Legal status of professionals under the sway of The New Romanian Civil Code

Legal status of professionals under the sway of The New Romanian Civil Code

Senior Lecturer Lucian Bernd Săuleanu, PhD

University of Craiova

Faculty of Law, Romania

PhD Silvia Elena Săuleanu

University of Craiova

Faculty of Law, Romania

Key words: professionals, The New Romanian Civil Code, specifics of obligations, solidarity of co-debtors , the lawful flow of interests, notice of default to the debtor, as for the place of payment

Entry into force on October 1^st, 2011, of Law no. 287/2009 on the Civil Code has brought up again into attention the problem of the commercial law autonomy¹, in fact an old topic in legal literature². An analysis of the points of view stated lately in various studies or public conferences leads to the observation that the dominant note is the scepticism to the new configuration of the commercial matter.

We have not the aim to identify the advantages or disadvantages of one system or another, although I fundamentally join the opinions stated³ in the sense of recognising the commercial law as a distinct branch of private law, despite the unity achieved by the New Civil Code. Regarding the autonomy of the commercial law, we must distinguish between the legislative autonomy and scientific autonomy. Even if a unit of private law has been normatively done, the science of commercial law is required, having reasons of own existence.

Conversely, by regulating in the New Civil Code some profoundly commercial legal institutions, we may state a commercialisation of civil law has occurred⁴. Such a remark is valid both statistically, the number of legal relations wherein the parties are professionals being much higher than that where we find only non-professionals, and on the other had, by many regulated legal institutions.

Thus, the commercial provisions that justified their specificity compared to the civil ones precisely because of the nature of commercial relations, not only they disappeared, but they have been extended to all private law relations. This conclusion may be easily observed from the way in which the derogatory rules of commercial obligations have been taken by the new Civil Code from the Commercial Code in 1887.

Among the institutions taken into the New Civil Code, we list as example: the professionals and the enterprise (art. 3), joint venture (art. 1.949-1954), the commission contract (art. 2.043-2.053), the consignment contract (art. 2.054-2.063), the shipment contract (art. 2.064-2.071), the agency contract (art. 2.072-2.095), the intermediation contract (art. 2.096-2.102), banking contracts⁵ of the current account type (art. 2.171-2.183), the current bank account (art. 2.184-2.190), the bank deposit (art. 2.191-2.192), credit facility (art. 2.193-2.195), rental of safe deposit boxes (2.196-2.198), autonomous guarantees such as the letter of guarantee and letter of comfort (art. 2321-2322), securities (art. 2630-2631).

In matters relating to obligations, the provisions of the New Civil Code outline many and substantial changes. In this context, we aim to determine to what extent the rules derogatory in this matter, as they were governed by the Commercial Code (art. 40/-45, art. 59) have been taken into the new regulation. We take into account those rules that determine the derogatory nature of commercial obligations against civil obligations, namely: solidarity of co-debtors; the actual flow of interests, interdiction to grant the grace period, the court not allowing the disputed withdrawal, place of performance of commercial obligations, determining the price.

The autonomy of commercial law and that of company law is of very high practical importance; the theory of unity of private law has had replications in the legal doctrine written in the las century, the groundwork of which was the objective view on commercial law presented by professor Caesare Vivante in his work ” Un code unique des obligations” (1937).

The theory of unity of private law is present in the New Civil Code by the incorporation of all the regulations regarding persons, family relations, as well as commercial relations. Art. 3 establishing a general application in all legal relations between professionals, as well as in all legal relations between professionals and any other person that is a subject of civil law.

Art. 3 (2) introduces the new therm of ”professional”, referring to all those that exploit a commercial undertaking. Art. 3 (3) defines the ”exploitation of a commercial undertaking” as the systematic exercise by one or many persons of an organized activity that consists in producing, administration or alienation of goods or service providing, regardless if it has a lucrative purpose or not.

Art. 8 of Law no. 71/2011 on implementation of the New Civil Code establishes that the term of ”professional” covers the notions of ”trader”, ”entrpreneur”, ”economic operator”, etc.

Solidarity of Co-debtors

Art. 1.446 of the New Civil Code maintains the presumption of solidarity for the obligations contracted during the activity of an enterprise, if the law does not provide otherwise.

Maintaining the special commercial law directly results in maintaining the cases where the legal (or absolute) passive solidarity cannot be removed, taking into account the cases provided by Law no. 31/1990.

By comparing the text of art. 1.446 of the New Civil Code with the art. 42 Commercial Code, we observe a difference in the sense that in this latter case, the presumption is a relative one, the parties being able to establish the contrary (“in commercial bonds, co-debtors are held jointly, except the contrary stipulation”). Or, in the New Civil Code, the presumption applied in all these relations, except when the law stipulates otherwise.

The conclusion is that the co-debtors’ joint responsibility presumption is no longer a relative one, but an absolute one. The parties can no longer rebut this presumption.

It is also required to determine the scope of individuals covered by the incidence of joint responsibility presumption, established by art. 1446. From the contents of this text of the law, the express reference to "obligations contracted in the performance of an enterprise activity" results, so that it could be supported that this presumption applies only to debtors who are professionals and that the regulation does not differ from that of art. 42 par. 1 of the Commercial Code.⁶. We cannot agree with this opinion and we consider that basically the two provisions do not differ.

Thus, first of all, the scope of individuals was expanded once under the rule of the Commercial Code of 1887, the presumption concerned only the traders, while the current Civil Code applies to all professionals, a notion that includes the categories of trader, entrepreneur, economic operator, as well as any other certified individual performing economic or professional activities.

Second of all, as we shall further argue, the phrasing of art. 1446 is confusing⁷, not limiting the application of the presumption only to the legal relations where the debtors assume their obligation in the exercise of an enterprise. We believe that the joint responsibility of co-debtor was established in terms of the legal relations where one of the parties is a professional.

The premise we want to start from in supporting our view is the finality of joint responsibility between debtors; this derogatory rule on the matter of commercial obligations has been an edict to encourage the credit and was a guarantee for the creditor.

In order to draw a fair conclusion, we believe that it is required to first establish the effects regarding the non-professionals, respectively to observe to what extent the provisions of art. 42, par. 2 and 3 of the Commercial Code have been taken into the Civil Code.

First of all, the presumption of joint responsibility is applied according to art. 42, par. 2 and to even the non-trader surety who guarantees a commercial obligation. This provision is no longer in the new Civil Code so that, by observing the provisions governing the surety (art. 2.279-2.320), the surety’s liability is no longer differentiated according to the quality of surety⁸) and nor to the nature of the obligation assumed (meaning specific to the enterprise activity).

The joint surety is expressly regulated by art. 2.300 of the New Civil Code and it exists “when they are committed along with the main debtor with the status of surety or joint co-debtor”, in which case they shall no longer invoke the benefit of discussion or division.

Although the surety can be imposed by law (art. 2281), we observe that art. 1446 makes no reference to sureties. Thus, whether the surety is a professional or a non-professional, the presumption of joint responsibility does not operate (it has legal feature only for the obligations contracted in the exercise of the enterprise’s activity), but it should expressly result from that document (art. 2282).

Second of all, if art. 42, par. 3 of the Commercial Code expressly stipulated that the joint responsibility presumption does not apply to non-traders for operations that are not trading deeds in respect thereof, we observe that such a statement is no longer present in the New Civil Code.

There are two possible interpretations:

• Either the presumption applies to all co-debtors, including debtors who assume their responsibility outside the performance of an enterprise’s activity

• Or the presumption applies only to professionals (a notion where not just the “traders” are included) and only if that obligation is assumed in the exercise of its enterprise.

We believe that the first interpretation corresponds both to a grammatical and teleological interpretation, respectively in agreement with the intent of unifying the private law and implicitly the of unitary dealing with such legal relations.

Not taking the text of law from the Commercial Code of 1887 can be observed, which removes the joint responsibility in the case of non-traders and we cannot consider that the current form of art. 1.446 of the New Civil Code is random, so that this text must be interpreted in the sense of applying the presumption of joint responsibility and in the case of non-professional co-debtors. We cannot interpret that the nature of the enterprise activity refers even to co-debtors, meaning that when it would fall within the scope of such activities for them. From the grammatical interpretation, it results that this nature can also be just for the creditor. Perhaps precisely for removing the interpretations, when drafting the Commercial Code, the legislator has reinforced the presumption for non-traders, using an unequivocal phrasing. In the case of the New Civil Code, the legislator could have also been precise in drafting the text, taking the formula from art. 42, par. (“…for operations which, concerning them, these are not trading deeds”), so that the text could have had a simple and clear content: The joint responsibility between the debtors for the obligations assumed by them as professionals is presumed. The reference to professionals once the entire structure of the New Civil Code revolves around the dichotomy professional/non-professional was welcomed. By using the phrase "exercise of an enterprise’s activity", we find the interpretability of the text, as well as an inconsistency of the legislator, which, instead of constantly relating to the professional individual, it swivels in determining the legal effect by the enterprise activity. As long as the difference between the two systems (that of the unity of private law, namely of the commercial law autonomy) is based on the subjective theory (the entrepreneur individual), respectively the objective theory (which focuses on the trading deeds) implicitly the remaining provisions should have also been in accordance with the system variant adopted.

Another argument to substantiate the first interpretation is also drawn from the unit of generally applying the Civil Code, a principle stipulated in art. 3, par. 1, so that a general application on the entire relation would also correspond to this concept; applying the rules distinctly for each part of the rules is not possible once the purpose was to unify the private law and generally apply the provisions of the Civil Code. As art. 3, par. 1 stipulates that "the provisions of this Code shall also apply to the relations between professionals, as well as to the relations between thereof and any other civil law subjects", we believe that the text must be interpreted in the sense of the applicability of the co-debtors’ joint responsibility and in the case of the relations between a professional, on the one hand, and non-professionals, on the other hand, where the latter have the quality of debtors.

Regarding the second possibility of interpretation, although we are reserved precisely for the aforementioned arguments, we however point out that also in this case the scope of the presumption applicability has been extended, if we consider that the article refers to the context of assuming such an obligation (in the performance of an enterprise’s activity), and, from the definition provided by art. 3, par. 3, we observe that the applicability of the co-debtors joint responsibility presumption concerns any activity in the scope of production, management or alienation of goods or provision of services, whether it has or not a lucrative purpose. The argument to consider the formulation of art. 1446 sufficient, without requiring any explanation or reinforcement thereof in the sense that the presumption of co-debtors exercising the enterprise’s activity is applied, precisely because by unifying the legal relations of private law the emphasise is no longer on differentiating the nature of this relation (we do not have commercial/non-commercial relations nor relations between professionals/non-professionals); this differentiation has disappeared having civil legal relations. It is true that the legislator could not have been constant in this process of treatment unity and has set exceptions regarding an enterprise’s activity, but the context in which we admit that maintaining a difference between the obligations assumed by professionals and those who do not have this quality, we question ourselves about the effectiveness of the monistic concept and that only the professional and enterprise names have actually been implemented, without any other modification. However, even in presenting reasons to the Civil Code, it results a unitary approach of the enforcing relations has been desired.

Yet, if this second thesis is embraced, we must also admit another hypothesis, namely that the presumption only applies when the debtor has assumed their obligation in the enterprise’s activity, excluding the situations where the very professionals assume their obligation outside the enterprise’s activity.

We do not claim that such an interpretation of art. 1446 is not logical, but that it does not get through from the economy of the text. This second variant of interpretation is nothing but the reiteration of the principles set forth by the Commercial Code of 1887 regarding the regime of unilateral trading deeds, the merchantability presumption of art. 4, art. 56 of the Commercial Code, etc. all being the fundamentals of the dualism concept

Therefore, the conclusion that emerges regarding the comparison of the scope of applicability of the joint responsibility presumption according to the New Civil Code compared to the Commercial Code of 1887, we observe an expansion of the scope of the application thereof also in other legal entities and natural persons than those that could have been qualified as traders, under the Commercial Code.

Another example supporting the thesis of establishing a stricter regime on the joint responsibility is that of the provisions of art. 1886, par. 1 governing the joint liability of associates and first administrators appointed by contract for the damage caused by failing to comply with a formal requirement of the company contract or a formality required to establish a company or, if applicable, to acquire the legal entity by it⁹; the liability established by art. 1886, par. 1 applies to all associates, regardless of the company’s form, including those from simple companies. This provision establishes a stricter regime than that regulated by the Civil Code of 1864, which in art. 1520 established that the associates in civil companies, compared to the associates from trading companies are not jointly liable to third parties; this differentiation was no longer maintained by the New Civil Code in the sense of a different liability between professionals and non-professionals.

The Lawful Flow of Interests

Concerning the rule established by art. 43 of the Commercial Code on the lawful flow of interests¹⁰, in the New Civil Code we observe this rule is maintained by art. 1.535, par. 1 according to which if an amount of money is not paid on the due date, the creditor is entitled to deferred interests, from the due date until payment is made, in the amount agreed by the parties or, in absence, within the deadline provided by law, without needing to prove any damage.

By not specifying the nature of the obligation assumed (respectively a professional or a non-professional), we also observe in this case that the deferred interests are due from the due date, regardless of the specificity of the requirement (meaning assumed ​​during the enterprise’s activity or not), so that we point out once again the broadening of the scope of applicability of the rule of art. 43 of the Commercial Code to all money obligations assumed after the entry into force of the New Civil Code¹¹.

The current regime of the legal interest is provided by the Government Ordinance no. 13/2011 regarding the legal remunerative and penalty interest for monetary obligations, as well as for regulating such financial-fiscal measures in the banking field¹² which approved the G.D. no. 9/2000 regarding the level of the legal interest for monetary obligations.

The parties are free to establish, in conventions, the interest rate both for repaying a loan of an amount of money, and for the late payment of a monetary obligation (art. 1); establishing the interest is done only in writing, otherwise only the legal interest is due (art. 6).

Distinction is to be made between the remunerative interest (art. 1 par. 2) and the penalty interest (art. 1 par. 3).

The rate of the penalty interest is set at the level of the reference interest rate of the National Bank of Romania, plus 4 percentage points (art. 3 par. 2) which is published in the Official Journal of Romania, Part I or any time the level of the interest rate of monetary policy shall change (art. 3 par. 4).

The legal relationships not arising from the operation of an enterprise with lucrative purpose, the interest cannot exceed the legal interest by more than 50% per year (art. 5 par. 1).

Regarding the regime of interests, the following clarifications are required:

- as the contract is subject to the law in force when it is concluded, concerning its conclusion, interpretation, effects, execution and termination, so that the penal clauses are to be subject to this rule

- The penal clause agreed after the entry into force of the Civil Code causes the effects it stipulates, regardless of the date when the main obligation arises (art. 115 of the Law for applying the Law no. 287/2009 concerning the Civil Code).

Concerning the notice of default to the debtor, art. 1.523 par. 1 stipulates that the debtor is rightfully in delay when it has been stipulated that the mere fulfilment of the deadline set forth for the execution generates such an effect (therefore, without making a distinction between professionals and non-professionals) and par. 2 states the cases where the debtor is rightfully in delay, among which at letter d): “if the obligation to pay an amount of money, assumed in the exercise of an enterprise has not been performed”.

An application of the rightful notice of default may also be found on the matter of sale in art. 1.725:

“In the case of selling movable goods, the purchaser is rightfully in delay regarding the fulfilment of their obligations if, upon the due date, they did not even the price nor did they take the goods”.

Regarding the accumulation of the penalty with the execution in nature, art. 1.539 establishes that a creditor cannot request both the execution in nature and the payment of the penalty, unless the penalty has been stipulated for the non-execution of the obligations in due time or at the established place. In this case, the creditor can request both the execution of the contract and of the penalty, if they do not waive this right or if they do not accept the execution of the obligations, without reservations.

As for the place of payment¹³,

Art. 1.494 of the New Civil Code establishes that, in the absence of a contrary provision or if the place of payment cannot be established according to the nature of the service or under the contract, practices set forth between the parties or usages:

a) the monetary obligations must be performed at home or, as applicable, the headquarter of the creditor, on the date of payment;

b) The obligation to submit a determined individual item must be executed at the location where the item is on the date of concluding the contract;

c) the other obligations are performed at the home or, as applicable, the headquarter of the debtor, on the date of concluding the contract.

By comparing art. 1.494 of the New Civil Code with the art. 59 of the Commercial Code, we note that the texts are similar, the only difference brought ​​by the new Civil Code on the execution of the monetary obligations, a difference that is in favour of the creditor, reversing the presumption established by art. 1104 par. 3 of the Civil Code of 1864 which stipulated that the payment would be made at the debtor’s headquarter (not portable); therefore, this change is in the creditor’s advantage.

In return, the institution of the grace period and that of the disputed withdrawal are no longer taken into account by legislator in the New Civil Code. However, when implementing the notice of default to the debtor is regulated (art. 1522) the debtor’s possibility to execute their obligation within a reasonable time, given the nature of the obligation and the circumstances.

One reference may be identified on the grace period in art. 1.619 “The grace period granted to pay one of the debts does not prevent the achievement of the compensation”.

Art. 1101 par. 1 of the Civil Code of 1864 which governed the grace period was no longer taken into the New Civil Code (although par. 1 of art. 1101 on the partial payment has been taken into art. 1.490 of the New Civil Code). On the contrary, art. 1.495 of the New Civil Code establishes that, in the absence of a deadline stipulated by the parties or determined under the contract, of the practices established between them or of the usages, the obligation must be immediately executed. Exceptionally, par. 2 provides that the court may set a deadline when the nature of the service or the place where the payment is to be made so requires; to be noted that this text does not refer to granting a payment deadline according to certain circumstances ("in considering the position of the debtor" - art . 1101 of the Civil Code.), but to establishing it when such a deadline was not provided, nor does it result from the established practices or from the usages; therefore this art. 1.495 par. 2 does not govern the grace period.

However, granting a grace period had lost its effectiveness as derogatory rule of commercial obligations, an evidence in this sense being the provisions of art. 6 par. 3 of the G.O. 5/2001 on the procedure of payment summons, which establishes that if the judge finds that the creditor’s claims are unjustified, they shall issue the ordinance containing the payment summons and the payment deadline, which shall not be less than 10 days and not more than 30 days.

Determining the price between professionals is governed by art. 1.233:

“If a contract concluded between professionals does not set the price nor does it indicate a way to determine it, it is assumed that the parties took into account the price commonly practiced in that field for the same services achieved in comparable conditions or, in the absence of such a price, a reasonable price”.

In conclusion, the special nature of the legal relations arising from the trade activity, compared to the civil legal relations is undeniable, and this remains a constant element regardless of their normative source.

Undoubtedly, through many stipulations, the New Civil Code brings a plus of efficiency in legal relations which partly are professionals. We observed that the problem of interpreting the unit of private law in many aspects is just terminological.

That the unification of the two areas is formal or not does not prevent us from observing the evolution of legal institutions (by comparison) and extract the benefits of the changes made.

The specificity of commercial law cannot be impaired, and the evidence of its vitality is the very experience of the states that formally achieved the unification of private law¹⁴.

As stated, regarding the autonomy of the commercial law, we must distinguish between the legislative autonomy and scientific autonomy. The science of commercial law is necessary for reasons of own existence.

Moreover, the commercial law as law branch and as study subject in universities continues to exist in those countries that adopted a unique code, such as Italy, despite adopting the Civil Code of 1942¹⁵. We must not forget that many of the legal institutions related to the science of commercial law shall continue to be governed by the special legislation.

Even if in the new regulation it has been given up on the original fundamentals of commercial law, the pillars of this structures, namely the trading deeds and the trader, as it has also been noted in the doctrine¹⁶, remain defining elements providing specificity to the commercial law, respectively: the diminished role of the traders’ entity; the celerity of commercial operations; the institution of appearance; the importance and security of the credit.

The pragmatism of commercial law, compared to the civil law is observed in the absence of concern for outlining a general theory¹⁷, prevailing the interest for providing the traders with some flexible, rapid, efficient and also safe techniques.

As also noted in the doctrine, the specificity of the trade law in general and also the specificity of commercial obligations, in particular, can result from the following aspects:

a) The diminished role of the contractors’ entity in the commercial law relations.

Outlining such an attitude is the consequence of the contractual dirigisme as a tool of limitation. Limiting the principle of contractual freedom has been determined by the existence of a crisis of the contract due mainly to the state’s intervention in the economic life, a limitation that was mainly manifested by the development of adhesion contracts at the expense of traditional contracts, by the increased intervention in order to control it, by the adoption of a legislation on state’s monetary policy and control of prices, by establishing by law the clauses to be inserted should certain contracts be concluded, etc.

b) the celerity ​​of commercial operations has imprinted to many institutions of commercial law a distinctive character, adapted to this need. It is the reason why a flexible regime has been established, precisely for the conclusion of such contracts is often verbal; other relevant examples may also be found in: the procedure by which the creditor comes into the possession of the pledged item, the transfer of shares, commercial arbitration, etc. Celerity has required the use of new techniques, such as using the computer in order to conclude the contracts, make payments, etc. Lately, there has been a significant increase of formalism¹⁸ (standardisation of contracts), as a corollary of diminishing the role the contractors entity and resulted in the use of standard contracts, which often have abusive terms.

c) the importance of appearance in commercial law

The celerity ​​of legal operations make it impossible to constantly, correctly and completely verify the data necessary for the conclusion of a commercial operation (e.g. checking the existence of the other contractor, its reliability, etc..), which is why the legislator has given the consistency to the appearance institution in commercial law, precisely for protecting those involved. It is the case of commercial securities, the case of notes written in the trade register, etc.. Article 51 of Law no. 31/1990 stipulates that third parties may invoke the acts or deeds which publicity was not achieved for, which means they can even ignore them, as the text is not imperative, and art. 54 provides that the company or the third parties cannot invoke an irregularity in appointing the administrators, when this appointment has been done publicly, according to the law.

d) the importance of the credit in commercial law, corroborated with the security of commercial operations. The motor of trading is the credit, which is why, in this area, the legislator also needed to adapt the rules of civil law; this justifies the existence in commercial law of some exceptions or new rules: the joint responsibility of co-debtors is presumed that, which in civil law is an exception; the interests rightfully flow, not needing the notice of default to the debtor for the performance of an obligation to pay an amount of money; it is prohibited to grant a grace period etc. All these have their logic in providing the credit flow, and in the requirement to ensure a system that would provide security to operations. The examples given above also provide support for explaining the security of commercial operations.

Observing these last details, we have to emphasise that the existence of specificity is the natural consequence of the evolution of trade, that regardless of the name given or the terms used or the theories adopted, their essence cannot be removed and that the requirements of this activity were over time transposed in legislation, including the new regulations.