Commercial Law: Definition, Sources, and Instruments in Spain
**Item 1: Definition and Sources of Commercial Law**
**Commercial Law: Concept and Historical Evolution**
a) The Traditional Classification of Substantive Law
Traditionally, substantive law is divided into public law (bounded by the state) and private law (defined by the person, in defense of their goals and particular interests). Within private law, property law regulates the person as a subject of the economy and their relations in the exercise of economic activities. Property law is divided into two branches:
- Civil law: The foundation of all private property rights, regulating the entire economic life of the person.
- Commercial law: A special branch containing rules that differ from common law to regulate specific matters, institutions, and relationships. The relationship between civil and commercial law corresponds to the relationship between common law and special law.
b) Application of the Historical Method to the Study of Business Law
Historically, there has always been a special branch of commercial law within private property law. The duality that exists today in Spanish private equity law has its historical origin in the late Middle Ages. The birth of commercial law resulted from the inadequacy of the old ius civile, inherited from Rome, to address a new economic reality characterized by the flowering of an urban economy, trade, monetary systems, and credit. This new reality took place in market towns (fairs), with merchants as the actors, trade (exchange of goods) as the activity, and goods, money, and credit as the objects.
Commercial law, whose name is identified with the subject matter initially regulated (trade), emerged historically as the law of a class of people (merchants) in the exercise of their profession (trade), known as ius mercaturae. In the modern age, it became incorporated into legal bodies sanctioned by the King. The spirit of the Renaissance and the great geographical discoveries led to an expansion of mercantile activity. Mercantilism emerged, and commercial law gradually extended its scope to persons not traditionally considered traders (nobles, clergy) and activities not purely commercial.
The contemporary age saw the fall of absolutism (French Revolution, 1789) and the emergence of principles of liberty and equality, as opposed to the old ius mercatorum regimen. For this reason, trade was restructured. The Napoleonic Code (Civil Code of 1803, Commercial Code of 1807) clarified the existing dualism in private economic rights, separating civil and commercial law. The Napoleonic Commercial Code objectified mercantile law. Spain enacted its own Code of Commerce in 1829 under Fernando VII. The current code corresponds to Alfonso XII, dating from 1885.
**Instruments of Commerce: The Spanish System**
The Commercial Code of 1885, in force as amended by subsequent laws, followed the model of French law and adopted the objective test of a commercial act as the anchor of commercial matters. Acts of trade, whether or not executed by traders, and whether or not specified in this code, shall be governed by its provisions. In the absence of such provisions, commercial custom generally observed in each area shall apply. In the absence of both rules, common law is applied. For the code, the condition of the person who performs an act is indifferent to the qualification of a commercial act. Acts of commerce are neither defined nor numbered. Commercial matters are not only limited by the objective criterion of the act of commerce but also by the subjective status of the trader.
**Commercial Law as the Law of the Enterprise: Market Law**
The owner of a company engages in an occupation, a traffic in the market. Commercial law is a private right of employers and business traffic (the actual activity of employers). Commercial law is the law that regulates special private equity relationships that develop in the market. It comprises all private law relationships that develop in the economic sphere of the market. An expansion of commercial law shows the phenomenon termed the marketing of private law. Special law is spreading its scope to areas originally unbounded by commercial law. As a result, principles originally born to regulate a particular matter tend to become common.
**The Sources of Law and Constitutional Sphere of Activity**
First, we distinguish between formal sources (modes of training or the right expression) and material sources (powers that have regulatory power). Regarding the former, Article 2 of the Commercial Code provides that commercial acts shall be governed by the provisions of the code, alternatively, by commercial custom generally observed in each area, and in the absence of both rules, by common law.
According to Article 2 of the Commercial Code:
a) Commercial law is special law for commercial matters, and as such, its application precedes civil law (or common law) in this matter.
b) Civil or common law is not the source of Commercial Law but a general set of rules that applies to commercial matters in the absence of special rules for that matter.
c) Both are manifested through formal sources generally set out in Article 1 of the Civil Code: law and custom.
d) Of course, the content of these sources is different depending on the legal system in which they operate. The difference, then, is that the first source of Business Law is commercial law, and the usual commercial subsidiary source (or trade usage), while in civil or common law, the first source is civil law and the subsidiary source is civil custom. In conclusion, the sources of Commercial Law are commercial law and trade practices (commercial or custom).
**The Commercial Code and Special Laws: International Trade and the EU**
The current Commercial Code, influenced by the liberalism of the time, entered into force in 1886, replacing the first Spanish Commercial Code. Its development process was slow and complex. It offers a more robust structure and richer content, filling the gaps of the previous code and integrating many of the special laws enacted after it. The code contains 955 articles divided into four books:
- I. Of Traders and Trade in General
- II. Of Special Trade Contracts
- III. Of Maritime Trade
- IV. The Suspension of Payments, Bankruptcies, and Prescriptions
The major criticism of the Commercial Code has been to question its objectivity when it is necessary to determine whether or not the persons involved in contracts are traders. Both issues are addressed by special laws. Experience has shown that the regulation of the 1885 code has been insufficient to regulate new developments in social reality, necessitating the creation of supplementary laws.
Trade Laws: The first source of commercial law is mercantile law. When Article 2 of the Commercial Code states that commercial matters shall be governed by the provisions of the code, it refers not only to trade but to any law specifically applicable to mercantile matters. Commercial law, as the first formal source of our discipline, encompasses all written state standards, coded or not, and rigid rules of law concerning mercantile expression. This includes commercial laws and general administrative provisions.
Special Commercial Laws: Laws and regulations of lower rank complement the Commercial Code. They are so abundant that their relationship is almost impossible to define. However, a classification can be made based on their relation to the Code of Commerce:
a) Provisions that expand the code by developing its forecasts.
b) Provisions that amend provisions of the Code of Commerce. Multiple articles of the Code of Commerce have been reformed, so their wording is not the original.
c) Provisions that repeal provisions of the Commercial Code, replacing its regulation on the matters affected by special laws. If a matter was previously regulated in the Code of Commerce, it is now regulated outside of it by special laws.
d) Provisions on matters not regulated by the Commercial Code. Certain institutions were unknown to the Commercial Code or were referred to by laws to be disciplined. They are currently issued by special laws, such as:
- i. The Limited Liability Company
- ii. Labor Societies
- iii. Industrial Property
- iv. Suspension of Payments
These laws supplement the lacunae in the code, which is increasingly losing importance in commercial matters in favor of these laws.
International Law: The trend towards uniformity has been an important feature of commercial law. This feature is logical as it is called upon to regulate relations that transcend political boundaries. For this reason, it is logical to strive for uniformity in its rules and institutions. This uniformity was originally pronounced but weakened after the appearance of nation-states and the strengthening of law as the primary source of law, leading to differences among national legal systems.
This diversity poses serious problems in international commercial traffic, hindering its development and introducing uncertainty. These problems cannot be resolved satisfactorily by conflict rules. In the present circumstances, the growth of international economic relations in an increasingly interconnected and interdependent world requires overcoming national differences. These demands are answered with several solutions:
a) The unification of conflict rules, those considered national law applicable in a particular international legal relations.
b) The new lex mercatoria, conventional rules of origin established by stakeholders in international commercial traffic, which tends to overcome differences in national laws and resolve legal disputes that arise in this traffic.
c) International pacts and agreements between states, which regulate specific matters.
d) Integration of states in supranational areas of the domestic laws of member states.
International Law of the EU: Spain’s accession to the European Communities has brought significant implications for trade law because Spain will be guided by the foundations of the Community: the free movement of goods, persons, services, and capital, involving the creation of a common market. From its source, the European Community level needs a new right. The so-called acquis communautaire has been forming, constituted by rules of law emanating from the Community’s own sources. Some of these rules form primary legislation (to be integrated into national law and are directly applicable in Member States), while others form secondary legislation that imposes an obligation on Member States to adapt their legislation to EU rules.
The most important changes in trade law have been introduced by ordinary law. Subsequently, legislative changes have occurred in our law to adapt to EU directives.
**The Use of Trade**
The second source of commercial law is the use of trade (Article 2 of the Commercial Code). It is the effective practice and use of a particular repeated conduct. Usage, therefore, means conducting effective reiteration in the trading process, that is, repeated, uniform, and consistent observation of practices and standards by certain merchants in their business dealings. From this, two prerequisites for the formation of usages are repetition and opinio iuris. These usages are born in the life of traffic in a formative process in which three successive stages can be identified:
- Certain clauses are included in contracts so repeatedly that they eventually become standardized (style clauses).
- Through repeated use, it is estimated that explicit inclusion in the contract is not necessary; it is presumed to be the will of the parties and is thus implied.
- The content of these clauses is separated from the will of the parties and applies to the contract unless expressly agreed otherwise.
Applications can be classified according to territorial scope (local, regional, national, and international) or by reason of the professional activity in which they operate (common or special, general trading of a particular activity). However, the most important classification of usages distinguishes between interpretive usages (subject to the will of the parties, facilitating the interpretation of a contract) and normative usages (independent of the will of the parties, representing the objectivity of interpretive usage imposed on them as a rule of substantive law, it is custom in the legal sense). Interpretive usages are in the second phase of their training, while normative usages are in the third phase. Normative usage is a subsidiary source of first-degree commercial law. Normative usages are applicable in the defense of commercial law, thus filling the gaps in the mercantile legal system. In relation to the law, usage can be secundum legem (specify and fix the content of the law), contrary to law (which is ineffective if it uses trade policy, failing to apply its own law of commercial law), and praeter legem (acting in the gaps by integrating the commercial legal system to deal with cases that are not explicit).
Commercial usages are better suited than the law to the needs of traffic, although they also present a problem arising from the lack of fixity and the difficulty of determining whether they are normative or interpretive. For this reason, the usage must be tested for its implementation.