Private Law and its Impact on Business and the Economy
Economy and Private Law
1. Private Law and Efficiency – Law and Economics
The ultimate aim of private law is to regulate economic activity and social relationships among individuals and entities.
The law and economics approach is based on the understanding of the legal system.
2. Other Aims in Private Law – “Consumerism”
Other aims in private law are to protect the weaker parties in market transactions. The pursuit of efficiency leads to rules promoting fairness. Example: Spain has launched in recent decades an intense campaign for consumer protection by enacting specific legislation, establishing and operating bodies and institutions entrusted with the safeguarding of consumer rights, and implementing procedures to efficiently deal with conflicts involving consumer rights.
Private Autonomy
Parties are free to act as they wish, provided their actions are not against the law.
Trends in Private Law
1. The Impact of New Technologies on Economic Activity and Social Life
The digital space has become a new field for conducting one of the most ancient activities of the human race: the exchange of goods and services, or trade.
Markets are being reorganized into a network shape. Does the law keep pace with technological change?
2. Self-Regulation, Codes of Conduct, and International Standards
Self-regulation must be distinguished from the legitimate exercise of private autonomy:
- Self-regulation: is unidirectional; providers assume certain commitments and duties in favor of users, whereas no obligation is imposed on users.
- Private autonomy: is bidirectional; when negotiating, contracting, and agreeing on conditions and terms, both parties are regulating their conduct.
Complexity and technical sophistication are characteristics of economic sectors that make self-regulation more advisable for efficient regulatory operation (e.g., financial markets, electronic commerce, marketing and advertising, biotechnology, and nanotechnology).
3. The Increasing Role of “Trusted Third Parties” – Functions and Liability of Gatekeepers
Trusted third parties are increasingly relevant in modern economies. Trust in these parties is based on various factors, such as regulation and professionalism.
4. Alternative Dispute Resolution (ADR)
ADR methods include arbitration and mediation.
Online Dispute Resolution (ODR)
ODR is based on easy, fast, efficient, and real access to dispute resolution methods (justice).
Requirements to Become a Sole Trader
According to Article 1.1 of the Commercial Code, there are two legal requirements:
- Legal Capacity to Act
- Two conditions are required: majority of age (18 years old) and free disposition of goods (not being incapacitated).
- Emancipated minors do not have legal capacity.
- Exception: Minors and incapacitated adults can continue a business received as “mortis causa” through their guardians’ approval by a judge.
- Effective and Regular Practice of Business
The entrepreneur must focus entirely on running their business.
- Act on One’s Own Behalf (Not Mentioned in Law)
Sources of Private Law
- Constitution
- Law
- Organic Law: Rights and liberties, statutes
- Ordinary Law: All that is not organic
- Real Decreto Legislativo: Approves articulated legislation
- Real Decreto-Ley: Extraordinary and urgent need validation
- Customs, Uses, and Practice
Fill gaps, concretize mandates, dispel doubts
- General Principles of Law
Fill in gaps; unwritten rules
- Jurisprudence
Incorporation of a Company
- Certificate of clearance of the corporate name
- Power of attorney for the incorporation before a Spanish notary public
- Execution of the public deed of incorporation
- Declaration of intentions of the shareholders regarding the incorporation
- Provisional Tax ID number
- Open bank account
- Deposit of capital stock
- Body of administration
- Corporate bylaws
- Payment of transfer tax
- Registration in the Mercantile Register
S.A. and S.L.
The Commercial Registry
Organization
The Commercial Registry is a public institution (in provincial capitals and other cities) managed by one or more commercial registrars.
The registrar classifies and checks all documents to be entered in the registry.
Companies acquire legal personality through registration in the Commercial Registry (where the headquarters is established).
Purpose
- Registration of entrepreneurs, entities, and their information
- Legalization of books of entrepreneurs, appointments of experts and auditors, and deposit of accounting documents
- Centralization and publication of registered information
Registration Procedure
- All entities or companies have the obligation to register, but sole traders do not.
- A public document is required to make entries in the Commercial Registry (validated by a notary public, court, or administrative authorities).
- The procedure must be requested (initiated by the person who wants to register, except in very special cases).
How to Consult It?
The Commercial Registry is public.
Information can be requested at the Commercial Registry or through the website of the registrars.
A certificate may also be obtained through a written request.