The commercial code and the merchants. – The Code de Commerce of 1807 was drawn up quickly, following the severe commercial crisis that had raged in France in 1805; it was directly inspired by the ordinances of Louis XIV (of 1673 on land trade, of 1681 on maritime trade). Many of these provisions had already aged from the beginning, others soon aged, so that a long series of new laws had to complete them.
French commercial law, developed in the aftermath of the revolution, could not belong to a particular class of citizens; and so it applies to all acts of commerce, whatever the person who carries them out. However, it was essential that certain provisions were limited to those who make trade their usual profession, traders: such are the obligation to keep trade books, the obligation to publish the marriage contract, bankruptcy.
According to Eningbo, the Commercial Code was silent on business and commercial property. Subsequent laws have filled this gap, regulating the sale and pledging of commercial companies (law 17 March 1909) and giving traders a right to renew the lease (law 30 June 1926); a law of 18 March 1919 organized the commercial register, a simple repertoire that is not in France, as in some countries, the legal instrument of commercial advertising.
Commercial companies. – The rules of the partnership agreement were established by the civil code. The Code de commerce therefore exclusively regulated those whose essential object was the performance of commercial acts. Commercial companies are moral persons: that is, they possess a social patrimony over which the creditors of the company have a privilege in comparison with the creditors of the individual shareholders; only the associations in participation have no moral personality (law June 24, 1921).
Commercial companies are divided into two broad categories of partnerships, partnerships with joint and several liability of the partners, and joint-stock or anonymous companies, in which each shareholder is liable within the limits of his share. Intermediate between these two categories, limited partnerships include limited partners who are unlimitedly liable for all corporate obligations, and limited partners held only for the amount of their share. Public limited companies were subjected to detailed regulations by the law of 24 July 1867; they can be created freely, but their functioning is subject to precise rules. In 1925 it seemed indispensable to remove from these provisions certain companies of lesser importance, whose members nevertheless wanted to enjoy the benefit of a limitation of liability; and the law created limited liability companies.
During the financial crisis that followed 1931, it seemed essential to protect savings by modifying some provisions of the law of 24 July 1867 on joint stock companies. The law of November 13, 1933 on multiple voting shares, and the decree-laws of August 8 and October 30, 1935, July 30 and August 31, 1937 respond to this orientation. Of particular interest is the decree-law October 31, 1935, which governed the legal regime of the “masses of bondholders”.
Commercial contracts and credit titles. – Commercial contracts are dominated by the principle of oral evidence, which constitutes a serious derogation from the rules of civil law. Contracts on goods, sales, pledges, transport are governed by particularly simplified rules. Securities contracts, usually concluded on stock exchanges, are mostly governed only by customary and jurisprudential rules.
The decree-laws of October 30, 1935 introduced in France the international conventions on the uniformity of the bill of exchange (1930) and of the check (1931). Using the reserves provided for by the conventions themselves, these decrees have remained faithful to the French exchange rate theory which is based on the existence of an indissoluble link between the trade effect and the credit that gave it life and have preserved the principle of transfer of the ownership of the provision, thanks to which the bearer of the bills never undergoes the concurrence of the drawer’s creditors.
Bankruptcy and judicial liquidation. – The rules of the commercial code regarding bankruptcy were very defective and were replaced by those of the law of 28 May 1838. It entails severe deprivation of rights in respect of bankruptcies; and therefore it seemed necessary to attenuate the provisions in favor of bona fide traders victims of bad luck by instituting (law 4 March 1889) the judicial liquidation.
The judgment declaring bankruptcy or judicial liquidation can only take place in the event of “cessation of payments”; it creates a mass of unsecured creditors whose interests are represented by the trustee or the judicial liquidator, all personal actions being suspended. If the creditors cannot agree with the bankrupt to grant him an arrangement, the clauses of which are imposed on the minority by the majority of creditors, it is necessary to arrive at the “union”, procedure for the realization of the bankrupt’s assets.
Following the consequences of the commercial and financial crisis on the situation of many companies, it seemed necessary to reform various provisions on the bankruptcy procedure (decree-law of 8 August 1935) and to establish a kind of amicable settlement subject to the approval of the commercial court (decree law) 25 August 1937 on the approved friendly regulation).