A Comprehensive Guide to Legal Norms, Contracts, and Societies in Chile

Posted on Oct 15, 2024 in Law & Jurisprudence

Legislation Notes

The Law

Right: A set of legal rules governing life in society.

Legal Norms: These are composed of three types of rules:

1. Social Norms: Mandates imposed by decorum, community, or groups (e.g., chivalry, etiquette). The penalty is social acceptance or rejection.
2. Religious Rules: Precepts laid down by God. Violations are punished or rewarded in the afterlife. Unlike legal norms, sanctions apply after death.
3. Moral Rules: Internal guiding principles of human behavior. Morality governs internal actions and conscience.

These three rules shape legal norms and laws.

Characteristics of Legal Norms

• Heteronomous: Imposed by an external will (e.g., parliament).
• Coercible: Establish penalties for violations.
• Reflect State Will: Align with the government’s philosophy and direction for the country.

Sources of Law

Law emanates from the sovereign will, expressed in the form prescribed by the constitution, which prohibits or permits actions (Article 1 of the Civil Code).

Classification of Law

1. Origin:

   • Written Law: Documented and recorded.
   • Common Law: Based on customs passed down through generations.

2. Jurisdiction:

   • National Law: Applies within a specific state.
   • International Law: Governs relations between states and international organizations.

3. Nature (Test Question):

   • Public Law: Regulates state activity and public services. Focuses on welfare; individuals can only do what the law permits.
   • Private Law: Regulates relations between individuals, and between individuals and the state when acting in a private capacity. Individuals can do anything not prohibited by law.

Types of Law

Stratification of Rules

A lower-ranking rule cannot override a higher-ranking one.

1. State Constitution: Establishes state principles, human rights, and separation of powers.
2. Law (Article 1, Civil Code): Expresses sovereign will, prohibiting or permitting actions.
3. Decree Law: Rule dictated by de facto governments or dictatorships (equivalent to law).
4. Decree of Law Force: Rule giving the executive power to legislate (same as law).
5. Regulation: Details and supplements laws.
6. Decree: Executive order within its authority.
7. Ordinance/Instructions: Rules from senior service leadership.

Efficiency of Law in Time

Laws generally apply to the future. Retroactive application occurs in two cases:

1. Improvement of a person’s civil status (e.g., legitimizing children).
2. In dubio pro reo (in doubt, favor the defendant).

Laws are binding upon publication in the official gazette, unless otherwise specified.

Theory of Fictional Knowledge of the Law

Publication presumes everyone knows the law; claiming ignorance implies bad faith.

Repeal of a Law

Repeal voids a law. This can occur due to expiration or other reasons.

1. Scope:

   • Total Repeal: Entire law becomes ineffective.
   • Partial Repeal: Specific articles are repealed.

2. Method:

   • Express Repeal: Explicitly stated in a new law.
   • Tacit Repeal: New law’s content contradicts the old law.

Principles of Repeal

1. Newer laws prevail over older ones.
2. Specific laws prevail over general ones.

Note: Superior rules take precedence over lower-ranking ones.

The Person

There are two types of persons:

1. Natural Persons (Article 55, Civil Code)

All individuals of the human species, regardless of age, sex, race, or status. They are classified as Chilean or foreign. Birth is defined as complete expulsion from the womb, separation from the mother, and survival for at least one second. A birth certificate is then issued.

Conditions for Birth

1. Expulsion from the womb.
2. Complete separation from the mother.
3. Survival for at least one second after separation.

Death

• Real Death: Cessation of life (clinical death, brain death).
• Presumed Death: Disappearance for over five years.

2. Legal Persons (Article 545, Civil Code)

Fictitious entities that can acquire rights, incur obligations, and be represented in and out of court.

Types of Legal Persons

• Public Law:

  • Treasury, churches, TVN, customs, municipalities, etc.

• Private Law:

  • Non-profit:

    • Foundations (characterized by assets).
    • Corporations (people working for a common good).

  • For-profit:

    • Societies (Collective, Limited, etc.).

  • Special:

    • Associations, guilds, sports clubs, neighborhood associations, etc.

Attributes of Personality

Inherent characteristics possessed by any person.

These attributes are: name, address, marital status, nationality, wealth, and capacity.

Name

• Given Name and Surname: Used for legal identification. Surname is required and credits family lineage.

Characteristics of a Name

1. Must be in Castilian Spanish.
2. Cannot be sold.
3. Can be changed due to mockery, prejudice, or long-term possession by another.

Address

Residence (place) accompanied by intent to stay there.

Marital Status

Permanent situation in society regarding family relationships (single, married, widowed, legally separated, divorced).

Nationality

Legal bond linking a person to a state, creating rights and obligations.

Wealth

From a legal standpoint, the set of rights appreciable in money.

Capacity

The ability to acquire rights, incur obligations, and exercise them.

• Capacity to Enjoy: Ability to acquire rights.
• Capacity to Exercise: Ability to exercise rights.

Incapacity

Possessing rights but unable to exercise them.

• Absolute Incapacity: Applies to the insane and prepubescent children (women under 12, men under 14).
• Relative Incapacity: Applies to minors (women 12-18, men 14-18) and prodigals. They act through legal representatives or with authorization.

Contracts

A contract is an act where one party agrees to give, do, or not do something for another party. Each party can be one or more people.

Elements of a Contract

1. Parties:

   • Creditor: Entitled to enforce the provision.
   • Debtor: Obligated to comply with the provision.
2. Link: Legal effect binding the parties.
3. Benefit: The object of the contract (giving, doing, or not doing something).

Classification of Contracts

1. Obligations:

   • Unilateral: Only one party is obligated.
   • Bilateral: Both parties have mutual obligations.

2. Dependence:

   • Principal: Exists independently.
   • Accessory: Depends on a principal contract; extinguished when the principal contract is extinguished.

3. Completion (Article 1443, Civil Code):

   • Consensual: Perfected by mutual agreement.
   • Real: Requires delivery of the thing (e.g., loan, deposit).
   • Solemn: Requires specific formalities (e.g., marriage, real estate purchase).

4. Negotiation:

   • Free Discussion: Parties negotiate all clauses.
   • Accession: One party imposes the clauses.

5. Equivalence:

   • Commutative: What is given is equivalent to what is received.
   • Aleatory: Involves uncertain contingencies of gain or loss.

6. Naming:

   • Nominate: Have a name and legal regulation (e.g., sale, lease).
   • Innominate: Lack legal regulation; parties define the terms.

Legal Elements of a Contract

1. Essential Elements: Necessary for the contract to produce its effects.
2. Natural Elements: Implied unless otherwise stated (e.g., payment of price).
3. Accidental Elements: Must be explicitly stated (e.g., payment terms, penalties).

Societies (Companies)

A contract between two or more people who contribute something in common to share the resulting profits. A society has a separate legal status from its individual partners.

Elements of a Society

1. Contribution: Capital formed by what partners deliver or promise to deliver (money, assets, intellectual property, etc.). Contributions are appraised by agreement or by a third party. They can be integrated into domain or usufruct.
2. Profit Sharing: Allocation of profits and losses according to the charter. If unspecified:
   • Capitalist Partner: Shares profits/losses proportionally to their contribution.
   • Industrial Partner: Receives a share equal to the smallest contribution (profit); does not share losses.
3. Affectio Societatis: Clear intent to form a partnership.

Classification of Societies

1. Formality:

   • In Fact: Not subject to legal formalities.
   • In Law: Formed according to legal requirements.

2. Focus:

   • Person: Focus on partners (e.g., collective, limited liability).
   • Capital: Focus on capital (e.g., joint-stock company).

3. Purpose:

   • Commercial: Engage in acts of commerce.
   • Civil: All other purposes.

4. Scope:

   • Singular/Specific Purpose: Limited to specific assets.
   • Universal Title: All property is contributed (only allowed for married couples).

Types of Companies

• Collective Society (Highly Risky): Each partner is jointly and severally liable for all debts, regardless of contribution.
• Limited Liability Company: Partners are liable up to their contribution (maximum 50 partners).

Forming a Society

1. Draft a minute detailing contributions, partners, duration, dispute resolution, legal representation, etc.
2. Notarize the minute and create the deed and extracts.
3. Register extracts with the Commercial Registry within 60 days.
4. Publish an extract in the Official Gazette.
5. Register with the IRS.
6. Obtain a municipal patent.

Collective Societies

Concept

Managed by all partners or their delegates.

Capacity

Anyone with legal capacity can form a collective society. Minors require court authorization. Married women may need spousal permission, except those with separate property under Article 150 of the Civil Code.

Liability

Partners are jointly and severally liable for all debts (Article 370, Commercial Code).

Formation

Requires a public deed and registration of an extract (Articles 350 and 354, Commercial Code).

Content of the Deed

1. Partner Data: Name, address, ID, marital status, nationality.
2. Company Name: Includes partner names and “& Company.”
3. Company Objectives.
4. Capital Contributed by Each Partner.
5. Management and Name Use: Designation of legal representative.
6. Profit and Loss Distribution.
7. Start and End Dates.
8. Liquidation Clause: How assets will be distributed upon dissolution.
9. Dispute Resolution Clause: Typically designates an arbitrator.
10. Company Address.
11. Other Agreements.
12. Private Spending Allowance for Each Partner.

Contributions

Can be immediate or deferred, delivered to the agreed place or the company’s domicile. Non-compliance can lead to expulsion or legal action.

Prohibitions for Partners

1. Exceeding allocated private expenses.
2. Using company funds for personal business.
3. Assigning rights or transferring duties without consent.
4. Engaging in the same business sector without consent.

Company Directors

One or more directors, acting individually or jointly. They represent the company judicially and extrajudicially.

Dissolution of Companies

• Mutual agreement.
• Expiration date (unless automatic extension).
• Loss of objective.
• Partner’s death (unless otherwise stipulated).
• Bankruptcy.
• Invalidity declaration.
• Consolidation of all rights in one person.

Limited Partnership (Encomandita)

Characterized by two types of partners:

• Managing Partner: Manages the business and acts as legal representative.
• Limited Partner: Provides capital.

Similar to a collective society, but:

1. Limited partners cannot participate in management; if they do, they become liable for all debts.
2. Managing partners are jointly and severally liable; limited partners are liable up to their contribution.
3. Only managing partners’ names appear in the company name.
4. Two types: Simple (traditional) and By Shares (capital from shareholders not in the deed).

Requirements for Establishment

1. Full subscription of capital.
2. Each shareholder pays at least one-quarter of their shares.

Limited Liability Company (Article 3918, Commercial Code)

Can be civil or commercial, with a maximum of 50 members. Cannot engage in banking. Requires a public deed, registration of an extract, and publication in the Official Gazette. Liability is limited to contributions.

Joint-Stock Company (SA)

A capital company managed by a board. Always commercial, even with civil business. Two types:

1. Open: 500+ shareholders, 10% of shares owned by 100+ shareholders, or voluntarily traded on the stock exchange.
2. Closed: All others.

Formation

1. Deed.
2. Registration of an extract within 60 days.
3. Publication of the extract.

Content of the Deed

1. Shareholder Identification.
2. Company Name: Ends with “SA.”
3. Company Objective.
4. Capital and Shares.
5. Start and End Dates.
6. Interim Board.
7. Company Directors.

Company Directors

A board manages the company (minimum 5 for open, 3 for closed). The board elects a president who represents the company.

Shareholder Meetings

Shareholders can hold special meetings to address specific topics.

Appendix 1: Collective Societies (Commercial Code Articles 348-404) and Appendix 2: Limited Liability Company Act No. 3918 provide further legal details.