Chap1 pt2

Commercial activities are governed by the commercial code, civil activities are regulated by the civil code.

Difference between commercial activities and civil activities

Firstly, article 4 of the commercial code, commercial business are

1. “The work practiced by the trader in relation to his trade, and each work practiced by the trader considered related to his trade, unless otherwise evident”

2. Speculation (if you practice any activity to gain a profit, regardless of whether you are a merchant) (such as; buying or selling any movable with the intention of gaining profit) works practiced by a person, whether or not a trader, for purpose of realizing profit.

3. The works considered by the Law as commercial business, we must refer to the commercial code to see if there’s any work referred to as a commercial activity by law.

4. The works associated with or facilitating a commercial business.

To be considered a commercial activity the activity must be performed with the intent to speculate, like to gain profit through circulation of transactions.

Accessory commercial activity is a transaction/activity by the trader relating to his business, such as purchasing plane tickets to purchase goods in China from the UAE.

In the UAE, you only need to have speculation in order to gain profit through circulation (the movement of objects being transferred from one owner to another, an author sells their book to a publisher, the publisher sells it to the reader) of transactions to be considered commercial activity. But in other countries, speculation isn’t enough to be considered a commercial activity, you need circulation law.

The theory of enterprise, you need to establish a business project in order to be considered a commercial act. You will need workers, tools, machines, capital. This involves the element of repetition.

Aspects of Differentiation

Courts’ Jurisdiction

Ordinary courts have a general rule, which is jurisdiction over all cases brought regardless of whether they are civil or commercial. They will still be subject to their respective laws i.e. Commercial and Civil. Whereas in other countries may have a dual judicial system of civil courts and commercial courts.

The Quality of Merchant

To acquire the quality of merchant, you must carry out and perform commercial activities as a profession. Must be undertaken in his own name and his own account. You must also have the required commercial capacity. According to Article 11 of the CC, a merchant is defined as:

1. Everyone engaged in commercial business in his own name and for his own account, while enjoying the required competency, if such works are practiced as an occupation.

2. Every company carries out commercial activity or is established in one of the forms set out in the Commercial Companies Law, even if the practiced activity is civil.

A natural person who performs civil transactions shall not acquire the quality of merchant. It can be proved by all available means and the judge concerned has a discretionary power to reach his decision.

5 types of companies art. 9 32 2001

partnership company (natural person can be held liable during bankruptcy)

limited partnership company

public joint stock company

private joint stock company

limited liability company

Limitation of cheques: 3 Years

Civil Law statute of limitation: 15 years

Commercial Law Statute of Limitation: Up to 10 years

They have shorter limitation periods concerning the courts actions not the right itself.

Partners or Shareholders who established the company will not acquire the quality of merchant if the company has the quality of merchant, unless it is a general partnership company.

Art 66/1 of the Law of Evidence (civil law)

Any transaction whose value exceeds 50,000 AED or whose value is indefinite shall be established in writing. This does not exist in commercial transactions since this setting allows the use of witnesses or other means as presumptions for the amount of the dispute claim.

Bankruptcy

Permissible for any creditor to bring a bankruptcy case to the court if a merchant fails to pay a commercial debt following the disturbance of his financial affairs. It is only applicable to merchants. Also applies to merchants who fail to pay civil debt.

Once bankrupt the merchants assets are collectively liquidated with a view to distributing these assets to all creditors. Bankruptcy law no. 51 of 2023

Judicial Grace Period

When the judge has the right to give any debtor a period of time to pay their debts beyond the date on which the fulfilment of the debt is due. This is from Art. 359/2 of the UAE Civil Transaction Code. 1) This can only happen with justifiable reasoning. 2) The creditor will not suffer from the lack of the debtor’s payments.

Whereas Art. 596 of the Commercial Code of UAE, provides the court may not grant the debtor of a commercial debt a grace period during which he will pay his debt.

A debtor must fulfill their obligation when it becomes due. If the debtor delays in fulfilling this obligation then they must notify the debtor through an official document, either sent by mail or as agreed upon by the party. Article 81 of the UAE Commercial Code.

Interest on Commercial Loans and Debts

Civil Transaction Law does NOT have interest, according to article 2 which takes the islamic sharia as a second source of law, which makes interest illegal because it is haram. whereas Commercial Loans and Debts the creditor is entitled to charge interest on a commercial loan at the rate specified in the contract. If the interest rate is not specified in the contract, it is calculated based on the prevailing market rate at the time of the transaction. But it must not exceed 9% per annum until the full payment is made.