Business Law

Syllabus
Part 1 Introduction & Property Law

Table of Contents
PART 1 INTRODUCTION & PROPERTY LAW _____________________________________________ 1
TABLE OF CONTENTS ______________________________________________________________ 2
CHAPTER 1. INTRODUCTION INTO LAW _______________________________________________ 4
PARAGRAPH 1.1 WHAT IS LAW? ________________________________________________________________ 5
PARAGRAPH 1.2 ORIGINS OF LAW _______________________________________________________________ 7
1.2.1 The different schools ________________________________________________________________ 7
1.2.2 Origins of Dutch law ________________________________________________________________ 7
1.2.3 Sources of law _____________________________________________________________________ 8
1.2.3 The legal systems ___________________________________________________________________ 8
PARAGRAPH 1.3 FIELDS, TYPES AND AREAS OF LAW___________________________________________________ 10
1.3.1 National law vs. international law ____________________________________________________ 10
1.3.2 Areas of law ______________________________________________________________________ 10
PARAGRAPH 1.4 CIVIL LAW ___________________________________________________________________ 13
1.4.1 Introduction ______________________________________________________________________ 13
1.4.2 Essential Civil law definitions ________________________________________________________ 14
PARAGRAPH 1.5 INTERNATIONAL LAW (RECOMMENDED LITERATURE) ______________________________________ 18
1.5.1 Introduction ______________________________________________________________________ 18
1.5.2 Treaties _________________________________________________________________________ 19
1.5.3 Other sources _____________________________________________________________________ 21
PARAGRAPH 1.6 INTERNATIONAL ORGANISATIONS (RECOMMENDED LITERATURE) ______________________________ 23
1.6.1 Intergovernmental organisations _____________________________________________________ 23
1.6.2 Supranational organisations _________________________________________________________ 23
1.6.3 The United Nations ________________________________________________________________ 24
QUESTIONS CHAPTER 1 INTRODUCTION VERSION A ____________________________ERROR! BOOKMARK NOT DEFINED.
QUESTIONS CHAPTER 1 INTRODUCTION VERSION B ____________________________ERROR! BOOKMARK NOT DEFINED.

CHAPTER 2. PROPERTY ___________________________________________________________ 27

PARAGRAPH 2.1 WHAT IS PROPERTY? ___________________________________________________________ 28
PARAGRAPH 2.2 OWNERSHIP _________________________________________________________________ 29
2.2.1 Characteristics ____________________________________________________________________ 29
2.2.2 Rights and limitations ______________________________________________________________ 29
2.2.3 Limited rights (Recommended literature) _______________________________________________ 31
2.2.4.
Liens ________________________________________________________________________ 32
PARAGRAPH 2.3 DETENTION AND POSSESSION ______________________________________________________ 34
2.3.1 Detention ________________________________________________________________________ 34
2.3.2 Possession _______________________________________________________________________ 34
PARAGRAPH 2.4 ACQUISITION AND LOSS __________________________________________________________ 35
2.4.1 Transfer _________________________________________________________________________ 35
2.4.2 Inheritance _______________________________________________________________________ 35
2.4.3 Fixture __________________________________________________________________________ 35
2.4.4 Occupatio ________________________________________________________________________ 36
2.4.5 Finding __________________________________________________________________________ 36
2.4.6 Prescription ______________________________________________________________________ 37
2.4.7 Loss of property ___________________________________________________________________ 37
PARAGRAPH 2.5 TRANSFER ___________________________________________________________________ 39
PARAGRAPH 2.6 RETENTION OF TITLE ____________________________________________________________ 42

QUESTIONS CHAPTER 2 OWNERSHIP, DETENTION, POSSESION (& ACQUISITION) VERSION A_______________________ 43

QUESTIONS CHAPTER 2 OWNERSHIP, DETENTION, POSSESION (& ACQUISITION) VERSION B _______________________ 45
QUESTIONS CHAPTER 2 ACQUISITION OF PROPERTY AND TRANSFER VERSION A ________________________________ 47
QUESTIONS CHAPTER 2 ACQUISITION OF PROPERTY AND TRANSFER VERSION B ________________________________ 49

CHAPTER 3. INSOLVENCY __________________________________________________________ 51

PARAGRAPH 3.1 WHAT IS IT? _________________________________________________________________ 52
3.1.1 An introduction ___________________________________________________________________ 52
3.1.2 Bankruptcy proceedings ____________________________________________________________ 52
3.1.3 Suspension of payments ____________________________________________________________ 53
3.1.4 Debt restructuring for private individuals (Recommended literature)_________________________ 53
PARAGRAPH 3.2 WHO CAN GO BANKRUPT? _______________________________________________________ 56
PARAGRAPH 3.3 TYPES OF CREDITORS ___________________________________________________________ 56
3.3.1 Preferred creditors _________________________________________________________________ 57
3.3.2 Secured creditors __________________________________________________________________ 57
3.3.3 Unsecured creditors ________________________________________________________________ 57
3.3.4 Significance ______________________________________________________________________ 58
PARAGRAPH 3.4 PROCEDURE (RECOMMENDED LITERATURE) ____________________________________________ 59
3.4.1 The Netherlands___________________________________________________________________ 59
3.4.2 The United Kingdom _______________________________________________________________ 59
3.4.3 The United States__________________________________________________________________ 59
PARAGRAPH 3.5 CONSEQUENCES_______________________________________________________________ 61
PARAGRAPH 3.6 TERMINATION ________________________________________________________________ 62
QUESTIONS CHAPTER 3 INSOLVENCY ____________________________________________________________ 63

CHAPTER 4. INTELLECTUAL PROPERTY LAW ___________________________________________ 65

PARAGRAPH 4.1 WHAT IS INTELLECTUAL PROPERTY LAW? ______________________________________________ 66
PARAGRAPH 4.2 COPYRIGHT __________________________________________________________________ 67
4.2.1 Introduction ______________________________________________________________________ 67
4.2.2 The requirements __________________________________________________________________ 67
4.2.3 Style ____________________________________________________________________________ 69
4.2.4 Rights ___________________________________________________________________________ 69
4.2.5 Infringement and use_______________________________________________________________ 70
4.2.6 International copyright law __________________________________________________________ 71
PARAGRAPH 4.3 TRADE MARK _________________________________________________________________ 73
4.3.1 Introduction ______________________________________________________________________ 73
4.3.2 The requirements __________________________________________________________________ 73
4.3.3 Infringement and use_______________________________________________________________ 76
PARAGRAPH 4.4 PATENT (RECOMMENDED LITERATURE) _________________________ERROR! BOOKMARK NOT DEFINED.
4.4.1 Introduction _______________________________________________ Error! Bookmark not defined.
4.4.2 The requirements ___________________________________________ Error! Bookmark not defined.
4.4.3 Infringement and use________________________________________ Error! Bookmark not defined.
QUESTIONS CHAPTER 4 COPYRIGHT VERSION A _____________________________________________________ 77
QUESTIONS CHAPTER 4 COPYRIGHT VERSION B _____________________________________________________ 78
QUESTIONS CHAPTER 4 TRADEMARK VERSION A ____________________________________________________ 80
QUESTION CHAPTER 4 TRADEMARK VERSION B _____________________________________________________ 82

CHANGE LOG __________________________________________ ERROR! BOOKMARK NOT DEFINED.

PART 2 CONTRACTUAL AND NON-CONTRACTUAL LIABILITY ____ ERROR! BOOKMARK NOT DEFINED.

Chapter 1. Introduction into Law

Paragraph 1.1 What is law?
Paragraph 1.2 Origins of law
Paragraph 1.3 Fields, types and areas of law
Paragraph 1.4 Civil law
Paragraph 1.5 International law
Paragraph 1.6 International organisations
Questions Chapter 1

Paragraph 1.1 What is law?

Because law is incredibly diverse, there is no universal definition of law. Two possible definitions are:
The regime that orders human activities and relations through systematic application of the force of
politically organised society, or through social pressure, backed by force, in such a society ()1
or;
The collection of all the rules and regulations that are in effect at a given time and within a given
territory..
Every human being is part of society and interacts with other human beings. In the relationships that
these human beings develop, conflicts can arise. Not only human beings, but also businesses,
organisations and nations are part of society. They too may become involved in conflicts with other
members of society. Given the fact that conflicts can and will arise between different members of
society, there is a need for a system or mechanism that can solve or in case a solution cannot be
established keep these conflicts under control. Law is one of these systems or mechanisms.
Good manners, moral obligations or religious rules are not part of the law of a country or society.
Neither are rules that have been abolished or that are not yet in effect. Obviously, all these types of
rules do have an effect on how people will and should behave and of course these rules help(ed)
shape the law as such, but they are not the sort of rules that can be enforced before a court of law.
Law has many different functions that may, however, at times be conflicting and that may not always
provide an effective solution to a conflict.
One could say that the functions of law are to:

Keep the peace

Shape moral standards

Promote social justice

Maintain the status quo

Facilitate orderly change

Facilitate planning

Provide a basis for compromise

Maximise individual freedom

Why does law even exist? The purpose of law can be described as a means to order and protect the
interests of human beings in their interactions or relation(ship)s with each other, while at the same
time maintaining the underlying ethical principles or values. Another purpose of law is to maintain
the rules, in other words to exercise supervision on adherence to the rules and to make sure that
1

Source: Blacks Law Dictionary, Third pocket edition, Thomson/West 2006

conflicts are solved via the judicial system. Therefore part of the law consists of rules regarding
litigation and the competencies of those involved in upholding the law.
If law as we see it today would not exist, the law of the strongest would apply. This would inevitably
lead to an arms race and economic inefficiency. Economic inefficiency means that resources that
could be used for the advancement of society are now used to, for example, produce weapons.

Paragraph 1.2 Origins of law

1.2.1 The different schools
There are many different views regarding the origin of law. Most views can be categorised in one of
the following schools:

The natural law school: law is based upon what is correct; morality and ethics; choices
between good and evil.

The historical school: law is an aggregate of social traditions and customs that have
developed over centuries.

The analytical school: law is shaped by logic.

The sociological school: law is a vehicle for achieving (sociological) goals.

The command school: rules are made and enforced by the ruling party rather than a
reflection of the societys morality, history, logic or sociology.

There is general consensus about the fact that there are two guiding principles, based upon which
legal rules or laws are created:
Efficiency: it doesnt really matter what the content of the rules is, as long as there are rules. A good
example of this are traffic rules; it doesnt matter whether we drive on the left or right side of the
road, as long as there are rules that determine which side of the road we use.
Ethics/justice: the rules are based on principles about fundamental human values, such as rules that
prohibit murder, rape, abuse, et cetera.
Sometimes rules are the result of a combination of efficiency and ethics.
The law is therefore a collection of rules, based on social norms, human values and effective
regulation with regard to the behaviour of human beings who are part of a society and with regard to
the organisation of the human society.

1.2.2 Origins of Dutch law

Present Dutch law is largely based on French law, which in its turn is largely based on Roman law.
However, even before the Code Napolon was introduced, Roman law already (heavily) influenced
Dutch law. Do bear in mind that the term Dutch law, in this context, is not entirely accurate since
the Kingdom of the Netherlands did not yet exist. The various regions of what are now called the
Netherlands were part of the Holy Roman Empire (Burgundian and Habsburg period). In 1462 Charles
the Bold instructed the court of appeal of the region Holland to use Roman law. Under the reign of
Holy Roman Emperor Charles V Roman law became even more important and widespread.
Ma vraie gloire nest pas davoir gagn quarante batailles; Waterloo effacera le souvenir de tant de
victoires; ce que rien neffacera, ce qui vivra ternellement, cest mon Code Civil. Napolon
Bonaparte

The Code Napolon (the French Civil Code) was finished in 1804. In 1809, during the French
occupation of the Netherlands (approximately 1795 1815), Napolon introduced the
aforementioned Code in the Netherlands. The Code Napolon was later used as the basis for the first
Dutch Civil Code (1838). In 1992 a completely revised version of the Dutch Civil Code was introduced.
Roman law

French law

Dutch law

1.2.3 Sources of law

Law can be found in many different sources. Not all rules or regulations that are in effect in a certain
country at a certain time are found in laws. In fact, many of those rules and regulations are not even
codified. The different sources of law are:

Laws or acts:
A law or act is a document or a set of documents, usually made by a government, in which
rules are written down that order the way in which society behaves and that apply to
everyone or to a group of people specifically mentioned in that law or act.

Jurisprudence:
The combination of all past judgments by all courts. These judgments contain a solution to
the specific case in question, but may also contain new rules and/or (new) interpretations of
the law in general.

Customs:
In different sectors of business there are certain common practices that people working in
that sector consider as binding rules or the way things are done. These customs within a
certain sector of business can become part of the law in case a judge is convinced that those
practices exist and that people working in that sector consider them as binding.

Treaties, conventions, regulations:

These sources of international law are also part of the law that is in effect in a certain
country at a certain time. They may be given different names, but they all have an
international origin.

1.2.3 The legal systems

There are three legal systems:
1. Civil Law2
2. Common Law
3. Religious Law
All countries in the world can be categorised in one (or more) of these systems. The most common
legal system is Civil Law. Civil Law can be subdivided into French Civil Law, German Civil Law,

When referring to the legal system, capital letters (majuscules) will be used Civil Law

Scandinavian Civil Law and Chinese Civil Law. The introduction into China of Western legal texts
probably started around the year 1839.3
The basic difference between the systems lies in the order of importance of the sources of law. In a
Civil Law system, codified law is most important. Jurisprudence is important as well, but does, at
least in theory, not have the same status as codified law. In a Common Law system, jurisprudence is
the most important source. This does not imply that no codified law exists.
Religious Law can be Sharia (Islamic), Halakha (Jewish) or Canon law (Christian). Written law, in the
sense of religious texts, is the most important source of religious law. The most widely used religious
law is, without a doubt, Islamic law. It consists of Sharia and Fiqh (Islamic jurisprudence). Most
countries use Islamic Law as a supplement to either Civil Law or Common Law. In these mixed
countries (i.e. bijuridical) Islamic Law commonly applies to family law.
Please note that the exact balance between the sources of law varies from country to country.

Civil Law
Common Law
Bijuridical (Civil and Common Law)
Customary law
Fiqh

3
4

http://www.lawinfochina.com/Article/Article2.shtm
http://en.wikipedia.org/wiki/File:LegalSystemsOfTheWorldMap.png; latest revision 13 February 2012

Paragraph 1.3 Fields, types and areas of law

1.3.1 National law vs. international law
Many different distinctions in law can be made. The first important one is the distinction between
national law and international law. This distinction refers to the source from which the law stems. If
the law is created by a national government and is intended to apply to the inhabitants of the
country that government represents, it is a national law.
If a law is drawn up by the governments of two or more countries or by an international organisation,
no matter whether it is called a treaty, a convention or a regulation, it is an international law. That
law can apply to all the inhabitants of the countries the governments represent, it can consist of rules
that govern the relationships between the governments involved or it can order the governments
involved to create laws that apply to the inhabitants of the countries they represent.
Sovereignty is essential. Every state has the exclusive competence to determine what should be
included into its legislation. On a national level, the Trias Politica (Montesquieu, Separation of
Powers) often applies. The Trias Politica is the separation of the legislative power (le pouvoir
lgislatif), executive power (le pouvoir excutif) and judiciary power (le pouvoir judiciaire). Separation
is important for a state to secure the freedom of its people. By separating the powers, there is less
risk of abuse of power by one specific group or institution. In addition to the Trias Politica, a system
of checks and balances may be applicable.

1.3.2 Areas of law

National law deals with a large variety of issues. Dependent on the specific subject of a particular
law, national law can be divided into public law and private law. Public law deals with issues in which,
in one way or another, public authorities are involved as public authorities ( Schematic 1.1).
Public law can further be divided into:

State (or Constitutional) law consists of rules regarding the way the state is organised and
the authority of the different institutions of the state, such as the parliament, the local
governments (municipalities) et cetera. It also deals with the relationship between civilians
and the state and the possibilities civilians have to influence the functioning of different
institutions of the state. The main source of State law is the Constitution.

Tax law contains rules that deal with the amount of money persons have to pay to the tax
authorities, based on things like income or the costs of goods or services that were bought.

Penal law (or Criminal law) is about threatening certain behaviour with penalties. Penal law
determines which specific acts are prohibited, the sanctions that can be imposed if someone
violates the law and the rules regarding the tracing and prosecution of criminals and the
execution of sentences.

Administrative law governs the relationship between civilians and public authorities, acting
as the executive power of the state. It determines the limitations for the different state

institutions when executing their tasks and the rights civilians can enforce with regard to the
executive tasks of the authorities.
Private law mainly governs the legal relations between private persons and legal entities. Private law
can be divided into:

Civil law governs a large variety of topics ( Paragraph 1.4). 5

Commercial law governs certain business and commercial transactions. By now, most
commercial law has been incorporated into the Civil Code. The relevance of Commercial law
therefore diminishes and it is very likely that Commercial law will eventually disappear as a
separate area. Commercial law includes rules regarding carriage by land and sea; merchant
shipping and certain payment methods.

Competition law promotes and maintains market competition by regulating anti-competitive

conduct. Please note that Competition law also has public law aspects. Competition law, or
Antitrust law, has three main elements:
o Prohibiting agreements or practices that restrict free trade and competition between
businesses. This includes in particular the repression of free trade caused by cartels.
o Banning abusive behaviour by a firm dominating a market, or anti-competitive
practices that tend to lead to such a dominant position.
o Supervising the mergers and acquisitions of large corporations, including some joint
ventures. Transactions that are considered to threaten the competitive process can
be prohibited altogether, or approved subject to measures to offer licences or
access to facilities to enable other businesses to continue competing.
Schematic 1.1
Private Law

Public Law

Natural person

Natural person

Public authorities

Public authorities

Natural person

Legal person

Public authorities

Natural person

Legal person

Legal person

Public authorities

Legal person

Natural person
person

Public authorities acting as a

Legal person
person

Public authorities acting as a

Schematic 1.2
Private Law

Public Law

Commercial law

State law

Competition law

Administrative law

Civil law

Penal law

Tax law

In Dutch: Burgerlijk recht or Civiel recht

Paragraph 1.4 Civil law

1.4.1 Introduction
The main source of Civil law is the Civil Code (Burgerlijk Wetboek). The Dutch Civil Code is divided
into eight books. To quote an article of the Dutch Civil Code one first has to mention the book, then
the article. For example, 6:162 DCC is article 162 of book 6 of the Dutch Civil Code (tort).
Book 1 Family Law and the Law of Persons
Book 2 Legal Persons
Book 3 The Law of Property, Proprietary and Valuable Rights and Interests
Book 4 Inheritance Law
Book 5 Rights in rem
Book 6 General Part of the Law of Obligations
Book 7 Specific Contracts
Book 8 The Law of Carriage and Means of Transportation
In addition to the Civil Code, there is a Civil Procedure Code (Wetboek van Burgerlijke
Rechtsvordering). The Civil Procedure Code contains procedural law, such as rules that determine
what happens in a lawsuit. It also contains rules about jurisdiction, the judgment, injunctions,
seizure, arbitration et cetera.
The area Civil law has numerous sub-areas. The most important sub-areas are:

Property law
Possession, detention, ownership and transfer are all part of this sub-area ( Chapter 2).

Tort law
Law governing wrongful acts.

Contract law
Deals with topics such as offer and acceptance, the legal status of negotiations, breach of contract,
force majeure.

Family law and the law of persons

A civilians rights as a person (name, nationality, custody, place of birth, etc.)

Labour law (or Employment law)

Laws, administrative rulings and precedents that address the legal rights of, and restrictions on,
working people and their organisations. As such, it mediates many aspects of the relationship
between trade unions, employers and employees

Corporate law (or Company law)

Determines a legal entitys rights and obligations (ways of establishing a legal entity, place of
establishment, name, organisation of the legal entity, etc.). Corporate law is the study of how
shareholders, directors, employees, creditors, and other stakeholders such as consumers, the
community and the environment interact with one another under the internal rules of the entity.

1.4.2 Essential Civil law definitions

In this paragraph some of the basic definitions of the area Civil law will be explained.

Good faith
What is good faith?
A state of mind consisting in (1) honesty in belief or purpose, (2) faithfulness to ones duty or
obligation, (3) observance of reasonable commercial standards of fair dealing in a given trade or
business, or (4) absence of intent to defraud or to seek unconscionable advantage.6
In a Civil Law system, the term good faith usually refers to (1).

The principle of reasonableness and fairness

Reasonableness and fairness (art. 3:12 DCC) is one of the most important principles of Dutch Civil
law. In Common Law, just like in the old Dutch Civil Code, this principle is referred to as good faith
( definition (3) of Good faith).
What is the importance of this principle?
The importance lies in the fact that even if parties specifically agree on something, the effect of what
they agree upon can be limited by reasonableness and fairness (limiting effect of reasonableness and
fairness).
Article 6:2 DCC:7
1. An obligee and obligor must, as between themselves, act in accordance with the
requirements of reasonableness and fairness.
2. A rule binding upon then by virtue of law, usage or a juridical act does not apply to the
extent that, in the given circumstances, this would be unacceptable according to
standards of reasonableness and fairness.
Example: In a contract party A has excluded all liability in case of damage. By order of that party one of
his employees wilfully (intentionally) causes damage to the property of party B. Rational application of
the law would lead to the conclusion that party A is not liable, since he has excluded all liability in case
of damage. However, that outcome is unfair in light of the fact that the employee wilfully caused the
damage. The principle of reasonableness and fairness demands that party A pays for the damage
caused to the property of party B, since only that outcome is just and fair.
6

rd

B.A. Garner, 2006. Blacks Law Dictionary. 3 edition. St. Paul: Thomson/West
All translations are taken from: The Civil Code of the Netherlands; H. Warendorf, R. Thomas, I. Curry-Summer; Kluwer
International BV, 2009
7

Reasonableness and fairness also governs the legal relation between the parties involved. This means
that the parties have to act reasonably and fairly towards each other. As a result of this, the parties
have certain obligations towards each other, even if their contract doesnt explicitly state this.
Example: A car dealer has the obligation to deliver a car with enough petrol in the petrol tank to allow
the buyer to reach a petrol station. Even if there is no clause in their contract that deals with this issue,
the car dealer has this obligation, simply because it is reasonable and fair.

Article 6:248 DCC:

1. A contract not only has the juridical effects agreed to by the parties, but also those which,
according to the nature of the contract, apply by virtue of law, usage or the requirements
of reasonableness and fairness.
2. A rule binding upon the parties as a result of the contract does not apply to the extent
that, in the given circumstances, this would be unacceptable according to standards of
reasonableness and fairness.

Legal facts
The participants in legal relationships acquire their rights and obligations as a result of events that
are significant from a legal point of view. Those events are legal facts, which can be described as
events that have one or more legal consequences.
The American book Blacks Law Dictionary8 contains the following definition: A fact that triggers a
particular legal consequence..
Example: At birth a baby is already given certain rights, such as the right to nourishment. Birth is
therefore a legal fact.
Example: A sales contract obliges the seller to transfer the property. A sales contract is therefore a
legal fact.
Example: A driver who causes a traffic accident typically has the obligation to pay damages to the
person who is injured in the accident. A traffic accident is therefore a legal fact.
Example: When a person dies, his rights and obligations end. Death is therefore a legal fact.

Legal facts can either be human acts with legal consequences or bare legal facts, meaning facts that
do not necessarily involve any human action. Legal facts that involve human actions can be divided
into two groups; juridical acts and factual acts ( Schematic 1.3).

Juridical acts
A juridical act is any human action that intends to achieve a certain legal consequence. Juridical acts
can be unilateral and multilateral. Juridical acts are typical for Civil Law jurisdictions.9
8

rd

B.A. Garner, 2006. Blacks Law Dictionary. 3 edition. St. Paul: Thomson/West
http://definitions.uslegal.com/j/juridical-act/

Example: A person selling his bike has the obligation to deliver the bike to the person who bought it.
This obligation was intended. The person who bought the bike has the obligation to pay the price. This
obligation was also intended. More importantly, both parties intend to achieve the legal consequence
of these two obligations, namely a transfer of ownership. Closing a contract of sale is therefore a
juridical act.
Example: As (last) will grants certain rights and obligations to the persons mentioned in the will.
Those rights and obligations were intended by the deceased (before he died). In other words, the one
who writes the last will intends to achieve this legal consequence after he dies. Making a last will is
therefore a juridical act.

Factual acts
Factual acts can be described as human acts that do not intend to achieve a certain legal
consequence. Tort is one of the most important examples of a factual act. Breach of contract is
another example of a factual act.
Example: A man, parking his car, unintentionally crashes his car into the car of his neighbour, which is
parked in front of him. The neighbour obtains the right to claim damages. The man did not intend to
damage his neighbours car and he certainly did not intend to create a right to claim damage for his
neighbour. The law however clearly states that his neighbour has the right to do so. Since the law
creates a legal consequence that was not intended by the man who parked the car, this action (which
the law calls tort) is a factual act.
Example: A car dealer delivers a car that is not functioning properly. As a result of that the buyer loses
control over the car and smashes it into a lamp post. The car is completely destroyed and the buyer
suffers severe injuries to his head. The buyer is now entitled to claim damages from the car dealer.
This breach of contract by the car dealer (he did not live up to his contractual obligation to deliver a
properly functioning car) creates the right to claim damages; a legal consequence which was not
intended by the car dealer. It is therefore a factual act.

Relative rights
A relative right is a right that can only be effected in relation to one or more specific persons. The
right to claim damages is a right that can only be enforced against the person who caused the
damage. The right to receive a bike one has bought can only be effected to the person who sold the
bike. One cannot claim damages from just anyone or ask anyone else to deliver the bike. So, in other
words, it is a right that can only be exercised within the scope of the legal relation between two (or
more) specific persons.

Comprehensive rights (also known as absolute or exclusive rights)

Comprehensive rights work against everyone. Anyone who infringes these rights can be ordered to
refrain from doing so. The best example of a comprehensive right is ownership. The owner of a plot
of land, for example, can demand anyone who walks on his land without his permission (trespassing)
to leave. The owner of a car can demand that no-one uses his car without his permission.

Schematic 1.3

LEGAL FACTS

Human acts
with legal
consequences

Juridical act

Unilateral

Multilateral

Bare legal
facts

Factual act

Lawful act

Wrongful act
(Tort)

Breach of
contract

Paragraph 1.5 International law (Recommended literature)

1.5.1 Introduction
International law can be described as law that is drawn up by the governments of two or more
countries or by an international organisation, no matter whether it is called a treaty, a convention or
a regulation.10 In its most general sense, international law consists of rules and principles of general
application dealing with the conduct of nations and international organisations and with their
relations inter se, as well as with some of their relations with (natural or legal) persons. International
law originally started with regulation by moral values and customs. One of the earliest international
agreements was concluded in 1258 BC between the Egyptian pharaoh Ramses II and the king of the
Hittites, Hattusilis III.
A key-element in international law is sovereignty. This means that every state has the right and
freedom to determine its own law and to decide which authority and competence the judiciary and
the executive power have. States are independent and other states shall not interfere. That being
said, due to ever-increasing globalisation and cooperation, states occasionally have to give up a part
of their sovereignty.
International law is divided into Private international law and Public international law. Private
international law deals with conflicts between persons (natural or legal) with a foreign element (the
parties are usually living or established in different countries). In other words, the fundamental
elements of Private international law are internationality and horizontal relations. Private
international law is a set of procedural rules that determines which court has jurisdiction, which
(national) law is applicable and the way foreign judgments are recognised and executed. The rules of
Private international law are different from country to country.11
As previously stated, Private international law is primarily part of the national system. There are,
however, several international institutions that attempt to codify and modify rules of Private
international law through supranational regimes. The best example of such a supranational regime is
the regime of the European Union.
Public international law should not be confused with Private international law. Public international
law concerns itself only with relations between multiple nations, international organisations or
nations and the citizens or subjects of other nations. During the twentieth century, Public
international law has vastly increased in use and importance. This is mostly due to the increase in
global trade, armed conflict, environmental deterioration on a worldwide scale, awareness of human
rights violations, rapid increases in international transportation and a boom in global communication.
Public international law is a distinct and self-contained system of law, independent of the national
systems.

10
11

http://www.britannica.com/EBchecked/topic/291011/international-law/233501/General-principles-of-law
http://www.transnational.deusto.es/IP2010/docs/What%20is%20PIL.pdf

Since there is no overall legislature or legislative body in the international political system, the rules,
principles, and processes of international law must be identified through a variety of sources and
mechanisms. This can make international law appear difficult to maintain and enforce.12
The sources of international law are:

Treaties

Conventions and regulations

Jurisprudence (of International Courts of Justice)

Customs

Legal principles

1.5.2 Treaties
Conventional international law derives from international agreements, called treaties, between
nations and/or international organisations. The scope of these international agreements or treaties is
almost limitless. The only notable exception is that treaties should not conflict with the rules of
international law regarding basic standards of international conduct or the obligations of a Member
State under the Charter of the United Nations. Some rules of international law are recognised by the
international community as absolute, so no derogation is allowed.
A treaty is called bilateral when only two parties are involved in the creation of the treaty; a treaty is
called multilateral when more than two parties are involved in the creation of the treaty.

Characteristics
A treaty contains mutual rights and obligations for the parties that close the agreement. The treaty is
binding for the parties that close the treaty, based on the principle of pacta sunt servanda.
In case of a national legal conflict, there is a judicial system to enforce compliance with an
agreement. In case of international conflicts, no mandatory judicial system exists. Therefore, if the
parties fail to settle and do not voluntarily submit their conflict to a mediator, an arbitrator or an
international court, the only means a party has at its disposal to force another party to comply are
diplomatic, economic and (sometimes) military sanctions.

Content of treaties
Treaties can create rules that apply to all the inhabitants of the countries the governments closing
the treaty represent or can consist of rules that govern the relationships between the governments
involved. They can also order the governments involved to create laws that apply to the inhabitants
of the countries they represent.
There are three types of treaties:

12

http://library.law.columbia.edu/guides/Researching_Public_International_Law

Trait-contrat: governs the relationships between the parties involved; mutual rights and
obligations (contract-like); e.g. delivery of products
Trait-loi: creates new (general public) laws that apply to the inhabitants of the countries of
member states (law-like); e.g. European Convention on Human Rights
Trait-constitution: establishment of international organisations; e.g. United Nations Charter

The second category of rules is part of the law that is in effect in a country that is a party to the
treaty. This category is directly effective, which means that it is binding for everyone, including
civilians, legal entities, and even governments (local, regional and national). These rules create rights
and/or obligations that can be invoked by everyone before a national court of law. It is up to a judge
to decide whether or not a rule is directly effective. When such a rule is directly effective, it takes
precedence over national law.

Process of making a treaty

Every country has its own national rules that deals with topics such as how to engage in treaties and
the hierarchical position the rules of a treaty have, with regard to national rules.
The general procedure of concluding a treaty:
1. The government of a country engages in negotiations with the government(s) of (an)other
country/countries. As soon as they have reached an agreement, the governments of the
countries involved sign the text of the treaty. Although the treaty is now signed, that doesnt
mean it is immediately in force.
2. In order for it to enter into force, it has to be approved by the parliaments of the countries
involved, so the governments will submit the treaty to their parliament for approval.
Approval can be given tacitly or explicitly. Tacit approval is given, in case no member of the
parliament requests explicit approval within a certain period of time. Explicit approval is
given by the parliament in case more than a certain amount of positive votes is reached
(usually 50% + 1 vote, sometimes a higher percentage is required).
3. After approval is given by the parliament, the treaty is ratified. This is an official notification
to the other country (or countries) involved in the treaty, that the treaty has been approved
and is therefore binding. Usually this is done in an official ceremony in which representatives
of the governments of the countries, involved in the treaty, sign a document containing the
text of the treaty.
4. Lastly an official proclamation (usually done by publishing the treaty) is made to the
inhabitants of the countries involved, after which the treaty enters into force at a date
mentioned in the proclamation.

Relation between national law and international law

As soon as a treaty enters into force, it becomes part of the law that is in effect in a certain country.
However, that doesnt automatically mean that it is directly in force in the sense that everyone can
invoke the rules of the treaty. Countries can choose between two different systems to make sure the
treaty is incorporated into their national legal system (so that everyone can invoke the rules of the
treaty):

1. Monism (Incorporation system):

A treaty is directly applied or self-executing (in a sense that no national act is required to
make the treaty part of the national system). If a national rule is in violation of an
international rule that is directly effective, the international rule takes precedence. Judges
can use both national and international law.
2. Dualism (Transformation system):
The rules of a treaty are only applied after a national act is made in which the rules of the
treaty are included, so an additional act is required to make the treaty part of the national
system. The rules of the treaty are, in other words, transformed into national law. Judges
only use national law. If national law is in violation of international law, the most recent law
prevails. Screening of subsequent law is therefore required in countries that have a dualistic
system in order to prevent violation of international agreements.

1.5.3 Other sources

Conventions and regulations
A convention or regulation is a document, drawn up by an international organisation, in which
governments of different countries participate. Examples of such organisations are the United
Nations and the European Union. A document (containing rules) that is issued by the United Nations
or the Council of Europe is usually called a convention; legislation issued by the European Union is
often in the form of regulations ( Block 3). A convention is, in essence, just a treaty.

Jurisprudence (of International Courts of Justice)

A judicial system is a national phenomenon. In other words, there is not really an effective
international court system. That being said, there are a few international courts.

The importance of the jurisprudence created by the International Court of Justice of the UN
is limited, since the Court only has the authority to rule if the countries involved have
voluntarily submitted to the rulings of the Court. As a result this the court never rules over
really important matters.

Jurisprudence created by the European Court of Human Rights is much more important for
international legal relationships. Even though it is an intergovernmental organisation, the
courts rulings are very important, because the supreme courts of the countries involved in
the Council of Europe regard the rulings as binding and therefore uphold them.

The rulings of the European Court of Justice are essential, because they are based on judicial
power that has been transferred from the participating countries to the European Union, so
a fourth layer has been added to the national structure of the judicial system (Court of First
Instance, Court of Appeal, Supreme Court). As a result of this the rulings of the European
Court of Justice are binding within every Member State of the European Union. Not only

rulings of this court in individual cases are important, but also the so-called preliminary
rulings.

Customs
A set of customs, developed over the years, which regulate how countries should deal with each
other. Customary law and conventional law are primary sources of international law. Both have equal
authority. Customary international law comes into existence when states regularly and consistently
follow certain practices out of a sense of legal obligation.

Legal principles
Another source of international law identified by the ICJs statute is () the general principles of law
recognized by civilized nations. These principles essentially provide a mechanism to address
international issues not already subject either to treaty provisions or to binding customary rules.
Such general principles may arise either through Civil law or through international law. Perhaps the
most important principle of international law is the principle of good faith. It governs the creation
and performance of legal obligations and is the foundation of treaty law.13 Other relevant legal
principles are: pacta sunt servanda and freedom of contract.

13

http://www.britannica.com/EBchecked/topic/291011/international-law/233501/General-principles-of-law; Another
important general principle is that of equity/impartiality, which permits international law to have a degree of flexibility in its
application and enforcement

Paragraph 1.6 International organisations (Recommended literature)

International law includes the classic concepts of law in national legal systems, e.g. status, property,
obligations, and tort (or dlit). It also includes substantive law, procedure, process and remedies.
Traditionally, states were the main subject of international law. Fairly recently individuals and
international organisations have also become subject to international regulation.
International organisations play an increasingly important role in the relationships between nations.
An international organisation is an organisation that is created by international agreement or which
has membership consisting primarily of nations.14 There are two types of international organisations,
namely intergovernmental organisations and supranational organisations.

1.6.1 Intergovernmental organisations

This type of organisation is created to encourage international cooperation between the countries
that participate in the organisation. These organisations try to establish this by developing common
policies and drawing up treaties. The organisations themselves dont have the authority or power to
force a participating country to do something against its will. The participating countries cooperate
within the context of the organisation on a voluntary basis and are free to use the facilities the
organisation provides. The organisation itself has only very limited powers. The organisation can
perhaps be compared to a sort of international board room, where the sovereign power remains
with the participating countries. Decisions within the organisation are taken in unanimity.
The United Nations (UN) and NATO are examples of an intergovernmental international organisation.

1.6.2 Supranational organisations

This type of organisation is created by the participating countries in such a way that the countries
transfer a part of their own sovereign power to the organisation itself. The common interests of the
participating countries are more important than the interests of the individual countries. The
participating countries create a treaty, on the basis of which an international organisation is created,
that has its own sovereign power with regard to legislation, execution and jurisdiction.
As a result of the transfer of sovereign power, the organisation can force a particular participating
country to do something against its will.15 Every participating country is subject to the power of the
organisation, and therefore also subject to its legislation, executive powers and legal rulings.
Decisions within the organisation are usually made by a majority vote.
The European Union is the best known example of a supranational international organisation.
Intergovernmental organisation
14
15

Supranational organisation

http://topics.law.cornell.edu/wex/international_law
As long it is with regard to a matter over which sovereign power has been transferred

Supranational
organisation

Transfer of
sovereignty

Sovereign
country
Intergovernmental
organisation

Sovereign country

1.6.3 The United Nations

At the end of World War I, the League of Nations was founded. The fairly unsuccessful League of
Nations was the precursor to the United Nations, founded after World War II. Many countries felt the
need to create an international organisation that would have world peace, or the prevention of
another world war, as its main goal. It would try to achieve this goal mainly by providing a platform
for dialogue. On the 26th of June 1945 the founding countries concluded a treaty, called the Charter
of the United Nations. There are currently 193 Member States. The headquarters of the United
Nations are situated in New York.
All countries can become a member of this intergovernmental organisation, provided the country
pledges to accept the obligations imposed on the member states by the United Nations Charter.
The five most important organs of the United Nations are:

The General Assembly

This organ consists of all the Member States of the United Nations, represented by a maximum of
five representatives. Every Member State has one vote. The General Assembly deals with all topics
mentioned in the Charter and everything that relates to the authority and functioning of the organs
of the United Nations. The General Assembly can make recommendations about topics such as
international peace and security, disarmament, political cooperation, the development of
international law, and international economic, social, cultural and educational cooperation. The
General Assembly can also take decisions, sometimes in the form of a resolution.

The Security Council

The powers of the Security Council are to maintain international peace and security. Military action
can be taken by the Security Council.16 The Security Council consists of fifteen Member States, of
which five are permanent members (France, China, England, Russia and the United States). The other
ten are chosen every two years.
Decisions in the form of Security Council Resolutions are adopted if at least nine members approve.
The permanent members have the right of veto so an affirmative vote or an abstention from these
Members is strictly required.
All Member States have to accept and execute a decision given by the Security Council. In that sense
the Security Council is a supranational organ of an otherwise intergovernmental organisation.17

Economic and Social Council

ECOSOC was established under the United Nations Charter as the principal organ to coordinate
economic, social, and related work of the fourteen specialised agencies, functional commissions and
five regional commissions. The Council also receives reports from eleven United Nations funds and
programmes. The Economic and Social Council (ECOSOC) serves as the central forum for discussing
international economic and social issues, and for formulating policy recommendations addressed to
Member States and the United Nations system. It is responsible for:

promoting higher standards of living, full employment, and economic and social progress;

identifying solutions to international economic, social and health problems;

facilitating international cultural and educational cooperation; and

encouraging universal respect for human rights and fundamental freedoms.

It has the power to make or initiate studies and reports on these issues. It also has the power to
assist the preparations and organisation of major international conferences in the economic and
social and related fields and to facilitate a coordinated follow-up to these conferences. With its broad
mandate the Council's purview extends to over 70 per cent of the human and financial resources of
the entire United Nations system.

The Secretary-General of the United Nations

The Secretary-General is the highest administrative official who presides over meetings of the
General Assembly, the Security Council and a few other organs. He has the authority to bring every
situation that in his opinion threatens international peace and security to the attention of the
Security Council. The Secretary General is the highest executive power within the United Nations.

The International Court of Justice

The Court resides in The Hague (in the Netherlands). It is the most important judicial authority of the
United Nations. The Court only has authority to rule in cases in which Member States have
16
17

http://www.un.org/Docs/sc/unsc_functions.html
To a very limited extent the Member States have transferred their sovereign power to the Security Council

voluntarily submitted to the authority of the Court, in which case the Member States are obliged to
adhere to the ruling of the Court. In case they dont, the other Member State(s) involved can ask the
Security Council to take measures to enforce the Courts ruling.
The Court is allowed to give legal advice to the General Assembly, the Security Council or any other
organ of the United Nations.

Separate body established by the United Nations:

The International Criminal Court

The International Criminal Court (ICC), governed by the Rome Statute, is the first permanent, treatybased international criminal court established to help end impunity for the perpetrators of the most
serious crimes.
This Court, residing in The Hague, was founded in 1998 within the context of the United Nations by a
treaty called the Rome Statute. Its purpose is to try people who have committed the most serious
international crimes such as genocide, crimes against humanity and war crimes. The court can even
try people who have committed these crimes during an internal (national) conflict (civil war) in a
member state, as long as the crimes have been committed after the Statute took effect.

Chapter 2. Property
Paragraph 2.1 What is property?
Paragraph 2.2 Ownership
Paragraph 2.3 Detention and possession
Paragraph 2.4 Acquisition and loss
Paragraph 2.5 Transfer
Questions Chapter 2

Paragraph 2.1 What is property?

According to article 3:1 of the Dutch Civil Code, property is comprised of all things and of all
proprietary and valuable rights.18 In some countries things can be corporeal (tangible) or incorporeal
(intangible), but in the Netherlands things are always corporeal. Property in general, on the other
hand, can be either corporeal or incorporeal.
Things (corporeal property) are objects that have physical form and characteristics such as tables,
chairs, computers but also buildings, land et cetera. Proprietary and valuable rights (incorporeal
property) are non-physical, such as a right to enforce a debt (chose in action). Other examples of
proprietary and valuable rights are business goodwill, patents and copyrights. The general definition
of proprietary and valuable rights is: rights that are transferable and are intended to procure a
benefit or have been acquired in exchange for actual or expected benefit.
Corporeal things can be divided into movable (or personal) things and immovable (or real) things.
Examples of movable things are aeroplanes, books, televisions and bread. Examples of immovable
things are land and buildings.
A word that is often used in the context of property is the word goods. Goods are tangible or
movable personal property, in particular articles of trade or items of merchandise. Services, on the
other hand, are intangible commodities.
There are three possible legal statuses one can have with regard to property: property can be held
(detention), possessed (possession) or owned (ownership).

18

The Civil Code of Qubec (Canada) uses the word patrimony to describe all property and debts of a person

Paragraph 2.2 Ownership

2.2.1 Characteristics
Ownership is the most comprehensive right a person (or a group of persons) has over property. The
main characteristic of ownership is therefore that one is allowed to do with ones property whatever
one wants. The owner has nearly limitless authority: he can use it, discard it, sell it or even
destroy it. That being said, ownership is not completely unlimited.
Please note that the owner (of property) is also the owner of all the components of the property,
meaning everything that is attached to the property. The property is part of the owners estate.

Droit de suite
Droit de suite is another characteristic of ownership. Ownership of corporeal property remains with
the owner even if owner doesnt have direct control over it. For example: if a car is stolen, the owner
remains the owner of the car, even if the thief starts using it and even if the thief takes the car with
him to another part of the world.

Droit de prfrence
Even if someone else claims certain rights with regard to the property, the owner has priority (in the
sense of preference) because he has higher ranking rights.
Example: The owner of a car lends it to his neighbour, who is allowed to use it for as long as he wants,
until the moment the owner needs it again. However, after three weeks the neighbour goes bankrupt.
In case of bankruptcy, the neighbour normally wouldnt be able to return the car, since all the goods
that were in his possession at the moment of bankruptcy are handed over to the trustee who presides
over the settlement of the bankruptcy. The creditors of the neighbour will all submit their claims and
will want to be paid from the revenue of the sale of, among other things, the car. The owner of the
car, however, is allowed to retrieve his car, because his rights as owner are higher in rank than the
rights of the creditors of the neighbour.

2.2.2 Rights and limitations

Rights
The owner has the right to:

Enjoy the use of the property in (almost) every way he wants to

Collect and use the civil and natural fruits of his property, such as dividend paid by a
company or apples from an apple tree

Pursue legal actions with regard to his property

Revindicate his property

Establish limited rights

Transfer the property

Limitations

There are basically three main categories of limitations to the comprehensive right of ownership.
1. Rights accorded to others
- Limited rights (usufruct, pledge etc. See paragraph 2.2.3)
- Personal rights (rent)
2. The law
The law also imposes certain limitations on ownership. There are situations where you need
permission to use your property in a certain way. For example: you need permission, in the
form of a permit, from the local authorities (the municipality) to start a restaurant in your
home. You are also not allowed to simply build a house on a plot of land that you own and
you are not allowed to paint the outside of your house bright pink.
- Expropriation
The last category is expropriation. Expropriation may be necessary for the construction of
roads, railroads, canals, public utilities et cetera. Because expropriation has far-reaching
consequences and, possibly, a large impact, two requirements have to be met. The first
requirement is that expropriation is only allowed if it is done in the public interest. The
second requirement is that there shall be a pre-defined reasonable indemnification (due
compensation).
3. Rules of unwritten law
- Abuse of rights
The category abuse of rights is primarily based on jurisprudence. There are several standard
judgments dealing with this specific category.19 Two essential rules derived from
jurisprudence are that 1) you are not allowed to use your right without reasonable interest
and with the sole purpose of annoying someone else and 2) if there is a disproportionately
small advantage versus a disproportionately large disadvantage (consideration of interests),
your ownership rights may be restricted.
- Nuisance
It is a fact of life that the quiet enjoyment of property (mainly immovables) is sometimes
interfered with. Interference can be in the form of loud noises, vibrations, foul odours,
smoke, dust, gases, excessive light, high temperatures and so on. The question is whether
interference always constitutes nuisance. The answer to this question is: no. In the
Netherlands there has to be interference (annoyance/disturbance) plus a wrongful act (art.
5:37 jo art. 6:162 DCC). There will only be a wrongful act if the interference is substantial and
unreasonable.

19

For example: Berg en Dalse Watertoren (HR 13 maart 1936, NJ 1936, 415 en HR 2 april 1937, NJ 1937, 639) & Amotiearrest (HR 17 april 1970, NJ 1971, 89)

2.2.3 Limited rights (Recommended literature)

When the owner grants someone else a certain right to his property, he splits off specific rights from
his own comprehensive right. These rights are called limited rights; they encumber the
comprehensive right. Limited rights only give the person, who was granted that right, limited
authority with regard to the property. Limited rights are divided into limited rights on property in
general and limited rights on things. Limited rights can also be divided into rights of enjoyment20 and
liens (or security rights).
Servitude
The first limited right that can only rest on things is servitude, also called easement. Servitude is a
right of enjoyment. It can be described as an encumbrance imposed on an immovable thing in favour
of another immovable thing. The first thing is called the servient thing (or property) and the second
thing is called the dominant thing (or property).21 In practice, servitudes can be a right-of-way, a
servitude of support, a servitude of light and air or rights regarding artificial waterways. More
varieties do exist. Servitudes have a specific, limited purpose.
Emphyteusis
The second limited right that can only rest on things is emphyteusis, also called leasehold.
Emphyteusis is a right of enjoyment. In the Netherlands, emphyteusis is often used in the city centre
of larger cities such as The Hague and Amsterdam. Emphyteusis gives the holder the right to hold and
use the immovable thing of another person. Usually the lessee has to properly maintain the property
and he has to pay taxes. In addition to the aforesaid, the lessee may have to pay (a small amount of)
rent. The duration of emphyteusis can be extremely long; it is not uncommon for emphyteusis to last
more than twenty years.22 Termination of emphyteusis by the lessor is very difficult.
Superficies
The third limited right that can only rest on things is superficies a right of enjoyment. Superficies
allows you to own or to acquire buildings, works or vegetation in, on or above an immovable thing
owned by another person. Superficies is an exception to the rule of article 5:20 DCC that states that
the owner of the land is also owner of buildings, works and plants durably attached to the land.
Superficies prevents acquisition by fixture.
Apartment rights
The fourth category of limited rights that can only rest on things is apartment rights. Apartment
rights are rights of enjoyment. As the name already indicates, apartment rights are (only) relevant for
apartment buildings/apartment complexes. The owner of an apartment (or flat) is co-owner of the
whole building and has an exclusive right to use his own apartment. In addition to that, he has a right
to use the common parts of the building. The apartment owners are organised in an owners
association.23 The rights and obligations of the owners can be found in the deed of division and if

20

Genotsrecht
In Common Law terminology: servient estate and dominant estate
22
See for example article 1197 of the Civil Code of Qubec
23
In Dutch: VvE Vereniging van Eigenaren
21

applicable in regulations issued by the owners association. Usually a monthly fee has to be paid to
the owners association.

Usufruct
Usufruct is a right that can rest on property in general. Usufruct is a right of enjoyment; as
usufructuary you have the right to use/enjoy and derive profit or benefit from someone elses
property. Fruits in this context is not limited to natural fruits: civil fruits are included as well. The
best examples of civil fruits are rent and interest. In the Netherlands one can even have usufruct on a
house, which means that one can use and live in the house. The main obligation of the usufructuary
is to properly maintain the property.

2.2.4. Liens
Pledge24 and mortgage are both liens (or security rights). They can both rest on property in general.
The difference between the two types of liens is that, in the Netherlands, mortgage can only rest on
registered property (aeroplanes, ships, buildings) whereas pledge can rest on all movable nonregistered property (for example the inventory of a caf).
The purpose of a lien is to provide security (usually payment security) to a creditor. If the debtor
doesnt fulfil his obligations, the creditor can sell the property on which the lien rests and settle his
claim(s) with the proceeds. The biggest advantage of a lien is that holders of a lien have priority in
case of bankruptcy of the debtor. They are, in other words, secured creditors25. Pledgees and
mortgagees have the right of immediate execution, which means that they can sell the property
without interference from a judge.
Pledge and mortgage are inconceivable without a corresponding obligation/claim. Consequence of
the aforesaid is that if the obligation/claim ceases to exist, the lien will also (automatically) cease to
exist. Pledge and mortgage are indivisible rights: both rights dont (partially) cease to exist if part of
the obligation is fulfilled. Only when the obligation is fulfilled in its entirety, the liens (automatically)
cease to exist.
Pledge
There are two types of pledge: one requires the property to be brought under control of the pledgee
or a third person agreed upon by the parties, the other one simply requires a deed or registered
document. The reason why two types of pledge exist is that it would, for instance, be rather
inconvenient to have a pledge on the inventory of your restaurant with the requirement to bring it
under the control of someone else. The major downside of the second type of pledge is that the
pledgee has no control over the property on which the pledge rests. There is, therefore, a risk that
the property suddenly disappears.
24
25

In some jurisdictions, pledge is commonly referred to as chattel mortgage

In Dutch law, the word separatist is often used

Mortgage
Nearly everyone, at some point in life, has to deal with mortgage (or hypothec26). Buying a house
without previously obtaining financing is rare. Banks or other financial institutions, however, wont
be very keen on providing financing for your house if they cant establish a mortgage on the house in
case you fail to pay the (monthly) fees.
From a mortgagors perspective, the main benefit of a mortgage is that the mortgagor can use or
continue using the property; he doesnt have to bring the property under the control of the
mortgagee. The main advantage for the mortgagee is that the value of immovable property is
relatively stable. It is also much easier to verify whether another lien (mortgage) rests on the
property.

26

Depending on the jurisdiction, hypothec is either a type of mortgage or used as a synonym for mortgage

Paragraph 2.3 Detention and possession

2.3.1 Detention
A holder27 only has (effective) control over a thing; he holds the property for someone else, usually
the owner.
Examples: A contractor, a carrier, someone who rents, hires or leases something, someone who has
something on loan and someone who manages the affairs of another all dont pretend to be the
person entitled; they all acknowledge that someone else, namely the owner, has a better right.

A holder cant promote himself to possessor or owner.28 Holders dont receive special protection by
law.

2.3.2 Possession
Possession is the detention of property for oneself; a person has effective control combined with a
suggestion of entitlement. A pretention of ownership, one could say.
It is important to note that there can only be one possessor at the same time. It is usually the owner
who has possession.
Possession can be in good faith or in bad faith. Good faith requires that the possessor reasonably
considers himself as person entitled. Once you possess something in good faith, you automatically
continue possessing something in good faith (good faith remains good faith).
There are several benefits to being a possessor: you are considered as person entitled, you are
entitled to receive both natural and civil fruits, you can execute possessory actions to recover
possession of the property and you may even acquire ownership via prescription ( Paragraph
2.4.6).

27
28

Also called detentor

This rule, which also applies to possession, is derived from Roman law: nemo causam possessionis sibi ipse mutare potest

Paragraph 2.4 Acquisition and loss

There are many different ways of acquiring property.29 In this paragraph the most important ways
are described.30

2.4.1 Transfer
The most common way in which people acquire property is by transfer, such as a sales contract or a
gift. Please note that not all contracts transfer ownership.

2.4.2 Inheritance
One can inherit property from someone who has died. The heirs inherit the exact same rights the
person who died had, including if applicable any limited rights ( Paragraph 2.2).
Example: If you inherit your uncles boat, but his neighbour was granted the right to use that boat for
ten years, and that time period has not yet expired, you will acquire ownership of the boat, but you
will have to allow the neighbour to use the boat until the period expires.

2.4.3 Fixture
To understand what fixture is, one first has to take into account the following:
Article 3:4 DCC:
1. A component part of a thing is anything commonly considered to form part of that thing.
2. A thing attached to a principal thing in such a manner that it cannot be separated
therefrom without substantial damage to either, is a component of that thing.
Article 5:20 DCC:
1. To the extent the law does not otherwise provide, ownership of land comprises:
(a) ()
(b) ()
(c) ()
(d) ()
(e) buildings and works forming a permanent part of the land, either directly or
through incorporation with other buildings or works, to the extent that they are
not part of an immovable thing of another person;
(f) plants growing on the land.
There are two basic situations of acquisition of property by fixture. The first situation is that a thing
becomes immovable by attaching (affixing) it to an immovable thing.
29

Please note: if one, in this context, acquires property, one becomes owner, so one could also use the term acquisition of
ownership
30
Compare articles 711 717 of the Code civil franais

Examples: If you plant a tree in your neighbours garden, your neighbour will acquire ownership of
that tree by fixture. If you install a bath in someone elses house using cement, the owner of the house
becomes owner of the bath by fixture. If you build a house on someone elses land, that other person
becomes owner of the building.

The second situation is that a movable thing is attached (affixed) to another movable thing that is
regarded as the prominent object (also called the principal thing).
Example: If you install two bicycle tyres on your bicycle, and these tyres are someone elses property,
you will acquire ownership of the tyres by fixture. The bicycle is clearly the prominent object.

For both situations, the degree of attachment is important. If something can easily be removed,
acquisition by fixture is highly unlikely.
In case there is no prominent object, the owners of the different parts that were attached to each
other will become co-owners of the whole (combined) thing. The same rule applies if separate
components, owned by different people, form an entirely new object.

2.4.4 Occupatio
Res nullius
If you find a thing you dont immediately acquire it unless the thing is movable and clearly belongs to
no-one. In that particular case, the thing is a res nullius. One acquires a res nullius via occupatio
(appropriation).31 Bar some exceptions, finding a res nullius becomes increasingly difficult.
Susceptible to occupatio are: animals (land, sea and air), shells, minerals et cetera, but also things
that were abandoned/given up by the previous owner.

2.4.5 Finding
Lost things
How can you acquire ownership of things you find, but are not a res nullius? You first have to report
the find to the authorities (municipality or police). Consequence is that you usually have to deposit
the thing. After that, you have to wait one (1) year. If, during that year, the original owner doesnt
claim back the thing, the finder acquires it. If the original owner does reclaim the thing, the finder is
entitled to a finders fee. Please note that the aforementioned only applies to lost things.

Treasures
Discovering a treasure is everyones dream. Treasures are things of value that have remained hidden
for a long time so the owner becomes untraceable. The question is: do you acquire ownership if you
31

th

J.H.A. Lokin, 1999. Prota Vermogensrechtelijke leerstukken aan de hand van Romeinsrechtelijke teksten. 5 edition.
Groningen, page 105

find a treasure? Yes, in the Netherlands the person who finds the treasure immediately acquires
ownership of one half of the treasure; the person in or on whose property the treasure was found
acquires the other half.32 There is no co-ownership if you discover the treasure in or on your own
property. Regardless of where the treasure was found, you are required to report it to the
authorities.

2.4.6 Prescription
Prescription is acquisition of property by lapse of time. There are two types of prescription:
acquisitive prescription and extinctive prescription. Acquisitive prescription is only possible in case
the acquirer acted in good faith. Extinctive prescription is possible even if there is bad faith.
The main difference between the two types of prescription is the duration (prescription period). The
prescription period of acquisitive prescription is either three (3) years or ten (10) years. The threeyear period applies to movable, non-registered things, rights to bearer and rights to order.33 The tenyear period applies to immovable things. Because bad faith is allowed, the prescription period of
extinctive prescription is much longer: twenty (20) years.34 It is applicable to all property.
Completion of the extinctive prescription period results in expiry of the legal claim (right of action
usually revindication) of the owner. Therefore, the owner simply cant reclaim his property anymore.
In general, completion of the prescription period leads to the same result for both types of
prescription: automatic acquisition of property. Continuous possession is required for acquisitive and
extinctive prescription.
It is important to realise that possession is one of the main requirements; a holder cant acquire
property via prescription.

2.4.7 Loss of property

Property can be lost in several ways as well. For obvious reasons, the ways of losing property are very
similar to the ways of acquisition.

32

Transfer: the former owner of the goods loses his property rights as a result of a valid
transfer of property to the new owner; this includes the situation in which a third party,
acting in good faith, becomes the new owner, despite the fact that the seller did not have the
authority to transfer the property to him ( Paragraph 2.5).

Death

Fixture

Giving it up/Abandoning it: if you intentionally throw away something, you give up
ownership.

The Monumentenwet 1988 contains a few exceptions (article 50 in particular)

Article 3:99 DCC
34
Article 3:306 DCC
33

Destruction: if your house burns down, you lose ownership of the house. You will now be the
owner of the burned remains of the house, but the house as such no longer exists so you no
longer own it.

Via prescription

Expropriation

Paragraph 2.5 Transfer

In order to validly transfer property or, in other words, for someone to validly become owner, three
requirements have to be met:
1) Valid title
2) Delivery
3) Authority
The requirements can be found in article 3:84 DCC.

Valid title
The title described the reason for the transfer; it refers to the legal basis.
Valid titles:

Sales agreement:
Two obligations: the obligation of the owner to deliver the property to the other contractual
party and the obligation of the other contractual party to pay the agreed upon remuneration.

Exchange agreement:
Two obligations: the obligation of the first party to deliver the property to the second party
and the obligation of the second contract party to deliver his property to the first party.

Gift:
One obligation: the obligation of the owner to deliver the property to other party. The other
party, however, has to accept the transfer.35

The law:
Tort can be the basis for a transfer of property.

Examples of invalid titles are:

35
36

Putative title:
Both parties are convinced that certain obligations still have to be met, but in reality they
have already been met.

Sale to someone who has an appointed guardian:

Someone who has an appointed guardian is often (legally) incapable of transferring property.
The guardian is allowed to annul the juridical act.36

Rent, loan, lease:

These types of agreements are not meant to transfer ownership.

Title resulting from an agreement that is contrary to the law/public policy (agreement null
and void):
For example arms trade between private individuals.

Which makes it a bilateral juridical act

Article 3:32 sub 2 DCC

Delivery
Delivery of property can be done in many different ways, depending on the kind of property that is
transferred.
Immovable property:
Immovable is delivered by drawing up the necessary documents (deeds) and the registration
of the transfer in the relevant public registry. Only after these two requirements are fulfilled,
the ownership transfers.
Movable property:
Delivery of possession can be done by a possessor or by a detentor.
By a possessor:

Factual transfer of possession: is the most common way of delivering movable physical
property is by simply handing it over to the new owner.

Traditio symbolica: a symbolical act of delivery (for example handing over the keys to a car).

Constitutum possessorium: is used if the former owner wants to keep the property for a
short period of time after the transition of ownership took place. This way of delivering
property requires a mutual statement (by the former and the new owner) that the property
is transferred to the new owner, and that the former owner will now hold the property (for
the new owner) for a certain period of time.

Traditio brevi manu: is used in case the new owner was already holding the property. For
this way of delivering property a mutual statement that the property is transferred to the
new owner is sufficient.

Traditio longa manu: is used in case a third party holds the property and will continue to
hold the property for a certain period of time after the transfer of property between the
former and the new owner took place. A mutual statement is required and in addition to
that the third party has to be notified of the transition of ownership.
By a detentor:

Factual delivery of possession: works the same way as factual transfer of possession but
please note that only a possessor can transfer possession (!).

Traditio symbolica

Traditio brevi manu

Traditio longa manu

Rights:
Rights to bearer (cheques, share certificates, bonds) are delivered by handing over the
documents to the new owner. Rights to order (certain claims that explicitly mention the
name of the creditor) are delivered by handing over the documents to the new owner plus
endorsement.

Authority
Transfer of property is only valid in case the property is transferred by someone who has the
authority to commit legal actions with regard to the property.
It is usually the owner who has the exclusive authority to perform juridical acts with regard to the
property, so someone who has stolen property or someone who has borrowed property cant validly
transfer the property.
However, sometimes someone other than the owner has the authority to perform juridical acts. This
mainly applies to situations where a representative is appointed by the owner.
Article 5:2 DCC:
The owner of a thing is entitled to recover it from any person who holds it without right.
Article 5:2 DCC is about reivindicatio: the owners right of revindication. Revindication is one of the
most important rights of the owner. Revindication is even possible if the current possessor or holder
is in a state of bankruptcy.
th

Example: A is the proud owner of a very valuable, 18 century violin, which has been a family
heirloom for generations. One day he discovers a scratch on the varnish of the violin. The next
morning he brings the violin to B, a renowned repairman. B assesses the damage and ensures A that
he will be able to repair the violin. A can collect the violin in a month. After three weeks C, a famous
violinist, visits Bs workshop. He tells B he is looking for the violin of his dreams. B, who is a little
absent-minded, offers C As violin, thinking it is one of his own. C is impressed by the beautiful sounds
the violin produces and decides to buy it. After some negotiating between B and C, they reach an
agreement. B hands the violin over to C and C leaves the shop, thinking he is now the proud owner of
As violin.

In order to facilitate trade, by limiting uncertainty, a few exceptions exist to the owners right of
revindication. The aforementioned exceptions result will in a loss of ownership. In the Netherlands,
the new owner is protected against the previous owners revindication if he meets the requirements
of article 3:86 sub 1 DCC:
1)
2)
3)
4)
5)

Movable property
Physical delivery
Remuneration paid
The acquirer acted in good faith
The acquirer is willing and able to identify the alienator within three (3) years of
acquisition

Looking back at the example with the violin: if C meets all five requirements mentioned above, he
will become the new owner of the violin and A will, unfortunately, lose ownership. The only thing A
can do now is claim damages from B.

However, even if all five requirements of article 3:86 sub 1 DCC are met, the owner of a movable
thing, who has lost it a as a result of theft, can on the basis of article 3:86 sub 3 DCC revindicate
the movable thing within a period of three (3) years unless the following requirements are met:
1)
2)
3)
4)
5)

Acquirer is a natural person

Acquirer is not acting in the conduct of a profession or business
Alienator (usually) deals with the public in similar things
Alienator uses business premises (such as a shop)
Alienator acting in ordinary course of business

Or: it concerns money or paper payable to bearer or order (so it shouldnt concern money)
If these six (five + one) requirements are met, ownership is finally acquired for good.

Paragraph 2.6 Retention of title

As the name already indicates, retention of title is about retaining ownership until a certain
obligation is fulfilled. The obligation in question is usually a payment obligation. This means that
ownership will not pass from (typically) seller to buyer until the contract price is paid in full. One
could, therefore, say that retention of title is a form of security.
The main advantage of a retention of title clause is that the seller can revindicate in case of
bankruptcy of the buyer.
Retention of title clauses are frequently used in (inter)national business.

Questions Chapter 2 Ownership, Detention, Possesion (& Acquisition)

Version A
Question 1
Mention the main characteristics of ownership.

Question 2
a. Albert has a very old cabinet at home. However, the cabinet is damaged, so Albert takes
the cabinet to a repairer (Bob). The cabinet is in the workshop for a whole month. In this
month, who is owner of the cabinet and why? Which characteristic of ownership is
relevant here and why?
b. Imagine all the trousers of the clothes shop H&M have been stolen by Mr. X. According
to droite de suite, who is now owner?
c. Going back to the case of the cabinet. The cabinet is still in the workshop. Unfortunately
the business is not doing well so Bob goes bankrupt and the bank seizes all his things so
the creditors can be repaid. Does this mean Albert has lost ownership of his cabinet?
Which characteristic of ownership is relevant and why?

Question 3
a.
b.
c.
d.

Accepting a gift is a way of acquiring property. Yes/no

Taking possession of a wallet is a way of acquiring property. Yes/no,
Installing an engine in someone elses car is a way of acquiring property of that car. Yes/no.
Inheriting the right to use someone elses cottage is a way of acquiring property of that
cottage. Yes/no,
e. If you find a treasure you will acquire property of the treasure. Yes/no,

Question 4
a. What is droit de suite?
b. What is droit de prfrence?
c. Give an example of a limitation to the right of ownership on the basis of non-codified law.

Question 5
Albert, a first year student at the Rotterdam Business School, shares an apartment with two of his
friends. Albert and his friends live the life of ordinary students: they sleep late, drink a lot and
produce a lot of garbage, which they usually throw in their back garden, instead of putting it in a
public garbage disposal. After some time they have collected so much garbage, that they are no
longer able to see the grass of their back garden. The garbage begins to rot, so Albert and his friends
want to get rid of it. They decide to donate the garbage to their neighbour. One night they collect all
the garbage and put it in the neighbours back garden. The neighbour is less than pleased when he
sees the pile of garbage in his garden the next morning.
a. Does a gift or donation constitute a legal basis for transfer of property?
b. Has the neighbour become the owner of the garbage? If so, why? If not, who is then the
owner of the garbage?
c. Who is the legal owner of the garbage that is now in the neighbours back garden?
d. What would it take for them to legally give up ownership of the garbage?
After the neighbour hands the garbage back to them (and gives them a piece of his mind), Albert and
his friends decide to throw everything in the public garbage disposal, situated in front of their

apartment block. Another neighbour, passing by an hour later, discovers a piece of parchment in one
of the garbage bags and takes possession of it. At home he discovers that it is a valuable, 17th century
manuscript, worth at least 10,000. A few weeks later, Albert reads a newspaper article about the
find and realises the piece of parchment was in one of his garbage bags.
e. Can Albert revindicate the piece of parchment, claiming he is still the owner of it?

Question 5
a. Explain the difference between possessor, holder and owner.
b. How do you determine whether someone is holding or possessing a thing?
One month ago, Alex bought a new car. He has the car at home and mainly uses it to go to work.
Nina, a very good friend of Alex, wants to go away for the weekend and she asks if she can use Alexs
car. Alex agrees, as long as she puts petrol in the car. Nina uses the car to go to Belgium for the
weekend.
c. Who is owner of the car and who is possessor?
Nina and Alex end up in an argument because Nina wants to stay in Belgium for a few more weeks.
She is so angry at Alex for not lending the car for a few more weeks that, in her anger, she sells the
car to her cousin, Frank. Her cousin does not know that this is in fact Alexs car so he is very pleased
with his new car.
d. Who is owner, possessor and/or holder?

Questions Chapter 2 Ownership, Detention, Possesion (& Acquisition)

Version B
Question 1
Mention the main characteristics of ownership.

Question 2
a. Albert has a very old cabinet at home. However, the cabinet is damaged, so Albert takes the
cabinet to a repairer (Bob). The cabinet is in the workshop for a whole month. In this month,
who is owner of the cabinet and why? Which characteristic of ownership is relevant here and
why?
b. Imagine all the trousers of the clothes shop H&M have been stolen by Mr. X. According to
droite de suite, who is now owner?
c. Going back to the case of the cabinet. The cabinet is still in the workshop. Unfortunately the
business is not doing well so Bob goes bankrupt and the bank seizes all his things so the
creditors can be repaid. Does this mean Albert has lost ownership of his cabinet? Which
characteristic of ownership is relevant and why?

Question 3
a. Which rights do you have as an owner?
b. Name some limitations.

Question 4
You are an IBMS student renting a room from Eelco, a private landlord. In the agreement it is stated
that you are not allowed to put your music on after 22h00. Eelco, however, does regularly put his
music on after 22h00 because the building is his property.
Is this allowed, if not, why?

Question 5
a. The Hogeschool hands out free pens with their logo on it. Have you acquired ownership of
the pen? Yes/no
b. Taking possession of a set of keys is a way of acquiring property. Yes/no,
c. Building a shed with wood you stole from your neighbour is a way of acquiring property of
your neighbours wood. Yes/no,
d. Inheriting the right to receive interest of the bank account of your uncle is a way of
acquiring property of that bank account. Yes/no,
e. If you find a very valuable and ancient Roman sword in a public garden, will you acquire
property of the sword? Yes/no,
f. Adrian is sitting in a train and sees a Metro (free newspaper) lying on a chair which
someone has left behind. Adrian takes the newspaper. Did he acquire ownership? Yes/no,
g. Bruno sees a bike, which has still its key in the lock, in front of a club (Blender in
Rotterdam) and thinks he is very fortunate, because he needs a new bike. He takes the bike
and cycles away with it. Did he obtain ownership? Yes/no.

h. Bruno is fishing in Kralingse bos (park in Rotterdam) and he catches a carp (fish). Is he
owner of the fish?
i. Adrian adds the neighbouring land to his land, seeing no one is living nor using this piece of
land. Is he owner of the land?
j. Adrian finds a diamond ring on the street and reports it to the police. The owner never
shows up. Is Adrian owner?

Question 6
a. Explain the difference between possessor, holder and owner.
b. How do you determine whether someone is holding or possessing a thing?
One month ago, Alex bought a new car. He has the car at home and mainly uses it to go to work.
Nina, a very good friend of Alex, wants to go away for the weekend and she asks if she can use Alexs
car. Alex agrees, as long as she puts petrol in the car. Nina uses the car to go to Belgium for the
weekend.
c. Who is owner of the car and who is possessor?
Nina and Alex end up in an argument because Nina wants to stay in Belgium for a few more weeks.
She is so angry at Alex for not lending the car for a few more weeks that, in her anger, she sells the
car to her cousin, Frank. Her cousin does not know that this is in fact Alexs car so he is very pleased
with his new car.
d. Who is owner, possessor and/or holder?

Questions Chapter 2 Acquisition of property and transfer Version A

Question 1
Gilbert is 14 years old and has a bike worth 2,000. He sells and delivers his bike to Henk, an 18 year
old, for the price of 1,200. He also delivers the bike to Henk. A week later, Gilberts father asks his
son where he left his bike. Gilbert tells his father that he sold the bike to Henk. Gilberts father does
not agree with the sale of the bike and goes to Henk and tells him the contract of sell is annulled.
a. Has Henk acquired ownership of the bike before het contract of sale was annulled?
b. Can you say after the annulment, that Henk has never been owner of the bike?
c. What if Henk has already sold the bike on to Isaac, before the father of Gilbert intervened.
Did Isaac acquire ownership of the bike?

Question 2
John is the proud owner of a valuable classic car. One day, when he takes it for a ride, he is involved
in a car accident. As a result, the rear bumper of the car is badly damaged. John brings the car to
Edward, who is an expert in repairing classic cars. Edward tells John he will be able to repair it, but it
will take time. John can collect the car in two months. A few days after John has brought the car to
Edward, he shows a picture of the car to Philip, who immediately falls in love with it. After some
negotiating, John sells the car to Philip.
Can John transfer ownership of the car to Philip at that particular moment? How?
John and Philip make a (two-sided) declaration, but they forget to inform Edward. When Philip
shows up in the workshop of Edward after the car has been repaired, Edward refuses to give him the
car, because as far as he knows- John is still the owner of the car.
b. Can Philip claim the car from Edward, stating that he is the owner of the car?
John calls Edward and tells him that Philip bought the car from him. Edward is now willing to hand it
over to Philip. On his way home, Philip is spotted in his new car by Alex. Alex, a multi-millionaire who
has a huge collection of classic cars, tells Philip he wants to buy the car right away. Philip is hesitant,
but Alex offers him an amount of money Philip cant refuse. Philip only has one condition. He is
willing to transfer ownership of the car to Alex immediately, but he wants to drive the car for
another month, so that he can at least enjoy his treasure a bit longer. Alex agrees and the car is
sold.
c. Can Philip transfer ownership of the car to Alex at that particular moment and still drive it
for one month? How?

Question 3
Walking down a busy street, Alan loses his watch without even realising it. A bit later, Bridget picks
up the watch, not knowing whom it belongs to. The watch is in perfect condition, so she decides to
take it home with her and give it to her boyfriend Charles as a present. She doesnt tell him she found
it on the street. Charles doesnt like the design of the watch, so he sells it to his friend Daniel for a
fair price, telling Daniel he received the watch as a gift from his girlfriend. Daniel happens to be a

colleague of Alan. When Alan meets Daniel the next morning at the office, Alan realises Daniel is
wearing his watch. He recognises the dial of the watch, which was designed at his specific
instructions. Alan wants to claim back his watch from Daniel.
a. Did Bridget become the owner of the watch?
b. Did Charles become owner of the watch?
c. Will Daniel have to give Alan the watch back (so in other words, did Daniel become owner)?

Questions Chapter 2 Acquisition of property and transfer Version B

Question 1
Alex has a very expensive Samsung television ( 5,000) in his living room. One night Bob breaks in
and steals the TV. A few days later, he sells the TV to Chris for a price of 1,000. Chris is a friend of
Bob and he is aware of the fact that the TV is stolen. Bob delivers the TV to Chris. Another few weeks
later, Chris sells the TV to David, owner of an electronics shop, for the price of 3,000. Chris delivers
the TV to David. David isnt aware of the theft. Chris told David that he acquired the TV of his mother,
who passed away several months ago. Chris even hands over a false (but very convincing) receipt,
which makes his story even more plausible. Four days later, Ewoud (a consumer) buys the TV for
3,500 at Davids shop. Ewoud takes the TV to his house. Three months later Frank visits Ewoud and
he convinces Ewoud to sell the TV to him for 3,000. Frank takes the TV to his house. Frank is a
friend of Bob and he knows that the TV is stolen from Alex.
a. Has Bob acquired ownership of the TV?
b. Has Chris acquired ownership of the TV?
c. Has David acquired ownership of the TV?
d. Has Ewoud acquired ownership of the TV?
e. Has Frank acquired ownership of the TV?
f. Imagine that Alex had seen the TV in the shop of David, before David could sell the TV to
Ewoud. Would it be possible for Alex to claim (revindicate) his TV back from David?
g. Imagine that Alex had seen the TV in the house of Ewoud, before he could sell it to Frank.
Would it be possible for Alex to claim (revindicate) his TV back from Ewoud?
h. What if Alex had seen the TV in the house of Frank? Would it be possible for Alex to claim
(revindicate) his TV back from Frank?

Question 2
On an unfortunate day, Julia loses her diamond-studded watch worth 10,000. The next day Karen
finds the watch. A week later Karen sells Julias watch to Leo, who knows the watch was lost. Leo
takes the watch to a jewellers shop to check if the diamonds are real. The shop gives him a certificate
of origin. A month later, Leo gives the watch as a gift to his brother Michael. Leo told Michael that he
got the watch from his father-in-law. Three months later Michael sells the watch to Nick for 8,000.
Michael has told Nick that he got the watch from his brother Leo and he also give the certificate of
origin to Nick.
a. Has Karen acquired ownership of the watch?
b. Has Leo acquired ownership of the watch?
c. Has Michael acquired ownership of the watch?
d. Has Nick acquired ownership of the watch?
e. Imagine that Julia finds out that Nick has her watch in possession. Julia revindicates her
watch from Nick. Is Nick obliged to give the watch back to Julia?

Question 3

Oliver has a chainsaw in his garden. One day Patrick walks past the garden of Oliver, climbs over the
fence and steals the chainsaw of Oliver. He takes it home with him and uses it for a while. After a
year, Patrick decides he does not need the chainsaw anymore and puts an advertisement in the local
newspaper. Quinton reacts to this advertisement and visits Patrick to have a look. When Quinton
asks where the chainsaw comes from, Patrick tells him a vague story that a friend of his had to get rid
of his chainsaw. Quinton, however, does not really care about the story and is very happy he can buy
a very good quality chainsaw for quite a low price. He pays Patrick 100 and takes the saw with him.
a. Has Patrick acquired ownership of the chainsaw?
b. Has Quinton acquired ownership of the chainsaw?
c. Assume that Quinton bought the chainsaw in good faith. Will Quinton have to give the
chainsaw back to Oliver if Oliver revindicates his chainsaw?

Chapter 3. Insolvency
Paragraph 3.1 What is it?
Paragraph 3.2 Who can go bankrupt?
Paragraph 3.3 Types of creditors
Paragraph 3.4 Procedure
Paragraph 3.5 Consequences
Paragraph 3.6 Termination
Questions Chapter 3

Paragraph 3.1 What is it?

3.1.1 An introduction
Insolvency is the legal status of a person or an organisation that cannot repay the debts it owes to
his/its creditors. In case of insolvency, creditors may file a bankruptcy petition against a business or
corporate debtor (involuntary bankruptcy) in an effort to recover a portion of what they are owed.
In the majority of cases, however, bankruptcy is initiated by the debtor himself (a voluntary
bankruptcy that is filed by the insolvent individual or organisation). An involuntary bankruptcy
petition may not be filed against an individual, private debtor who is not engaged in business.37
Bankruptcy in The Netherlands is governed by the Dutch Bankruptcy Act (DBA).38 Intra-EU crossborder insolvency proceedings are governed by Council Regulation (EC) No 1346/2000 of 29 May
2000 on insolvency proceedings. Cross-border insolvency proceedings that do not fall within the
scope of the EU Insolvency Regulation will be governed by the general rules of Dutch international
private law.
Three types of insolvency procedures are to be distinguished from each other in the Dutch
Bankruptcy Act:
1) Bankruptcy (faillissement)
2) Suspension of payments (surseance van betaling)
3) Debt restructuring for private individuals (schuldsanering)

3.1.2 Bankruptcy proceedings

If the petition is granted, the district court will declare the debtor bankrupt and appoint one or more
trustees (in Dutch: curator). The trustee is charged with the administration and liquidation of the
bankruptcy estate.
Main rule is that the district court will only declare a debtor in state of bankruptcy if the debtor has
ceased to pay. This means that there is at least a due debt and a claim for support.39 In jurisprudence
it has been established that there should be more than one creditor.
If the debtor is properly summoned, bankruptcy may be declared in a default judgment. In that case
the debtor has a right to ask for a review within fourteen days after the judgment of bankruptcy.
Appeals must be lodged ultimately within eight days. Both review and subsequent appeals have no
suspensory effect (the judgment is provisional).40
37

http://books.google.com/books?id=iqE9AAAAIAAJ&pg=PA4; http://www.thefreedictionary.com/bankrupt
Faillissementswet (Fw)
39
Articles 6 BA
40
Provisional enforcement or execution is a decision by the court that there will be no stay (suspension) of execution of a
decision, although an appeal is being lodged against it. Normally the lodging of an appeal does lead to a stay of execution.
So a defendant, who went into appeal, can still be forced to pay to the creditor. Without the provisional judgment, the
defendant would only have to pay after the Judge of the Court of Appeal has made a decision. T. Foster, 2009. Dutch Legal
Terminology in English. Deventer: Kluwer, page 155
38

3.1.3 Suspension of payments

Proceedings:
With the suspension of payments procedure the Dutch Bankruptcy Act intends to provide a legal
instrument in order to restructure and continue an enterprise in financial distress, which in whole or
in part is viable.
This means the debtor will have a postponement by court order of the payment of his debts,
which he foresees will be impossible to meet when they respectively fall due.41 This remedy is
available to debtors who possess sufficient property to cover all their debts but foresee the
impossibility of meeting them when they respectively fall due.42
The commercial court will appoint an official receiver to report to it on the debtor's situation and
may decide to grant a suspension of payments. In this case it will appoint one or more administrators
to supervise the debtor's transactions during the period of suspension. During this period, the debtor
may not transfer, mortgage or commit his assets.43
A requirement is that the debtor must foresee that he will not be able to continue paying his due
debts.44 Also there is a duty of information: inform the administrator or receiver fully and accurately
about everything that he knows of or can understand that is important for proper completion of the
proceedings.
;
The purpose of a suspension of payments is to suspend or delay the payment of debts.
The basis is the probability of the debtors inability to meet his obligation when they respectively fall
due, despite the fact that he has sufficient assets to cover all his liabilities.45 The suspension of
payments procedure, however, rarely ever fulfilled its goal and companies that do ask for suspension
of payment generally are declared bankrupt within a few weeks after the initial decision on the
suspension of payments request.

3.1.4 Debt restructuring for private individuals46 (Recommended literature)

This relatively new arrangement under the Dutch Bankruptcy Act provides a possibility for private
individuals in a debt position without any prospects to make a fresh start without being chased for
life by his creditors. The Netherlands have had a regulation for restructuring the debts of private
individuals since 1999. It is based on the Debt restructuring of private individuals act (Wet
Schuldsanering Natuurlijke Personen (WSNP)) and is as such incorporated as an independent
41

http://www.batasnatin.com/law-library/civil-law/obligations-and-contracts/830-suspension-of-payments-insolvencylaw.html
42
http://pinoy-business.com/corporate/284-options-for-entrepreneurs-in-financial-distress-suspension-rehabilitation-andinsolvency
43
http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_lux_en.htm#3.c)
44
http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm; article 214 BA
45
http://www.batasnatin.com/law-library/civil-law/obligations-and-contracts/830-suspension-of-payments-insolvencylaw.html
46
Wet Schuldsanering voor Natuurlijke Personen. See articles 284 of the Bankruptcy Act.

regulation in title III of the Bankruptcy Act. The principal objective of the regulation is to ensure that
private individuals finding themselves in a financially difficult situation are not pursued for years on
end by the debts they incurred. Another objective of the regulation is to ensure that fewer private
individuals are declared bankrupt.47
The aim of the scheme is to prevent private individuals, with or without their own business, suffering
from the effects of a debt for a prolonged period. Creditors are also required to cooperate under the
scheme.
The core of this Act is to provide the possibility to private individuals in a debt position without any
prospects to make a fresh start without being chased for life by his creditors. The fresh start is
obtained by the liquidation of the assets of the debtor and to save during a period of at the most five
years his repayment capacity (earnings less minimum costs of living).48 At the end of the term these
proceeds are divided among the creditors and a fresh start is obtained. During this term the debtor
has to observe the terms and conditions set out by the law and the so-called restructuring plan
(saneringsplan). If the debtor does not comply with these terms the debt restructuring could be
revoked and the debtor will be declared bankrupt without getting a fresh start.49
Several criteria apply to the debt restructuring arrangement:
Prior to application of the legal debt restructuring arrangement the law imposes mandatory pursuit
of an extrajudicial50 phase. On the grounds of a model statement issued by the municipality it must
be evident that there have been attempts to reach an amicable settlement. Why these attempts
have been in vain must also be evident.51
Only the private individual himself can petition for the applicability of the debt-restructuring act. The
court appoints an administrator. The administrator is charged with the supervision over the debtor in
the sense that the debtor complies with his obligations under the debt restructuring. In the majority
of the debt restructuring cases debt relief social workers are appointed as administrators. In the
more complex cases (most of the time if the debtor runs a business) attorneys at law are appointed.
The administrator is paid a small monthly fee and receives a subsidy. The monthly fee is to be paid
from the proceeds of the estate. The subsidy is only a temporary measure and subject to review. The
bankruptcy judge in a debt restructuring supervises the administrator. The fresh start is obtained by
the liquidation of the assets of the debtor and to save during a period of at the most five years his
repayment capacity (earnings less minimum costs of living). At the end of the term these proceeds
are divided among the creditors and a fresh start is obtained. During this term the debtor has to
observe the terms and conditions set out by the law and the restructuring plan. If the debtor does
47

http://ec.europa.eu/enterprise/policies/sme/files/sme2chance/doc/report_ned_en.pdf;
N.J.
Polak,
1999.
Faillissementsrecht. Deventer: Kluwer, page 276; R.J. van Galen, E.W.J. Liagre Bhl and R.W. de Ruuk, 1997.
Faillissementswet. Deventer: Kluwer, Losbladige Kluwer, inleiding Titel III.
48
Duty of effort in debt restructuring: the debtor who is admitted to the debt should exert maximum effort for his creditors
for a period of three years, so that as much money as possible comes into the estate. For three years he will have to make
his capacity to repay available to his creditors up to 95% of the applicable support level
49
http://www.cbs.nl/en-GB/menu/methoden/toelichtingen/alfabet/p/personal-debt-restructuring.htm
50
Dutch translation: buitengerechtelijk
51
For further information about the requirements: http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm

not comply with these terms, the debt restructuring could be revoked and the debtor will be
declared bankrupt without getting a fresh start. The debt restructuring can also be ended by offering
the creditors a scheme of arrangement. Under the debt restructuring act different voting ratios are
applicable and under circumstances the judge can even impose a scheme of arrangement on the
creditors. 52

Summary
T

o summarise, the objectives of the three types of insolvency are:

1) The sole objective of bankruptcy proceedings is liquidation of the available equity to
distribute among the creditors.
2) The suspension of payments proceedings has a restructuring objective rather than
liquidation in order to prevent the latter.
3) The debt restructuring proceedings in court have a double objective: liquidation of the
available equity and restructuring of the debt burden. 53

52

M.A.J.G. Janssen et al, 2008. Bankruptcy And A Fresh Start: Stigma On Failure And Legal Consequences Of Bankruptcy.
Dutch report, p. 7.
53
http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm

Paragraph 3.2 Who can go bankrupt?

Any debtor (being a natural person or a private legal entity) can be declared bankrupt by the district
court, so both legal entities and private individuals can be declared bankrupt. Applications for
bankruptcy can be filed by:
the natural person or private legal entity itself;
a creditor, or
the public prosecutor.
Bankruptcy is open to both natural persons and legal entities. Bankruptcy can be applied for by the
debtor himself (own declaration), by a creditor or by the Public Ministry (Openbaar Ministerie) for
reasons in the public interest. In principle this means that all private individuals may submit an
application, as may those enterprises that are not operated in the form of a corporate body, such as
a sole proprietorship.
Suspension of payments is not granted to a natural person who does not practice an independent
profession or business. The debtor himself can apply for suspension of payments provided that this
party is not a natural person. Creditors may not therefore apply for suspension of payments.
Debt restructuring is only open to natural persons. The natural person who has a debt burden such
that there is no prospect of repayment and who submits a complete petition for debt restructuring to
the court and who moreover is in good faith according to the court. Creditors may not therefore apply
for debt restructuring.
The clerk to the court should publish in the State Gazette54 certain data from the pronouncement of
the court in which the bankruptcy, suspension of payments or debt restructuring proceedings are
opened: for example the name and full address of the debtor and the name of the acting supervisory
judge and the appointed receiver.55
The main focus of modern insolvency legislation and business debt restructuring practices is no
longer on the elimination of insolvent entities but on remodelling the financial and organisational
structure of debtors experiencing financial distress in order to permit the rehabilitation and
continuation of their business.56

Paragraph 3.3 Types of creditors

Before discussing the process of how assets of a bankrupt company are distributed, it is important to
understand the classification of creditors for the purpose of the distribution of claims on liquidated
assets. Creditors can be divided (can differ per country) into roughly four categories.
1. Preferred creditor
54

Staatscourant: Official journal/legal gazette: The Staatsblad, Staatscourant and Tractatenblad contain parts with
legislation as well as parts with legal notices and other official texts
55
http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm
56
Reifner et al, 2003; Gerhardt, 2009; Fraude, 2010

2. Secured creditors
3. Unsecured creditors
After the general bankruptcy costs have been complied (e.g. payment of the trustee), the liquidation
of assets will be completed. Examples of bankruptcy debts are indebted salaries, indebted rent
payments (from the date of bankruptcy).

3.3.1 Preferred creditors57

A preferred creditor is a creditor receiving a preferential right to payment upon the debtor's
bankruptcy under applicable insolvency laws. Examples of preferred creditors are employees with
overdue salaries, the Tax authorities.
In most legal systems, some creditors are given priority over ordinary creditors, either for the whole
amount of their claims or up to a certain value. In some legal systems, preferential creditors take
priority over all other creditors, including creditors holding security. If property of the bankrupt
company is insufficient to compensate all preferred creditors, the property is distributed
proportionally to all preferred creditors.

3.3.2 Secured creditors

Creditors whose claims are guaranteed by a lien or security right ( Paragraph 2.2.3). These
creditors are not affected by the insolvent companys bankruptcy since they can take possession of
assets. However, they still need to prove their claim to the trustee or to the court. Secured creditors
have the law to protect them and can apply to the courts to enforce payment. By ignoring a secured
creditor you could end up in court, have the bailiffs remove your personal belongings and furniture,
cut off your vital supplies such as water and electricity and ultimately have you put in prison.
Examples are suppliers of gas, electricity, water, lessor of immovable property. Usually they are
considered as unsecured creditors, unless they have guaranteed their claim.58

3.3.3 Unsecured creditors59

Unsecured creditors are the creditors whose claims are not guaranteed by any security in the
bankrupt companys property and do therefore not have priority. If the property of the estate is
insufficient to compensate all unsecured claims, the property is distributed proportionally to all
unsecured creditors. Normally these creditors are in one of the following categories: credit cards,
unsecured loans, store cards, catalogues, mobile phones and mail order companies.60

57

Preferred creditor: a creditor with a preferential right created by a statutory provision, i.e. the tax authorities and the
social insurance board are examples of high ranking preferred creditors
58
http://www.becomingbankrupt.co.uk/types-of-creditor.html
59
Concurrente crediteur: Common creditor: a non-preferred, unsecured, deferred creditor
60
http://www.becomingbankrupt.co.uk/types-of-creditor.html

There is also even another category after unsecured creditors. This is the subordinated debt. This
debt has a lower priority than other bankruptcy debts. This means that they are more risky for the
lender of the money. It is unsecured and has lesser priority. Parties can contractually agree to this.
This does entail a high risk for the creditor, so often the interest rate is very high and it is attractive
for entrepreneurs to ask for investment.
Research in the Netherlands has shown that creditors in bankruptcy often receive nothing. The Tax
Authorities usually recover 30% of their debts, preferred creditors 10% and unsecured between 38%.61

3.3.4 Significance
A bankruptcy affects both common unsecured creditors and preferred creditors. Secured creditors
may exercise their security rights as if there were no bankruptcy. In practice secured creditors are
affected by the bankruptcy, since secured creditors tend to prefer a private sale of the secured goods
instead of the legally required public sale. The reason for this preference is that the proceeds
through a private sale are most of the time higher than through a public sale. In order to sell the
secured goods through a private sale the co-operation of the trustee is required.62 The practice has
risen that the trustee asks a certain percentage of the sale proceeds for his co-operation. Secured
creditors and even third parties are not allowed to exercise their rights if a cooling down period is
ordered.63
A suspension of payments only affects common unsecured creditors. Secured creditors and preferred
creditors are as a general rule not effected and should in principle be fully paid. The practice,
however, is somewhat different, due to inter alia the introduction of the cooling down period and
the grown practice that preferred creditors like the tax authorities and the social insurance board
under circumstances give their co-operation to a scheme of arrangement. Since the circumstances
under which co-operation is given are laid down in policy rules such co-operation could be enforced
legally.64

61

http://www.cbs.nl/NR/rdonlyres/0D1B8D1C-ABBF-4A39-8D8E-B5D500BA1EA0/0/insolventietrechtincijfers07.pdf
He now manages the the affairs of the debtor (who is now officially incapable and unauthorised)
63
M.A.J.G. Janssen et al, 2008. Bankruptcy And A Fresh Start: Stigma On Failure And Legal Consequences Of Bankruptcy.
Dutch report, p. 5.
64
M.A.J.G. Janssen et al, 2008. Bankruptcy And A Fresh Start: Stigma On Failure And Legal Consequences Of Bankruptcy.
Dutch report, p. 6.
62

Paragraph 3.4 Procedure (Recommended literature)

3.4.1 The Netherlands
Dutch bankruptcy law (Dutch Bankruptcy Act = Faillissementswet) covers three separate legal
proceedings:
The first is the bankruptcy (faillissement). The purpose is the liquidation of the assets of the
company. The bankruptcy applies to both individuals as well companies.
The second legal proceeding in the Bankruptcy Act is the suspension of payments (surseance).
Surseance only applies to companies. Its goal is to reach an agreement with the creditors of the
company.
The third proceeding is the debt restructuring for individuals (schuldsanering). This proceeding is
designed for individuals only. Decisions taken can be granting discharge in debt restructuring, a levy
from the bankruptcy or a possible interim termination of debt restructuring. The court appoints a
bankruptcy judge and an administrator. The court may also dismiss the receiver or administrator if he
neglects his legal duties. An acting supervisory judge is appointed by the court to take care of the
numerous decisions of management and supervision of the estate during the term of the
proceedings. This individual supervises the receiver or administrator, grants permission for some
transactions and decides on possible complaints from interested parties.65

3.4.2 The United Kingdom

In the United Kingdom, bankruptcy (in a strict legal sense) relates only to individuals (including sole
proprietors) and partnerships. Companies and other corporations enter into differently-named legal
insolvency procedures: liquidation and administration (administration order and administrative
receivership). However, the term bankruptcy is often used when referring to companies in the media
and in general conversation.
A trustee in bankruptcy must be either an Official Receiver (a civil servant) or a licensed insolvency
practitioner. Current law in England and Wales is largely derived from the Insolvency Act 1986.
Following the introduction of the Enterprise Act 2002, a UK bankruptcy will now normally last no
longer than twelve months and may be less, if the Official Receiver files in court a certificate that his
investigations are complete. It was expected that the UK government's liberalisation of the UK
bankruptcy regime would increase the number of bankruptcy cases..66

3.4.3 The United States

Bankruptcy in the United States is a matter placed under federal jurisdiction by the United States
Constitution (in article 1, section 8, clause 4), which allows Congress to enact "uniform laws on the
65

66

http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm
http://en.wikipedia.org/wiki/Bankruptcy

subject of bankruptcies throughout the United States". The Congress has enacted statute law
governing bankruptcy, primarily in the form of the Bankruptcy Code, title 11 of the United States
Code.67 Federal law is complemented by state law in some places where federal law does not provide
a suitable solution or expressly refers to state law.
While bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the US
district courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions,
are often dependent upon state law. State law therefore plays a major role in many bankruptcy
cases, and it is often not possible to generalise bankruptcy law across state lines.
Generally, a debtor declares bankruptcy to obtain relief from debt, and this is accomplished either
through a discharge of the debt or through a restructuring of the debt. Generally, when a debtor files
a voluntary petition, his or her bankruptcy case commences.

67

http://www.credit-land.com/articles/articles_page_68600_1881780_4.php

Paragraph 3.5 Consequences

The effect of the bankruptcy order is that the bankrupt loses his power of disposition over the estate
in bankruptcy68 to a trustee in bankruptcy or receiver (for legal persons), who has far-reaching
power, but who in turn is supervised by a supervisory judge.69 The estate comprises all of the
debtors property at the time of the judgment that admits him to the arrangement, as well as all
property that he obtains during the bankruptcy or application of debt restructuring.70 The
possessions that are not excessive remain outside of the estate.
As a result of the judgment in which the debtor is admitted to the bankruptcy or the debt
restructuring arrangement he lawfully loses authority to have his property at his disposal: from that
time onward the property belong to the estate that is managed by the administrator or receiver. He
also loses the authority to conduct and to allow actual transactions in respect of the property He is
obliged to surrender all property that belongs to the estate on the request of the administrator or
receiver. The debtor must obtain permission from his administrator or receiver for some legal
transactions, such as entry into a credit transaction.
No obligation exists for the creditors to submit all claims to the receiver or administrator. Anyone
wishing to share in the income, which is paid out via what is referred to as a distribution list to known
creditors, should submit his claim.71
It is common in many cases to limit credit to individuals and businesses for major purchases for a
period of up to several years after the bankruptcy is considered fully discharged. The circumstance
that someone has been bankrupt or has been involved in moratorium or debt restructuring, remains
registered for some time with the Bureau for Credit Registration (BKR) and with the Central
Insolvency Register (CIR) at the Board for Jurisprudence in The Hague. This is after all a relevant risk
factor for credit providers. There are no legal obstacles to restarting an enterprise.
An entrepreneur who has significantly contributed to the bankruptcy through apparent improper
administration of the enterprise may be held liable by the administrator on the grounds of the Civil
Code. The Penal Code contains provisions concerning threatened bank breaking. No specific
sanctions exist for employers/non-corporate bodies if they do not comply with their debt
restructuring obligations.72

68

Dutch translation: failliete boedel

T. Foster, Dutch Legal Terminology in English, Kluwer 2009, p. 26.
70
According to articles 20 and 295 BA
71
http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm
72
http://ec.europa.eu/civiljustice/bankruptcy/bankruptcy_net_en.htm
69

Paragraph 3.6 Termination

What are the conditions for termination of the proceedings? A bankruptcy can be ended in several
ways:

The bankruptcy judgment is reversed by the Court of Appeal

Closing of the bankruptcy for lack of assets

Closing of the bankruptcy due to the fact that the debtor is in the position to resume
payments of his debts

Conclusion with the creditors of a scheme of arrangement73

Suspension of payment proceedings end either through withdrawal at the debtors request or by
means of an agreement that the court approves.
Debt restructuring is completed positively or negatively. If a debtor complies with the debt
restructuring obligations (fully informing the receiver, getting as much money into the estate as
possible for three years, going to work or, as the case may be, staying at work) the court will grant
him a clean sheet in the final judgment. This implies that the remaining debts may no longer be
legally collected by the creditors.74 If a debtor does not comply with his debt restructuring obligations,
there may be an intermediation with no clean sheet: the debtor will now be in a state of
bankruptcy.75 For example, this can happen if the debtor allows excessive new debts to arise during
the term of his debt restructuring, or if he tries to disadvantage his creditors.
The essential difference between bankruptcy and debt restructuring is that after completion of a
bankruptcy the unpaid claims survive and can therefore become collectable again for creditors.76 A
bankruptcy ends by means of an agreement, by means of a simplified completion (removal in case of
a lack of income) or by means of a distribution to the creditors following verification of their claims.

73

http://ec.europa.eu/enterprise/policies/sme/files/sme2chance/doc/report_ned_en.pdf, p. 5.
See article 358 of the Bankruptcy Act
75
See article 350 of the Bankruptcy Act
76
Articles 195 BA
74

Questions Chapter 3 Insolvency

Question 1
The public prosecutor has requested for the bankruptcy of Mrs. Hommel (who is the director of
Hommel Ltd). The public prosecutor accuses her of mismanagement; she is therefore personally
liable for the financial damage of the shareholders. According to the public prosecutor, Hommel lives
in a fancy villa in Wassenaar and owns several BMWs. However, Hommel has already foreseen the
judgment declaring bankruptcy and flees to Belgium. The curator/trustee has a claim of 1,600,000
on Hommel.
a. Can the public prosecutor file a petition against Hommel Ltd? Which type of insolvency is
possible and which isnt?
b. Why is personal bankruptcy relevant here?
c. Could Hommel do anything against the judgment declaring bankruptcy?
d. Mention a reason why Hommel would flee to Belgium. Would it make a difference?

Question 2
The foundation YoungFit offers to her forty-two creditors payment of half of their debt. The week
before, one of the big creditors has filed for bankruptcy of the foundation. The board of directors is
trying to come to an agreement with this creditor before the court case. They say that if bankruptcy
is granted, the creditors will receive a lot less.
How is the foundation trying to avoid bankruptcy and if the request of the creditor would be granted,
would this method of the foundation be a way to end the bankruptcy?

Question 3
The company H&M is not doing well financially. The board of directors has an emergency meeting to
decide whether to file a request for bankruptcy or suspension of payments. They turn to you for legal
advice.
a. What is the difference between bankruptcy and suspension of payments? What would you
advise?
b. What is the main advantage and disadvantage of suspension of payment?

Question 4
Mr. Wevers had borrowed a sum of 5,000 from his friend Bart. Unfortunately, Wevers has several
outstanding debts with several creditors, including his bank (he has not paid his mortgage for three
months), his credit company Visa, his study loan with DUO, Ikea (he had ordered all his furniture
there, but only paid half) and his ex-wife, who he still owes alimony.
Bart is worried that he will not get his money bank. In addition, Wevers is thinking of submitting a
request for bankruptcy or a debt restructuring for private individuals.
a. Why should Wevers not ask for a suspension of payments?
b. Mention per party the type of creditor.

c. Lets assume that Wevers has been granted the request of bankruptcy, so Bart now has a
claim on a bankrupt. What does this mean for Bart?
d. What if Bart had lent the money to Wevers after his bankruptcy was granted (which would
not be very wise): can Bart still claim his money back?
e. If mr. Wevers would request of a Debt restructuring for private individuals, how long would
the procedure take?
f. Bart has been waiting for a very long time for his claim. What if the bankruptcy has been
terminated and Bart still has not been paid?
g. What if mr. Wevers has done the debt restructuring for private individuals and the judge has
decided after 3 years he deserves a clean slate. Can Bart still claim his money back? And what
could he have done or still do?

Chapter 4. Intellectual Property Law

Paragraph 4.1 What is intellectual property law?
Paragraph 4.2 Copyright
Paragraph 4.3 Trade mark
Paragraph 4.4 Patent
Questions Chapter 4

Paragraph 4.1 What is intellectual property law?

Intellectual property law is an interesting and diverse area. One of the things that make it such an
interesting area is the increased importance of intellectual property: intellectual property is booming
business. This is also clearly demonstrated by the number of recent (significant) lawsuits.
The main types of intellectual property are copyright, trade mark (or trademark), patent and design
rights. In this Chapter, the first three will be discussed.
Intellectual property is a form of intangible property. Just like any other property it can be (partially)
bought, sold, inherited or otherwise acquired. In the Netherlands, intellectual property rights are
comprehensive rights, which means they can be enforced against everyone.
Intellectual property is protected to prevent others, typically for a certain period of time, from taking
unfair advantage of someone elses efforts. Moreover, it gives people incentives in the form of
recognition and the possibility of obtaining fair economic rewards. The ultimate goal is to encourage
development and to stimulate creativity.
The focus of this Chapter is on Dutch law, but English law is also used by way of comparison. Due to
the on-going harmonisation of intellectual property laws, European law is very relevant and
therefore regularly quoted and referred to.

Paragraph 4.2 Copyright

4.2.1 Introduction
The most important message regarding copyright is that it does not protect the idea but only the
independent expression of the idea. Copyright in the Netherlands is codified in the Auteurswet
(henceforth: Dutch Copyright Act). Even though quite a few people would love to disagree, copyright
the right to copy. On the contrary; copyright is meant to protect the work of an author77 against
unauthorised copying. The copyright holder, usually the author himself, controls whether and how
the work is used.
In the Netherlands, the international copyright notice () is entirely optional. This implies that
copyright is automatically obtained and that no (registration) fees have to be paid. In the
Netherlands, an author doesnt even have to realise that he created a protected work.78 The fact that
copyright is automatically obtained applies to all countries that are party to the Berne Convention (
Paragraph 4.2.6). In countries that are not party to the Berne Convention, registration may be
required. In some countries, copyright does have to be asserted. To assert a copyright, the copyright
notice is often used.79
To avoid disputes about who is the author of a work, it is advisable to keep an archive of your work,
including all sketches, concepts et cetera. This archive helps to demonstrate the process of creation.
Article 7 of the Berne Convention determines that the duration of copyright is the life of the author
plus fifty (50) years after his death. European legislation provides even longer protection: the life of
the author plus seventy (70) years. Therefore, the duration of copyright in the Netherlands is the life
of the author plus seventy years. In case of joint authorship, the death of the last surviving author
counts.
Copyright laws in the European Union are harmonised albeit less harmonised than patent and trade
mark laws mainly through Directive 2001/29/EC.80

4.2.2 The requirements

In the Netherlands there are four requirements that have to be met in order to obtain a copyright:
1)
2)
3)
4)

77

A work
Tangibility
Own character
Personal stamp (touch) of the author

Also referred to as maker or creator

rd
J.H. Spoor, D.W.F. Verkade, D.J.G. Visser, 2005. Auteursrecht. 3 edition. Deventer: Kluwer, page 3
79
Countries that are party to the Universal Copyright Convention 1971, but are not party to the Berne Convention
80
Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain
aspects of copyright and related rights in the information society
78

In England there are only three requirements: it has to be a work, there has to be tangibility and
there has to be originality.

A work
Only certain, specific types of works are protected. In the Netherlands there are three categories,
based on the Berne Convention:81 literary works, scientific works and artistic works. Literary works
and artistic works are categories in England as well, but in addition to these they have dramatic
works and musical works as separate categories.
A few examples of what is regarded as a work on the basis of article 10 of the Dutch Copyright Act:
books, brochures, magazines, geographical maps, designs, sketches, photographic works, films,
computer programs, choreographic works, speeches, theatrical performances, sculptures, musical
works (with or without words) and so on. One can clearly see that even though England has two
different categories, more or less the same types of works are protected.
The length, the quality or the artistic value is in principle irrelevant.

Tangibility
Tangibility implies that copyright does not protect ideas, but only the particular (tangible) expression
of an idea. The expression must be recorded in a permanent form; this can either be in writing or in
any other way.82

Own character
The own character requirement implies that the work shall not be an imitation or a copy of another
work. In practice it rarely happens that there is no own character.

Personal stamp of the author

This requirement combined with the own character requirement is often referred to as
originality. The words personal stamp, as a matter of fact, should be interpreted as personal
touch.
The Supreme Court of The Netherlands redefined this requirement in its 2008 decision in the Endstra
tapes case.83 The Supreme Court stated84 that the work has to be in a form that is the result of
creative human labour, and therefore creative choices, which means that it must be a creation of the
mind. It also stated that the aforesaid has to be derived from the work itself, not from the intentions
of the author.

81

rd

J.H. Spoor, D.W.F. Verkade, D.J.G. Visser, 2005. Auteursrecht. 3 edition. Deventer: Kluwer, page 75
nd
D. Bainbridge and C. Howell, 2011. Law Express Intellectual Property Law. 2 edition. Essex: Pearson Education Limited,
page 5
83
HR 20 May 2008, LJN:BC2153, C07/131HR, Endstra tapes
84
In line with HR 4 January 1991, NJ 1991, 608, Van Dale/Romme
82

4.2.3 Style
Style is not protected by copyright. Therefore, you can compose music in the style of Gershwin, paint
in the style of Picasso and write in the style of Tom Clancy. The main issue is: what is considered as
non-protected style and what is considered as copyright protected features? The boundary between
these two is largely determined by the following factors:

Is the specific combination of style-elements as such original and does it bear the personal
stamp of the author?

Can the style-elements be shaped in a different way?

These factors were developed in Dutch jurisprudence. Despite the fact that these factors help in
determining the boundary, there is still a large grey area. It is eventually up to a judge to decide
where exactly the boundary is in each individual case.

4.2.4 Rights
A copyright holder has two sets of rights: moral rights and economic (or exploitation) rights.

Economic rights
As the name already indicates, the goal of economic rights is to give the copyright owner the
possibility to make money from the exploitation of the work. Copyright owners have the exclusive
right to authorise, restrict or prohibit:85

Copying in any way, shape or form

Issuing copies of the work to the public

Renting or lending copies of the work to the public

Performing, showing or playing the work in public

Broadcasting the work or other communication to the public by electronic transmission

Adapting the work, such as translating, transcribing or converting

Examples of copying: photocopying, reproduction of a printed page in handwriting, typing or

scanning, taping live or recorded music.

Moral rights
The typical thing about moral rights is that they can even be exercised after the author has
transferred or licensed his work to a third party. Moral rights can be integrity rights or paternity
rights.86
On the basis of his integrity right, the author can object to derogatory treatment (in the sense of
mutilation, modification or distortion) of the work that is prejudicial to his honour or reputation. For
the latter, the opinion of a right-thinking member of the public is relevant and not the opinion of the

85
86

http://www.ipo.gov.uk/types/copy/c-about/c-about-faq/c-about-faq-economic.htm
Article 25 of the Dutch Copyright Act

author himself.87 The integrity right can only be exercised by the author if the work that is treated in
a derogatory way is afterwards published or issued to the public.
The paternity right involves that the author is entitled to be identified as such. This is not an
automatic right because it has to be asserted. This also works the other way around: authors have
the right not to have works falsely attributed to them.

4.2.5 Infringement and use

Copyright infringement is the unauthorised use of the whole or a (substantial) part of the work. In
the Dutch Copyright Act there are two categories of infringement: verveelvoudiging (multiplication)
and openbaarmaking (disclosure in the sense of making available to the public).88 Multiplication
has two sub-categories: producing one or more physical copies in which the work is included
(reproduction) on the one side and translating, adapting or otherwise changing the intangible work
(adaptation) on the other side.89
The remedies of the copyright owner are: filing an injunction, claiming damages and obtaining an
order to hand over or destroy infringing copies. On a European level, the remedies are laid down in
Directive 2004/48/EC.90 Some forms of infringement are considered a criminal offence. The most
notable example is piracy (deliberate) copyright infringement on a commercial scale.91
Using (a part of) a copyrighted work does not always constitute copyright infringement. First of all,
there is a possibility to obtain a licence from the copyright owner. A copyright can also be bought.
Moreover, one is allowed to quote from lawfully published works the so-called citation right. The
work can also (partially) be used for research and teaching purposes and even for news reporting. All
limitations to copyright are included in paragraph 6 of the Dutch Copyright Act.
Fair use
Fair use, which is a very important limitation to copyright in the United States, does not exist as such
in the Netherlands. There is, however, an on-going debate about whether fair use should (eventually)
be included in either the Dutch Copyright Act directly or in European legislation.92 In the United
States, fair use is codified in section 107 of the Copyright Act:
107. Limitations on exclusive rights: Fair use93

87

nd

D. Bainbridge and C. Howell, 2011. Law Express Intellectual Property Law. 2 edition. Essex: Pearson Education Limited,
page 29
88
Article 12 and article 13 of the Dutch Copyright Act
89
rd
J.H. Spoor, D.W.F. Verkade, D.J.G. Visser, 2005. Auteursrecht. 3 edition. Deventer: Kluwer, page 156
90
Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual
property rights
91
Agreement on Trade-Related Aspects of Intellectual Property (TRIPs), annex C1 of the Marrakesh Agreement Establishing
the World Trade Organisation, Marrakesh 15 April 1994, article 61
92
http://www.rijksoverheid.nl/onderwerpen/ict/legaal-downloaden-en-fair-use
93
http://www.copyright.gov/title17/92chap1.html#107

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work,
including such use by reproduction in copies or phone records or by any other means specified
by that section, for purposes such as criticism, comment, news reporting, teaching (including
multiple copies for classroom use), scholarship, or research, is not an infringement of
copyright. In determining whether the use made of a work in any particular case is a fair use
the factors to be considered shall include
(1) the purpose and character of the use, including whether such use is of a
commercial nature or is for non-profit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted
work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted
work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is
made upon consideration of all the above factors.
Despite the fact that fair use is non-existent in the Netherlands, Dutch courts can use general legal
rules and principles to determine that a certain situation does not constitute infringement.94

Parody
A parody is the imitation of another work in an altered form to achieve a comical effect. From a social
and cultural point-of-view, parodies are usually allowed.95

4.2.6 International copyright law

Most countries in the world are Member of the World Intellectual Property Organisation (WIPO), a
specialised agency of the United Nations. The WIPO was established in 1967. The WIPOs website has
a huge database with the intellectual property laws of all Member States.96 The database is not
limited to copyright laws.
The Berne Convention deals with the protection of literary and artistic works. The text of the
convention was first accepted in Berne (Switzerland) in 1886. To handle the administrative tasks,
BIRPI97 was established. In 1970, BIRPI became WIPO. The importance of the Berne Convention is
that before it entered into force, national copyright laws generally speaking only applied to works
created within the country itself. A work published in the Netherlands was only protected in the
Netherlands; it could be copied and sold without permission of the copyright owner in any other
country.

94

rd

J.H. Spoor, D.W.F. Verkade, D.J.G. Visser, 2005. Auteursrecht. 3 edition. Deventer: Kluwer, page 221
Article 18b of the Dutch Copyright Act
96
http://www.wipo.int/wipolex/en/national.jsp
97
Bureaux Internationaux Runis pour la Protection de la Proprit Intellectuelle
95

European Directives, such as Directive 2001/29/EC and Directive 2004/48/EC, are also an important
source for international copyright law.

Paragraph 4.3 Trade mark

4.3.1 Introduction
A trade mark is a distinctive, exclusive sign used by a person.98 Trademarks are used to identify that
certain products or services originate from a unique source. In other words, products or services can
be distinguished from products or services of other persons. A trade mark gives the trade mark
proprietor the exclusive right to use the mark for products or services for which it has been
registered. Goodwill is protected; others are not allowed to profit from the reputation of the trade
mark. The economic value of a trade mark can be substantial.
To claim a trade mark, can be used. The indicates that a trade mark is officially registered.
However, even if you register a trade mark use of the is not mandatory. Registration is not strictly
required in the Netherlands, but if you decide to register your trade mark in the Netherlands, it is
registered at the regional Chamber of Commerce (Kamer van Koophandel). For better protection,
registration at the BBIE (Benelux-Bureau voor de Intellectuele Eigendom)99 is necessary. If you want to
sell your products or services in the whole European Union, registration at the OHIM (Office for
Harmonization in the Internal Market) in Alicante, Spain is strongly recommended.100 World-wide
registration of a trade mark at the WIPO can be arranged via the BBIE.
A Benelux trade mark costs at least 240. The registration procedure can take more than four
months. A European trade mark, called Community Trade Mark (CTM) costs at least 900. The
duration of a trade mark is ten (10) years. It is important to note that a trade mark registration can
be renewed, provided you still actively use the trade mark (Use it or lose it).
Dutch trade mark law was codified in the Benelux Merkenwet. In September 2006, the Benelux
Merkenwet was replaced by the BVIE, Benelux-verdrag inzake de intellectuele eigendom (henceforth:
BCIP, Benelux convention on intellectual property).

4.3.2 The requirements

In the Netherlands, but also in England, the three requirements for obtaining a trade mark are:
1) A sign
2) Graphical representation
3) Capable of distinguishing

A sign
98

This will usually be a legal person natural persons, however, can also be the owner of certain trade marks
BOIP Benelux Office for Intellectual Property
100
http://oami.europa.eu/ows/rw/pages/index.en.do
99

A sign can consist of words (including personal names), designs, letters, numerals, shape or
packaging. The following is included: word marks, figurative marks, sound marks, three-dimensional
marks and colours101.102 Registration of smell as a mark is extremely difficult, but possible in theory.

Graphical representation
A trade mark has to be clear, precise, self-contained, easily accessible, intelligible, durable and
objective. These criteria were first mentioned in Sieckmann v. Deutsches Patent- und Markenambt103
and are therefore often referred to as the Sieckmann-criteria.

Capable of distinguishing
A trade mark can be distinguishing because it has an original or a fantasy name. If the trade mark
does not have an original or fantasy name, distinctiveness can be built up by the trade mark holder.
An example of this is Apple. In addition to this, distinction through use is possible.104
Registration is refused if there are absolute or relative grounds of refusal. The absolute and relative
grounds for refusal are included in the Community Trade Mark Regulation (CMTR).105 In October
2008 the Trade Mark Directive was issued.106 This Directive the successor of Directive
89/104/EEC107 contains many provisions that were also included in the CMTR.108
Article 7 CMTR:
Absolute grounds for refusal
1. The following shall not be registered:
(a) ();
(b) trade marks which are devoid of any distinctive character;
(c) trade marks which consist exclusively of signs or indications which may serve, in
trade, to designate the kind, quality, quantity, intended purpose, value,
geographical origin or the time of production of the goods or of rendering of the
service, or other characteristics of the goods or service;
(d) trade marks which consist exclusively of signs or indications which have become
customary in the current language or in the bona fide and established practices of
the trade;
101

http://www.ipo.gov.uk/pro-types/pro-tm/t-law/t-pan/t-pan-207.htm
http://oami.europa.eu/ows/rw/pages/CTM/FAQ/CTM1.en.do, and;
http://www.boip.int/nl/pdf/regulations/beneluxverdrag.pdf
103
European Court of Justice C-273/00, judgment of 12 December 2002, paragraph 47 55, as confirmed in: European
Court of Justice C-104/01, judgement of 6 May 2003, Libertel Groep BV v. Benelux Merkenbureau, paragraph 1 of the
Courts ruling
104
For example: European Court of Justice C-108/97 and C109-97, judgment of 4 May 1999, Windsurfing Chiemsee
Produktions- und Vertriebs GmbH v. Boots- und Segelzubehr Walter Huber and Franz Attenberger, paragraph 2 of the
Courts ruling
105
Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark;
106
Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the
Member States relating to trade marks
107
First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade
marks
108
The developments are accurately described in:
http://www.whoswholegal.com/news/features/article/12862/developments-european-trademark-law
102

(e) signs which consist exclusively of:

(i) the shape which results from the nature of the goods themselves;
(ii) the shape of goods which is necessary to obtain a technical result;
(iii) the shape which gives substantial value to the goods;
(f) trade marks which are contrary to public policy or to accepted principles of
morality;
(g) trade marks which are of such a nature as to deceive the public, for instance as to
the nature, quality or geographical origin of the goods or service;
(h) ();
(i) trade marks which include badges, emblems or escutcheons other than those
covered by Article 6ter of the Paris Convention and which are of particular public
interest, unless the consent of the competent authority to their registration has
been given;
(j) trade marks for wines which contain or consist of a geographical indication
identifying wines or for spirits
(k) which contain or consist of a geographical indication identifying spirits with
respect to such wines or spirits not having that origin;
(l) trade marks which contain or consist of a designation of origin or a geographical
indication registered in accordance with Council Regulation (EC) No 510/2006 of
20 March 2006 on the protection of geographical indications and designations of
origin for agricultural products and foodstuffs (1) when they correspond to one of
the situations covered by Article 13 of the said Regulation and regarding the
same type of product, on condition that the application for registration of the
trade mark has been submitted after the date of filing with the Commission of the
application for registration of the designation of origin or geographical indication.
Article 8 CMTR:
Relative grounds for refusal
1. Upon opposition by the proprietor of an earlier trade mark, the trade mark applied for
shall not be registered:
(a) if it is identical with the earlier trade mark and the goods or services for which
registration is applied for are identical with the goods or services for which the
earlier trade mark is protected;
(b) if because of its identity with, or similarity to, the earlier trade mark and the
identity or similarity of the goods or services covered by the trade marks there
exists a likelihood of confusion on the part of the public in the territory in which
the earlier trade mark is protected; the likelihood of confusion includes the
likelihood of association with the earlier trade mark.

Genericised trade mark

On the basis of article 12 paragraph 2 sub (a) of the Trade Mark Directive,109 registration may be
revoked if, as a consequence of acts or inactivity of the proprietor, the name becomes customary in
the current language to describe a general class of products or services. These trademarks are
referred to as genericised trademarks or generic trademarks; at first they are distinctive, but they
lose distinctiveness and become generic. The following marks are examples of trademarks that
became generic in the United States and therefore lost protection: aspirin, butterscotch, escalator,
kerosene, Tipp-ex, zipper, thermos.110

4.3.3 Infringement and use

A trade mark is infringed if it is used for the same products or services or if it is used for similar
products or services. Others are free to use the trade mark for other goods unless the mark is used in
such a way that it harms the proprietor in an unfair way. A trade mark does not monopolise the word
that is trademarked.
The available remedies for a trade mark proprietor in case of infringement are largely similar to the
remedies of a copyright owner ( Paragraph 4.2.5). Some forms of infringement are considered a
criminal offence. The most notable example is counterfeiting an economic crime. Counterfeiters
deceive the consumer and potentially damage the reputation of the genuine manufacturer.

Trademarks of repute
Trademarks of repute are better protected than normal trademarks. To become a trade mark of
repute, a trade mark needs a certain reputation. The reputation is determined by the following
factors: market share, intensity of sale, geographical location, duration of use and the advertising of
the trade mark.111 An example of a trade mark of repute is Heineken.

109

Similar to article 51 paragraph 1 sub (b) of the CMTR

More examples can be found here: http://en.wikipedia.org/wiki/List_of_generic_and_genericized_trademarks
111
European Court of Justice C-375/97, judgment of 14 September 1999, General Motors Corporation v. Yplon SA,
paragraph 27
110

Questions Chapter 4 Copyright Version A

Question 1
Peter, a Dutchman living in Montreal but often returning to his hometown Rotterdam, is a
manufacturer of t-shirts in Canada. As a brand he uses his name and an image of an elf (designed by
Chris). On the shirts there is a random selection of Dutch words. Fred buys a whole load of these
shirts in Canada and ships them to the Netherlands. During the period of time that Peter is in
Rotterdam, he seizes the shirts that Fred has brought in.
a. Does Peter have copyright protection in the Netherlands? Argue when he has and when he
has not.
b. Does Peter have the right to change the elf next year? What if Chris is considered as
copyright holder?
c. Does Peter have a copyright in Canada and also the Netherlands?
d. Could Fred successfully use the defence that he doesnt like the image of the elf and that it
should therefore not be seen as a work of art or literature?
e. Could Fred use the argument that the elf looks exactly like the ones in Lord of the Rings?
f. Is Fred still acting in violation of a copyright if he put the shirts on the market in Canada after
buying them in Canada?
g. Would Fred have a better position if he had bought the shirts in Germany to sell in the
Netherlands?
h. Imagine Fred has his own shop in Rotterdam where he sells the t-shirts of Peter. Would it be
allowed for Fred to put an image of the elf which is on the t-shirt in his commercial add?
i. Which rights does a maker have and which rights could be infringed by Fred?
j. Does Peter have a copyright on the words on his shirts?
k. Are the words a strong or weak copyright? What would be the consequence? And what
about the image of the elf (answer for both cases where the elf is a design of Chris and
where the elf is very similair to the one in Lord of the Rings).

Questions Chapter 4 Copyright Version B

Question 1
The Business Law teachers are rewriting all course materials. They are using many books they
borrowed from the library and reliable internet sources for their rewriting. After a few weeks they
have a very nice Syllabus for the course module. They have also used a few images in the Syllabus
which they found on the internet. In addition to the Syllabus they also occasionally want to show a
video film during their lectures. However, one of the Business Law teachers is a bit worried whether
they are infringing any copyrights.
a.
b.
c.
d.
e.

When does copyright become relevant for the BL teachers?

What protection does copyright offer?
Who are protected by copyright?
When do you infringe copyright and can you also mention some exceptions.
With regards to the videos: to show the students a video film during a lecture. Is this
allowed?
f. The BL teacher has downloaded some of the pictures from internet. Can she use it in an
educational context?
g. Imagine one of the teachers would like to use a section of the film for a trial study day to give
a good illustration to the potential new students how a business law lecture looks like. Can
the teacher do this?
h. Answer the before mentioned question if it was for an open day?
i. During a conference at your university, one of the BL teachers gives a lecture using a
PowerPoint presentation. During the presentation, she shows a TV programme via a link. Is
that allowed?
j. The BL teacher wants to send an article related to copyright she found on the web by e-mail
to her colleague. Can she do this?

Question 2
Patrick, who is an artist, gives permission to his publisher to publicise 13 of his own paintings in the
form of a calendar. A third party, Harry, buys a few of these calendars, cuts out the reproductions
of these paintings and sticks them on chipboards and sells these to consumers. Harry says that the
rights of the creator is exhausted by selling his painting as a calendar, he (Harry) therefore can use
his picture. According to Harry, Patrick as a copyright holder cannot control the change of
ownership of the copy anymore, because Patrick publicised his work and Harry can now reuse it
without asking permission.
a. Could you argue for Patrick that Harry is copying his work?
b. What if Patrick has also made a small film, which you as a student want to use in your ppt
presentation for Business Law. Can you use parts of the video in your ppt (or prezi)
presentation?
c. What are the remedies Patrick can use?

d. What if Harry thought of making a parody of the calendar by adding Nazi soldiers on every
picture? Would this be allowed or not?

Questions Chapter 4 Trademark Version A

Question 1
Robert has a restaurant called Snacks. On the outside of his restaurant he hangs a sign with his logo
(which he has registered); a frying pan with the word Snacks. In a village nearby Hank opens his
catering service company named Snecks. On his window he paints a frying pan with the name
Snecks underneath.
a. Could Robert prohibit Hank to use the word Snecks? Which arguments would Robert use?
Could Hank argue against it?
b. Suppose that Robert has a right on the word Snacks, which arguments could you think of to
say that this brand is weak?
c. Why could it be important that a trade mark is strong or weak?
d. Could a trade mark get weaker and/or stronger?
e. Suppose Hank finds out that Robert has stolen his logo from his artist, Peter. Could this
make the legal position of Hank stronger? Name the requirements for legitimacy of a trade
mark.

Question 2
In Thailand, Carel buys five containers full of perfume. The bottles have a shape similar to a Greek
god. On the bottles there is no label and no name. The package of the bottles is plain white
cardboard. At arrival in Rotterdam a French company called Eaudelille, seizes the bottles, on grounds
of infringement of her trade mark. Eaudelille has registered the bottle and the scent as a trade mark
in the Benelux. Eaudelille has requested the judge to destroy the whole cargo of Carel and to prohibit
further promotion of the perfume in his commercial paper.
a. Can you register a shape of a bottle and a scent as a trade mark? Can scent be protected by
copyright?
b. What is the advantage of a trade mark on the bottle and the scent compared to a copyright?
c. Could Eaudelille ask for destruction of the whole cargo of Carel if he has purchased the
perfume legally in Thailand and did not know of the registration of Eaudelille?
d. Would Carel have a better legal position if he had purchased the perfume in Germany?
e. Is Carel allowed to put a picture of the bottle in a commercial paper? What if he had bought
the bottles in Germany? What about the copyright?
f. Would it be an option for Carel to empty the bottles of perfume, fill them with clear Greek
water instead, and sell them?

Question 3 (Recommended)
The Dutch inventor Wallace has invented a kind of a metal which can carry a thousand times its own
weight. He asks for patent. More and more companies are using his type of metal. Gareth buys in
Taiwan many refrigerators of the brand Super. The refrigerators contain elements of Wallaces metal.
Gareth transports the refrigerators to Holland. In Holland Wallace seizes the refrigerators because
Super had never asked for permission to use the metal.

a. Gareth hopes to find a failure in the patent of Wallace and wonders what the requirements
are. Could you name them and has Wallace fulfilled them all?
b. Which requirements of trade mark do not have to be fulfilled for patent?
c. What kind of patent can Wallace obtain and for how long?
d. What are the disadvantages of applying for a patent?
e. Suppose that Wallaces metal is composed of two kinds of materials and another
manufacturer makes the same metal, but with a slightly different composition, namely with
three types of other materials. Based on which argument could you say that there is still an
infringement on Wallaces rights?
f. What if another company has improved the metal, into a stronger and lighter type? They
want to use this metal in products, but Wallace refuses to give permission. Does the
company need his permission?

Question Chapter 4 Trademark Version B

Question 1
LOral has brought a perfume on the market called Maroussia. Another company, called Thor, has
brought similar perfumes (no copies though). LOral argued that this in an unjustified advantage for
the other companies at the expense of LOral. LOral questions how much their trade is protected.
LOral thinks there is a certain level of similarity between its brand and of its opponent Thor.
Especially because LOral thinks when consumers see the perfume of Thor they will connect this
with their perfume Maroussia.
LOral goes to you for advice and asks you several questions:
a. Must LOral, in order to be protected, register their trademark?
b. LOral decides to go to the trademark office to register their mark? Will there be a
guarantee that their mark will be registered?
c. LOral is thinking of a new symbol for their brand. Can they use any type of mark?
d. What would you advise LOral to use for their mark?
e. Imagine that Thor was a producer of detergent for toilets. They have a new product to
clean your toilets with called Naroussia. Can you think of any objections LOral, as a
perfume producers, could have against this product of Thor?
f. If LOral had called their perfume not Maroussia, but oriental flour for the passionate
women. Could this be rejected and why?
g. What if LOral does not use their trademark for 6 years? What can be the consequence?