Introduction to commercial law
1.1Definition of Commercial Law
The definition of commercial law is provided in the Commercial
Code, and the law states that the provisions of the commercial
law shall apply to commercial acts and every natural and legal
person who acquires the status of a merchant.
That, commercial law applies to commercial acts which are
generally performed by merchants. However, in some cases non
merchant carry out commercial and consequently commercial law
applies to although they are performed by non merchant.
It is important to note that commercial law is one of the branches of private
law. It is well known that legal rules are divided into two main branches:
Public law and Private Law.
Public law involves legal relations in which the state is involved as sovereign
state and not as a private person. Public law includes the following branches:
public international law, criminal Law, constitutional law and administrative
Private law involves relations where the parties act as private persons dealing
on equal standing. Private law includes civil law, the law of civil and
commercial procedures, maritime law, private international law and
1.2 Scope of application of Commercial Law?
There are two theories in that respect: the objective theory and the subjective
The objective theory provides for the application of commercial law on
commercial activities whether or not they are performed by a merchant.
Accordingly, commercial shall apply to a person who buys movables for the
purpose of reselling them. Commercial law shall apply to a person who carries out
commercial activities even if he does not carry them out profession.
However, the main critic that can be directed to this theory is the fact
that there is no definition of what constitutes a commercial act. In addition,
the scope of commercial acts expanding day by day, some acts which were
considered civil acts not so long ago are now considered commercial acts
such as building or purchasing real-estate for the purpose of resale or lease.
On the other hand, the subjective theory focuses on the identity of the
persons performing the act. The subjective theory provides for the
application of commercial law on merchants when they perform their
According to this theory commercial law does not apply to non-merchants
even if they performed commercial activities.
In practice, it is difficult to apply the subjective theory as one should
provide for an accurate definition of the term "merchant" and an
exhaustive list of the various commercial professions.
To solve this problems, the legislators made a combination of both theories
as Article one of the Commercial Code provided that "the provisions of this
law shall apply to commercial acts and every natural or legal person who
acquired the status of the merchant"
3 :Why Commercial Law?
The legislators provided for distinction between civil and commercial
law. The legislators recognized that the special nature of commercial
law which is based on swiftness and credit. These features are
usually not applicable to civil law transactions. We shall briefly
examine these features:
Civil transactions are usually preceded by extensive and lengthy
bargaining. This is not case in commercial transactions which are
concluded swiftly without regard to much of formalities associated with
Also, commercial dealings are subject to frequency do not only involve a
single transactions as the case in civil dealings. In addition, commercial
transactions may involve perishable goods that need to traded quickly.
Accordingly, the rules governing commercial activities involve special
provisions to account for the swift requirement, such as the flexibility
regarding the rules of evidence and non allowance of Judicial grace periods
except under special circumstances.
commercial transactions involve credit that is deals are often concluded and
payment is often delayed. For instance, a retail merchant buys from a
wholesale merchant with credit usually bank loan is obtained. Payment is
usually effected after the products are sold. The same is true for the wholesaler.
Thus, a chain of credit is involved. If one party defaults the other parties will
be affected. Accordingly, special rules exist in commercial law to
accommodate the requirement of credit such as bankruptcy, the assumption of
solidarity between debtors of a commercial debt and the high commercial
interest compared to the rate of interest in civil matters.
1.4 Historical Development of Commercial Law:
Commerce is one of the oldest professions in the world. One can trace the
origin of commercial law back to ancient times. We will present overview of
this development starting from the ancient times until the modern ages.
One can trace the origins of commercial law back to ancient times.
Commercial law was based on custom. Commercial customs were common
among the people of the Mediterranean as well as ancient Iraq and ancient
Egyptians. These nations used some form of documents which are similar to
commercial papers. One of the most important records of commercial law at
those times is the codification of commercial customs of the time in the "Code
of Hammurabi" the ancient ruler of Iraq.
This codification contained rules regarding companies and credit. In addition,
the Greek established some customs related to maritime trade. Starting from
the seventh century Arabs made many contributions to commercial law as they
developed new commercial rules in the field of personal companies,
bankruptcy and the bill of exchange
The Romans established a vast empire which included most of Europe, North
Africa and parts of Asia. Although the Romans developed many legal codes
they did not contribute much to the development of commercial law.
The Romans did not practice trade and they considered it an indecent
profession that could be only practiced by foreigners and slaves. Thus, the
Roman Civil Codes did not is general contain commercial provisions. Later on
the law of nations (Jus gentium) which governed legal relations between
foreigners and Romans contained commercial provisions that were less
complicated and more swifter than the Rom Civil code Finally, the Roman
Civil Code incorporated the rules of the Law of Nation including the
commercial provisions. Examples of commercial provisions codified by the
Romans rules related to bankruptcy and common maritime losses.
The Middle Ages:
The Eleventh Century to the Sixteen's Century;
This period witnessed the expansion of trade due to the crusades. One can
fairly say that the rules established at this period were the basis of modem
commercial law. At this period International markets were common in Italy,
especially in Florence, Venice and Genoa. Merchants at these markets were
governed by their own customs and traditions. The Church also had an effect
on the development of commercial law as it prohibited usury with some few
The Seventeenth Century to the Eighteens Century;
At this period commercial law became a professional law made and applicable
only merchant. Commercial law also developed into a customary and technical
law. Commercial Law also acquired so international flavor as it was applicable
between western European states.
The Modern Ages;
The development of the nation state was accompanied by the codification of
trade customs. In France, trade customs were first codified in 1673 in a code
known as "Code Savary" which included rules related to commercial papers,
company law and bankruptcy. This codification was followed by a maritime
code which was issued in 1707. As a result of the French Revolution a new
Commercial Code was issued in1807.