The Goodwill (Stock-trade)

In common law legal systems, the good will is an intangible asset that normally represents the excess of the value of the business over the value of its tangible assets established reputation of a business regarded as a quantifiable asset In legal systems of French inspiration (Romanian), the good will is more than the merchants reputation, it is a totality of different elements which together are used by the merchant with the view to carry on his business The performance of commercial activity requests the existence and the use of goods such as buildings, merchandise, industrial equipment, raw materials, patents and so on. All these goods used for the accomplishment of commercial activity represent the goodwill of a merchant. The Commercial Code does not provide either a definition of the goodwill or legal provisions for its regulation. The legislator had used the term goodwill, without explaining it, within several normative acts, such as the Law no. 26/1990 on the Register of Trade, republished. However, there is a definition of the term goodwill provided by the Law no. 298/2001 concerning the amendment of the Law no. 11/1991 on the unfair competition. Thus, according to article 11 point c form the law, the goodwill represents the ensemble of movable and immovable, tangible and intangible (trade marks, firms, emblems, patents, the place of business and so on) used by a merchant in order to perform its activity. The Definition Thus, the goodwill is an ensemble of movable and immovable, tangible and intangible goods used by a merchant in his commercial activity, in order to get clients and to obtain profits. The Distinction between Goodwill and other close notions a) Goodwill and Patrimony. Unlike the goodwill, which is an ensemble of goods, the patrimony contains all patrimonial rights and obligations of the merchant. b) Goodwill and Enterprise. As we mentioned before, the enterprise is an independent organized activity which combines elements like capital, labor or nature for the purpose of producing goods and services and of obtaining profit. The goodwill is an ensemble of goods used for the accomplishment of commercial activities. Thus, we may see from these definitions that, beside goods, the enterprise also combines other elements like capital or labor. As a consequence, the goodwill is only a part of the enterprise. The legal nature of the goodwill

Legal doctrine considers it as de facto universality and not a legal universality as the patrimony is. In the juridical doctrine, most authors consider that the goodwill constitute an ownership right over an intangible thing, as the copyright. As a consequence, the features of the goodwill are the following: 1. it is an unitary thing, different from the goods that compose it. Thus, the goodwill can be the object of juridical acts such as the sale-purchase or the donation. 2. it is a movable thing because in its composition the movable goods prevail. 3. it is an intangible movable thing because in its composition the intangible goods have the highest value. 4. It can be object of pledged 5. It is a part of the patrimony of the merchant, not the patrimony itself. 6. It lasts as long as it is exploited (used), so its existence is less stable than of other intangible goods The assignment contract (contract de cesiune), is the agreement concluded between the assignor (cedent) and the assignee (cesionar) with the view to transfer to the assignee the rights that belong to the assignor The elements of the goodwill Because the goodwill contains those goods that are necessary for the performance of a specific commercial activity by a specific merchant, its composition is different from one merchant to another, it depends upon the specificity of the merchants activity. In the same time, the elements that compose the goodwill may change, in accordance with the needs of the trade, but the goodwill as a whole continues to exist. Generally, regardless of the specificity of commercial activity, we consider that the goodwill contains two categories of goods: 1. tangible goods 2. intangible goods The tangible elements of the goodwill They are included within this category:

a. immovable goods, such as buildings, real estate and so on. b. movable goods, such as raw materials used for the production of other goods and products or merchandise which are the result of commercial activity. The intangible elements of the goodwill They are included within this category: the firm, the emblem, the clients, the place of business, the patents, the trade marks and so on. 1) The Firm It is an element of identification, a name, registered in the Register of Trade, used by the merchant to identify his business. (article 30 Law 26/1990). Natural persons the firm is composed by the name (full name or only the family name with the first letter of the second name) and, sometimes, with a phrase representing the object of activity. Commercial Companies the firm has different forms, depends on the type of company we discus about. Characteristics: - each new firm has to be different than the others already in use - the name must be avaible, so we have to check at the Register office (Registrul Unic), but an erased name can be taken after 2 years it has been erased. - the firm must not include a denomination, name, used by public institutions; - it can be transmitted through acts intervivos/ mortis causa only together with the goodwill. - protection by: - incorporation and no matter if it is used or not - action in counterfeit (contrafacere) and action for usurpation - action based on unfair competition facts - action for damages (moral or pecuniary) + criminal proceedings 2) The Emblem (Corporate Image) It is a sign or denomination used to make the difference between merchants. Characteristics: it is not compulsory to have an emblem

its disponibility can be checked at the Registration Office we can use emblems on invoices, letters, catalogues, advertising etc can be transmitted separately of the good will protection by:

- incorporation if it is used - action for recovery of property (in revendicare) - action based on unfair competition facts - action for damages (moral and pecuniary) 3) The clients (The Practice) It represents the ensemble of natural and legal persons that have juridical relations with a merchant. In accounting is a figure, meaning it can be evaluated. Influenced by: - internal factors: objective (the place where the shop/headquarters is located, the quality of merchandises) or subjective (advertising, clients fidelity, shop assistants behavior. - external factors (competition, market share owned, possibility to obtain credits) 4) Commercial frequented place (Goodwill) It is the capacity to attract clients. Influenced by: - objective factors (e.g. the place where the shop/headquarters is located, the quality of merchandise) - subjective factors (advertising, shop assistants behavior) - external factors ( the merchants reputation, the merchants partners reputation) 5) Property and industrial law rights a) trademarks b) patents c) industrial drawings and models

d) copyright