Commercial Law: A Comprehensive Overview PDF

# Commercial Law: A Comprehensive Overview **Definition of Commercial Law:** The law governing commercial acts, contracts, and the trading community. **Sources of Commercial Law:** - Article 2 of the Egyptian law of commerce states: - Commercial matters are governed by agreements between con...

# Commercial Law: A Comprehensive Overview **Definition of Commercial Law:** The law governing commercial acts, contracts, and the trading community. **Sources of Commercial Law:** - Article 2 of the Egyptian law of commerce states: - Commercial matters are governed by agreements between contracting parties. - If no agreement exists, the provisions of the current law, or any other related to commercial issues, govern the transaction. Otherwise, civil law applies. - A violation of public order in Egypt nullifies any prior agreement and the rules of trade custom or trade usage. **Elements of Commercial Law:** 1. **The Contract:** - In commercial transactions, the contract (agreement between contracting parties) holds the most priority - even above other sources of commercial law. - It must not contradict public order in Egypt. 2. **Commercial Law and Related Provisions:** - These laws apply when a loophole exists in the contract. 3. **Trade Custom and Trade Usage:** - These elements apply when they do not violate public order within Egypt. 4. **The Provision of Civil Law:** - Judges apply relevant civil law clauses in disputes related to commercial matters. - Civil law is the general law for private transactions. - It applies in the absence of any other relevant commercial law source. **Key Distinctions between Civil and Commercial Law:** 1. **Grace Periods:** - Courts may not grant a debtor of a commercial obligation a term to fulfill their obligation or defer payments except in cases of necessity. - Conversely, in civil law, courts may grant a debtor of a civil obligation a term for fulfillment. 2. **Rules of Evidence:** - Commercial law emphasizes principles of freedom of evidence. - This is often sufficient for commercial disputes. - Company and ship contracts, commercial papers, and related documents must be in writing. - Civil law primarily relies on witness testimony or evidence in writing. 3. **Joint Liability of Debtors:** - Debtors in commercial transactions are jointly liable for their obligations unless stated otherwise in an agreement. - In civil law, joint liability is established only through explicit contracts. 4. **Bankruptcy:** - Only traders who are under a commercial debt can be subjected to bankruptcy. - Their assets are divided among creditors. - If a trader defaults on civil debts, they cannot be declared bankrupt. 5. **Interest on Money:** - Interest accrued due to late payments on a commercial debt is payable from the date the debt is due. - This is unless stipulated otherwise by law or agreement. - These payments are not calculated from the moment the debt is legally claimed, as in civil law. 6. **Prescription by Lapse of Time:** - Commercial transactions between merchants or among each other have a 7-year statutory prescription period. - This period may extend to 10 years in specific legislated cases. - Civil obligations lapse after 15 years. **Types of Commercial Acts:** Commercial acts can be divided into different categories: 1. **Individual Commercial Acts:** - These are considered commercial by law, even if performed only once. - According to Article 4, the following acts are considered commercial: - Purchase of moveables for sale or leasing. - Renting moveables for sub-leasing. - Establishing commercial companies. 2. **Commercial Acts by Profession:** - These are considered commercial if performed as a profession. - Article 5 defines the following activities as commercial: - Supply of goods and services - Industries - Inland water transport - Trade agencies, including insurance - Bank and money exchange transactions 3. **Commercial Acts by Way of Accessory:** - According to Article 8, the following acts fall under the commercial umbrella: - Work performed by a trader related to their profession is commercial. - All work undertaken by a trader is considered commercially related to their trade, unless otherwise established. 4. **Mixed Acts:** - Actions with commercial and civil aspects. - For example, a civilian buying an appliance from a commerce outlet. **Definition of a Trader:** A person who habitually engages in commercial transactions. **Conditions for Acquiring Commercial Status (Natural Person):** 1. **Professional Engagement:** - A merchant must engage in commercial transactions as a profession. - A person merely engaging in isolated commercial acts is not considered a merchant. 2. **Own Account:** - A merchant must be running a business for their own account. 3. **Legal Capacity:** - A merchant needs full legal capacity, including being over 21 years of age. - The court may grant exceptions for minors aged 18 or older to engage in commercial activities under court supervision. 4. **Registration in the Commercial Registry:** - A merchant must register their business in the Commercial Registry. **Note:** - Retail and semi-wholesale traders are considered merchants. - Wholesalers and importers are also merchants. - Individuals who purchase goods such as food, clothing, machinery, or pharmaceutical products for resale are considered merchants. - Traders engaged in supply contracts with government agencies (e.g., hospitals, schools) are merchants. **Article 16 of the New Code of Commerce:** 1. **Small Craftsmen:** - Provisions of commercial law do not apply to small craftsmen. 2. **Craftsman Costs:** - Craftsmen whose business costs are minimal and who rely on trades to earn just enough for subsistence are considered self-employed and not merchants. 3. **Public Sector Employees:** - Public sector employees are not permitted to engage in private commercial trade. **Rights of a Merchant (Trader):** Commercial law protects the rights of merchants who register their business and open a commercial location. Key rights include: - **Name Protection:** - A merchant's chosen name or brand is protected, preventing anyone from using the same name within the same area of commerce. - **Trademarks:** - A merchant's trademark for their specific product protects their rights. - No one can use the same trademark without the merchant's permission. - **Patents:** - If a merchant uses a patent in their product or marketing, it protects their right to use it. - Violations are punished. - **Chamber of Commerce:** - Merchants are entitled to join the Chamber of Commerce. - They can receive various services and benefits, such as document authentication. - This helps in concluding commercial transactions and makes relevant paperwork acceptable both locally and internationally. - **Place of Business:** - A merchant's place of business is not just a physical location but a complex element with material (physical) and non-material aspects (moral). - **Material Elements:** - These consist of goods, merchandise, and essential equipment not for sale (e.g., calculators, air conditioners). - **Moral Elements:** - These include client base and reputation, which are fundamental to the business. - **Licenses:** - These are a critical aspect of a business, granted by relevant authorities. - **Lease:** - The lease agreement covering the place of business is legally binding. - **Reputation:** - The business's overall standing and reputation are crucial. - **Trademarks and Patents:** - These are vital components of a business. - **Commercial Books:** - A merchant must keep a record of business transactions. - **Evaluation:** - The value of a place of business is determined by its reputation, client base, location, etc. - Businesses in bustling, commercial markets typically have higher rental costs compared to less prominent locations. However, if the less prominent business is well-established and popular, its value may increase despite its location. - **Competition:** - The seller of a business can include a clause in the contract restricting the buyer from opening a similar business in the same market area. - **Pledge:** - A merchant can use their place of business as collateral for loans. # Commercial Register The New Code of Commerce governs the Commercial Register, as outlined in Article 30: 1. **Establishment:** - Each administrative quarter is required to have a separate commercial register. - This register should contain records of all traders, including individuals and companies, who are subject to mandatory registration. 2. **Mandatory Registration:** - Traders must register with the commercial registry office in the area where their business is based. - It is unlawful to run a business without registration. 3. **Registration Requirements:** - The register documents include: - The names of individuals or companies. 4. **Registration Process:** - The date of registration marks the official recognition of a trader's status. **Who Must Register?** - Companies and individuals involved in certain types of trade are required to register with the relevant administrative authority. These include: - Individuals wishing to operate a trading shop. - Partnerships, joint stock companies, limited liability companies. - Public juristic persons engaging in commercial trade. - Cooperative associations - Individuals and juristic entities working as commercial agents. **Conditions of Registration:** 1. **Citizenship & License:** - Individuals must be Egyptians with a valid trading license to register. 2. **Foreign Exceptions:** - There are exceptions for foreigners or companies with foreign involvement. Registration may be permitted under these scenarios: - Projects approved by the Investment Authority in accordance with the Investment Law. - Foreigners solely engaged in export activities based on capital companies. # Publicity and Validity 1. **Registration Information:** - A merchant is required to display their business name, registration number, and relevant commercial register details on their place of business, all correspondence, and printed materials. These details are mandatory for public visibility. 2. **Validity:** - Registration is valid for five years, and then a renewal application is required. - A failure to renew within 90 days of expiry results in the deletion of the registration from the commercial register. # Changes and Cancellations 1. **Changes:** - A merchant must inform the commercial registry of any relevant changes to their registration within one month. - For example, a change in the company's structure, ownership, or address. 2. **Cancellation:** - A merchant's registration may be automatically cancelled under various circumstances, such as: - Ceased trading and relocation to a different country. - Death of the individual or liquidation of the company. - Termination of the business. - Failure to file a renewal application within the 90-day grace period after expiry. 3. **Deletion:** - If a merchant fails to apply for cancellation, the commercial register is required to delete the registration. - A clear justification for the deletion must be provided. # Penalties and Inspection The Commercial Registry law imposes penalties for violations. - Penalties can be through imprisonment, fines, or both. # Value of Registration 1. **Legal Standing:** - Registration grants a trader legal recognition and provides legal protection. - Any information recorded within the register becomes legally valid and binding on third parties from the date of registration. - It can only be challenged if the registration itself is invalid. 2. **Cancellation:** - A cancellation request must be presented by the trader's legal inheritors or beneficiaries. 3. **Unregistered Businesses:** - A trader cannot avoid the legal repercussions of their actions by claiming their business is unregistered. # Commercial Books 1. **Retention:** - All merchants have a legal obligation to maintain and preserve specific commercial books. - The volume of books required depends on the size and nature of the business. 2. **Languages:** - The main set of commercial books must be in Arabic. - However, it is acceptable to maintain additional books using a foreign language. 3. **Minimum Book Requirements:** - Every merchant must maintain at least two books: - The Daily Journal - The Inventory Book 4. **Exemptions:** - Merchants with capital under 20,000 Egyptian Pounds are exempt from keeping commercial books. 5. **Electronic Records:** - Technology is permitted. A merchant can use a computer to create and keep digital records of their accounts. 6. **Types of Books:** - The Daily Journal is the most important commercial book, with all trade activities recorded. - The Inventory Book records details of merchandise held at the end of the financial year, copies of balance sheets, and details of profit and loss statements. - Correspondence books are maintained for all incoming and outgoing letters. A copy of all correspondence must be preserved. 7. **Maintaining Commercial Books:** - Merchants must maintain these books properly. - Avoid blank spaces, deletion, or alterations. 8. **Preservation:** - Merchants are obliged to keep copies of all their correspondence, cables, and other relevant documents for a period of five years from the date they were sent or received. # Commercial Books as Evidence Commercial Books serve as legal evidence: 1. **Court Orders:** - Judges can order a merchant to submit their commercial books in a legal dispute. - This is done to extract evidence relevant to the case. 2. **Restrictions:** - Judges can't give an opposing party unrestricted access to an individual's commercial books. - The only permissible exception is in legal disputes directly related to inheritance cases. 3. **Bankruptcy:** - In cases of bankruptcy or insolvency, the court may take possession of the bankrupt's books. - This includes a declaration of a settlement to avoid bankruptcy. - The books are then handed over to the official bankruptcy assignee. # Book Maintenance 1. **Pre-Use Procedures:** - Before using the journal and inventory books, all pages must be numbered and signed by the merchant. 2. **Ministerial Decrees:** - Regulations concerning the use of commercial books by banks or companies are issued through ministerial decrees. 3. **Ownership:** - All commercial books remain the responsibility of the merchant even if kept and maintained by their employees. 4. **Retention Periods:** - Merchants are obligated to keep all commercial books and supporting documents for five years after their creation or last entry. - The books should be duly marked indicating the termination of business activity. **Source:** - This document was compiled from an Arabic text. **Note:** - This is a translated and paraphrased summary of the original text. - Emphasis was added in a few key areas to highlight important points.