Business Law Lecture 2 PDF

BUSINESS LAW Dr. Mona Mahmoud Lecture 2 DIFFERENTIATION BETWEEN COMMERCIAL ACTS AND CIVIL ACTS Since commercial and civil acts differ in form, content, and legal system, it is important to look for the criterion to be adopted in order to distinguish between a commercial and civil act....

BUSINESS LAW Dr. Mona Mahmoud Lecture 2 DIFFERENTIATION BETWEEN COMMERCIAL ACTS AND CIVIL ACTS Since commercial and civil acts differ in form, content, and legal system, it is important to look for the criterion to be adopted in order to distinguish between a commercial and civil act. Therefore, jurisprudence tried to put a certain definition to clarify the commercial activities, therefore, they provided some theories as follows: DIFFERENTIATION BETWEEN COMMERCIAL ACTS AND CIVIL ACTS 1. Speculation Criterion: The purpose of carrying out the work is to speculate (gain profit) 2. Circulation Criterion: That the aim of the act is to facilitate the circulation and movement of wealth (goods, services, money and bonds). 3. The Enterprise Criterion: The act is to acquire the commercial character if it is carried out in the form of an enterprise. Finally, Jurisprudence decided to depend on the combination of all the above -mentioned theories to decide that the act is considered commercial. ASPECTS OF DIFFERENTIATION 1. Court Jurisdiction 2. Rules of Evidence 3. Bankruptcy 4. Solidarity Between the Debtors 5. Judicial Grace Period 6. Expeditious Enforcement of Judgements: 7. Short Prescription Period 8. Notice 9. Rate of Interest 1- JURISDICTION OF COURTS Competent Court The jurisdiction of a court means, simply, that a certain court is competent to hear a certain case. In Egypt there is no distinction between civil and commercial courts. Thus, courts in Egypt are competent to adjudicate any dispute whether it is a civil or commercial, and the judges shall apply to each dispute the law that suits whether it is civil or commercial. However, in the forties of the last century two specialized commercial courts of summary jurisdiction were established in Cairo and Alexandria to adjudicate commercial disputes. 1- BIS JURISDICTION OF COURTS It is worth mentioning that the Egyptian legislator created special Economic Courts. Which consists of First Instance and Appeal Courts. These courts have a jurisdiction over criminal cases stemming from investment operations, consumer protection, commercial, and banking transaction. Rules of Jurisdiction The legislator has facilitated the rules of jurisdiction when it comes to commercial disputes. The general rules provide that a dispute should be brought before the court where the defendant resides. However, in commercial disputes that plaintiff can also bring a dispute in the court in which vicinity the transaction has been concluded, or partially or entirely performed. 2- RULES OF EVIDENCE In civil cases where the claim amount exceeds EGP 1,000, it cannot be proved by witnesses, it must be proved in writing. However, this limitation does not exist in commercial matters, as the use of such means of proof, that of witnesses or other means, such as presumptions, is permitted, Regardless of the amount or value of the disputed claim. The general rule in commercial matters is the freedom of proof or the right to provide evidence by any available means. 3. BANKRUPTCY Bankruptcy is a proceeding by which the creditors take possession of the properties of a debtor through a trustee appointed by the court. Such trustee manages the properties of the debtor, and subject to certain priorities, distributes it among the creditors. Only a merchant can be subjected to bankruptcy. A merchant cannot be declared bankrupt unless he stops paying his commercial debts. Moreover, If a merchant stops paying his civil debts, he cannot be declared bankrupt. 4- SOLIDARITY BETWEEN THE DEBTORS According to Article 47 Commercial Code, those who are collectively debtors of a commercial debt are jointly and severally liable for payment of such debt unless the law or the agreement provides otherwise. To the contrary, under Article 279 Civil Code, joint and several liabilities of debtors or creditors is not presumed, it is created only by agreement or by law. 5- JUDICIAL GRACE PERIOD Under Art. 346 of the Civil Code, the court is allowed to grant a bona fide debtor with a civil debt a grace period beyond the date on which the fulfillment of the debt is due, when it considers this procedure justifiable by the surrounding circumstances and provided that not serious prejudice is thereby caused to the creditor. The Commercial Code, on the other hand, provides in Art. 59 that the court may not grant the debtor with commercial obligation a grace period during which he will pay in full or pay in installments his debt, except in exceptional circumstances, and this must not cause any serious prejudice to the creditor. 6- EXPEDITIOUS ENFORCEMENT OF JUDGEMENTS: According to Article 289 of Civil and Commercial Procedure Code (CCPC), a judgement in a commercial matter is, by law, immediately enforceable provided that a suretyship is given by the party in favor of whom the judgement is rendered. To the contrary, under Article 287 of CCPC, a judgement on a noncommercial matter cannot be enforced as long as it can be appealed. 7- SHORT PRESCRIPTION PERIOD According to Art. 374 of the Civil Code, civil lawsuits and final ruling as pronounced in these lawsuits are to prescribe with the lapse of 15 years from the date on which the fulfillment of obligations is due, and from the date on which the final rulings are issued. Thus, Art. 68 of the Commercial Code provides that the lawsuits resulting from the obligations of the merchants towards one another, and which are related to their commercial dealings are to prescribe with the lapse of 7 years from the due date on which fulfillment of the obligation is due, unless stated otherwise by the law. Likewise, the final ruling as declared in these lawsuits is to lapse with the expiry of 10 years. 8- NOTICE Notice is a procedure in which the debtor is put on notice that he has to fulfill his obligation otherwise he will face a legal action in a court of law. In civil matters, In order to enforce a debt, the creditor must notify the debtor with an official document. In commercial matters, there is a requirement of speed which necessitates the abolishment of formalities. Thus, the legislator allowed in commercial acts using non-official notice without following the official procedures which used in civil matters. Non-official notices include registered letter, telex, fax, or any other new communication ways. 9- RATE OF INTEREST Rate of Interest Article 226 of the Civil Code stipulates that: “ If the object of the obligation is the payment of a sum of money, and its amount was known when payment was claimed, and if the debtor delays its payment, he shall pay to the creditor by way of compensation for the delay interests amounting to four percent in civil matters and five percent in commercial matters, effective from the date of the judicial claim unless the agreement or the commercial custom fixes another date, and all this unless otherwise prescribed by the law. Under Article 227 Civil Code, the parties to a civil contract cannot agree upon a rate of interest that exceeds 7% to the contrary, under article 50 Commercial Code, the interest shall be calculated in accordance with the rate used by the Central Bank in its deals, unless a lesser rate is agreed upon. 9- BIS RATE OF INTEREST Time Frame for Calculating interest The legislator provided for certain exceptions regarding the time frame for calculating the interest rate. In civil matters, interest shall be calculated as of the date of judicial claim. In commercial matters, the Commercial Code, provided that, interest is due as of the date in which the debt is due or as of the date determined by custom. Accumulated Interest Rate In civil matters, one cannot charge an amount of interest which is higher than the original debt. However, this is not the case in commercial matters, as the Commercial Code allowed a creditor to charge an amount of interest which is higher than the original debt if the law or the custom provided for such an exception. Nevertheless, this customary exception would usually occur in the field of banking.