Maurizio Sciuto, ‘The Network Contract in Italy: A Third Route between “Contract” and “Organisation”?’

The Italian legislator, the first out of all European legislators, has recently pursued giving separate legal relevance to the Network contract as such concerning its external relevance and consequently in relations between the network as such and third parties. In particular, the activity carried out through the network operates therefore on the market by making use of a “joint capital fund” and by operating through a “joint body”. Regardless, the network as such does not acquire individual legal personality, not representing a different new entity as regards the businesses that are its members, and for the obligations the joint body entered into concerning the network program, third parties may exercise their rights exclusively against the joint fund. In other words, the financial liability for potential obligations entered into for the purpose of accomplishing the network program weighs exclusively on the same fund, without anything more being asked of the network’s member business owners and co-owners of the fund, thereby fulfilling a limited liability arrangement for them.

This, therefore, concerns, a system of liability that is very compound, and certainly different from those classified businesses (that may be referred to a single subject), as well as those that enjoy (for all intents and purposes) limited liability, and those that – on the other hand – foresee the involvement of the member in all of the body’s obligations. Consequently, a “third route” is proposed in the italian law that appears to consider the “other” characteristic – at times also called hybrid – of the network phenomenon when compared to the traditional ways of economic initiative, commonly referable to the main alternative between the “contract” and “organisation”: on the one side, the individual action by which the factors of production performing on the market are obtained by using the swap contract instrument, with a basically bilateral framework; on the other hand, the joint action by those who integrate and coordinate the required factors of production inside classified organisation (even when the organisation is made up of more bodies, but structured within a combined group), basically with a hierarchical structure. Between the “market” and “hierarchy” the need to give adequate legal status to business relations whose real rights find their place in the middle emerges.

Sciuto, Maurizio, The Network Contract in Italy: A Third Route between ‘Contract’ and ‘Organisation’? (July 16, 2014).

First posted 2014-08-26 06:25:30

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