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INTRO: WHY SHOULD ECONOMISTS CARE ABOUT LAW? ECONOMIC ACTORS Economy develops through the combination of land, firm, services, financial and human capital, which are real-world entities, rooted in the social environment and mostly designed by law A firm is a cluster (=ammasso) of: • financial proper...

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INTRO: WHY SHOULD ECONOMISTS CARE ABOUT LAW? ECONOMIC ACTORS Economy develops through the combination of land, firm, services, financial and human capital, which are real-world entities, rooted in the social environment and mostly designed by law A firm is a cluster (=ammasso) of: • financial property (capital) • intellectual property (copyright) • industrial property (trademarks, patents) • contracts inside it (shareholders, workers) and outside it (suppliers, clients) The choice of each economic actor, businesses or consumers, must overcome legal rules governing property, contracts, torts (=illecito civile, danni) Law is therefore seen as a list of dos and don’ts

ECONOMIC WELFARE What is welfare economics? It is the branch of economics that uses microeconomic techniques to evaluate wellness at the aggregate level The Economic analysis of law look at legal rules as tools to incentivize individuals to undertake activities that are beneficial for the society. In this case Law is perceived as an instrument of Welfare maximization Since market equilibrium is exposed to different risks of failure, which may impede it from maximizing the social and economic welfare of society, legal rules may be interpreted as ways to correct market failures Examples of market failures are:  Negative externalities -> TORT LAW  Information asymmetry -> CONTRACT LAW  Bounded rationality -> CONSUMER LAW Law is necessary to detect and to prevent market failures, private law rules address these issues and can be applied to correct them.

LAW IN THE EYES OF ECONOMISTS Law has to do with efficiency (mostly private law) and distribution (mostly public law) Costs and benefits related to any economic activity depend on the legal framework within which they are exercised. Indeed law influences efficient allocation and distribution of resources among individuals There are two different economic analysis of law:  Descriptive economic analysis: it consists in predicting the effects of various legal rules (how would individuals react within a certain legal framework?)  Normative economic analysis: it consists in suggesting policy recommendations (how to interpret a given rule in order to achieve a more efficient outcome?)

UNIT 1: LAW AND THE STATE DEFINITION OF LAW To mean law, European languages adopted a term different than ius Neo-Latin languages took the word directum, which meant just, equal:  French: droit  Italian: diritto  Spanish: derecho  German: Recht

WESTPHALIAN PARADIGM Domestic law:  The State’s sovereignty entitles it to bind (legare) its own citizens by enacting legal rules  The way to legal nationalism was opened and led to the major codifications of private law of the 19th century International law:  The State’s sovereignty can be voluntarily self-limited through agreements with other States  Each contracting State has a duty to give execution to the international agreements it has entered into Westphalian sovereignty, or state sovereignty, is the principle of international law that each nationstate has exclusive sovereignty over its territory. External powers should not interfere in another country's domestic affairs. Each state, no matter how large or small, has equal rights to sovereignty. STATE LAW Since each State creates its own law, any discourse about law is possible only with regard to a national law, which depends upon the acts enacted by each State (an exception is represented by international law) A branch of legal science specifically investigates the comparison between a national law and another, which is referred to as comparative law EUROPEAN UNION: it is constituted by 28 member states (even though United Kingdom shall withdraw):  EU institutions have power to make European legal rules  European legal rules belong to an autonomous legal system

SETTLING CONFLICTS OF LAWS International private law deals with international collusions As regards States which are members of the European union, their international private law has been unified through regulations of the European Union Renè David gathers (=raccogliere) national laws of the world into “families”, which share similar concepts and historical roots Within the Western legal tradition, the most important families of national laws are two:  Civil law: the basic characteristic of civil law is that they have implemented the “doctrine of separation of powers”: o Legislature o Executive o Judiciary o Baron de Montesquieu states that “only the mouth that pronounces the words of the law, inanimate beings that are not able to modify either its force or its rigor” o In this case the core of civil law is collected and systematically organized into a civil code o The beginning of this tradition may be traced back to the renaissance of Roman law between 11th and 12th century o In Bologna Irnerius found the Corpus Iuris Civilis, a collection of fundamental works in jurisprudence, made up in the 6th century by order of Justinian I (it is made by a Core, a Digest or Pandects, an Institutes part and last a New Laws part) o Opinions rendered (= tradotte) by jurists who lived in Rome between the 2nd century b.c. and the 3rd century a.D., as collected in the 6th century a.D. in Byzantium, were considered as the main source of law that happened not because a sovereign had ordered so (non ratione imperii), but because that legal thought was deemed (= giudicato) to be endowed (= dotato di) with an inner rationality (sed imperio rationis) o Tremendous changes in the meanwhile occurred in society and political institutions urged for a mighty effort of creative interpretation and adaptation of those ancient texts o The combination of Roman law collected in the Justinian compilation and the apparatus of its “scientific” interpretations by scholars (communis opinio doctorum) became the law generally applicable in Western Europe o Catholic Church developed a law of its own (indeed after Pope Gregory VII, the Church was organized as a political institution): canon law (also based on Roman legal thought) o CIVIL LAW + CANONICAL LAW = COMMON LAW  Common law o After the battle of Hastings (1066), rise of a “common law” o The political and juridical unity achieved by England already in the 11th century prevented the ius commune of continental Europe from expanding on the island: civil war (1642-1651) and Glorious Revolution (1688-1689)

o The tenets of the French revolution could not gain ground in England, essentially because the democratisation of politics had already been achieved o Common law is not based upon acts approved by the Parliament, particularly it is not codified o Common law develops through a case approach by courts o Rule of “stare decisis”, pursuant to which precedents are binding for courts

UNIT 2: LEGAL NORMS AND THEIR STRUCTURE LEGAL POSITIVISM Kelsen’s theory goes under the denomination of ‘normativism’ “Pure Theory of Law” (Reine Rechtslehre) (1933): based upon the fundamental assumption that law consists of legal rules, or norms, which are completely autonomous from religion, morality, and so on – in this sense, this theory is qualified as “pure” Legal positivism requires that some kind of test is introduced, through which norms can be acknowledged as such and discriminated from other, not legally binding rule Such a test could solely rest on the “origin” of a norm, its “pedigree”, to wit the process though which a norm is adopted by political institutions Each norm owes its validity to another norm, which governs and rules the proceedings through which the former is enacted

NORMATIVISM Norms are dislocated though a hierarchical order (Stufenbau), where each of them depends upon the higher one which stands above it A norm is valid if and only if it pertains (= si attiene) to such a hierarchical order, which is termed as legal order (or legal system) “soft positivism”: the conventional “rule of recognition” (=Identificazione) of a norm may well incorporate, besides pedigree, principles of justice or substantive moral values (Hart) Hierarchical order: 1. 2. 3. 4. 5.

“Basic norm” Constitution Statutes Administrative regulations Custom

STRUCTURE OF NORMS “Thou shalt no kill” This kind of absolute imperatives may be appropriate to religion or to morality, but not to law: •Law conveys a coercive social order, while religion binds only those who believe in it and morality only those who accept it •Kelsen’s theory: a norm is such not because it stipulates a command, but because it stipulates the sanction to be applied in case the command is disobeyed by someone IF a “state of affairs” comes into being THEN someone will be burdened with a “sanction” A norm is shapes as a “hypothetical independent period”, whose protasis (= the IF-clause) consists of a state of affairs and whose apodosis (= the THEN-clause) of a sanction The norm attaches a (negative) reaction of the State to a possible event or behavior (e.g. IF a contract is breached by one of the parties which have entered into it, THEN that party will be deprived of her/his rights towards the other) THE SCOPE OF NORMS A norm is marked by two characteristics: generality and abstractness => “treat like cases alike” • Generality: ➡ A norm is addressed not to individuals identified as such but to a class of individuals who happen to find themselves in the state of affairs envisaged ((=figuratesi)(by the IF-clause • Abstractness: ➡ A norm is applicable to whatever event or behavior matches with the state of affairs envisaged by the IF- clause They are general because they are applicable to anyone to accomplish the action They are abstract since they are applicable to each possible event or behaviour of the same kind provided by the If clause

UNIT 3: PRIVATE LAW AND PUBLIC LAW PRIVATE LAW AND PUBLIC LAW Jurisdictions of continental Europe are generally acquainted with the distinction between private law (droit privé, Privatrecht, diritto privato) and public law (droit publique, öffentliches Recht, diritto pubblico) • Private law: is that part of law in which the administration as such does not play a role • Public law: is that part of the law in which the administration as such plays a role (the distinction between public and private law is formalised only with Napoleon around 18th century) => the State can act as a private party The distinction is somehow rooted in the sources of Roman law and over time dealt with by (German and French) scholarship The distinction became an institutional reality only in 1800, when Napoleon created administrative tribunals Private law is applicable to public entities, if the administration plays by the rules of private law (a matter of property for example)

WHAT IS PUBLIC LAW? The rise of public law has historically aimed at exempting the State’s authoritative power from undergoing private law norms (particularly regards civil liability towards citizens) As opposed to private law, which is applicable to all legal subjects and is therefore deemed as general, public law is special, i.e. applicable solely to the State as exercising its own sovereign powers If the State acts not for the sake of its own authoritative power, but like any other legal subject, private law is perfectly applicable to its legal relations the State is said to act iure privatorum (accordingly to private law) E.g. the State may have private properties and, if so, may well rent or sell them by entering into private law contracts with any other legal subject The different branches of public law are: 1. Administrative law pertains to what is executory. It covers the many interactions between government agents and civilians (example: the diplomas of Bocconi) 2. Criminal law deals with the prosecution of crimes (or criminal offences), i.e. unlawful acts which are punished by the State because of their harmfulness towards individuals or the community 3. Constitutional law lays the State’s foundations, both regarding protection of citizens’ fundamental rights and liberties, and the structural and functional organization of its powers

4. Procedural law regulates the proceedings for the judicial application of private law, criminal law and administrative law 5. Tax law regulates taxation The boarder between private and public law is not fixed but it depends on political decisions (how much freedom (private law)) Sometimes in trouble times, public law prevails on private law. The idea of privilege of the State, even in the civil law, has been alleviated from the original idea of Napoleon

PRIVATE LAW Private law deals with the mutual relations between citizens •civil law: applicable to the generality of legal subjects - Contract law, tort law, property law, family law, inheritance law •commercial law: specifically applicable to enterprises - Companies, fair competition (antitrust prohibitions), industrial and intellectual property (only to businesses) The Italian Codice Civile encompasses both civil and commercial law and has thus reunited private law

LEGAL TRANSACTIONS Usually private law deals with legal transactions, which are a matter of choices and freedom. Therefore usually public law does not deal with them. Legal transactions are concluded through a declaration of will (be it through language, or by conduct), which is intended to perform a change in rights and duties of who is acting (the party) Any legal subject is given the power to produce a legal effect on her/his own patrimony or personality, to the extent to which the law does not pose any mandatory prohibition on doing so A legal transaction is the decision of having some legal effects What is private autonomy? The concept of private autonomy is expressed in the DRAFT COMMON FRAME OF REFERENCE 1. Parties are free to make a contract or other juridical act and to determine its contents, subject to any applicable mandatory rules. 2. Parties may exclude the application of any of the following rules relating to contracts or other juridical acts, or the rights and obligations arising from them, or derogate from or vary their effects, except as otherwise provided. 3. A provision to the effect that parties may not exclude the application of a rule or derogate from or vary its effects does not prevent a party from waiving a right which has already arisen and of which that party is aware

Legal transactions play a major role in private law. Undeniably, they constitute the most important category of legal facts and their domain tends to expand also in other areas of legal systems (criminal and administrative laws, as an instance) - examples: contracts, will, marriage

PARTIES’ AUTONOMIES MANDATORY RULES AND DEFAULT RULES • Mandatory rules: may not be set aside by an agreement between their addressees o Paramount for public law is the supremacy of public interest over individuals’ interests • Default rules: may be set through an agreement between their addresses o Nearly the entirety of private law consists of default rules o They are binding only if there aren’t other agreements between legal entities o A major role is played by default rules which supplement agreements entered into by the parties

UNIT 4: SOURCES OF LAW; INTERPRETATION SOURCES OF LAW The secondary rules which govern the possible change of the primary ones are commonly known as sources of law

Sources of law play a major role in the historical development of a legal order, since they stipulate what facts or acts are capable: • to create new rules, or • to change or repeal those already existing They answer the question of whether a particular rule is also a legal rule Each legal system is based upon its own sources of law, which are not effective as such in any other legal system The term “sources” can have two different meanings: • Sources of production: change the law in force through: - Acts: sovereign decision intended to enact new rules, or to amend or repeal those already existing; - Facts: customs and traditional practices meeting two requirements: 1. Objective stability over time 2. Social perception a given behaviour is legally binding • Sources of cognition: give legal notice about the sources of production (official journals, they intent to give notice about the sources of production, they make the law accessible to the citizens)

SOURCES OF PRODUCTION 1. The Constitution (Charter and complementary provisions) 2. Statutes/enactments having force of law (leggi, decreti legge, decreti legislativi) 3. Regional laws 4. Regulations 5. Uses It’s a hierarchical order, they do not have the power to change or cancel a norm from a superior source, but they do have the power to modify that of a lower source It is the system of production recognized by the Italian law They follow a hierarchical order, each of them may affect the laws created by an inferior source but not by a superior source All of these are ACTS, only “Uses” is FACTS

SOURCES OF COGNIZANCE 1. Gazzetta ufficiale della Repubblica Italiana

SOURCES OF EU LAW

Primary sources • 1951: Treaty of Paris European: Coal and Steel Community • 1957: Treaties of Rome: EURATOM (European Atomic Energy Community); EEC (European Economic Community) - after the Treaty of Lisbon everything was reshaped and reorganized to have anymore a European community but a European Union • Objective: creating a European area of free trade, with no internal frontiers (free circulation of goods, services, workers, capitals) ... the last, Lisbon Treaty of 2007 for the adoption of the European Constitution • The Treaty on European Union establishes which competences are to be attributed to the European Union, regulates community bodies and their legislative powers. • It is characterized by its own sources of production and cognition - remember it is characterized by international Law • The primary level is given by the founding treaties, which are about the rules of the European organization Secondary sources 1. Non binding acts: - Recommendations - Opinions - They can be useful, but they do not create really binding laws 2. Binding acts: - Regulations: directly applicable in all Member States, binding in their entirety, prevailing over contrasting norms of Italian law (or of any other domestic law), not only pre- existing, but also future (this is the result of constitutional and EU case-law). Regulations are immediately applicable in all Member State - Directives: addressed to the Member States, binding as to the result to be achieved, upon Member States, leave to national authorities the choice of form and method Directive introduces principles, and a deadline within which Member State have to transpose them into their national legal system. They are a bit more vague than regulations, they bind Member States as to the result to be achieved (they set the goals and how to achieve them). Regulations are much more stronger, since they do not give freedom to each member to interpret them. 90% of European law has been created through directives. Directives require some kinds of national laws to be inserted in the national system - Decisions There is an area where EU law and national law crash, in this case, EU law will prevail The supremacy of the European law can be seen even in the fact that domestic law is applied by national courts. Whereas, European law is applied not only by European courts.

RELATIONSHIP BETWEEN NATIONAL AND EU SOURCES OF LAW initial clash between the ECJ and Italian Constitutional Court Today it is a shared principle that EU law is always to be preferred regardless of whether it was approved before or after the conflicting national law (ECJ, case Costa vs. Enel, 1964):

European Union and Italy are considered two distinct and autonomous legal orders, each of which has its own system of legal sources When Italy signed the first Treaty, it transferred competence to the European Community with regard to certain subject matters and policy areas and, as a consequence, accepted that community law would take precedence over Italian law

THE ITALIAN CIVIL CODE The Civil Code is made up of 6 books: 1. Persons and family Natural persons Legal entities Family law 2. Successions 1. Property Notion and...