Fundamentals of Commercial Law and Legal Sources
Commercial Law: Formal and Material Sources
Functions of Commercial Law
Commercial Law is a branch of law specializing in civil rights, aiming to regulate economic reality. It arose from the inability of civil law to adequately regulate complex economic activities.
The first major formulation was the Code of Commerce (1885).
Commercial Law is essential for economic security. It generates coverage rules for economic operators:
- Internally: Within their organization (e.g., partnership agreements).
- Externally: Regarding relationships with the environment (e.g., insurance policies, contracts, finance, etc.).
Definition of Commercial Law
Commercial Law is part of private law, which includes all legislation relating to entrepreneurs and acts emerging from the exercise of their profession in the market.
(Note: Private law regulates relations between individuals, and also those of public bodies when they act without sovereign power, i.e., when acting as individuals.)
The Legal System and Rules of Law
Legal System
A legal system is defined as a set of legal rules.
Rule of Law
A Rule of Law is a guideline or mandate regulating individual behavior. It emanates from a competent, entitled body (State, regions) that possesses regulatory power. It imposes an active duty or prohibition on the subject’s conduct.
The legal rule creates rights and duties. Failure to comply may involve a penalty. Its coercive nature (forcing compliance) distinguishes it from mere social customs.
Formal and Material Sources of Law
The term ‘sources of law’ requires distinguishing between:
- Sources in the formal sense: Refers to the means or manner in which legal rules are expressed.
- Sources in the material sense: Refers to the social forces that create standards.
Sources in the Formal Sense
According to Article 1.1 of the Civil Code, the formal sources of law in our system are:
- The Law
- Custom
- General Principles of Law
Although commercial practice is listed second, legal doctrine traditionally understands that the primary reference point for commercial custom is common law (Civil Code).
Sources in the Material Sense
Material sources are generally recognized as the State, the Autonomous Communities, and active social forces within the community. Certain international standards may also be directly applicable in Spain.
Legislation: Commercial Law
A) The Commercial Code of 1885
This was historically the most important commercial law, although its relevance is diminishing over time. Much of it has been repealed, and while some articles have been redrafted, the result is often unsatisfactory, suggesting a future resolution through the drafting of a new Commercial Code.
It is considered largely obsolete due to social evolution.
The obsolescence problem has been addressed in two ways:
- Disposal of its rules: Leaving a wide margin of autonomy for individuals to govern economic relations.
- Enactment of special trade laws.
B) Special Commercial Laws
These laws emerged due to economic necessity, the age of the Commercial Code, and the emergence of new commercial realities.
- Autonomous Communities intervene in the development and implementation of some commercial laws.
Commercial Uses and Custom
Commercial uses are considered the second source of commercial law. It signifies the effective and repeated practice of a particular behavior.
Requirements for Commercial Use
A commercial use must meet the following criteria:
- Must derive from a consistent and repeated practice in trade, generating a general awareness of its obligatory nature.
- Must serve regulatory purposes, not be contrary to morality or public order, and must be proven.
- Applied when the law is confusing or silent.
Given the difficulty in ascertaining the existence of a justified use, jurisprudence traditionally holds that commercial use must be proven by the parties and is not presumed to be known by the judge. Article 1.3 of the Civil Code explicitly requires the necessity of proving custom.