchy of the state bodies and
authorities. This hierarchy is very important because in case of a conflict between
legal rules adopted by different bodies the legal rules adopted by the superior
body have priority to apply. However, as far as the individuals as the ones to
whom the law is addressed or legal rules are concerned, all normative acts have
the same juridical force meaning they are compulsory.
3. According to the character of the prescribed behaviour, legal rules may be
classified as follows: imperative legal rules and disposal legal rules.

The imperative legal rules are those which must be applied exactly as they are
provided without exception. The imperative legal rules may be divided as follows:
-imposed legal rules which provide expressively the obligation to do something,
meaning they impose to the subject of law a certain behaviour, action. Example:
art 33 in the Constitution provides: The State must take the necessary measures
in order to ensure the hygiene and the public health".
-prohibitive legal rules which forbid a certain action or behaviour. Example: Art
37 in the Constitution: The associations having a secret character are forbidden.

The disposal legal rules which allow the subjects of la w to choose their own
behaviour. They may be divided as follows:
- permissive legal rules: which provide certain rights or possibilities for the
subjects of law. Example: art 559 of the Civil Code: The owner is allowed to
build above and underground his land all the buildings, plantations and works he
considers appropriate with the exceptions established by law.
- suppletive legal rules: which allow the subjects of law to choose the behaviour
in certain circumstances. Otherwise, meaning if the subjects of law do not choose
their behaviour, the provisions of the suppletive legal rules are to be applied.
Therefore, the suppletive legal rules replace the will of the parties whenever this
will has not been expressed. Art.1689 of the Civil Code: The delivery of the sold
goods must be performed at the place where they were situated at the moment of
concluding the contract unless the parties have agreed otherwise. Therefore , the
6
 parties may provide within their sellpurchase contract the place of delivery of the
sold goods which corresponds better to their interest. If the sale-purchase contract
does not contain any clause concerning the place of delivery, the suppletive legal
rule becomes applicable and it determines in a compulsory wat the place of
delivery of the sold goods.

Taking into account the extent of their application, legal rules are:

General: The general legal rules apply within an entire field of activity (an
entire branch of law).
Special: The special legal rules refer to a limited sphere of social relations
taking into account specific criteria, circumstances or qualities of the
persons to whom they are addressed. It should be noted that the special
rules have a special character, they derogate from the general legal rule. It
derogates means to deviate, to depart from a general provision to regulate
a certain issue in a different way as compared to the general regulation to
provide exceptions to the general regulation.
Exception legal rules: The exception legal rules are also derogative. They
provide derogations to the behaviour prescribed by general or special legal
rules. They must be strictly interpreted and should be applied only under
the circumstances described in the hypothesis. Example: In relation to the
donation contract art. 1015 Civil Code provides that the Donation
contract cannot be revoked. Nevertheless, art. 1020 Civil Code provides
the exceptions to this rule, meaning cases in which the donation may be
revoked. Art. 1020: Donation contract may be revoked if the beneficiary
of the donation does not perform the tasks assumed through the contract.

This classification is very important in relation to the application of the legal rule.
Thus, if 2 legal rules may be applied at the same time, the derogative legal rule, meaning
exception or special, has priority to apply according to the principle special rules
derogate from general rules.
According to their structure, the legal rules may be classified :

Complete legal rules which contain all the 3 elements of their structure.
Reference legal rules which do not have all the 3 elements. In order to find the
missing elements, the reference rules send to another legal rules in the same
normative act or in another one. Art 3 Law no. 215/1998 on Public Property and
Its Juridical Regime: The public domain consists of the goods provided by art.
135 par. 4 from the Constitution, the goods provided by the annexes of the present
law as well as any other goods that serve a public purpose or interest according to
their nature or to the law .

7
 Blank legal rules are also incomplete legal rules, but the missing elements will
be completed in the future by another normative act which is not yet adopted. Art.
14 of Law 2003/1999 on Labor Permits: The procedure for issuing and nullifying
the Labour permits will be regulated through the application rules adopted b y the
ministry of Labour within 60 days following the publication of the present law in
the Official Monitor of Romania.

The application of law

The term law has two different meanings.

Firstly, law means all normative acts adopted by the state authorities (the
Parliament, the Government, the Ministries and the local administrative authorities). This
is the wide meaning of the term law. Secondly, law means only the normative act
adopted by the legislative power, namely the Parliament.
In relation to the application of law, we should take into account three
coordinates, as follows:

The application of law in time;

The application of law on the territory;
The application of law to persons.

The application of law in time

During the years, the existing laws are replaced by others, because the State is
interested to regulate in a different way certain social relations, in order to correlate the
law and the economic and social realities. Therefore, it is very important to establish the
period of time during which a law must be applied, meaning the moment when the law
begins its application, as well as the end of its application. Actually, the law begins its
application from the moment of its entering into force. As a consequence, the law
becomes compulsory and it must be applied and observed by everybody starting from its
entering into force.
According to the Romanian Constitution, the law enters into force three days after
its publication in the Official Monitor of Romania or on a further date expressly
mentioned within the law itself.
Starting from its entering into force, the law is presumed to be known by
everybody. Indeed, nobody can plead his ignorance of the law in front of the judge.

The final moment of the application of law is the moment of its abrogation.
The abrogation (the repeal) means the future abolition or elimination of the law.
The abrogation may be express or implicit (tacit).

8
 1. The express abrogation occurs when the legislator expressly provides that a
certain law is repealed. Furthermore, the express abrogation may be direct or
indirect.

The direct express abrogation occurs when the new law mentions directly the
abrogated law or the abrogated articles of law. For exa mple: on the date of entering
into force of the present law, the Law no. x is abrogated (repealed).

The indirect express abrogation occurs when it is provided that the laws or the articles
that are contrary to the new law are abrogated. Thus, we generally use the expression:
All contrary (conflicting) legal provisions are abrogated (repealed).

2. The tacit (implicit) abrogation occurs whenever the new law contains legal
provisions which are incompatible with the previous law, without mentioning
expressly that the previous law is abrogated.

The principles and the exceptions concerning the application of law in time

Generally, the law must be applied between the moment of its entering into force
and the moment of its abrogation. However, the juridical relations may produce their
effects during periods of time when different laws apply, especially because in time the
existing laws may be replaced by other legal provisions. As a consequence, we should
determine the applicable law to a particular legal relation, on a certain moment in time,
taking into account the following principles:

1. The principle of the non-retroactivity of law.

This principle states that the law regulates only the circumstances, the situations
occurred after its entering into force. The new law cannot regulate the past situations,
meaning those occurred before its entering into force. Thus, article 6 of the Civil Code
provides: The law is applicable as long as it is in force. It has no retroactive power.
In the same way, the Romanian Constitution provides: The law disposes only for the
future, except for the more favourable criminal law.
As a consequence, according to the principle of the non-retroactivity of the law, the
following rules must be observed:
a. the new law does not regulate the juridical relations which were created, modified
or extinguished before its entering into force;
b. the new law regulates the following:

9
 The juridical situations which are created, modified or extinguished after its
entering into force;
The future effects of juridical relations created prior to its entering into force.

However, there is an exception to the principle of the non-retroactivity of the law,

which is expressly provided by the Romanian Constitution. Thus, according to the
Romanian Constitution, the more favourable criminal law has retroactive power.

2. The principle of immediate application of the new law.

This principle means that a prior normative act cannot regulate the situations occurred
after its abrogation, because the new law must be applied immediately, starting from its
entering into force. As a consequence, the future situations will be regulated by the new
law.
However, there is an exception to this principle, which is called the ultra-activity of the
law. According to this exception, even after the entering into force of the new law, the
prior law may be applied to certain juridical situations which are expressly provided by
the new law.

The application of the law on the territory

This application of the law on the territory is governed by the principle of the
territoriality of law, which is expressly provided by article 7 Civil Code. Thus, according
to this principle, generally the Romanian law is applied on the Romanian territory.
However, the application of this principle depends on the following elements:
the extent of competence of the state bodies which have adopted the legal provisions;
the existence of juridical relations having a foreign element.
Therefore, taking into account the extent of competence of state authorities, the
normative acts adopted by the Parliament, the Government and the authorities of central
public administration are to be applied on the whole territory of Romania. Nevertheless,
the normative acts adopted by the local administrative authorities (the local council and
the county council) are to be applied only on the territory of the county, the town or the
village.
On the other hand, the juridical relations having a foreign element create a
conflict between different laws belonging to different states. As a consequence, this
problem of conict of laws is to be solved by the legal rules of international private law.
Therefore, according to these legal rules, the Romanian law may be applied outside the
territory of Romania or a foreign law may be applied outside its territory, namely on the
territory of Romania. However, it should be mentioned that in such a case, the application
of a foreign law on the Romanian territory is possible in accordance with the provisions
of the Romanian legal rules of international private law.
10
 The application of law to persons

As mentioned before, the beneciaries of legal rules are the natural or legal
persons. The law applies equally to all its beneciaries, to all persons, regardless of their
sex, nationality and race. As a consequence, all persons are equal in front of the law.
However, it does not mean that any law, any normative act applies in the same
way and within the same limits to all persons. From this point of view, there are laws
with general application (such as the Constitution or the Civil Code) and laws which
apply only to specic categories of persons (such as for example the Law no. 31/1990 on
commercial companies, republished, amended and completed).
In addition, the application of law is always national, because the law applies on
the national territory. It means that the national law is to be applied on the national
territory to all the persons who are within the borders of the state at a particular moment.
As a consequence, the Romanian law applies not only to the Romanians, but also to the
foreigners, during their stay in Romania.

Juridical relation

Definition: The juridical relation is the social relation regulated by the legal rule. Within
private law any juridical relation is defined by the juridical equality of the parties.
Each juridical relation has 3 elements of structure as follows:
1. The parties /the subjects of the juridical relation meaning natural or legal persons
as owners of rights and obligations.
2. The content of the juridical relation which includes the rights and obligations of
the parties.
3. The object of the juridical relation meaning the behaviour of the parties, the
actions or inactions that the parties may exercise, must do or are not allowed to
do.

1.The parties of the juridical relation - are the subjects of law namely the owners of
subjective rights and obligations. The participation of the natural person to juridical
relations meaning his quality of subject of law depends on the legal capacity of the
person in question .The legal capacity includes the following 2 parts: abstract capacity
and concrete capacity.

The abstract capacity means the possibility of the natural person to have rights
and obligations. The abstract capacity follows the existence of any human being because
it expresses the quality of subject of law and it allows the participation of the individual
to the juridical life. As a consequence, the abstract capacity of any natural person begins
at the moment of his birth and ends when the natural person dies. Concerning the starting

11
moment of the abstract capacity the general rule is the date of birth, but the law also
provides an exception to this rule. Thus, the Civil Code recognizes anticipated abstract
capacity to the conceived child who is not yet born, under the condition he would be born
alive. However, according to the art. 36 of the Civil Code, the anticipated abstract
capacity refers only to the possibility to have rights. It may be applicable in the field of
inheritance. Concerning the final moment of the abstract capacity, its the mo ment of the
death of the person. As a consequence, if the death is physical the abstract capacity
ends on the date of death as mentioned by the death certificate. If the death is not
physical because the person had disappeared, the law provides a special procedure, the
procedure for the judicial declaration of death. This procedure is necessary in order to
clarify the legal situation of the person who has disappeared during a long period of time
because its impossible to know any more if the person is still alive. The clarification is
necessary in the first place to the family of the miss ing person, but it may also be useful
to other persons having juridical relations with the missing person such as his creditors.
Generally, following the application brought by any interested person, the missing person
may be declared death by Judgement of the Court of Law after 2 years from the date of
the last news of the person missing in question. As an exception, the persons who have
disappeared during war, accidents of other exceptional circumstances which may lead to
the conclusion that the person is no longer alive, may be declared dead after a period of 6
months from the date of their disappearance. However, in all cases, the Judgement which
declares the death must mention the date of the death which is also the date when the
abstract capacity of the person ends. In this respect, according to the provisions of art. 53
from the Civil Code, the missing person is considered alive until the judicial declaration
of his death by definitive of final Judgement.

The concrete capacity of the natural person means the possibility of the person to
actually exercise his subjective rights and assume his obligations by concluding juridical
acts in his own name. As mentioned before, any natural person has abstract capacity. In
addition, the content of the abstract capacity is the same for any natural person.
Nevertheless, concerning the concrete capacity certain categories of natural persons have
no concrete capacity at all or they have a limited or restrained concrete capacity.
Actually, the concrete capacity supposes the existence of an intentional and free will or
understanding meaning the discernment or the judgement in order to be able to evaluate
correctly the juridical consequences of his actions or his expressions of the will. The
discernment or judgement depends on the age of the natural person, but, also , on his
mental health. As a consequence, taking into account the existence and the quality of the
discernment in relation to the age, the concrete capacity of the natural person has 3
stages:

1. The lack of the concrete capacity

2. The limited or restrained concrete capacity
3. Full concrete capacity

12
 1. According to the law, the minor under 14 years old and the persons put under
judicial interdiction lack the concrete capacity. A person, either minor or major is put
under judicial interdiction due to a state of mental illness which impedes him to
understand the consequences of his acts. Therefore, following the application brought by
the interested person, the judge investigates the mental state of the person and pronounces
a judgement which declares the lack of concrete capacity of the person in question.
Concerning the categories of natural persons who lack the concrete capacity their
juridical acts are concluded by their legal representatives, namely the parents or a legal
guardian. As an exception, the law allows these categories of persons, who lack the
concrete capacity, to conclude themselves ordinary and unimportant contracts, for
example buying tickets for the bus.

2. The minor between 14 and 18 years old has a limited concrete capacity. It
means that the juridical acts of the minor between 14 and 18 years old are concluded by
him, but he needs the preliminary approval of his legal representative and sometimes,
when its expressly requested by the law, the authorization of the judge. As an exception,
the minor between 14 and 18 years old does not need the preliminary approval for
concluding ordinary and unimportant contract. In addition, the minor between 14 and 18
years old is allowed to conclude without preliminary approval conservation and
administrative acts. Conservation acts are juridical acts meant to avoid the laws of a
subjective right. Administrative acts are juridical acts meant to assure the normal use of
the goods belonging to the person and the increase of the value of its patrimony. In
addition, the law forbids the minor between 14 and 18 years old to conclude certain
categories of juridical acts even if he has obtained the authorization of his legal
representative and the judge, such as for example a donation contract.

3. Full concrete capacity represents the possibility of the natural person to

exercise all his subjective rights and to assume all his obligations by concluding by
himself without any authorization or representation, all the juridical acts allowed by the
law. The full concrete capacity is considered as the general rule meaning it is the usual
situation in the field of concrete capacity.

According to the law, the full concrete capacity begins at the age of 18 years old.
As an exception , through marriage the minor gets full concrete capacity. According to
the provisions of the Civil Code the minor may marry starting from the age of 16 years
old, but he or she needs the doctors opinion and the approval of the parents. In addition,
according to the art. 40 of the Civil Code under exceptional circumstances and for
justified reasons, the judge may recognize the full concrete capacity to the minor starting
from the age of 16 years old.

13
14
 The setting up of a legal person
According to the law, the legal person may be set up in the following 3 ways:
Throw the constitutive act adopted by the competent body of the state meaning a
law adopted by the Parliament, a normative act or a decision adopted by the
government or a decision adopted by the local council or the council of the
county. This way of setting up legal persons refers mainly to state legal persons
meaning the bodies of the legislative power (the houses of parliament), the
bodies of the executive power, the bodies of the judicial power, the local
administrative units, the public institutions and the companies belonging to the
state.
Throw the constitutive act concluded by the members of the legal person which
must be authorized by the competent body of the state. This way of setting up
legal persons refers mainly to political parties, private companies, associations
and fundations and so on. The authorisation for the setting up of the legal person
in this way is provided by a judicial authority or a body of the executive power.
In order to set up completely and validly a legal person in this way, the law also
requests in certain cases the incorporation or the registration of the legal person
in different registers established by the state authorities. As a general rule, throw
this formality of registration or incorporation the legal person gets full abstract
capacity.
By other ways provided by the law as for example the Romanian state which is
declared a legal person by law.

The legal capacity of the legal person

The legal capacity of the legal person is composed by 2 elements: the abstract capacity
and the concrete capacity.
The abstract capacity - concerning the abstract capacity of the legal persons we
should make a difference between legal persons having a patrimonial goal and
legal persons having a non-patrimonial goal. Thus, legal persons with patrimonial
goal may have all the rights and obligations except those that refer to the natural
person. Nevertheless, the abstract capacity of the legal persons with a non-
patrimonial goal is special they are allowed to have only the rights and obligations
that correspond to their goal. This rule is known as the Principle of Speciality of
the abstract capacity. According to the law the abstract capacity of the legal
person is obtained on the date of its registration or incorporation. Concerning the
legal persons that are not submitted to incorporation or registration their abstract
capacity begins on the date of the juridical act throw which they are validly set up.
However, even before the date of incorporation or registration the legal person

15
 has a limited or anticipated abstract capacity starting from the date of conclusion
of its constitutive act. It means that during this period the legal person may have
the rights and the obligations that are necessary for its valid setting up. The
abstract capacity of the legal person ends on the date of ending its legal
personality meaning at the moment of its dissolution.
The concrete capacity - concerning the concrete capacity of the legal person we
should mention first that the legal person, meaning a group of persons cannot
have its own will different of the will of its members. However, the legal person
must participate to juridical relations b y concluding juridical acts, meaning acts
which imply the will and the discernment. Therefore, the law has adopted the
solution to consider the will of one or several persons from the group as being the
actual will of the collective subject of law, meaning the legal person. This rule is
known as the legal representation of the legal person by its management bodies.
Therefore, according to the law, the legal person exercises its rights and it
assumes its obligations throw its management bodies. The juridical acts
concluded by the management bodies of the legal person within the limits of the
powers given to them are the acts of the legal person itself. This rules are the
general rules concerning the legal representation of legal persons. In addition, the
law also provides special rules concerning certain categories of legal persons.
Thus, for example the Romanian State is generally represented by the Ministry of
Finance.

The companies regulated according to law no. 31/1990

- types of companies in the romanian law-

The companies regulated according to law no. 31/1990 are the most important category
of professionals legal persons which participate to the juridical relations of business law.
As a definition, in accordance with the romanian law, the company regulated by law
31/1990 is a group of persons set up by a company contract and having legal personality
in which the associates agree to put together some goods in order to perform activities of
production, trade or provision of services for the purpose of obtaining and sharing the
profits. Generally in the romanian law the companies are regulated mainly by the law no
31/1990 republished, amended and completed.

The juridical forms of companies regulated by the law 31/1990

According to the provisions of the law the companies regulated by the law no. 31/1990
we published can only be set up in one of the following 5 juridical forms:

16
 The general partnership (societate in nume colectiv)
The limited partnership (societate in comandita simpla)
The company by shares (societate pe actiuni)
The limited partnership by shares (societate in comandita pe actiuni)
The limited liability company (societate cu raspundere limitata)

Therefore, it is not possible to set up a company regulated by the law no. 31/1990 we
published in other juridical form than those provided by this law. The differences
between the juridical forms of companies are determined by the extend of liability of the
associates for the debts of the company.
Concerning the general partnership, its obligations are guaranteed with its patrimony
and the unlimited and joint liability of all the associates. Unlimited liability means that
regardless of his contribution to the registered capital of the company, each associate is
liable for the debts of the company with his own patrimony. Joint liability means that in
the case the company does not pay a debt, any associate can be obliged to pay the hole
amount regardless of his amount of contribution to the registered capital of the company.
Concerning the limited partnership, it has 2 categories of partners: active partners and
passive or sleeping partners. The obligations of the limited partnership are guaranteed
with its own patrimony and the unlimited and joint liability of active partners. The
sleeping partners are liable for the debts of the partnership only within the limits of their
contributions to its registered capital.
Concerning the company by shares, its registered capital is divided into shares and the
obligations of the company are guaranteed with its patrimony. The shareholders are liable
only within the limits of their contributions to the registered capital of the company.
Concerning the limited partnership by shares, it has 2 categories of partners: active
partners and sleeping partners. Its registered capital is divided into shares. Its obligations
are guaranteed with its own patrimony and the unlimited and joint liability of active
partners. The sleeping partners are liable only within the limits of their contributions to
the registered capital.
Finally, concerning the limited liability company, its obligations are guaranteed with
its patrimony. The associates are liable only within the limits of their contributions to the
registered capital of the company.
The persons who want to set up a company are free to choose between the 5 juridical
forms of company provided by the law. The juridical form chosen by the associates must
be mentioned in the constitutive act of the company. Nevertheless, after choosing the
juridical form of the company, the associates are obliged to comply with the legal
provisions which regulates the setting up and the functioning of that type of company.
17
 The classifications of companies regulated by the law 31/1990
The companies regulated by the law 31/1990 we published may be classified
according to several criteria. In the romanian system of law, the most important criterion
is the criterion of their nature and the importance of the personal element or the material
element. According to this criterion, the companies regulated by the law 31/1990 we
published are devided as follows:

Companies of persons
Companies of capitals
The companies of persons are those companies set up b y a small no. of partners
taking into account the mutual trust between the associates and their personal qualities.
This element is known as the intuitue personae element. Actually, in this case, the
personal element is more important than the material e lement. The general partnership
and the limited partnership are companies of persons.
The companies of capitals are those companies which are set up by a great/important
no. of associates taking into account only the actual contribution of the associates to the
capital of the company. Therefore in this case the personal qualities of the associates are
not important. The company by shares and the limited partnership by shares are
companies of capitals.
Concerning the limited liability company, it cannot be included in one of this 2
categories. Actually, like in the case of companies of persons the setting up of the limited
liability company is based on the intuitue personae element, meaning on the mutual
trust and the personal quality of the associates. Nevertheless, the liability of the associates
is limited to their contributions as in the case of companies of capitals.
The second criterion of the companies regulated by the law 31/1990 we published is
the criterion of the structure of the registered capital. According to this criterion, the
companies may be devided in the following 2 categories:
Companies in which the registered capital is devided into parts of interest such as
the general partnership, the limited partnership and the limited liability company.
According to the provisions of the law no 31/1990 we published the parts of
interest issued by the limited liability company are known as social parts.
Companies in which the registered capital is devided into shares such as the
company by shares and the limited
The third criterion is according by the criterion of the no. of associates. According to
this criterion the companies are divided as follows:

18
 Companies with sole associate such as the limited liability companies with sole
associates;
Companies with 2 or more associates.
Actually, the romanian law recognizes the companies with sole associate but only in
the juridical form of the limited liability company with sole associate. The sole associate
may be a natural or a legal person but a person can be the sole associate of a single
limited liability company with sole associate. In addition, a limited liability company
with sole associate is not allowed to be the sole associate of another limited liability
company with sole associate. Finally, the sole associate of the limited liability company
exercises the powers of the general meeting of associates which exists in companies
having 2 or more associates. In addition, the sole associate may also be the administrator
of the company.

The subjective right. The corresponding obligation.

The obligation means the duty imposed upon the passive subject to have a certain
behavior which corresponds to the requirement of the active subject. The behaviors of the
passive subject may consist of giving, doing or not doing something. As a consequence,
the obligtion may be divided in 3 categories as follows:
Obligation to give: The obligation to give means to constitute or to transfer a real
right. For ex, the oblig of the seller to transfer the ownership right to the buyer is
an oblig to give (not transfering the goods, only he right). Another ex would be
the oblig of the debtor to constitute a mortige right.
Obligation to do: The obligation to do means to perform an action in behalf of the
active subject, as for ex the delivery of goods, the performance of services et
cetera.
Obligation not to do: The obligation not to do means the duty of the passive
subject to refrain from any action that may damage the exercise of an absolute
right or to refrain from something that the passive subject would be entitled to do
in the absence of the oblig. For ex the promise to sell a thing to a person at an
established date obliges the party who has made the promise not to sell the thing
in question to another person until the deadline. Ex: multiple questions and open
questions (ex: classify the obligation/rights according to ; explain concrete
capacity et cetera)

The object of the juridical relation

The object of the juridical relation is composed by the behavior of the parties
established through the juridical relation, meaning the action or the inaction that the
19
active subject hast the right to require and the passive subject has the duty to perform.
Generally, the behavior of the parties, meaning their action or inactions, are related to
goods. Therefore the goods must be considered as the derived object of the juridical
relation.
The goods. Def! According to the law, the goods are tangible or intangible things
or objects having an economic value and which may constitute the obj of a patrimonial
right. The goods may be classified in accordance to several criterias.
Taking into account their nature and qualifications made by the law, the goods are
divided in 2:
Immovable
Movable
The immovable goods. According to the law there are 3 categ of immovable goods:
Immovable goods by their nature - are the things that cannot be transported or
moved either by their own energy or by an exterior energy meaning the land and
everything that is incorporated or built on the ground or underground such as
buildings, trees, rivers et cetera. Should be also mentioned that all the parts of the
building such a windows, doors et cetera are considered as immovable goods
since they are incorporated in the building in a permanent manner.
Immovable goods through the obj they apply to they are the real rights over
immovable goods.
Immovable goods by destination they are the parts of the materials which are
temporarily separated from an immovable thing if they are meant to be used again
in relation to that immovable thing.
The movable goods. According to the law there are 3 categ of movable goods as
follows:
Movable goods by their nature - are those goods which can be moved or
transported from one place to another, either those that are moving themselves
(ex: animals) or those that can be moved by an exterior force (ex: chair).
Movable goods as provided by the law they are patrimonial all rights over
movable or immovable goods except for the real rights over immovable goods.
Movable goods by anticipation in this categ there are included immovable
goods by their nature which are considered by the parties of a contract as mo vable
goods by anticipation because they`ll become movable soon (ex: fruits, harvest
which is not picked yet)
A second way of classifying the goods: Following the legal regime of their circulation,
there are goods in civil circuit and goods of civil circuit. The goods in civil circuit are
those that may the obj of the contracts, meaning those that may be sold and bought
20
through juridical acts. In this respect, all goods are in civil circuit unless the law
expressly forbids their free circulation. The goods of civil circuits are those goods that
cannot be the obj of juridical acts meaning those that cannot be bought or sold freely.
Within this categ there are included the goods belonging to the public property of the
state or the administrative territorial units (ex: town, village et cetera).
A third way of classifing the goods: According to the way they are determined the
goods are divided in 2:

Individually determined goods (bunuri certe)

Generally determined goods (bunuri de gen)
The individually determined goods are those that are individualized by specific
elements or features as for ex a car, a house, a painting et cetera.
The generally determined good are those that are individualized by common qualities
or features corresponding to a class or category of goods. Therefore, these goods belong
to a wider class or categories of goods, and their specific individualization are made by
number, size, weight, et cetera (ex: milk, apples, money).
A forth way of classifing the goods: As far as the use of the goods implies or not their
consumption, the goods are divided in 2:
Consumable goods
Nonconsumable goods
Consumable goods are those movable goods whose normal use implies the
consumption of their substance or their alienation. As for ex the apples, money et cetera.
Nonconsumable goods are those goods that may be used repeatedly without
consuming their substance. As for ex a house, a car, a book et cetera.

Taking into account the possibility to replace them in the performance of an oblig, the
goods may be:
Fungible: Fungible goods are those goods which are considered as identical for a
juridical way of view. As a consequence they may be replaced in the performance
of an oblig. According to the law, the generally determined goods are fungible.
Non-fungible: Non-fungible goods are those goods which have an individuality
that does not allow their replacement in the performance of an oblig (ex: car,
house et cetera).

21
 According to the possibility to produce other goods known as fruits, the goods are
divided into:
Producing: Producing goods are those goods that periodically produce other
goods known as fruits without consuming themselves (ex: tree which is producing
leafs).
Non-producing: Non-producing goods are those goods that are not able to
produce other goods, meaning fruits, without consuming their substance. In this
respect, from a juridical point of view, concerning the goods that are produces by
other goods, we should make a difference between fruits and products. The fruits
are produced by other goods, without consuming themselves as for example, the
fruits which are produced by a tree et cetera. The products are those goods which
are the result of the material consumption of other goods (ex: wood from a tree).
The fruits may be classified as follows:
Natural fruits goods that are produced without human intervention (ex:
grass, leafs et cetera)
Industrial fruits goods that are the result of human activity (ex: harvest)
Civil fruits sums of money resulting from the use of goods by other
persons based on a juridical act (ex: rent, interest)
Taking into account their perception, the goods are divided into tangible and
intangible goods:
Tangible: those goods which have a material existence and may be perceived by
the individuals using human sense (ex: house, chair).
Intangible: those goods which have an abstract existence (ex: rights).

The sources of juridical relations

The juridical relation may have as source human actions or events, meaning juridical
facts lato sensu. The juridical facts lato sensu are defined as human actions or natural
events which create, modify or finish/ terminate juridical relations according to the law.
The juridical facts lato sensu are divided in the following:
Juridical facts stricto sensu
Juridical acts
The juridical facts stricto sensu are the natural events which do not depend on human
actions as well as human actions which are comitted without the intention to produce
juridical effects (ex: death, crime).
The juridical acts are human actions performed with the intention to produce juridical
effects.

22
 The juridical acts
Def! It is the expression of will of one or more persons made with the intention to
create, to modify or to terminate juridical relations. According to the number of wills
which are expressed in the act, the juridical acts may be divided in:
Unilateral juridical acts: An unilateral juridical act involves the expression of the
will of a single person (ex: offer to conclude the contract, the will testament-).
Bilateral /multilateral juridical acts: A bilateral or multilateral juridical act is an
agreement between 2 or more persons with different interest. Such acts are also
known as contracts (ex: sale-purchase, donation contract, company contract
multilateral-).
Classification of contracts
First criterion is taking into account their effects, the contracts are divided into:
Unilateral is that contract in which only one party assumes obligations towards
the other party, as for ex the donation contract.
Bilateral are those contracts in which both contracting parties have mutual
obligations. Each party is at the same time debtor and creditor of the other. (ex:
sale purchase contract, renting contract).
The second criterion would be according to the interest or the objective of the parties,
the contracts are divided into:
Contracts made with onerous title it is a contract in which each party promises
economic benefits advantage to the other (ex: sale purchase contract transfer the
ownership rights, buyer promises to pay the price). The contracts made with
onerous title are divided into (takes into account the degree of determination of
the obligations assumed by the parties):
1. Commutative - A commutative contract is the contract in which the
parties know from the moment of concluding the contract, the
existence and the extent of their mutual obligations (ex: sale
purchase contract).
2. Aleatory An aleatory contract is a contract in which the
performance of the obligations assumed by the parties depend on a
future uncertain event (alea). When the aleatory contract is
concluded the parties do not know the extent of their mutual
obligations (ex: insurance contract).

23
 Contracts made with gratuitous title it is a contract in which only one party
promises to the other an economic benefit without expecting anything in
exchange. (ex: donation contract)
The third criterion of classifying is according to the formalities imposed by the law
for their valid conclusion the contracts are divided into:

Consensual
Formal
Real
The consensual contracts is concluded by the simple agreement of the parties and the
law does not request any additional formal conditions for its validity. In the romanian
system of law, most contract are consensual.
A formal contract is validly concluded only when the parties fulfill some additional
formal conditions other than the simple agreement. The formality required by the law for
concluding such contracts is in most cases a written form. Furthermore, the law
sometimes require an authentic form for concluding some formal contracts.
A real contract is concluded only after the delivery of the thing which is the object of
the contract from one party to the other. Therefore, in this case, the delivery of the thing
is requested in order to conclude the real contract, in addition to the agreement of the
parties (ex: the loan contract, the deposit contract).
A forth criterion for classifing the contract is the one which is based on the way the
contracts are performed, they are divided in 2 categories:
Instant performance (uno ictu)
Succesive performance
A contract with uno ictu involves a single performer, meaning that the execution of
this contract is made at once (ex: the sale purchase contract).
A contract with succesive performance involves several performances of the same
kind of obligation over and over again until the expiry of the duration of the contract (ex:
renting contract, insurance contract et cetera).

24