Inefficiency in Legal Business Transactions: Causes and Remedies
Item 19: Inefficiency of Legal Business
Introduction
A business transaction is considered null if it fails to produce the intended legal effects. This can occur if the transaction lacks an essential element, pertaining to either the subject or the object (e.g., an invalid object classified as Res Extra Commercium). Strict inefficiency arises when the transaction has no effect due to external factors. An example of this is donations between spouses.
1. Causes of Inefficiency
- Failure of the person
- Infringement of the will
- Defects in the cause
- Infringement of attitude on the object
- Defects in the shape or unlawful/impossible condition
2. Defects in Formation and Declaration of Will
A fundamental requirement for a valid business transaction is the objective existence and proper manifestation of will. This requires consistency between intention and expression.
3. Error
Error is a vice that influences the formation of a person’s will. Several types of errors exist:
- Error in Person: Confusion regarding the person with whom one is negotiating. This occurs when intending to transact with one person but mistakenly dealing with another, or when relying on specific qualities of a person that prove to be false.
- Error in Substance: A misunderstanding of the essential and constant qualities of a thing, though not always crucial.
- Error in Corporem: A mistake about the identity of an object. This applies only to the object’s identity, not its name (e.g., intending to buy a specific riverside farm but mistakenly purchasing another). If the intent was to buy any riverside farm, the error doesn’t invalidate the transaction.
Other factors that can negate a business transaction include fear and fraud (dolo).
Fraud (Dolo)
Fraud is defined as malice, deceit, or perverse deception employed before a transaction, inducing the other party to enter into it. The Praetor introduced the exceptio doli to prevent transactions based on fraud. Justinian later granted exceptions and actions for all concluded transactions affected by fraud. The Praetor also created the actio doli, a subsidiary action against the perpetrator of fraud, which could be filed within one year and was not transferable to heirs.
Fear
Fear is a serious threat that compels consent. The threat must be unjustified (e.g., “Pay your debt or I’ll sue” is a justified threat). The threat must affect a reasonable person and concern an unlawful action. The threatened person has legal protection. While civil law initially validated transactions made under duress if formalities were met, the Praetor later established restitution in integrum for third parties who benefited from transactions conducted under duress. Actions and exceptions were created to invalidate such transactions.
Violence (Vis Maior)
Independent of fear and fraud, physical violence (vis maior) can also invalidate a transaction.
Other Causes of Invalidity
Mental Reservation
: when one party makes a serious statement and apparently adequate, but not really stated what he thinks. That person must pay the damages committed, especially the 3 rd. Also in Roman law was considered that the author of a joke (IOCANDI Crati) should respond by 3 and by the other party.
– Simulation Simulation: It exists when there is a difference between what appears and what it really thinks. Simulation are said to be absolute when it appears he wants to make a business and no one wants to do business. The simulation on masks occurs if the business really wants to be with another. The improper simulation occurs when ara perform an illegal business, a business that will not be born for that purpose.– Error There is improper error, and can occur between what is thought and what is expressed (eg, the word was pronounced donation and intention was to take a credit) This error is in the statement and is called the error Impediments error or improper.
2 – Recognition, confirmation and conversion business
– ValidationValidation: If a business is confirmed can become effective or valid, for example this is true when a parent acknowledges the debt of his son and assumes therefore the invalidity of business at first, becomes invalid. You can also validate a business in cases where no time to revoke a grant, the business is still operating and there is an acquisition by the pledger successively. There waiver validation when using the means provided by law to revoke a legal business but in these cases, this business could not be void but could only be voidable – Confirmation is when a subsequent act perfected earlier measure incomplete.– Conversion Conversion: This occurs when a business is to have valid purposes, but if its effects are under assumptions, through the Senate to consult the will of the parties, this business is transformed into another. It is therefore a mere correction or certification for the business.
3 – The legal business weather Weather: Weather plays a very important, time is not interrupted. It is as such a good and can be purchased over time without any further requirement. Similarly it may take some time to convert a valid business invalid. The Romans distinguished 2 modes of counting time:1) COMPUTATIO NATURALIS: To measure the time from moment to moment, ie rigid and accurately measure. Determine the time period from the time the act occurs in concrete until it is determined the legal effect of certain way. This system is used in situations where the priority determines the priority: Example of a person into debt with only 5 people and has an endowment of 100, has a debt of 25 sesterces to each person, so that the debt amounts to 125. How do you pay if the debts were incurred on the same day? Should be determined accurately and determine the time of day when these debts are settled, so you will have preference on who has served 1.2) COMPUTATIO Civilis: This was more prevalent because in this type of computation the smallest indivisible unit was on, so if I have to pay a debt on 30 October, the period will commence on 29 October 12 at night, so I have every day 30 to pay. It sets the time needed to repay the debt.