Business Law Syllabus Part 5 Final

8/12/2019 Business Law Syllabus Part 5 Final

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ROTTERDAM BUSINESS SCHOOL

Part 1

Business LawSyllabus

Introduction & Property Law


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Business Law Syllabus Part 1Revision 2

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Table of Contents

TABLE OF CONTENTS _________________________________________________________________________ 2

PARAGRAPH 1.1WHAT IS LAW? ________________________________________________________________ 6

PARAGRAPH 1.2ORIGINS OF LAW _______________________________________________________________ 81.2.1 The different schools ________________________________________________________________ 8

1.2.2 Origins of Dutch law ________________________________________________________________ 8

1.2.3 Sources of law _____________________________________________________________________ 9

1.2.3 The legal systems ___________________________________________________________________ 9

PARAGRAPH 1.3FIELDS,TYPES AND AREAS OF LAW___________________________________________________ 11

1.3.1 National law vs. international law ____________________________________________________ 11

1.3.2 Areas of law ______________________________________________________________________ 11

PARAGRAPH 1.4CIVIL LAW___________________________________________________________________ 13

1.4.1 Introduction ______________________________________________________________________ 13

1.4.2 Essential Civil law definitions ________________________________________________________ 14

PARAGRAPH 1.5INTERNATIONAL LAW (RECOMMENDED LITERATURE) ______________________________________ 181.5.1 Introduction ______________________________________________________________________ 18

1.5.2 Treaties _________________________________________________________________________ 19

1.5.3 Other sources _____________________________________________________________________ 21

PARAGRAPH 1.6INTERNATIONAL ORGANISATIONS (RECOMMENDED LITERATURE) ______________________________ 23

1.6.1 Intergovernmental organisations _____________________________________________________ 23

1.6.2 Supranational organisations _________________________________________________________ 23

1.6.3 The United Nations ________________________________________________________________ 24

QUESTIONSCHAPTER 1WEEK 1A ______________________________________________________________ 27

QUESTIONSCHAPTER 1WEEK 1B ______________________________________________________________ 30

CHAPTER 2. PROPERTY _____________________________________________________________________ 32

PARAGRAPH 2.1WHAT IS PROPERTY? ___________________________________________________________ 33

PARAGRAPH 2.2OWNERSHIP _________________________________________________________________ 34

2.2.1 Characteristics ____________________________________________________________________ 34

2.2.2 Rights and limitations ______________________________________________________________ 34

2.2.3 Limited rights (Recommended literature) _______________________________________________ 35

2.2.4. Liens ________________________________________________________________________ 37

PARAGRAPH 2.3DETENTION AND POSSESSION______________________________________________________ 39

2.3.1 Detention ________________________________________________________________________ 39

2.3.2 Possession _______________________________________________________________________ 39

PARAGRAPH 2.4ACQUISITION AND LOSS__________________________________________________________ 402.4.1 Transfer _________________________________________________________________________ 40

2.4.2 Inheritance _______________________________________________________________________ 40

2.4.3 Fixture __________________________________________________________________________ 40

2.4.4 Occupatio ________________________________________________________________________ 41

2.4.5 Finding __________________________________________________________________________ 41

2.4.6 Prescription ______________________________________________________________________ 42

2.4.7 Loss of property ___________________________________________________________________ 42

PARAGRAPH 2.5TRANSFER___________________________________________________________________ 44

PARAGRAPH 2.6RETENTION OF TITLE____________________________________________________________ 47




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CHAPTER 3. INSOLVENCY ____________________________________________________________________ 54

PARAGRAPH 3.1WHAT IS IT? _________________________________________________________________ 55

3.1.1 An introduction ___________________________________________________________________ 553.1.2 Bankruptcy proceedings ____________________________________________________________ 55

3.1.3 Suspension of payments ____________________________________________________________ 56

3.1.4 Debt restructuring for private individuals (Recommended literature)_________________________ 56

PARAGRAPH 3.2WHO CAN GO BANKRUPT? _______________________________________________________ 59

PARAGRAPH 3.3TYPES OF CREDITORS ___________________________________________________________ 59

3.3.1 Preferred creditors _________________________________________________________________ 60

a. Preferential creditors _______________________________________________________________ 60

3.3.2 Secured creditors __________________________________________________________________ 60

3.3.3 Unsecured creditors ________________________________________________________________ 61

3.3.4 Significance ______________________________________________________________________ 61

PARAGRAPH 3.4PROCEDURE (RECOMMENDED LITERATURE) ____________________________________________ 623.4.1 The Netherlands ___________________________________________________________________ 62

3.4.2 The United Kingdom _______________________________________________________________ 62

3.4.3 The United States __________________________________________________________________ 62

PARAGRAPH 3.5CONSEQUENCES_______________________________________________________________ 64

PARAGRAPH 3.6TERMINATION________________________________________________________________ 65

QUESTIONSCHAPTER 3 _____________________________________________________________________ 66

CHAPTER 4. INTELLECTUAL PROPERTY LAW _____________________________________________________ 68

PARAGRAPH 4.1WHAT IS INTELLECTUAL PROPERTY LAW? ______________________________________________ 69

PARAGRAPH 4.2COPYRIGHT__________________________________________________________________ 70

4.2.1 Introduction ______________________________________________________________________ 70

4.2.2 The requirements __________________________________________________________________ 70

4.2.3 Style ____________________________________________________________________________ 71

4.2.4 Rights ___________________________________________________________________________ 72

4.2.5 Infringement and use_______________________________________________________________ 73

4.2.6 International copyright law __________________________________________________________ 74

PARAGRAPH 4.3TRADE MARK_________________________________________________________________ 75

4.3.1 Introduction ______________________________________________________________________ 75



PARAGRAPH 4.4PATENT ____________________________________________________________________ 794.4.1 Introduction ______________________________________________________________________ 79






QUESTIONCHAPTER 4WEEK 7B _______________________________________________________________ 87

CHANGELOG ______________________________________________________________________________ 88


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Chapter 1. Introduction into Law

Paragraph 1.1What is law?

Paragraph 1.2Origins of law

Paragraph 1.3Fields, types and areas of law

Paragraph 1.4Civil law

Paragraph 1.5International law

Paragraph 1.6International organisations

QuestionsChapter 1


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Paragraph 1.1What is law?

Because law is incredibly diverse, there is no universal definition of law. Two possible definitions are:

The regime that orders human activities and relations through systematic application of the force ofpolitically organised society, or through social pressure, backed by force, in such a society ()

1

or;

The collection of all the rules and regulations that are in effect at a given time and within a given

territory..

Every human being is part of society and interacts with other human beings. In the relationships that

these human beings develop, conflicts can arise. Not only human beings, but also businesses,

organisations and nations are part of society. They too may become involved in conflicts with other

members of society. Given the fact that conflicts can and will arise between different members of

society, there is a need for a system or mechanism that can solve or in case a solution cannot be

establishedkeep these conflicts under control. Law is one of these systems or mechanisms.

Good manners, moral obligations or religious rules are not part of the law of a country or society.

Neither are rules that have been abolished or that are not yet in effect. Obviously, all these types of

rules do have an effect on how people will and should behave and of course these rules help(ed)

shape the law as such, but they are not the sort of rules that can be enforced before a court of law.

Law has many different functions that may, however, at times be conflicting and that may not always

provide an effective solution to a conflict.

One could say that the functions of law are to:

Keep the peace Shape moral standards Promote social justice Maintain the status quo Facilitate orderly change Facilitate planning Provide a basis for compromise Maximise individual freedom

Why does law even exist? The purpose of law can be described as a means to order and protect the

interests of human beings in their interactions or relation(ship)s with each other, while at the same

time maintaining the underlying ethical principles or values. Another purpose of law is to maintain

1Source: Blacks Law Dictionary, Third pocket edition, Thomson/West 2006


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the rules, in other words to exercise supervision on adherence to the rules and to make sure that

conflicts are solved via the judicial system. Therefore part of the law consists of rules regarding

litigation and the competencies of those involved in upholding the law.

If law as we see it today would not exist, the law of the strongest would apply. This would inevitably

lead to an arms race and economic inefficiency. Economic inefficiency means that resources that

could be used for the advancement of society are now used to, for example, produce weapons.


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Paragraph 1.2Origins of law

1.2.1 The different schools

There are many different views regarding the origin of law. Most views can be categorised in one of

the following schools: The natural law school: law is based upon what is correct; morality and ethics; choices

between good and evil.

The historical school: law is an aggregate of social traditions and customs that havedeveloped over centuries.

The analytical school: law is shaped by logic. The sociological school: law is a vehicle for achieving (sociological) goals. The command school: rules are made and enforced by the ruling party rather than a

reflection of the societys morality, history, logic or sociology.

There is general consensus about the fact that there are two guiding principles, based upon which

legal rules or laws are created:

Efficiency:it doesnt really matter what the content of the rules is, as long as there are rules. A good

example of this are traffic rules; it doesnt matter whether we drive on the left or right side of the

road, as long as there are rules that determine which side of the road we use.

Ethics/justice:the rules are based on principles about fundamental human values, such as rules that

prohibit murder, rape, abuse, et cetera.

Sometimes rules are the result of a combination of efficiency and ethics.

The law is therefore a collection of rules, based on social norms, human values and effective

regulation with regard to the behaviour of human beings who are part of a society and with regard to

the organisation of the human society.

1.2.2 Origins of Dutch law

Present Dutch law is largely based on French law, which in its turn is largely based on Roman law.

However, even before the Code Napolon was introduced, Roman law already (heavily) influenced

Dutch law. Do bear in mind that the term Dutch law, in this context, is not entirely accurate since

the Kingdom of the Netherlands did not yet exist. The various regions of what are now called the

Netherlands were part of the Holy Roman Empire (Burgundian and Habsburg period). In 1462 Charles

the Bold instructed the court of appeal of the region Holland to use Roman law. Under the reign of

Holy Roman Emperor Charles V Roman law became even more important and widespread.

Ma vraie gloire nest pas davoir gagn quarante batailles; Waterloo effacera le souvenir de tant de

victoires; ce que rien neffacera, ce qui vivra ternellement, cest mon Code Civil. Napolon

Bonaparte


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The Code Napolon (the French Civil Code) was finished in 1804. In 1809, during the French

occupation of the Netherlands (approximately 1795 1815), Napolon introduced the

aforementioned Code in the Netherlands. The Code Napolon was later used as the basis for the first

Dutch Civil Code (1838). In 1992 a completely revised version of the Dutch Civil Code was introduced.

Roman law French law Dutch law

1.2.3 Sources of law

Law can be found in many different sources. Not all rules or regulations that are in effect in a certain

country at a certain time are found in laws. In fact, many of those rules and regulations are not even

codified. The different sources of law are:

Laws or acts:A law or act is a document or a set of documents, usually made by a government, in which

rules are written down that order the way in which society behaves and that apply to

everyone or to a group of people specifically mentioned in that law or act.

Jurisprudence:The combination of all past judgments by all courts. These judgments contain a solution to

the specific case in question, but may also contain new rules and/or (new) interpretations of

the law in general.

Customs:In different sectors of business there are certain common practices that people working in

that sector consider as binding rules or the way things are done. These customs within a

certain sector of business can become part of the law in case a judge is convinced that those

practices exist and that people working in that sector consider them as binding.

Treaties, conventions, regulations:These sources of international law are also part of the law that is in effect in a certain

country at a certain time. They may be given different names, but they all have an

international origin.

1.2.3 The legal systems

There are three legal systems:

1. Civil Law22. Common Law3. Religious Law

All countries in the world can be categorised in one (or more) of these systems. The most common

legal system is Civil Law. Civil Law can be subdivided into French Civil Law, German Civil Law,

2When referring to the legal system, capital letters (majuscules) will be usedCivil Law


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Scandinavian Civil Law and Chinese Civil Law. The introduction into China of Western legal texts

probably started around the year 1839.3

The basic difference between the systems lies in the order of importance of the sources of law. In a

Civil Law system, codified law is most important. Jurisprudence is important as well, but does, at

least in theory, not have the same status as codified law. In a Common Law system, jurisprudence is

the most important source. This does not imply that no codified law exists.

Religious Law can be Sharia (Islamic), Halakha (Jewish) or Canon law (Christian). Written law, in the

sense of religious texts, is the most important source of religious law. The most widely used religious

law is, without a doubt, Islamic law. It consists of Sharia and Fiqh (Islamic jurisprudence). Most

countries use Islamic Law as a supplement to either Civil Law or Common Law. In these mixed

countries(i.e. bijuridical) Islamic Law commonly applies to family law.

Please note that the exactbalance between the sources of law varies from country to country.

4

Civil Law

Common Law

Bijuridical (Civil and Common Law)

Customary law

Fiqh

3http://www.lawinfochina.com/Article/Article2.shtm

4http://en.wikipedia.org/wiki/File:LegalSystemsOfTheWorldMap.png;latest revision 13 February 2012
http://en.wikipedia.org/wiki/Customary_lawhttp://en.wikipedia.org/wiki/Fiqhhttp://en.wikipedia.org/wiki/File:LegalSystemsOfTheWorldMap.pnghttp://en.wikipedia.org/wiki/File:LegalSystemsOfTheWorldMap.pnghttp://en.wikipedia.org/wiki/Fiqhhttp://en.wikipedia.org/wiki/Customary_law


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Paragraph 1.3Fields, types and areas of law

1.3.1 National law vs. international law

Many different distinctions in law can be made. The first important one is the distinction between

national law and international law. This distinction refers to the source from which the law stems. Ifthe law is created by a national government and is intended to apply to the inhabitants of the

country that government represents, it is a national law.

If a law is drawn up by the governments of two or more countries or by an international organisation,

no matter whether it is called a treaty, a convention or a regulation, it is an international law. That

law can apply to all the inhabitants of the countries the governments represent, it can consist of rules

that govern the relationships between the governments involved or it can order the governments

involved to create laws that apply to the inhabitants of the countries they represent.

Sovereignty is essential. Every state has the exclusive competence to determine what should be

included into its legislation. On a national level, the Trias Politica (Montesquieu, Separation of

Powers) often applies. The Trias Politica is the separation of the legislative power (le pouvoir

lgislatif), executive power (le pouvoir excutif) and judiciary power (le pouvoir judiciaire). Separation

is important for a state to secure the freedom of its people. By separating the powers, there is less

risk of abuse of power by one specific group or institution. In addition to the Trias Politica, a system

of checks and balances may be applicable.

1.3.2 Areas of law

National law deals with a large variety of issues. Dependent on the specific subject of a particular

law, national law can be divided into public law and private law. Public law deals with issues in which,

in one way or another, public authorities are involved as public authorities(Schematic 1.1).

Public law can further be divided into:

State law consists of rules regarding the way the state is organised and the authority of thedifferent institutions of the state, such as the parliament, the local governments

(municipalities) et cetera. It also deals with the relationship between civilians and the state

and the possibilities civilians have to influence the functioning of different institutions of the

state. The main source of State law is the Constitution.

Tax law contains rules that deal with the amount of money persons have to pay to the taxauthorities, based on things like income or the costs of goods or services that were bought.

Penal law (or Criminal law) is about threatening certain behaviour with penalties. Penal lawdetermines which specific acts are prohibited, the sanctions that can be imposed if someone

violates the law and the rules regarding the tracing and prosecution of criminals and the

execution of sentences.


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Administrative lawgoverns the relationship between civilians and public authorities, actingas the executive power of the state. It determines the limitations for the different state

institutions when executing their tasks and the rights civilians can enforce with regard to the

executive tasks of the authorities.

Private law mainly governs the legal relations between private persons and legal entities. Private law

can be divided into:

Civil lawgoverns a large variety of topics (Paragraph 1.4).5 Commercial law governs certain business and commercial transactions. By now, most

commercial law has been incorporated into the Civil Code. The relevance of Commercial law

therefore diminishes and it is very likely that Commercial law will eventually disappear as a

separate area. Commercial law includes rules regarding carriage by land and sea; merchant

shipping and certain payment methods.

Competition lawpromotes and maintains market competition by regulating anti-competitiveconduct. Please note that Competition law also has public law aspects. Competition law, or

Antitrust law, has three main elements:

o Prohibiting agreements or practices that restrict free trade and competition betweenbusinesses. This includes in particular the repression of free trade caused by cartels.

o Banning abusive behaviour by a firm dominating a market, or anti-competitivepractices that tend to lead to such a dominant position.

o Supervising the mergers and acquisitions of large corporations, including some jointventures. Transactions that are considered to threaten the competitive process can

be prohibited altogether, or approved subject to measures to offer licences or

access to facilities to enable other businesses to continue competing.

Schematic 1.1

Private Law Public Law

Private person Private person

Private person Legal entity

Legal entity Legal entity

Private person Public authorities acting as

civilian or company

Legal entity Public authorities acting as

civilian or company

Public authorities Public authorities

Public authorities Private person

Public authorities Legal entity

Schematic 1.2

Private Law Public Law

Commercial law Competition law Civil law

State law Administrative law Penal law Tax law

5In Dutch: Burgerlijk rechtor Civiel recht


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Paragraph 1.4Civil law

1.4.1 Introduction

The main source of Civil law is the Civil Code (Burgerlijk Wetboek). The Dutch Civil Code is divided

into eight books. To quote an article of the Dutch Civil Code one first has to mention the book, then

the article. For example, 6:162 DCC is article 162 of book 6 of the Dutch Civil Code (tort).

Book 1Family Law and the Law of Persons

Book 2Legal Persons

Book 3The Law of Property, Proprietary and Valuable Rights and Interests

Book 4Inheritance Law

Book 5Rights in rem

Book 6General Part of the Law of Obligations

Book 7Specific Contracts

Book 8The Law of Carriage and Means of Transportation

In addition to the Civil Code, there is a Civil Procedure Code (Wetboek van Burgerlijke

Rechtsvordering). The Civil Procedure Code contains procedural law, such as rules that determine

what happens in a lawsuit. It also contains rules about jurisdiction, the judgment, injunctions,

seizure, arbitration et cetera.

The area Civil law has numerous sub-areas. The most important sub-areas are:

Property law

Possession, detention, ownership and transfer are all part of this sub-area (Chapter 2).

Tort law

Law governing wrongful acts.

Contract law

Deals with topics such as offer and acceptance, the legal status of negotiations, breach of contract,

force majeure.

Family law and the law of persons

A civilians rights as a person (name, nationality, custody, place of birth, etc.)

Labour law (or Employment law)

Laws, administrative rulings and precedents that address the legal rights of, and restrictions on,

working people and their organisations. As such, it mediates many aspects of the relationship

between trade unions, employers and employees


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Corporate law (or Company law)

Determines a legal entitys rights and obligations (ways of establishing a legal entity, place of

establishment, name, organisation of the legal entity, etc.). Corporate law is the study of how

shareholders, directors, employees, creditors, and other stakeholders such as consumers, the

community and the environment interact with one another under the internal rules of the entity.

1.4.2 Essential Civil law definitions

In this paragraph some of the basic definitions of the area Civil law will be explained.

Good faith

What is good faith?

A state of mind consisting in (1) honesty in belief or purpose, (2) faithfulness to ones duty or

obligation, (3) observance of reasonable commercial standards of fair dealing in a given trade or

business, or (4) absence of intent to defraud or to seek unconscionable advantage.6

In a Civil Law system, the term goodfaith usually refers to (1).

The principle of reasonableness and fairness

Reasonableness and fairness (art. 3:12 DCC) is one of the most important principles of Dutch Civil

law. In Common Law, just like in the old Dutch Civil Code, this principle is referred to as good faith

(definition (3) of Good faith).

What is the importance of this principle?

The importance lies in the fact that even if parties specifically agree on something, the effect of what

they agree upon can be limited by reasonableness and fairness (limiting effect of reasonableness and

fairness).

Article 6:2 DCC:7

1. An obligee and obligor must, as between themselves, act in accordance with therequirements of reasonableness and fairness.

2. A rule binding upon then by virtue of law, usage or a juridical act does not apply to theextent that, in the given circumstances, this would be unacceptable according to

standards of reasonableness and fairness.

Example:In a contract party A has excluded all liability in case of damage. By order of that party one of

his employees wilfully (intentionally) causes damage to the property of party B. Rational application of

the law would lead to the conclusion that party A is not liable, since he has excluded all liability in case

6B.A. Garner, 2006. Blacks Law Dictionary. 3

rdedition. St. Paul: Thomson/West

7All translations are taken from: The Civil Code of the Netherlands; H. Warendorf, R. Thomas, I. Curry-Summer; Kluwer

International BV, 2009


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of damage. However, that outcome is unfair in light of the fact that the employee wilfully caused the

damage. The principle of reasonableness and fairness demands that party A pays for the damage

caused to the property of party B, since only that outcome is just and fair.

Reasonableness and fairness also governs the legal relation between the parties involved. This means

that the parties have to act reasonably and fairly towards each other. As a result of this, the parties

have certain obligations towards each other, even if their contract doesnt explicitly state this.

Example:A car dealer has the obligation to deliver a car with enough petrol in the petrol tank to allow

the buyer to reach a petrol station. Even if there is no clause in their contract that deals with this issue,

the car dealer has this obligation, simply because it is reasonable and fair.

Article 6:248 DCC:

1. A contract not only has the juridical effects agreed to by the parties, but also those which,according to the nature of the contract, apply by virtue of law, usage or the requirementsof reasonableness and fairness.

2. A rule binding upon the parties as a result of the contract does not apply to the extentthat, in the given circumstances, this would be unacceptable according to standards of

reasonableness and fairness.

Legal facts

The participants in legal relationships acquire their rights and obligations as a result of events that

are significant from a legal point of view. Those events are legal facts, which can be described as

events that have one or more legal consequences.The American book Blacks LawDictionary

8contains the following definition: A fact that triggers a

particular legal consequence..

Example: At birth a baby is already given certain rights, such as the right to nourishment. Birth is

therefore a legal fact.

Example:A sales contract obliges the seller to transfer the property. A sales contract is therefore a

legal fact.

Example: A driver who causes a traffic accident typically has the obligation to pay damages to theperson who is injured in the accident. A traffic accident is therefore a legal fact.

Example:When a person dies, his rights and obligations end. Death is therefore a legal fact.

Legal facts can either be human acts with legal consequences or bare legal facts, meaning facts that

do not necessarily involve any human action. Legal facts that involve human actions can be divided

into two groups; juridical acts and factual acts (Schematic 1.3).

8B.A. Garner, 2006. Blacks Law Dictionary. 3rdedition. St. Paul: Thomson/West


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Juridical acts

A juridical act is any human action that intends to achieve a certain legal consequence. Juridical acts

can be unilateral and multilateral. Juridical acts are typical for Civil Law jurisdictions.9

Example:A person selling his bike has the obligation to deliver the bike to the person who bought it.

This obligation was intended. The person who bought the bike has the obligation to pay the price. This

obligation was also intended. More importantly, both parties intend to achieve the legal consequence

of these two obligations, namely a transfer of ownership. Closing a contract of sale is therefore a

juridical act.

Example:A (last) will grants certain rights and obligations to the persons mentioned in the will. Those

rights and obligations were intended by the deceased (before he died). In other words, the one who

writes the last will intends to achieve this legal consequence after he dies. Making a last will is

therefore a juridical act.

Factual acts

Factual acts can be described as human acts that do not intend to achieve a certain legal

consequence. Tort is one of the most important examples of a factual act. Breach of contract is

another example of a factual act.

Example:A man, parking his car, unintentionally crashes his car into the car of his neighbour, which is

parked in front of him. The neighbour obtains the right to claim damages. The man did not intend to

damage his neighbours car and he certainly did not intend to create a right to clai m damage for his

neighbour. The law however clearly states that his neighbour has the right to do so. Since the law

creates a legal consequence that was not intended by the man who parked the car, this action (which

the law calls tort) is a factual act.

Example:A car dealer delivers a car that is not functioning properly. As a result of that the buyer loses

control over the car and smashes it into a lamp post. The car is completely destroyed and the buyer

suffers severe injuries to his head. The buyer is now entitled to claim damages from the car dealer.

This breach of contract by the car dealer (he did not live up to his contractual obligation to deliver a

properly functioning car) creates the right to claim damages; a legal consequence which was not

intended by the car dealer. It is therefore a factual act.

Relative rights

A relative right is a right that can only be effected in relation to one or more specific persons. The

right to claim damages is a right that can only be enforced against the person who caused the

damage. The right to receive a bike one has bought can only be effected to the person who sold the

bike. One cannot claim damages from just anyone or ask anyone else to deliver the bike. So, in other

words, it is a right that can onlybe exercised within the scope of the legal relation between two (or

more) specific persons.

9http://definitions.uslegal.com/j/juridical-act/


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Comprehensive rights (also known as absolute or exclusive rights)

Comprehensive rights work against everyone. Anyone who infringes these rights can be ordered to

refrain from doing so. The best example of a comprehensive right is ownership. The owner of a plot

of land, for example, can demand anyone who walks on his land without his permission (trespassing)

to leave. The owner of a car can demand that no-one uses his car without his permission.

Schematic 1.3

LEGAL FACTS

Human actswith legalconsequences

Juridical act

Unilateral Multilateral

Factual act

Lawful actWrongful act

(Tort)Breach ofcontract

Bare legalfacts


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Paragraph 1.5International law (Recommended literature)

1.5.1 Introduction

International law can be described as law that is drawn up by the governments of two or more

countries or by an international organisation, no matter whether it is called a treaty, a convention ora regulation.10In its most general sense, international law consists of rules and principles of general

application dealing with the conduct of nations and international organisations and with their

relations inter se, as well as with some of their relations with (natural or legal) persons. International

law originally started with regulation by moral values and customs. One of the earliest international

agreements was concluded in 1258 BC between the Egyptian pharaoh Ramses II and the king of the

Hittites, Hattusilis III.

A key-element in international law is sovereignty. This means that every state has the right and

freedom to determine its own law and to decide which authority and competence the judiciary andthe executive power have. States are independent and other states shall not interfere. That being

said, due to ever-increasing globalisation and cooperation, states occasionally have to give up a part

of their sovereignty.

International law is divided into Private international law and Public international law. Private

international law deals with conflicts between persons (natural or legal) with a foreign element (the

parties are usually living or established in different countries). In other words, the fundamental

elements of Private international law are internationality and horizontal relations. Private

international law is a set of procedural rules that determines which court has jurisdiction, which

(national) law is applicable and the way foreign judgments are recognised and executed. The rules of

Private international law are different from country to country.11

As previously stated, Private international law is primarily part of the national system. There are,

however, several international institutions that attempt to codify and modify rules of Private

international law through supranational regimes. The best example of such a supranational regime is

the regime of the European Union.

Public international law should not be confused with Private international law. Public international

law concerns itself only with relations between multiple nations, international organisations or

nations and the citizens or subjects of other nations. During the twentieth century, Public

international law has vastly increased in use and importance. This is mostly due to the increase in

global trade, armed conflict, environmental deterioration on a worldwide scale, awareness of human

rights violations, rapid increases in international transportation and a boom in global communication.

Public international law is a distinct and self-contained system of law, independent of the national

systems.

10http://www.britannica.com/EBchecked/topic/291011/international-law/233501/General-principles-of-law

11http://www.transnational.deusto.es/IP2010/docs/What%20is%20PIL.pdf


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Since there is no overall legislature or legislative body in the international political system, the rules,

principles, and processes of international law must be identified through a variety of sources and

mechanisms. This can make international law appear difficult to maintain and enforce.12

The sources of international law are:

Treaties Conventions and regulations Jurisprudence (of International Courts of Justice) Customs Legal principles

1.5.2 Treaties

Conventional international law derives from international agreements, called treaties, between

nations and/or international organisations. The scope of these international agreements or treaties is

almost limitless. The only notable exception is that treaties should not conflict with the rules of

international law regarding basic standards of international conduct or the obligations of a Member

State under the Charter of the United Nations. Some rules of international law are recognised by the

international community as absolute, so no derogation is allowed.

A treaty is called bilateral when only two parties are involved in the creation of the treaty; a treaty is

called multilateral when more than two parties are involved in the creation of the treaty.

Characteristics

A treaty contains mutual rights and obligations for the parties that close the agreement. The treaty is

binding for the parties that close the treaty, based on the principle ofpacta sunt servanda.

In case of a national legal conflict, there is a judicial system to enforce compliance with an

agreement. In case of international conflicts, no mandatory judicial system exists. Therefore, if the

parties fail to settle and do not voluntarily submit their conflict to a mediator, an arbitrator or an

international court, the only means a party has at its disposal to force another party to comply are

diplomatic, economic and (sometimes) military sanctions.

Content of treaties

Treaties can create rules that apply to all the inhabitants of the countries the governments closing

the treaty represent or can consist of rules that govern the relationships between the governments

involved. They can also order the governments involved to create laws that apply to the inhabitants

of the countries they represent.

There are three types of treaties:

12http://library.law.columbia.edu/guides/Researching_Public_International_Law


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Trait-contrat: governs the relationships between the parties involved; mutual rights andobligations (contract-like); e.g. delivery of products

Trait-loi: creates new (general public) laws that apply to the inhabitants of the countries ofmember states (law-like); e.g. European Convention on Human Rights

Trait-constitution: establishment of international organisations; e.g. United Nations CharterThe second category of rules is part of the law that is in effect in a country that is a party to the

treaty. This category is directly effective, which means that it is binding for everyone, including

civilians, legal entities, and even governments (local, regional and national). These rules create rights

and/or obligations that can be invoked by everyone before a national court of law. It is up to a judge

to decide whether or not a rule is directly effective. When such a rule is directly effective, it takes

precedence over national law.

Process of making a treaty

Every country has its own national rules that deals with topics such as how to engage in treaties and

the hierarchical position the rules of a treaty have, with regard to national rules.

The general procedure of concluding a treaty:

1. The government of a country engages in negotiationswith the government(s) of (an)othercountry/countries. As soon as they have reached an agreement, the governments of the

countries involved sign the text of the treaty. Although the treaty is now signed, that doesnt

mean it is immediately in force.

2. In order for it to enter into force, it has to be approvedby the parliaments of the countriesinvolved, so the governments will submit the treaty to their parliament for approval.

Approval can be given tacitly or explicitly. Tacit approval is given, in case no member of the

parliament requests explicit approval within a certain period of time. Explicit approval is

given by the parliament in case more than a certain amount of positive votes is reached

(usually 50% + 1 vote, sometimes a higher percentage is required).

3. After approval is given by the parliament, the treaty is ratified. This is an official notificationto the other country (or countries) involved in the treaty, that the treaty has been approved

and is therefore binding. Usually this is done in an official ceremony in which representatives

of the governments of the countries, involved in the treaty, sign a document containing the

text of the treaty.4. Lastly an official proclamation (usually done by publishing the treaty) is made to the

inhabitants of the countries involved, after which the treaty enters into force at a date

mentioned in the proclamation.

Relation between national law and international law

As soon as a treaty enters into force, it becomes part of the law that is in effect in a certain country.

However, that doesnt automatically mean that it is directly in force in the sense that everyone can

invoke the rules of the treaty. Countries can choose between two different systems to make sure the


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treaty is incorporated into their national legal system (so that everyone can invoke the rules of the

treaty):

1. Monism (Incorporation system):A treaty is directly applied or self-executing (in a sense that no national act is required to

make the treaty part of the national system). If a national rule is in violation of an

international rule that is directly effective, the international rule takes precedence. Judges

can use both national and international law.

2. Dualism (Transformation system):The rules of a treaty are only applied after a national act is made in which the rules of the

treaty are included, so an additional act is required to make the treaty part of the national

system. The rules of the treaty are, in other words, transformed into national law. Judges

only use national law. If national law is in violation of international law, the most recent law

prevails. Screening of subsequent law is therefore required in countries that have a dualistic

system in order to prevent violation of international agreements.

1.5.3 Other sources

Conventions and regulations

A convention or regulation is a document, drawn up by an international organisation, in which

governments of different countries participate. Examples of such organisations are the United

Nations and the European Union. A document (containing rules) that is issued by the United Nations

or the Council of Europe is usually called a convention; legislation issued by the European Union is

often in the form of regulations (Block 3). A convention is, in essence, just a treaty.

Jurisprudence (of International Courts of Justice)

A judicial system is a national phenomenon. In other words, there is not really an effective

international court system. That being said, there are a few international courts.

The importance of the jurisprudence created by the International Court of Justice of the UNis limited, since the Court only has the authority to rule if the countries involved have

voluntarily submitted to the rulings of the Court. As a result this the court never rules over

really important matters.

Jurisprudence created by the European Court of Human Rights is much more important forinternational legal relationships. Even though it is an intergovernmental organisation, the

courts rulings are very important, because the supreme courts of the countries involved in

the Council of Europe regard the rulings as binding and therefore uphold them.

The rulings of the European Court of Justice are essential, because they are based on judicialpower that has been transferred from the participating countries to the European Union, so


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a fourth layer has been added to the national structure of the judicial system (Court of First

Instance, Court of Appeal, Supreme Court). As a result of this the rulings of the European

Court of Justice are binding within every Member State of the European Union. Not only

rulings of this court in individual cases are important, but also the so-called preliminary

rulings.

Customs

A set of customs, developed over the years, which regulate how countries should deal with each

other. Customary law and conventional law are primarysources of international law. Both have equal

authority. Customary international law comes into existence when states regularly and consistently

follow certain practices out of a sense of legal obligation.

Legal principles

Another source of international law identified by the ICJs statute is () the general principles of law

recognized by civilized nations. These principles essentially provide a mechanism to address

international issues not already subject either to treaty provisions or to binding customary rules.

Such general principles may arise either through Civil law or through international law. Perhaps the

most important principle of international law is the principle ofgood faith.It governs the creation

and performance of legal obligations and is the foundation of treaty law.13 Other relevant legal

principles are:pacta sunt servandaand freedom of contract.

13 http://www.britannica.com/EBchecked/topic/291011/international-law/233501/General-principles-of-law; Another

important general principle is that of equity/impartiality, which permits international law to have a degree of flexibility in its

application and enforcement
http://topics.law.cornell.edu/wex/Sources_of_international_lawhttp://www.britannica.com/EBchecked/topic/238692/good-faithhttp://www.britannica.com/EBchecked/topic/291011/international-law/233501/General-principles-of-lawhttp://www.britannica.com/EBchecked/topic/291011/international-law/233501/General-principles-of-lawhttp://www.britannica.com/EBchecked/topic/238692/good-faithhttp://topics.law.cornell.edu/wex/Sources_of_international_law


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Paragraph 1.6International organisations (Recommended literature)

International law includes the classic concepts of law in national legal systems, e.g. status, property,

obligations, and tort (or dlit). It also includes substantive law, procedure, process and remedies.

Traditionally, states were the main subject of international law. Fairly recently individuals andinternational organisations have also become subject to international regulation.

International organisations play an increasingly important role in the relationships between nations.

An international organisation is an organisation that is created by international agreement or which

has membership consisting primarily of nations.14There are two types of international organisations,

namely intergovernmental organisations and supranational organisations.

1.6.1 Intergovernmental organisationsThis type of organisation is created to encourage international cooperation between the countries

that participate in the organisation. These organisations try to establish this by developing common

policies and drawing up treaties. The organisations themselves dont have the authority or power to

force a participating country to do something against its will. The participating countries cooperate

within the context of the organisation on a voluntary basis and are free to use the facilities the

organisation provides. The organisation itself has only very limited powers. The organisation can

perhaps be compared to a sort of international board room, where the sovereign power remains

with the participating countries. Decisions within the organisation are taken in unanimity.

The United Nations (UN) and NATO are examples of an intergovernmental international organisation.

1.6.2 Supranational organisations

This type of organisation is created by the participating countries in such a way that the countries

transfer a part of their own sovereign power to the organisation itself. The common interests of the

participating countries are more important than the interests of the individual countries. The

participating countries create a treaty, on the basis of which an international organisation is created,

that has its own sovereign power with regard to legislation, execution and jurisdiction.

As a result of the transfer of sovereign power, the organisation can force a particular participating

country to do something against its will.15Every participating country is subject to the power of the

organisation, and therefore also subject to its legislation, executive powers and legal rulings.

Decisions within the organisation are usually made by a majority vote.

The European Union is the best known example of a supranational international organisation.

14http://topics.law.cornell.edu/wex/international_law

15As long it is with regard to a matter over which sovereign power has been transferred
http://topics.law.cornell.edu/wex/torthttp://topics.law.cornell.edu/wex/tort


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Intergovernmental organisation Supranational organisation

Supranational

organisation

Transfer of

sovereignty

Sovereign

country

Intergovernmental

organisation Sovereign country

1.6.3 The United Nations

At the end of World War I, the League of Nations was founded. The fairly unsuccessfulLeague of

Nations was the precursor to the United Nations, founded after World War II. Many countries felt the

need to create an international organisation that would have world peace, or the prevention of

another world war, as its main goal. It would try to achieve this goal mainly by providing a platform

for dialogue. On the 26thof June 1945 the founding countries concluded a treaty, called the Charter

of the United Nations. There are currently 193 Member States. The headquarters of the United

Nations are situated in New York.

All countries can become a member of this intergovernmental organisation, provided the country

pledges to accept the obligations imposed on the member states by the United Nations Charter.

The five most important organs of the United Nations are:

The General Assembly

This organ consists of all the Member States of the United Nations, represented by a maximum of

five representatives. Every Member State has one vote. The General Assembly deals with all topics

mentioned in the Charter and everything that relates to the authority and functioning of the organs

of the United Nations. The General Assembly can make recommendations about topics such as

international peace and security, disarmament, political cooperation, the development of

international law, and international economic, social, cultural and educational cooperation. The

General Assembly can also take decisions, sometimes in the form of a resolution.


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The Security Council

The powers of the Security Council are to maintain international peace and security. Military action

can be taken by the Security Council.16The Security Council consists of fifteen Member States, of

which five are permanent members (France, China, England, Russia and the United States). The otherten are chosen every two years.

Decisions in the form of Security Council Resolutions are adopted if at least nine members approve.

The permanent members have the right of veto so an affirmative vote or an abstention from these

Members is strictly required.

All Member States have to accept and execute a decision given by the Security Council. In that sense

the Security Council is a supranational organ of an otherwise intergovernmental organisation.17

Economic and Social Council

ECOSOC was established under the United Nations Charter as the principal organ to coordinate

economic, social, and related work of the fourteen specialised agencies, functional commissions and

five regional commissions. The Council also receives reports from eleven United Nations funds and

programmes. The Economic and Social Council (ECOSOC) serves as the central forum for discussing

international economic and social issues, and for formulating policy recommendations addressed to

Member States and the United Nations system. It is responsible for:

promoting higher standards of living, full employment, and economic and social progress; identifying solutions to international economic, social and health problems; facilitating international cultural and educational cooperation; and encouraging universal respect for human rights and fundamental freedoms.

It has the power to make or initiate studies and reports on these issues. It also has the power to

assist the preparations and organisation of major international conferences in the economic and

social and related fields and to facilitate a coordinated follow-up to these conferences. With its broad

mandate the Council's purview extends to over 70 per cent of the human and financial resources of

the entire United Nations system.

The Secretary-General of the United Nations

The Secretary-General is the highest administrative official who presides over meetings of the

General Assembly, the Security Council and a few other organs. He has the authority to bring every

situation that in his opinion threatens international peace and security to the attention of the

Security Council. The Secretary General is the highest executive power within the United Nations.

16http://www.un.org/Docs/sc/unsc_functions.html

17To a very limited extent the Member States have transferred their sovereign power to the Security Council


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The International Court of Justice

The Court resides in The Hague (in the Netherlands). It is the most important judicial authority of the

United Nations. The Court only has authority to rule in cases in which Member States have

voluntarily submitted to the authority of the Court, in which case the Member States are obliged toadhere to the ruling of the Court. In case they dont, the other Member State(s) involved can ask the

Security Council to take measures to enforce the Courts ruling.

The Court is allowed to give legal advice to the General Assembly, the Security Council or any other

organ of the United Nations.

Separate body established by the United Nations:

The International Criminal Court

The International Criminal Court (ICC), governed by the Rome Statute, is the first permanent, treaty-

based international criminal court established to help end impunity for the perpetrators of the most

serious crimes.

This Court, residing in The Hague, was founded in 1998 within the context of the United Nations by a

treaty called the Rome Statute. Its purpose is to try people who have committed the most serious

international crimes such as genocide, crimes against humanity and war crimes. The court can even

try people who have committed these crimes during an internal (national) conflict (civil war) in a

member state, as long as the crimes have been committed after the Statute took effect.


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QuestionsChapter 1 Week 1A

Question 1

a. How many legal systems are there and what are their names?b. For each legal system, name five countries that have adopted that system.c. What is the fundamental difference between the systems?

Question 2

Imagine you have your own company in the Netherlands and you want to close a deal with a very big

company from Bombay (India). Why would it be important for you, as director of the company, to

negotiate about the applicable law? Which law would you prefer and why?

Question 3Sylvia buys a second hand car from a dealer. It turns out the car was involved in a traffic accident.

The car dealer did not mention this to Sylvia. The car does not function properly so Sylvia wants to

return the car and she wants her money back.

a. What type of law and which area of law govern the lawsuit against the car dealer in whichSylvia demands her money back?

b. Which parties are involved in this lawsuit? No explanation required.

Question 4

John has to pay taxes to the amount of 20 ,000 over the last year. The authorities send him a notice

that he is required to pay the money within three months. John disagrees with the amount of money

he has to pay. After an official request, in which John asks for a reduction, is denied, he decides to

take his case to court. After losing the case John comes up with a cunning plan to evade taxes. He

falsifies his tax return and states that his income was a lot less than originally assessed, as a result of

which he would only have to pay 4,500 in taxes. Unfortunately for John his plan is discovered, and

he is brought before a court of law, where he is fined for falsifying an official document.

a. What type of law and what area of law govern the lawsuit John files against the taxauthorities?

b. Which parties are involved in this lawsuit? No explanation required.c. What type of law and what area of law govern the lawsuit against John in which he is fined

for falsifying an official document?

d. Which parties are involved in this lawsuit? No explanation required.

Question 5

The municipality of Rotterdam decides to buy a building in which it will house juvenile delinquents

after they have served their prison sentence. The juvenile delinquents will receive temporary housing


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and in-house rehabilitation training. The municipality buys the building from a company that until

recently used the building as a warehouse.

What type of law and what area of law govern the contract between the municipality of Rotterdam

and the company?

Question 6

Eric destroys his neighboursfence, because he is angry. On an almost daily basis his neighbour plays

very loud music until late at night; Eric wants revenge.

a. What type of law and what area of law govern the lawsuit against Eric in which he is fined fordestruction of property?

b. Which parties are involved in this lawsuit? No explanation required.c. What type of law and what area of law govern the lawsuit against Eric in which he is ordered

to pay his neighbour (compensatory) damages?

d. Which parties are involved in this lawsuit? No explanation required.Question 7

Having turned 18, Mary has obtained the right to vote for a member of parliament to represent her.

a. What type of law and what area of law gave her the right to vote?She has started university recently and applies for a student grant or scholarship to support her

education.

b. What type of law gives her the right to apply for a student grant/scholarship?She is now also allowed to close a contract of insurance for herself with an insurance company.

c. What type of law and what area of law govern her contract of insurance with the insurancecompany?

One day she decides to write a letter to a local newspaper, giving her opinion on abortion.

d. What type of law gives her the right to express her opinion on abortion freely?One day, when Mary is denied a specific job because she is a woman, she decides to file a lawsuit

against the company that offered the job, stating that they committed gender discrimination.

e. What type of law prohibits this?

Question 8

Mark ignores a red traffic light and speeds across a busy intersection. He loses control over the car

and slams into another car. His car overturns and slams against a traffic light, which is completely

demolished as a result of the accident. The traffic light is owned by the municipality of Rotterdam.

a. What type of law governs the lawsuit against Mark in which he is accused of causing a trafficaccident?

b. Which parties are involved in this lawsuit? No explanation required.c. What type of law and what area of law govern the lawsuit against Mark in which he is

ordered to pay damages for the damage he caused to the other car?

d. Which parties are involved in this lawsuit?No explanation required.


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e. What type of law and what area of law govern the lawsuit against Mark in which he isordered to pay damages for the damage he caused to the traffic light?

f. Which parties are involved in this lawsuit? No explanation required.

Question 9a. The right to claim damages is an absolute/relative right, because..........b. The right of the owner of stolen goods to retrieve those goods is an absolute/relative right,

because........

c. The right to claim delivery of the goods you have ordered over the phone is anabsolute/relative right because...........

Question 10

a. Accidently dropping your friends Blackberry (result: broken phone) is legally irrelevant/ alegal fact/ a juridical act/ a factual act, because..........

b. Selling your phone on E-Bay is legally irrelevant/ a legal fact/ a juridical act/ a factual act,because...........

c. Cycling to school is legally irrelevant/ a legal fact/ a juridical act/ a factual act,because..............

d. Dying as a result of a traffic accident is legally irrelevant/ a legal fact/ a juridical act/ a factualact, because..............

e. Throwing a stone trough your neighbours window is legally irrelevant/ a legal fact/ a juridicalact/ a factual act, because..........

f. Crossing the street to do some shopping is legally irrelevant/ a legal fact/ a juridical act/ afactual act, because..............

g. Dying as a result of a gunshot to the head is legally irrelevant/ a legal fact/ a juridical act/ afactual act, because.


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QuestionsChapter 1 Week 1B

Question 1

In your own view, what is according to you law? And do you prefer an independent

institution/mechanisms to settle disputes for you or would you prefer to be your own judge

Question 2

Imagine you have your own company in Holland (Civil Law system) and you want to close a deal with

a very big company from England (Common Law system). Why would it be important for you, as

director of your company, to know, when closing this international deal, whether the English

company is based in a Common Law country or a Civil Law country? Which system would you prefer

and why?

Question 3

Can a municipality never be a civil or legal entity and perform juridical acts? Explain and also give an

example.

Question 4

The municipality of Nijmegen sells and delivers immovable property (houses) to a real estate agent.

Which area of law is applicable and why?

Question 5

Sam buys a laptop at Media Markt. It turns out the laptop is badly damaged, but the seller did not

mention this to Sam. The laptop does not function properly so Sam wants to return the laptop and he

wants his money back.

a. What type of law governs the lawsuit against Media Markt in which Sam demands that hegets his money back?

b. Which parties are involved in this lawsuit? No explanation required.

Question 6Jasper is a first year IBMS student, fortunately receiving a monthly studiefinanciering(study grant).

He also borrows money from the government because he is renting a room on the Oostzeedijk in

Rotterdam. Years after successfully finishing his studies, he has to pay his debt, which amounts to

10,000. The authorities send him a notice to inform him that he is required to pay the amount of

money within six months. After an official request in which Jasper asks for a reduction is denied,

Jasper decides to take his case to court. After losing the case Jasper comes up with a plan to get

some extra money. He is now working as an accountant for PriceWaterHouseCoopers and he knows

how to rewire a percentage of the companys money to his own account. After five months he has


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gathered enough money to repay his debt. Unfortunately for Jasper his plan is discovered, and he is

brought before a court of law, where he is fined for fraud and theft.

a. What type of law gives you the right to apply for a grant/scholarship?b. What type of law governs the lawsuit Jasper files against the tax authorities?c. Which parties are involved in this lawsuit? No explanation required.d. What type of law governs the lawsuit against Jasper in which he is accused for fraud and

theft?

e. Which parties are involved in this lawsuit? No explanation required.

Question 7

Monday morning a terrible accident occurred. A car collided with two young bikers at an

intersection. There is a lot of chaos at the intersection. That morning Mister Barnes, a 45 year

director of a real estate company, was driving towards the intersection. He noticed the chaos too late

and manoeuvred to the right to avoid the accident. Unfortunately he hits Rob Brown, a 17 year oldstudent, who was driving there on his scooter. In addition to this, Barnes crashes into a lamppost,

which is completely destroyed.

Rob was on his way to school, heading towards the intersection (the traffic light was green), but he

was a bit preoccupied because he had a very important exam that morning. His dream is to become a

professional football player. The Dutch football club PSV has already seen Rob play and they have

said they are very much interested in him.

Barnes says he did see Rob but could not avoid him anymore. Rob was driving at average speed on

the bicycle path on the right hand side of Barnes. He was not wearing a helmet and didnt havehis

lights on.Barnes car is damaged and due to the accident Barnes has missed a very important business deal

worth two million Euros. Robs scooter is damaged and he has sustained severe physical injuries (a

concussion and loss of one leg).

Both parties want to claim damages from each other. Barnes states that Rob should have worn a

helmet and that he should have had his lights on. Rob states that Barnes should have paid attention,

that Rob is not liable for Barnesdamage and that Barnes should pay for his medical costs.

a. What type of law governs the lawsuit against Barnes in which he is fined for destruction ofpublic property/causing an accident?

b. Which parties are involved in this lawsuit?No explanation required.c. What type of law governs the lawsuit against Barnes in which he is ordered to pay Rob

(compensatory) damages?

d. Which parties are involved in this lawsuit? No explanation required.e. What would be the answer to the previous two questions if Rob would be ordered to pay?


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Chapter 2. Property

Paragraph 2.1What is property?

Paragraph 2.2Ownership

Paragraph 2.3Detention and possession

Paragraph 2.4Acquisition and loss

Paragraph 2.5Transfer

QuestionsChapter 2


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Paragraph 2.1What is property?

According to article 3:1 of the Dutch Civil Code, property is comprised of all things and of all

proprietary and valuable rights.18In some countries things can be corporeal (tangible) or incorporeal

(intangible), but in the Netherlands things are always corporeal. Property in general, on the otherhand, can be either corporeal orincorporeal.

Things (corporeal property) are objects that have physical form and characteristics such as tables,

chairs, computers but also buildings, land et cetera. Proprietary and valuable rights (incorporeal

property) are non-physical, such as a right to enforce a debt (chose in action). Other examples of

proprietary and valuable rights are business goodwill, patents and copyrights. The general definition

of proprietary and valuable rights is: rights that are transferable and are intended to procure a

benefit or have been acquired in exchange for actual or expected benefit.

Corporeal things can be divided into movable (or personal) things and immovable (or real) things.

Examples of movable things are aeroplanes, books, televisions and bread. Examples of immovable

things are land and buildings.

A word that is often used in the context of property is the word goods. Goods are tangible or

movable personal property, in particular articles of trade or items of merchandise. Services, on the

other hand, are intangible commodities.

There are three possible legal statuses one can have with regard to property: property can be held

(detention), possessed (possession) or owned (ownership).

18The Civil Code of Qubec (Canada) uses the word patrimony to describe all property and debts of a person


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Paragraph 2.2Ownership

2.2.1 Characteristics

Ownershipis the most comprehensive right a person (or a group of persons) has over property. The

main characteristic of ownership is therefore that one is allowed to do with ones property whateverone wants. The owner has nearly limitless authority: he can use it, discard it, sell it or even

destroy it. That being said, ownership is not completelyunlimited.

Please note that the owner (of property) is also the owner of all the components of the property,

meaning everything that is attached to the property. The property is part of the owners estate.

Droit de suite

Droit de suiteis another characteristic of ownership. Ownership of corporeal property remains with

the owner even if owner doesnt have direct control over it. For example: if a car is stolen, the ownerremains the owner of the car, even if the thief starts using it and even if the thief takes the car with

him to another part of the world.

Droit de prfrence

Even if someone else claims certain rights with regard to the property, the owner has priority (in the

sense of preference) because he has higher ranking rights.

Example:The owner of a car lends it to his neighbour, who is allowed to use it for as long as he wants,

until the moment the owner needs it again. However, after three weeks the neighbour goes bankrupt.

In case of bankruptcy, the neighbour normally wouldnt be able to return the car, since all the goods

that were in his possession at the moment of bankruptcy are handed over to the trustee who presides

over the settlement of the bankruptcy. The creditors of the neighbour will all submit their claims and

will want to be paid from the revenue of the sale of, among other things, the car. The owner of the

car, however, is allowed to retrieve his car, because his rights as owner are higher in rank than the

rights of the creditors of the neighbour.

2.2.2 Rights and limitations

RightsThe owner has the right to:

Enjoy the use of the property in (almost) every way he wants to Collect and use the civil and natural fruits of his property, such as dividend paid by a

company or apples from an apple tree

Pursue legal actions with regard to his property Revindicate his property Establish limited rights Transfer the property


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Limitations

There are basically four main categories of limitations to the comprehensive right of ownership.

1. Abuse of rightsThe category abuse of rights is primarily based on jurisprudence. There are several standardjudgments dealing with this specific category.19 Two essential rules derived from

jurisprudence are that 1) you are not allowed to use your right without reasonable interest

and with the sole purpose of annoying someone else and 2) if there is a disproportionately

small advantage versus a disproportionately large disadvantage (consideration of interests),

your ownership rights may be restricted.

2. NuisanceIt is a fact of life that the quiet enjoyment of property (mainly immovables) is sometimes

interfered with. Interference can be in the form of loud noises, vibrations, foul odours,

smoke, dust, gases, excessive light, high temperatures and so on. The question is whether

interference always constitutes nuisance. The answer to this question is: no. In the

Netherlands there has to be interference (annoyance/disturbance) plusa wrongful act (art.

5:37 jo art. 6:162 DCC). There will only be a wrongful act if the interference is substantial and

unreasonable.

3. The lawThe law also imposes certain limitations on ownership. There are situations where you need

permission to use your property in a certain way. For example: you need permission, in the

form of a permit, from the local authorities (the municipality) to start a restaurant in your

home. You are also not allowed to simply build a house on a plot of land that you own and

you are not allowed to paint the outside of your house bright pink.

4. ExpropriationThe last category is expropriation. Expropriation may be necessary for the construction of

roads, railroads, canals, public utilities et cetera. Because expropriation has far-reaching

consequences and, possibly, a large impact, two requirements have to be met. The first

requirement is that expropriation is only allowed if it is done in the public interest. The

second requirement is that there shall be a pre-defined reasonable indemnification (duecompensation).

2.2.3 Limited rights (Recommended literature)

When the owner grants someone else a certain right to his property, he splits off specific rights from

his own comprehensive right. These rights are called limited rights; they encumber the

comprehensive right. Limited rights only give the person, who was granted that right, limited

19For example: Berg en Dalse Watertoren (HR 13 maart 1936, NJ 1936, 415 en HR 2 april 1937, NJ 1937, 639)& Amotie-

arrest (HR 17 april 1970, NJ 1971, 89)


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authority with regard to the property. Limited rights are divided into limited rights on property in

general and limited rights on things. Limited rights can also be divided into rights of enjoyment20

and

liens (or security rights).

Servitude

The first limited right that can only rest on things is servitude, also called easement. Servitude is a

right of enjoyment. It can be described as an encumbrance imposed on an immovable thing in favour

of another immovable thing. The first thing is called the servientthing (or property) and the second

thing is called the dominant thing (or property).21 In practice, servitudes can be a right-of-way, a

servitude of support, a servitude of light and air or rights regarding artificial waterways. More

varieties do exist. Servitudes have a specific, limited purpose.

Emphyteusis

The second limited right that can only rest on things is emphyteusis, also called leasehold.

Emphyteusis is a right of enjoyment. In the Netherlands, emphyteusis is often used in the city centre

of larger cities such as The Hague and Amsterdam. Emphyteusis gives the holder the right to hold and

use the immovable thing of another person. Usually the lessee has to properly maintain the property

and he has to pay taxes. In addition to the aforesaid, the lessee may have to pay (a small amount of)

rent. The duration of emphyteusis can be extremely long; it is not uncommon for emphyteusis to last

more than twenty years.22Termination of emphyteusis by the lessor is very difficult.

Superficies

The third limited right that can only rest on things is superficies a right of enjoyment. Superficies

allows you to own or to acquire buildings, works or vegetation in, on or above an immovable thing

owned by another person. Superficies is an exception to the rule of article 5:20 DCC that states that

the owner of the land is also owner of buildings, works and plants durably attached to the land.

Superficies prevents acquisition by fixture.

Apartment rights

The fourth category of limited rights that can only rest on things is apartment rights. Apartment

rights are rights of enjoyment. As the name already indicates, apartment rights are (only) relevant for

apartment buildings/apartment complexes. The owner of an apartment (or flat) is co-owner of the

whole building and has an exclusive right to use his own apartment. In addition to that, he has a rightto use the common parts of the building. The apartment owners are organised in an owners

association.23The rights and obligations of the owners can be found in the deed of division and if

applicablein regulations issued by the owners association. Usually a monthly fee has to be paid to

the owners association.

20Genotsrecht

21In Common Law terminology: servient estate and dominant estate

22See for example article 1197 of the Civil Code of Qubec

23In Dutch: VvE Vereniging van Eigenaren


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Usufruct

Usufruct is a right that can rest on property in general. Usufruct is a right of enjoyment; as

usufructuary you have the right to use/enjoy and derive profit or benefit from someone elses

property. Fruits in this context is not limited to natural fruits: civil fruits are included as well. The

best examples of civil fruits are rent and interest. In the Netherlands one can even have usufruct on a

house, which means that one can use and live in the house. The main obligation of the usufructuary

is to properly maintain the property.

2.2.4. LiensPledge24and mortgage are both liens (or security rights). They can both rest on property in general.

The difference between the two types of liens is that, in the Netherlands, mortgage can only rest on

registered property (aeroplanes, ships, buildings) whereas pledge can rest on all movable non-

registered property (for example the inventory of a caf).

The purpose of a lien is to provide security (usually payment security) to a creditor. If the debtor

doesnt fulfil his obligations, the creditor can sell the property on which the lien rests and settle his

claim(s) with the proceeds. The biggest advantage of a lien is that holders of a lien have priority in

case of bankruptcy of the debtor. They are, in other words, secured creditors25. Pledgees and

mortgagees have the right of immediate execution, which means that they can sell the property

without interference from a judge.

Pledge and mortgage are inconceivable without a corresponding obligation/claim. Consequence of

the aforesaid is that if the obligation/claim ceases to exist, the lien will also (automatically) cease to

exist. Pledge and mortgage are indivisible rights: both rights dont (partially) cease to exist if part of

the obligation is fulfilled. Only when the obligation is fulfilled in its entirety, the liens (automatically)

cease to exist.

Pledge

There are two types of pledge: one requires the property to be brought under control of the pledgee

or a third person agreed upon by the parties, the other one simply requires a deed or registered

document. The reason why two types of pledge exist is that it would, for instance, be ratherinconvenient to have a pledge on the inventory of your restaurant with the requirement to bring it

under the control of someone else. The major downside of the second type of pledge is that the

pledgee has no control over the property on which the pledge rests. There is, therefore, a risk that

the property suddenly disappears.

24In some jurisdictions, pledge is commonly referred to as chattel mortgage

25In Dutch law, the word separatistis often used


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Mortgage

Nearly everyone, at some point in life, has to deal with mortgage (or hypothec26). Buying a house

without previously obtaining financing is rare. Banks or other financial institutions, however, wont

be very keen on providing financing for your house if they cant establish a mortgage on the house in

case you fail to pay the (monthly) fees.

From a mortgagors perspective, the main benefit of a mortgage is that the mortgagor can use or

continue using the property; he doesnt have to bring the property under the control of the

mortgagee. The main advantage for the mortgagee is that the value of immovable property is

relatively stable. It is also much easier to verify whether another lien (mortgage) rests on the

property.

26Depending on the jurisdiction, hypothec is either a type of mortgage or used as a synonym for mortgage


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Paragraph 2.3Detention and possession

2.3.1 Detention

A holder27only has (effective) control over a thing; he holds the property for someone else, usually

the owner.

Examples: A contractor, a carrier, someone who rents, hires or leases something, someone who has

something on l

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Business Law Syllabus Part 5 Final