1. LEB Lecture 1 Introduction Case 1 Matti Rudanko

2. Lecture 1: Slides Slide sets: 1 - 5 Pdf files: (1) offer – acceptance model, (2) error in expression LEB Lecture 1 2

3. The Views of the Regulator of the Markets – AND THOSE OF BUSINESS … LEB Lecture 1 3 The views are taken from regulative provisions, from international, European and national legislation, which are effectively harmonized… … but it is our task to find also here the business perspective so that regulatory provisions and other legal models are converted into business tools to create added value… … e.g. by creative use in market strategy planning, contracting and contract management, corporate finance etc.

4. … and the Special Mission of Our Approach … LEB Lecture 1 4 … is to see the keen interaction between various views represented by different areas of market regulation … … and the – even keener – interaction of these views with other market mechanisms, being of business economics, social, cultural of other nature … …and so to make an attempt of forming a comprehensive picture of the market environment.

5. The “four freedoms” of the Single Market LEB Lecture 1 5 The cornerstones of the single market are often said to be the “four freedoms” – the free movement of people, goods, services and capital. One of the “four freedoms” of the Single Market is the free movement of goods. Member States may restrict the free movement of goods only in exceptional cases, for example when there is a risk resulting from issues such as public health, environment, or consumer protection. http://ec.europa.eu/internal_market/top_layer/goods/index_en.htm http://ec.europa.eu/internal_market/top_layer/goods/index_en.htm

6. Financial Services “Financial Services policy should deliver stable, secure and efficient financial markets and ensure coherence and consistency between the different policy areas, such as banking, insurance, securities and investment funds, financial markets infrastructure, retail financial services and payment systems.” (http://ec.europa.eu/internal_market/finances/index_en.htm )http://ec.europa.eu/internal_market/finances/index_en.htm LEB Lecture 1 6

7. Views on the Markets Economics: markets in the context of political economy Methods of economics and business economics Finance and Accounting: pricing of derivatives, investor behavior, market efficiency, financial instruments, IFRS etc. Communication sciences (e.g. representations of finance in media), sociology etc. Classical question: why regulate the markets? Karl Marx – Adam Smith (the visible / unvisible hand) – the modern competition law The special characteristics and role of financial markets may increase the need of regulation (Here:) the (combined) legal view: function of regulation in market context LEB Lecture 1 7

8. Main Views and Objects of Regulation of International Markets LEB Lecture 1 8 Market regulation Competition law (EU, national) Monopolies, cartels, merger control Digital markets Data security Data protection Regulation of the international trade environment WTO and other trade organizations (international conventions) Contract law (national, EU, international) CISG, Unidroit Contractual relationship: conclusion of contract, contractual liabilities Regulation of financial markets (national, EU) Trading in securities Disclosure duties, investment services, tender offers, insider trading, market manipulation etc.

9. Overview of Course Topics (Slide Sets) The Legal Environment of International Markets Slide Set 1 General Doctrine of Contract Law Formation of Contracts Offer and Acceptance Model Non-conforming Reply to Offer Slide Set 2 Sale of Goods: National and International Legal Provisions Definition of Conforming Goods Legal Remedies for Defective Goods Slide Set 3 Choice of Law (International Private Law) Choice of Court Other Dispute Settlement Systems Slide Set 4 LEB Lecture 1 9

10. Overview of Course Topics, cont. International and British Contract Law Entire Agreement ICC Model Contract Slide Set 5 Corporate Social Responsibility on International Markets Law and Ethics of Business Slide Sets 6 b-d Company Law Economic Optimization of Contract Corporate Governance and Risk Management Slide Set 7 and 7b-d LEB Lecture 1 10

11. Overview of Course Topics, cont. Insider Provisions: General Framework Disclosure Duties, Insider Information and Business Secrets Slide Sets 8 and 9 Finnish Insider Cases: KKO 2009:1 and 2002:110 Slide Sets 10 and 11 Legal Liabilities on Securities Markets Slide Set 12 and 13 LEB Lecture 1 11

12. Overview of Course Topics, cont. LEB Lecture 1 12 Competition Law Slide Set 14 Impact (on Mergers and Acquisitions) of Financial Markets Law and Especially Tender Offer (Public Bid) Regulation Slide Set 15 Interaction of Competition Law, Consumer Law and Contract Law on the Markets Slide Set 16 (to be added)

13. Introduction to the Course Our Approach Regulative Views on the Markets Overview of the Lectures What Else or Your Comments? LEB Lecture 1 13

14. Search of Regulation Material Links to Finnish legislation translations : http://www.finlex.fi/en/laki/kaannokset/haku/?search%5Btype%5D=pika&se arch%5Bpika%5D=Act+on+Investment+Firms&submit=Search http://www.finlex.fi/en/laki/kaannokset/haku/?search%5Btype%5D=pika&se arch%5Bpika%5D=Act+on+Investment+Firms&submit=Search The Finnish Sale of Goods Act: http://www.finlex.fi/en/laki/kaannokset/1987/en19870355.pdf http://www.finlex.fi/en/laki/kaannokset/1987/en19870355.pdf The Finnish Contracts Act: http://www.finlex.fi/fi/laki/kaannokset/1929/en19290228.pdf http://www.finlex.fi/fi/laki/kaannokset/1929/en19290228.pdf CISG: http://www.cisg.law.pace.edu/cisg/text/treaty.htmlhttp://www.cisg.law.pace.edu/cisg/text/treaty.html Unidroit Principles: http://www.unidroit.org/english/principles/contracts/principles2010/integralv ersionprinciples2010-e.pdf http://www.unidroit.org/english/principles/contracts/principles2010/integralv ersionprinciples2010-e.pdf Links to EU legislation: http://eur-lex.europa.eu/en/tools/sitemap.htm (by indicated search keys, e.g. document number)http://eur-lex.europa.eu/en/tools/sitemap.htm LEB Lecture 1 14

15. Harmonisation of European Contract Law Principles of European Contract Law, Part 2 (Ole Lando,Hugh Beale) http://ec.europa.eu/justice/news/consulting_public/rome _i/contributions/private_law_university_amsterdam_en.p dfhttp://ec.europa.eu/justice/news/consulting_public/rome _i/contributions/private_law_university_amsterdam_en.p df http://www.hiil.org/project/harmonising-private-law-in- europe-a-mission-impossiblehttp://www.hiil.org/project/harmonising-private-law-in- europe-a-mission-impossible LEB Lecture 1 15

16. Search of Regulation Material, Financial Markets Links to search of material issued by (Finnish) Financial Supervison Authority, Nasdaq OMX (Helsinki Stock Exchange): see homepage of the course (https://noppa.aalto.fi/noppa/kurssi/32e11100/course_material )https://noppa.aalto.fi/noppa/kurssi/32e11100/course_material Links to Finnish legislation translations : http://www.finlex.fi/en/laki/kaannokset/haku/?search%5Btype%5D= pika&search%5Bpika%5D=Act+on+Investment+Firms&submit=Sea rch http://www.finlex.fi/en/laki/kaannokset/haku/?search%5Btype%5D= pika&search%5Bpika%5D=Act+on+Investment+Firms&submit=Sea rch Links to EU legislation: http://eur- lex.europa.eu/en/tools/sitemap.htm (by indicated search keys, e.g. document number)http://eur- lex.europa.eu/en/tools/sitemap.htm LEB Lecture 1 16

17. LEB Lecture 1 17 Search of Regulation Material, Especially on Insider Dealing (EU) of 28 January 2003 on insider dealing and market manipulation (market abuse); MAD DIRECTIVE 2003/6/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the definition and public disclosure of inside information and the definition of market manipulation COMMISSION DIRECTIVE 2003/124/EC

18. LEB Lecture 1 18 Regulation Material, Especially on Insider Dealing (Domestic) SMA ch. 12 - 14 The Penal Code, ch. 51, sect. 1 - 5 NASDAQ OMX Guidelines for Insiders FSA Standard 5.3: Declaratio ns of insider holdings and insider registers

19. Regulation Material, Especially on Insider Dealing (Domestic) Securities Markets Act (14.12.2012 / 746; http://www.finlex.fi/fi/laki/kaannokset/2012/en20120746.pdf ) http://www.finlex.fi/fi/laki/kaannokset/2012/en20120746.pdf –Ch. 12 – 14 on market abuse and insider registers –Ch. 3 – 5 on disclosure duties –Marketing and issuance of securities, duty of disclosure (SMA ch. 1 sect. 2 – 4) LEB Lecture 1 19

20. Case 1a: Conclusion of Contract, non-complying answer Task: 1. Conclusion of Contract in Nordic and International Contract Law 2. The Legal Effect of an Answer Different from the Offer 3. Significance of Payment Systems (Only General Outline)

21. Topics and Issues The Formation of Contract Offer – acceptance model Nordic systems Common law based systems CISG and Unidroit principles Non-complying Reply A reply not conforming with the offer (in terms of sales object, performance time, payment method etc.) Cf late reply Liability Questions Rise of contractual liability Precontractual liability? Liability for unreasoned withdrawal from contract negotiations? LEB Lecture 1 21

22. Other Material and Further Reading McKendrick, Ewan : Contract Law (9th edition, Palgrave Macmillan) Please make use of your knowledge of IB, Finance, Logistics, and other business economic or legal know how LEB Lecture 1 22

23. Case 1b: Conclusion of Contract, Entire Agreement Task: 1. English and Nordic Contract Systems: Entire Agreement 2. International Dimension: Choice of Law 3. Disclosure Duties upon Conclusion of Contract 4. Definition of Conforming Goods

24. Other Material and Further Reading Unidroit Principles 2.1.17 (Merger clauses) Ramberg, Jan: International Commercial Transactions (ICC, Kluwer, Norstedts 1998) p. 18 and 88 (see Slide set 5) Cf. McKendrick, Ewan : Contract Law (9th edition, Palgrave Macmillan) 21.2: entire obligations Please make use of your knowledge of IB, Finance, Logistics, and other business economic or legal know how LEB Lecture 1 24

25. Possible Tasks and Questions LEB Lecture 1 25 1. Choice of law questions: British or Finnish2. The definition of conforming goods in international and Finnish sale of goods law 3. Account for the main differences between the English and Finnish law approach to “entire agreements” (merger clauses). Observe the possibility of interpretation of the contract (Unidroit Principles 2.1.17) and adjustment of contract (Contracts Act Art. 36) 4. Report the legal remedies available to a party to the contract for con-conformity of the goods

26. Topics and Issues The Structure of Sale of Goods Contract British and Finnish contract law Entire agreement Interpretation of contract Contract law principles Adjustment of contracts Contract Law Regulation Sale of Goods Act (national) CISG Unidroit Principles British Law? International private law (choice of law) Non-conforming Goods Definition of conforming goods Entire agreement Information given by the seller in marketing Remedy alternatives LEB Lecture 1 26