Understanding Assets in Law: A Comprehensive Guide

Posted on Sep 2, 2024 in Law & Jurisprudence

Assets in Law

Concept: Assets are tangible or intangible things with economic value that can be the object of a legal relationship. To be considered an asset, a good must meet the following criteria:

Suitability to Meet an Economic Interest: Assets must have economic value and are not limited to moral elements of personality like life, honor, or freedom. They are considered extensions of personality.
Autonomous Economic Management: Assets must possess economic autonomy, existing as distinct economic entities. For example, energy becomes an asset when it is separated from the well that produces it, gaining its own economic value.
Legal Subordination to the Holder: Assets must be legally recognized and capable of being owned. Air, stars, and the sea, while things, are not assets because they are not subject to legal ownership.

Assets are things, but not all things are assets. Things encompass everything in nature except for people. Things become assets when they are considered real, provide utility to humans, and are capable of being owned.

Classifications of Assets

1. Assets Considered by Themselves (Arts. 79-91 DC)

This classification examines assets without considering their relationship to other goods or their owner.

Tangible Assets: These assets have a material existence, such as a house, land, or a book. They are the direct objects of law.
Intangible Assets: These assets lack a physical presence and are related to rights held by individuals or companies. Examples include property rights, dividends, and copyrights.

2. Assets Considered in Relation to Each Other (Arts. 92-97 DC)

This classification analyzes assets based on their relationship to other assets, distinguishing between principal and accessory assets.

Principal Assets: These assets exist independently, serving their function and purpose without reliance on other assets. For example, land is a principal asset.
Accessory Assets: These assets depend on the existence of a principal asset. For instance, a building is an accessory asset to the land it is built on.

Intangible assets can also be classified as principal or accessory. For example, a credit is a principal asset, while a penalty clause is an accessory asset, subordinate to the principal obligation.

3. Assets Considered in Relation to the Holder of the Domain (Arts. 98-103 CC)

This classification differentiates between public and private assets.

Private Assets: These assets belong to individuals or legal entities under private law.
Public Assets: These assets belong to legal entities governed by public law, such as the Union, states, and municipalities.

4. Assets Based on Marketability

This classification categorizes assets based on their ability to be traded.

Goods in Trade: These assets are freely transferable and can be bought or sold without restrictions.
Goods Out of Trade: These assets cannot be transferred or appropriated. This category includes assets that are inherently non-transferable, such as air and sunlight, as well as assets that are legally prohibited from being traded, such as public goods and certain family properties.

Classifications of Goods

1. Movable and Immovable Property

Movable Property (Furniture): These are assets that can be moved without changing their substance. This includes assets that can move themselves, like livestock, and assets that can be moved by external forces, like commodities and currency.
Immovable Property: These assets cannot be moved without altering their nature. This category is further divided into:

Classification of Immovable Property:

Immovable by Nature: This includes land, its surface, accessories, natural surroundings (trees, water sources), airspace, and subsoil. However, there are limitations to the ownership of airspace and subsoil as defined by the Civil Code (Art. 1229), Water Code (Decree 24.64334), Mining Code (Decree-law 227/67), and the Constitution (Article 176).
Immovable by Artificial Physical Accession: This category encompasses anything permanently attached to the land by human intervention, such as buildings, structures, and planted seeds. These items cannot be removed without causing destruction or modification.
Immovable by Intellectual Accession: This includes movable assets that the property owner intentionally uses for industrial exploitation, embellishment, or convenience. For example, a tractor used in agricultural production or a vase placed for decoration.
Immovable by Operation of Law: This category covers real rights over immovable objects, such as usufruct, use, housing, long-term leases, and easements. It also includes agricultural liens, actions to recover property, public debt policies prohibiting transfer, and inheritance rights, even if the inheritance comprises only movable property.

2. Movable by Nature, Anticipation, and Operation of Law

Movable by Nature: These are tangible assets that can be moved without damage, either by themselves or by external forces. Examples include livestock, furniture, and everyday objects.
Movable by Anticipation: These are immovable assets that are intended to be mobilized for economic purposes. For example, trees become movable when designated for firewood or when sold for demolition.
Movable by Operation of Law: This category includes real rights over movable objects, such as pledges and chattel mortgages, as well as intellectual property rights, like copyrights.

3. Fungible and Non-Fungible Goods

Fungible Goods: These are movable assets that can be replaced by others of the same species, quality, and quantity. Examples include coal, sugar, and money.
Non-Fungible Goods: These assets are irreplaceable because of their unique individuality. For example, a painting by a famous artist cannot be replaced with an equivalent.

The distinction between fungible and non-fungible goods is important in legal contexts such as loans and obligations. For instance, the loan of fungible goods is governed by Art. 586 of the Civil Code, while the loan of non-fungible goods is governed by Art. 579.

4. Consumable and Non-Consumable Goods

Consumable Goods: These assets are destroyed through their use, such as food.
Non-Consumable Goods: These assets can be used repeatedly without being consumed, such as a book.

It’s important to note that the classification of a good as consumable or non-consumable can depend on the context. For example, clothing is generally considered non-consumable, but when sold in stores, it becomes consumable because its purpose is to be acquired and used.

5. Divisible and Indivisible Goods

Divisible Goods: These assets can be separated into real parts without losing their essential qualities. For example, a bag of coffee can be divided in half, with each half retaining the properties and use of the whole.
Indivisible Goods: These assets cannot be divided without changing their substance or value. This indivisibility can be determined by nature, law, or the will of the parties.

Examples of Indivisible Goods:

By Nature: A live horse or a painting by a famous artist.
By Law: Shares in a company or inheritance rights.
By the Will of the Parties: An agreement to exchange an apartment for two houses, making the two houses indivisible despite their potential divisibility.

The distinction between divisible and indivisible goods is crucial in matters such as joint obligations and the dissolution of co-ownership.

6. Singular and Collective Goods

Singular Goods: These are individual items considered independent of others, such as a pen or a piece of paper.
Collective Goods: These are composed of multiple singular goods that together form a single whole with a distinct identity. Examples include a library (a collection of books) or a herd of cattle.

Types of Collective Goods:

Universality of Fact: Goods gathered together by human will, such as a library or a herd.
Universality of Law: Singular goods that become collective by legal definition, such as bankruptcy assets, an estate, or an inheritance.

Goods Considered Mutually

Principal Goods and Accessories

Principal Goods: These assets exist independently and serve their function without reliance on other assets. For example, land is a principal asset.
Accessory Goods: These assets depend on the existence of a principal asset. For instance, a building is an accessory asset to the land it is built on.

The distinction between principal and accessory goods is also applicable to intangible assets. For example, a credit is a principal asset, while a penalty clause is an accessory asset, subordinate to the principal obligation.

Classification of Accessory Goods:

Natural: Originating from nature, such as fruits, trees, and minerals.
Industrial: Resulting from human intervention, such as buildings, crops, and improvements.
Civil: Arising from abstract legal relationships, such as interest on a loan.

Goods Considered in Relation to the Holder of the Domain

Private Goods and Public Goods

Private Goods: Belonging to individuals or legal entities under private law.
Public Goods: Belonging to legal entities governed by public law, such as the Union, states, and municipalities.

Types of Public Goods:

Public Goods in Common Use: Accessible to all without restriction, such as parks, streets, and rivers.
Public Goods for Special Use: Designated for specific public services, such as government buildings, courts, and schools.
Sunday Public Goods: Assets belonging to the Union, states, or municipalities, forming part of their patrimony.

Goods That Are Out of Trade

These assets are not freely transferable and cannot be appropriated. This category includes:

Inalienable Goods by Their Nature: Inexhaustible resources like air, sea, and sunlight.
Legally Inalienable Goods: Assets prohibited from trade by law, such as public goods, indigenous lands, and certain family properties.
Inalienable Goods by Human Will: Assets made inalienable through legal clauses, either temporarily or permanently.

Improvements, Fruits, and Family Homes

Improvements: Accessory goods added to the principal asset, such as buildings, crops, and renovations.
Fruits: Goods derived from the principal asset, categorized as natural (e.g., fruits from trees), industrial (e.g., crops), or civil (e.g., interest on capital).
Family Homes: Properties designated as the primary residence of a family, often afforded legal protections from seizure or forced sale. These protections vary by jurisdiction and are subject to specific conditions and limitations.