Commercial Law: Traders, Company Forms and Insolvency
Commercial law covers the Commercial Code of 1942, company forms and insolvency. The exam tests whether you can characterise the act, identify the liability of each corporate actor, and rank creditors in a default.
Traders and commercial acts
- Commercial acts by nature or by form; a trader registers in the commercial register, keeps books, and is subject to commercial prescription.
Companies
- SNC (general partnership): partners are jointly and severally liable without limit.
- SARL: liability limited to contributions, quotas not freely transferable, a manager binding the company within its object.
- SAL: at least three shareholders, a board of directors, capital divided into shares, statutory audit, and stricter publication formalities.
- Corporate personality separates the company from its members; the veil is lifted only for fraud or confusion of assets.
Insolvency
- Proceedings open on cessation of payments. A preventive settlement aims at rescue; bankruptcy liquidates.
- Ranking: privileged claims, then secured claims (mortgage, pledge), then unsecured creditors. Clawback periods unwind transactions preceding the opening.
- Directors may incur personal liability for trading while insolvent.
Worked example
A two-partner SARL defaults on a bank loan; the manager had signed a personal guarantee. The bank recovers from the company's assets, from the manager under the guarantee, and from the partners only up to their contributions. There is no automatic personal liability of a partner simply because the company failed.
Traps
Confusing the manager's liability with the shareholders'; assuming quotas are freely assignable; forgetting publication of accounts and appointments; treating a personal guarantee as part of the corporate debt; ignoring clawback exposure.