Enterprise and Entrepreneur: Legal & Economic Definitions

1. Legal and Economic Definition of Enterprise

Economic definition of enterprise

• An enterprise may be defined as an organized assemblage of capital and work intended for manufacturing or distributing goods or services for meeting market demand.
• It designates activity and the instrumental organization.

Legal definition of enterprise

There is no single unitary concept of "enterprise" from the legal point of view. In legal terminology the concept of enterprise can embody different meanings. Thus it is clear that the concept of enterprise in laws against restraints on competition does not coincide with that of corporation law. In company law, an enterprise is identified with the single legal personality of each company or corporation; in restraints-on-competition law, one single "enterprise" could be integrated from different corporations.

Entrepreneur

Entrepreneur: The entrepreneur is the legal holder of the rights and obligations of the enterprise. As an economic actor, the enterprise results from the creating and managing activity led by the entrepreneur; in other words, the enterprise is an instrument for the entrepreneur to achieve his or her aims and, to such an extent, it exists for the law.

2. Atomistic Doctrine and Unitary Approach

Atomistic doctrine

Atomistic doctrines depict an enterprise as composed of multiple independent elements lacking unity; each component is treated or negotiated separately in accordance with its nature.

Unitary approach

A unitary approach expects to elevate the enterprise to a new category of patrimonial wealth as a universality. From this point of view, the business is an autonomous subject in commerce.

3. Does the Entrepreneur Have Legal Personality?

Main differences: sole trader vs corporations

For legal purposes, "person" and "personality" refer to the capacity to be subject to rights and duties. The entrepreneur has legal personality.

This division implies an organizational duality of models to run a business represented by, on the one hand, sole traders, and on the other, diverse types of more complex forms of business organization: corporations.

4. Contracts Possible Involving an Enterprise

Whether an enterprise is conceived as a single integrated unity (unitary theory) or is dismembered into multiple components (atomistic doctrine), a variety of contracts may involve an enterprise either totally or partially. Examples include:

• Sales contracts
• Hire (lease) contracts
• Usufruct agreements
• Pledge agreements
• Mortgages
• Mortis causa transactions

Such transactions may have substantial economic importance and legal interest. In this regard, traditional mercantile doctrine discusses the controversial but suggestive question of how to deal with the external appearance of unity of an enterprise that embodies internal complexity for transactional purposes.