PROF.DR.HURİYE KUBİLAY2013 SPRING SEMESTER

LAW 519 BUSINESS LAW

SUBJECTS

Fundamental Concepts of Obligations Law

Contractual Obligations (Establishment of a contract)

Contractual Obligations (Requirements of a contract)

Various kinds of contracts Law of Business Enterprise Law of Business Enterprise Mid-term Exam

SUBJECTS

General Principles of Company Law Joint Stock Corporations Joint Stock Corporations Limited Liability Company Negotiable Instruments Unfair Competition Protection of Trade Marks Review Review

WHAT IS LAW ?

Law is a system of reason, a set of deductions from principles of ethics, morals, or justice.

LAW

Law consists of a set of universal moral principles in accordance with nature.

The law as fundamentally a vehicle for the protection of individual rights, the attainment of justice, or economic, politic, and sexual equality.

- SUBSTANTİVE LAW (MADDİ HUKUK) - PROCEDURAL LAW (USUL HUKUKU)

TYPES OF LAW

Substantive Law

Substantive Law deals with the different ways people interact. Law adressed to actions and relationships among people is substantive law.

SUBSTANTIVE LAW

Civil Law Commercial Law Constitutional Law Administrative Law

Procedural Law / Adjective Law Procedural Law / Adjective Law

Law that structures government by laying down procedures on how it must act –especially that which relates to the courts thremselves- is known as procedural law. Procedural Law shapes the legal-judicial process: how lawsuits begin and move through the courts.

PROCEDURE LAW

Civil Procedure Law Criminal Procedure Law Administrative Procedure Law

PROCEDURAL LAW

Civil Procedure Law (Hukuk Muhakemeleri Kanunu) Civil Procedure Act, 6100 was entered into force in 01 October 2011.

Criminal Procedure Law (Ceza Muhakemeleri Kanunu)

LAW

Public Law – Private Law

Public Law

–for example constitutional law, administrative law- deals with relations between government and private citizens and organizations.

Private Law

Private Law which is the set of laws that spell out the duties, obligations and responsibilities that individuals and organizations owe to each other (Tort Law, Contract Law, Property Law, Partnership and Corporation Law)

LAW CLASSIFIED BY GOVERNMENTAL BRANCH CREATING IT Statutes A law enacted by a

legislature is called a statute. It is written and published in various forms.

Regulations Laws emanating from the executive branch –the source of administrative law- are called regulations or rules; they too are written and published.

Statutes are enacted by legislative body.

Statutory decrees and regulations are entered into force by executive body.

LEGISLATION

The stereotypical source of law in contemporary legal systems is the statute enacted by a legislative body that seeks to introduce new rules, or to amend old ones –generally in the name of reform, progress, or the alleged improvement of our lives.

HIERARCHICAL ORDER

The Constitution Statutes, International conventions,

statutory decrees Regulations By-Laws

- TURKISH CODE OF OBLIGATIONS- TURKISH COMMERCIAL CODE

MAIN SOURCES OF BUSINESS LAW

Ordinary legal transactions are subject to Code of Obligation

Commercial legal transactions are subject to Turkish Commercial Code

LEGAL SYSTEMS: CIVIL LAW and COMMON LAW

The system of codified law that obtains in most of Europe, South America, and elsewhere is known as civil law,

in contrast to the common law system that applies in England, former British colonies, the United States, and most of Canada.

CODES OF OBLIGATIONS

Code of Obligations, 818 (1926) Turkish Code of Obligations ( Enter

into force: 1th July 2012)

OBLIGATIONS ARISE FROM THREE SOURCES Contracts Tortious Acts Unjust/Unjustifiable enrichment

CONTRACT

Contract is a legal relation between two parties formed by the concurring declarations of their wills.

CONTRACTS ARE MADE EITHER TO CREATE AN OBLIGATION OR AMEND OR TERMINATE AN EXISTING OBLIGATION

A CONTRACT SHALL BE CONCLUDED WITH THE MUTUAL AND HARMONIOUS ASSENTS OF THE TWO PARTIES.

DECLARATION OF WILL OF A PARTY THAT GIVES RISE TO A CONTRACT IS CALLED THE OFFER AND IT CONSTITUTES THE INITIAL MOVE. A CONTRACT IS CONCLUDED WHEN THE OFFER MADE BY ONE PARTY (THE OFFERER) IS ACCEPTED BY THE OTHER PARTY.

OFFERAn offer is a declaration of will (intention) by the offerer, communicated to the offeree, whereby he declares his willingness to enter into a contract with a specified content and under certain terms.

Offer, as a rule, is made to a specific person. But, it is also possible to direct an offer to persons whose identity is not yet specified, that is to say to the general public.

OFFER MAY BE MANIFEST (EXPRESSIVE) OR IMPLIED.

INVITATION TO TREAT/OFFER

A declaration, carries merely the purpose of attracting the attention of the interested people and inviting them to make offers in case they care to enter into a contractual relation.

THE BINDING EFFECT OF THE OFFEROffer is the initial step towards creating a contractual relation and it grants the offeree right to conclude the contract by making an acceptance.

Offer communicated to an offeree who was present

Offer communicated between parties not present (Inter Absentes)

OFFER COMMUNICATED TO AN OFFEREE WHO WAS PRESENT

The term 'between present parties' means that both the offeror and the offeree were negotiating face to face, together at the same time and at the same place. Communications conducted through telephone is deemed as communications entered into between parties who are present.

An offer that is made to an offeree who is present and without allowing any time limit for acceptance, shall expire if it were not accepted immediately.

OFFER COMMUNICATED BETWEEN PARTIES NOT PRESENT (INTER ABSENTES)

In case the offerer has indicated a period of time for the acceptance, he must wait until the expiration of that period.

REVOCATION OF THE OFFER

The offeror may be relieved from being bound by the offer by sending a declaration of revocation to the offeree which should reach him either before the offer does or at the latest simultaneously with the offer.

ACCEPTANCE

The acceptance reflects the definite will of the other party (the offeree) to enter into the proposed contractual relationship, based on the terms and conditions contained in the offer.

The acceptance must be in full accord with the offer and consequently a modification of the terms and conditions of the offer is not deemed as an acceptance but considered to be a counter-offer, which may lead to the conclusion of a contract only if it is, in his turn, accepted by the original offeror.

CLASSIFICATION OF CONTRACTS Unilateral contracts Bilateral (synallagmatic) contracts

Perfect Bilateral (Synallagmatic) contracts (Contracts of sale, rent or carriage)

Imperfect Bilateral (Synallagmatic) contracts

UNILATERAL CONTRACTS

When the promise of a gift is accepted by the promisee, there will be a unilateral gift contract.

IMPERFECT BILATERAL CONTRACT

For example, an agency contract without remuneration or a loan contract without interest or loan for use. In the latter, the borrower of the loan has only the obligation to return what he has borrowed, whereas the other party has no counter obligation to fullfill.

PERFECT BILATERAL CONTRACTS

Perfect bilateral contract is a contract where the parties exchange their promises. In other terms, a bilateral contract or a synallagmatic (reciprocal) contract is a contract in which both parties undertake reciprocal duties which are enforceable by law. For example, in the case of a sales contract related to a real property (land), the seller promises to convey the title of the land and the buyer promises to pay the sale price.These are mutual promises and principal obligations of the parties.

PERFORMANCE

Performance of a contract means the complete and proper fulfilment of the obligations in accordance with the terms and conditions contained in the contract.

- CONTRACTUAL CAPACİTY- FORM OF THE CONTRACT- LEGALİTY OF THE SUBJECT MATTER

VALIDITY CONDITIONS OF A CONTRACT

CONTRACTUAL CAPACITYTO ENTER INTO A CONTRACT

Capacity to act means an ability to acquire rights and incur liabilities (TCC. Art.9).

Capacity to act should be distinquished from the capacity to enjoy civil rights (TCC. Art.8).

Under Turkish Law, every person, even an unborn child is subject to enjoy civil rights; provided that he’s born alive, but not every person should necessarily have the capacity to act.

DEGREES OF CAPACITY TO ACT Full capacity Full incapacity Limited incapacity Limited capacity

FULL CAPACITY

Capacity to make fair judgements. This means that a person has sufficient mental capacity to foresee and to understand the nature, importance and consequences of his transaction (TCC Art.13).

Majority. Turkish Law has fixed the age of majority at eighteen years. All persons under this age are known minors. Majority by marriage : Marriage confers majority (TCC Art.11). Majority by declaration of court: A minor who has completed 15th year, upon his application and approval of his parents may be declared by the judge to be of full age (TCC Art.12).

Negative condition : Not to be interdicted. The interdiction is to remove, totally or partially, a person’s capacity to act because of his thriftlessness, drunkenness, and misuse of administration or imprisonment for more than one year (TCC Art.405-408).

FULL INCAPACITY

The contract entered into by a mentally disordered person is null and void (TCC Art.15). A person deprived from power of will, cannot create a contract. A contract entered into by an incapable person cannot be converted into a valid contract even with the approval of his/her legal representative.

Turkish Law provides some exceptions to the voidity of a transaction : When equity requires that an incapable person be liable

to compensate for damages that he has caused (TCO Art.54).

Marriage of a person deprived at the time of wedding of the ability to make fair judgement yields all legal consequences of a valid marriage until the declaration of nullity by the court. This exception is recognized in order to protect the civil status of the child born until the declaration of nullity of the marriage.

A lawsuit based on an unjust enrichment can be brought against an incompetent person.

An incompetent person cannot allege the nullity of a contract against the rules related to good faith. For example, a mentally disordered employer should not be entitled to claim the recovery of the payments that he has made to his employee.

LIMITED INCAPACITY

Minors and interdicted persons have limited incapacity to act if they are subject to make fair judgement. They need the consent of approval of their legal representative (parents or legally appointed guardian) (TCC, Art.16).

The contract entered into by a person of limited incapacity is not bound while the other party is bound with the contract. The validity of the contract is in suspension, until ratification or refusal of ratification of the legal representative.

A gratuitous contract (without consideration), where the minor does not incur liability, can be validly entered into by a minor without the consent of his legal representative. For example, a minor can accept a gift without the consent of his legal representative because, in such a case, he/she merely acquires an advantage without incurring liabilities.

The person having limited incapacity is liable for the damages given by an unlawful act (tortious liability)

CLASSIFICATION OF CONTRACTS ACCORDING TO THE “CAUSA” Causal contracts Abstract contracts

CAUSAL CONTRACTS

Every obligation should have a cause behind it.This cause may be causa credendi, causa solvendi or causa donandi.The validity of a contract depends on the “validity of the cause”. It means that the contract is valid when the parties agree on a valid legal ground.

Under Turkish Law, the transfer of immovable is always admitted as causal.

The performance of a contract creating an obligation often needs another transaction, which is called “act of disposal”, an act that results in a decrease of assets. For example, a contract of sale creates an obligation the transfer of the property sold to the buyer. The performance takes place when the property sold is delivered to the buyer. The delivery is an act of disposal, an act that results in a decrease of the assets of the debtor (seller).

ABSTRACT CONTRACTS

A contract may be effective even if the cause is not valid.

This theory has been evolved to maintain the validity of a contract and to ensure the commercial security in business practice. Under the “abstract transaction theory”, transfer of title will be valid even the contract creating the obligation of transfer is void.

THE SUBJECT MATTER OF THE CONTRACTThe subject matter of a contract is a

promise/an undertaking for a promise.The creditor may ask his debtor to give

something, to do an act or to refrain from doing a specific act. Unless prohibited by law, the subject of the promise may be a tangible object, something that can be touched or that occupies a space, such as movables or real property or an intangible objectsuch as aright of credit or an intellectual and industrial right such as patents and inventions.

VARIOUS KINDS OF CONTRACTS Sale contract Hiring contract Guarantee contract Barter contract Service contract/The work contract Lend contract Brokerage contract The agency contract The contract of carriage

TORTS

A person causing damage to another person intentionally or by negligence by an act against the law shall be obliged to compensate the damage. A person causing damage to another person by an intentional act against the morals shall equally be obliged to compensate it.

TORT

The term “tort” (unpermitted actions) refers to a violation of a civil law rule of conduct causing injury to another person. The person whose unlawful conduct results injury to the victim is defined as “tortfeasor”. He is the one who commits a tortious act.

Any person who is deprived of his individual right in an unlawful manner can demand for the tortfeasor reperation of his damages. The victim (plaintiff) is the party who has sustained an injury to his person or property. He can bring a tort action against the tortfeasor (defendant) to recieve compensation. The goal of Tort Law is to assign financial liability to the tortfeasor for his tortious conduct that has resulted in injury or lost to an individual person or his property.

UNJUST ENRICHMENT

A person who acquires something at the expense of another without any legal ground shall be required to return it.

UNJUST ENRICHMENT

Unjust enrichment is the gain of a person from the property (assets) of another without having justifiable grounds. An unjust enrichment creates the duty to return. Any person, who has, in an unjustifiable manner, becomes richer by receiving a gain out of property of another, is bound to return.