Terminological Guide – Basic Terms:
1. Commercial transactions and what they are (according to the Bulgarian legislation)
2. Agreement for bank loan or bank deposits.
3. Record of the order. Bill of exchange. Check. Extra-judicial enforcement grounds.
4. Liquidation of a company in Bulgaria.
5. Transfer of company shares.
6. Bankruptcy.
1. Commercial transactions and what they are (according to the Bulgarian legislation).
A Commercial (trade) transaction is a type of transactions that has all its typical generic characteristics. A trade transaction is a legal fact with a fundamental element of the will of one or more persons aimed at achieving certain legal consequences. The legal criteria for determining which transaction is commercial are related to the particularities of the transactions themselves and to the qualities of the persons who perform them.
European law knows two systems for defining a transaction as commercial. On the one hand, it is an objective system – the specifics of the transaction made the person a trader. On the other hand, it is a subjective system – making a deal from a trader makes it a trade.
Deal (transaction) is a basic concept in law. A trade transaction is a type of transactions and for that reason it has all the characteristics of the transaction in general.
Commercial transactions are subject to the classification criteria of the deals, but several specificities should be considered:
There are no grants in commercial law. The “give to give” a principle always works. This also applies to sponsorship – it is a lucrative deal because there is a counterpart expressed in advertising.
It is extremely important to divide commercial transactions into one-sided and bilateral ones. The differentiation criterion here is whether one of the parties is a trader or both parties are traders.
For commercial transactions apply special rules of commercial law in deviation from the general civil law regime of deals. The rules of civil law also apply to commercial transactions, but the principle is that the special rules of the Commerce Act abolish the common civil-law rules.
Commercial transactions are generally concluded in the manner in which transactions are concluded in a civil law. The wills of each party must be objective, and the agreement should be settled. The moment of the conclusion of the transactions is the moment of obtaining the consent of the counterparty to the transaction.
2. Agreement for bank loan/credit.
Bank Loan
A bank loan agreement is a bilateral, reimbursed, formal contract whereby the bank undertakes to grant the borrower a sum of money for a specific purpose under certain conditions and term, and the borrower to use the amount as agreed and return it after the expiration of the term. A bank credit agreement is different from a consumer loan. A bank loan is not a real contract, unlike a consumer loan.
Bank Deposit
A bank deposit is a bilateral, reimbursed, real, informal contract whereby the bank undertakes to keep the deposited and individually determined items by the depositor for remuneration. A bank deposit is always reimbursed and bilateral, unlike a deposit agreement under the Obligations and Contracts Act.
3. Record of the order. Bill of exchange. Check. Extra-judicial enforcement grounds.
The recording of the order and the bill of exchange are out-of-court enforcement grounds. An order recording is an one-sided formal transaction whereby one person called the publisher is obliged to pay a certain amount of money to another person called the remitter or the recipient of the record of the order. The difference with a bill of exchange is that the order record is a promise to pay, not an order to pay. The bill of exchange is a constitutive security and, unlike the record of the order, is a one-sided formal transaction whereby one issuing party orders another payer to pay a sum to a third party, a debtor or a remitter of the bill of exchange.
Check
The check, similar to the order record and the bill of exchange, is an out-of-court enforcement order. A check is a security with which the issuer orders the payer to pay a certain amount. The check is a means of payment, and no interest is paid on it as it is paid on short notice.
4. Liquidation of a company in Bulgaria.
The liquidation of a company is the last stage of its existence when it ceases to operate, but continues to exist in the legal world as a legal entity. However, a liquidator or liquidators (liquidation committee) is appointed in the place of the governing bodies, which performs the duties and collects the pending claims.
The essence of liquidation involves actions for the fulfillment of obligations, collection of debts and conversion of property into money. Liquidation differs significantly from bankruptcy in its purpose. The liquidation is in the interest of the partners or shareholders, since as a rule the company has sufficient assets to satisfy the creditors. The purpose of the liquidation is to distribute the assets between the partners and the shareholders.
In liquidation there is insufficient property for the creditors, and the purpose is to protect their interests, to distribute the available property fairly among them. The liquidation proceeding ends with the filing of an application by the liquidator to the court for the termination of the legal entity and its deletion from the commercial register. There are also certain possibilities for the continuation of the company’s activity and exit from the liquidation proceedings.
5. Transfer of a company shares.
The company changes its owner by transferring the company shares. Legitimacy in society has acquired the concept of buying and selling companies. The shareholding may be transferred for consideration or gratuity, as well as inherited.
The transfer of the shareholding from one partner to another is free. And to third parties – subject to the requirements for admission of a new partner. The transfer of the company share is done by notarized signatures of the contract and entered in the commercial register.
6. Bankruptcy.
The idea of bankruptcy originated in Italy. Bankruptcy is a legal-technical term. It can be regarded as a legal institute set of rules, the state of the trader or production which is a dynamic factual composition.
Insolvency is a court proceeding of universal enforcement aimed at proportionately satisfying the creditors of a trader who is insolvent or over-indebted.
Commercial insolvency is a court action of universal enforcement to satisfy the creditors of a debtor who is insolvent or over-indebted.
Insolvency Features:
1. Independent legal institute – a set of legal rules governing relations in the event that a trader cannot pay his trade and some other obligations. This institute contains rules of both substantive and procedural law (with procedural substance prevailing).
2. Insolvency is a condition in which the trader has lost his commercial quality, the business is terminated and he cannot dispose of his commercial enterprise.
3. Court proceedings – is managed by a court. It is a dynamic factual composition that contains a certain series of legal facts: as a consequence of each preceding legal fact are those after it, i.e. each preceding legal fact gives rise to the next.
Insolvency is a way of universal enforcement because creditors act collectively, not in the way of individual pursuit of the debtor.
Hristo Vasilev Law Office – Sofia
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