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BOOK I. TRADERS AND BUSINESSES

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BOOK I.

TRADERS AND BUSINESSES

TITLE I. GENERAL PROVISIONS APPLICABLE TO TRADERS

 

Chapter 1. Provisions Applying to Persons Carrying on a Trade

Art. 1. – Scope of application of the Civil Code.

Unless otherwise provided in this Code, the provisions of the Civil Code shall apply to the status and activities of persons and business organisations carrying on a trade.

Art. 2. – Scope of application of the Maritime Code.

The relevant provisions of the Maritime Code shall apply to persons and business organisations carrying on maritime trade

Art. 3. – Persons and business organisations.

The provisions of this Code applicable to persons other than those provisions applicable to physical persons only shall apply to business organisations.
Nothing shall affect the special provisions of Book II and Book V Title IV of this Code applicable to business organisations only.

Art. 4. – Bodies corporate under Public Law.

1.    Unless otherwise expressly provided by law, bodies corporate under public law, such as administrative or religious institutions or any other public undertakings shall not be deemed to be traders even where they carry on activities under Art. 5.
2.    The provisions of sub-art. (1) shall not apply to undertakings in which bodies corporate under public law only participate.

Chapter 2. Traders

Art. 5. – Persons to be regarded as traders.

Persons who professionally and for gain carry on any of the following activities shall be deemed to be traders:
1.    Purchase of movables or immovable with a view to re-selling them either as they are

or after alteration or adaptation;

  1.  Purchase of movables with a view to letting them for hire;
  2.  Warehousing activities as defined in Art. 2806 of the Civil Code:
    4.    Exploitation of mines, including prospecting for and working of mineral oils;
    5.    Exploitation of quarries not by handicraftsmen;
    6.    Exploitation of salt pans;
    7.    Conversion and adaptation of chattels, such as foodstuffs, raw materials or semi-

finished products not by handicraftsmen;
8.    Building, repairing, maintaining, cleaning, painting or dyeing movables not by

handicraftsmen;
9.    Embanking, levelling, trenching or draining carried out for a third party not by

handicraftsmen;
10. Carriage of goods or persons not by handicraftsmen;
11. Printing and engraving and works connected with photography or cinematography

not by handicraftsmen.
12. Capturing, distributing and supplying water;
13. Producing, distributing and supplying electricity, gas, compressed air including

heating and cooling;
14. Operating places of entertainment or radio or television stations;
15. Operating hotels, restaurants, bars, cafes, inns, hairdressing establishments not

operated by handicraftsmen and public baths;
16.    Publishing in whatever form, and in particular by means of printing,engraving,

photography or recording;
17.   Operating news and information services;
18.   Operating travel and publicity agencies;
19.   Operating business as an agent, broker, stock broker or commercial agent;
20.   Operating a banking and money changing business;
21.   Operating an insurance business.

Art. 6. – Agricultural or Forestry undertakings.

  1. Persons who carry on activities relating to agriculture, forestry, breeding cattle or maintaining pastureland, shall not be deemed to be traders where they sell the products of the land they exploit or use, or animals or the products of animals bred mainly from the resources of the land which the said persons exploit or use.
    2.    Such persons shall not be deemed to be traders whether the exploitation is individual or collective, such as an agricultural community or a cooperative undertaking.
    3.    Nurserymen who sell plants which grow on the land they exploit or use shall not be deemed to be traders.

    Art. 7. – Agricultural Products How Dealt with.

  2. Persons who carry on activities under Art. 6 (1) shall not be deemed to be traders where they deal with their products in accordance with the usual practice of their business, so long as such dealing relates only to products of the land which they exploit or use, or to animals or products of animals bred mainly from the resources of the land which they exploit or use.
    2.    Such persons shall not be deemed to be traders whether the undertaking is individual or collective such as an agricultural community or a cooperative undertaking.

    Art. 8. – Fishermen and persons breeding fish, shell-fish or shells.

Fishermen and persons who breed fish or shell-fish or shells shall not be deemed to be traders where they sell the products of their fishing or breeding.

Art. 9. – Handicraftsmen.

  1.   The provisions of this Code relating to traders shall not apply to handicraftsmen.
    2.   Handicraftsmen are persons who carry on an independent activity, who live mainly

on their own manual work, who may carry on their activity with the assistance of

members of their family and of not more than three employees or apprentices and

who buy such material only as is necessary for carrying out their activities, without

setting up stocks.
3.    Handicraftsmen may use mechanical power.
4.    Handicraftsmen are subject to the provision of any special law relating to their

activities.

Art. 10. – Business Organisations.

  1.  Business organisations shall be deemed to be of a commercial nature where their

objects under the memorandum of association or in fact are to carry on any of the

activities specified in Art. 5 of this Code.
2.    Share companies and private limited companies shall always be deemed to be of a

commercial nature whatever their objects.

Chapter 3. Persons Capable of Carrying on a Trade

Art. 11. – Persons incapable under the Civil Code

  1.  Persons incapable under the Civil Code may not carry on any trade.
    2.    Where incapable persons carry on a trade, they shall not, subject to the provisions of Art. 14 and 15, acquire the status of traders and their acts may be invalidated in accordance with the relevant provisions of the Civil Code.

Art. 12. – Tutors.

Tutors may not carry on a trade in the name and on behalf of a minor except in the     cases provided in Art. 288 of the Civil Code. The same provisions shall apply to the tutor of an interdicted person.

Art. 13. – Emancipated Minors.

  1.  Notwithstanding the provisions of Art. 333 of the Civil Code,emancipated minors may not carry on a trade unless authorised in writing by the family council.
    2.    In default of authorisation under sub-art. (1), emancipated minors shall not be deemed to be of age.

    Art. 14. -Effect of Minority in relation to third parties.

Notwithstanding the provisions of Art. 318 of the Civil Code, where a minor who carries on a trade has caused himself to be entered in the commercial register as though he were of age, his being a minor shall not affect third parties, in accordance with Art. 121 of this Code.

Art. 15. – Publication of incapacity.

Where a person has been declared incapable, such incapacity shall not affect third parties     unless notice of such incapacity has been entered in the commercial register (Art. 121).

Chapter 4. Carrying on a Trade by Married Persons

Art. 16. – Married persons may carry on trade.

Any married person may carry on a trade as though he were unmarried unless his spouse objects thereto as provided in Art. 645 of the Civil Code.

Art. 17. – Notification of objection.

  1.  As between spouses an objection under Art. 16 may be notified to the trading spouse in any manner.
    2.    An objection under Art. 16 shall not affect third parties, in accordance with Art. 121 of this Code, unless notice of such objection has been entered in the commercial register.

    Art. 18. – Setting aside of objection.

  2.  Where the trading spouse is of the opinion that the objection is not justified, having regard to the interest of the family, he may apply to the family arbitrators to set aside the objection.
    2.    Where the objection is set aside by the arbitrators, a notice to this effect shall be entered in the commercial register.

    Art. 19. – Debts contracted by the trading spouse.

Debts contracted by the trading spouse shall be deemed to be debts of the marriage within the meaning of Art. 659 of the Civil Code and may be recovered on the     personal estate of each spouse and on common property.

Art. 20. – Effect of objection.

Where an objection under Art. 16 has been entered in the commercial register, debts contracted by the trading spouse may be recovered on his personal estate only.

Art. 21. – Cooperation of spouses.

Where spouses together carry on a trade, they shall both be deemed to be     traders, unless it is shown that one of them is the employee of the other.

Chapter 5. Right to Act as a Trader

Art. 22. – Freedom to carry on trade.

Subject to such prohibitions or lawful restrictions regarding unfair competition as may be prescribed, any person or business organization has the right to carry on any trade in accordance with the provisions regulating such trade.

Art. 23. – Legal prohibitions or restrictions.

  1.  Particular persons may be restricted or prevented from acting as traders or from carrying on a particular trade by legal provisions setting up prohibitions or incompatibilities.
    2.    Specific requirements as to age, qualifications, sex, nationality or license may be

imposed by law in respect of particular trades.

Art. 24. – Effect of prohibitions and restrictions.

  1.  Persons who carry on a trade subject to prohibition or restriction or without having

the prescribed qualifications shall be liable to the penalties provided by law.
2.    Persons who carry on a trade subject to prohibition or restriction may not invoke

the said prohibition or restriction to free themselves from liabilities incurred in carrying

on a trade subject to prohibition or restriction. They may not hold themselves out to

be traders to third parties but they shall be liable as though they were traders.

Art. 25. – Associations.

  1.  Associations may not carry on any trade.
    2.    Any violation of the provisions of sub-art. (1) shall constitute a ground for dissolution

under Art. 461 of the Civil Code.

Art. 26. – Business organisations carring on trade

No business organisation shall carry on a trade which it is not permitted to carry on or

which is subject to specific requirements with which the said business organisation has

not complied.

Art. 27. – Bodies corporate under Public Law.

The cases where a trade may be carried on by administrative or religious institutions or any other public undertaking and the conditions and effect of such trade shall be prescribed.

 

 

TITLE II. AUXILIARIES AND AGENTS

 

Chapter 1. Commercial Employee

Art. 28. – Definition.

1.    Commercial employee are persons who are bound to a trader by a contract of employment and who assist the trader by doing work of a non-manual nature as a salesman, secretary, accountant, guardian, inspector or director.
2.    Commercial employees are not traders.

Art. 29. – Civil Code applicable

Without prejudice to the provisions of this Code, the provisions of the Civil Code relating to contracts of employment shall apply to commercial Employees.

Art. 30. – Prohibition from carrying on private trade.

1.    A commercial employee may not carry on, on his own behalf or on behalf of a third party, a trade similar, to the trade carried on by his employer. Where an employee infringes this prohibition, his employer may claim damages and may cancel or refuse to renew the contract of employment in accordance with Art. 2591 of the Civil Code.
2.    A contract of employment may only contain a prohibition from carrying on private trade upon the expiry of the contract of employment on the conditions specified in Art 2589, 2590 and 2592 of the Civil Code.

Art. 31. – Agents.

1.    Commercial employees may act as agents by express to tacit agreement.
2.    The revocation of the power of agency shall not result in the cancellation of the contract of employment.

Art. 32. – Powers of Employee in charge of sales.

1.    The employee in charge of the sales in a store shall be deemed to have a power of agency for the purpose of selling or receiving goods which come within the normal business activities of stores of such nature.
2.    He may demand that goods sold by him be paid to him, unless payment is to be made to a special account.
3.    The employee may not demand payment outside the store unless so expressly authorised or unless he produces a receipt signed by the trader.

Chapter 2. Managers

Art. 33. – Definition

1.    A manager is a person who has been authorised, expressly or tacitly, to carry out acts of management and to sign in the name of the trader.
2.    A manager is not a trader.

Art. 34. – Publicity.

1.    Where a manager has been appointed, the trader shall cause an entry to be made in the commercial register.
2.    The manager shall have power to act by virtue of his appointment, not-withstanding that the provisions of sub-art. (1) have not been complied with.

Art. 35. – Powers of Manager.

1.    In his relations with third parties, the manager shall be deemed to have full power to carry out all acts of management connected with the exercise of the trade, including the power to sign a negotiable instrument.
2.    Unless expressly authorised to do so, he may not sell or pledge immovable property, nor may he sell, hire or pledge a business.

Art. 36. – Restriction on powers.

1.    The powers of a manger may be limited to the management of a branch. Such a restriction shall not affect third parties in accordance with Art. 121 of this Code unless notice of such restriction has been entered in the commercial register.
2.    Any other restriction shall not affect third parties.

Chapter 3. Commercial Travelers and Representatives

Art. 37. – Commercial travelers.

1.    A commercial traveler is a person, domiciled at the place where the head office of the business is situate and bound to a trader by a contract of employment, who is entrusted by the trader with visiting clients and offering to them goods or services in the name and on behalf of the trader.
2.    Unless otherwise agreed, contracts entered into by a commercial traveler shall be of no effect unless confirmed by trader.
3.    Commercial travellers are not traders.

Art. 38. – Commercial representatives.

1.    A commercial representative is a person, not domiciled at the place where the head office of the business is situate and bound to a trader by a contract of employment, who is entrusted by the trader with visiting clients in a specified area and offering to them goods or services in the name and on behalf of the trader.
2.    Unless otherwise agreed, contracts entered into by a commercial representative shall become effective without confirmation by the trader.
3.    Commercial representatives are not traders.

Art. 39. – Private Business.

1.    Unless otherwise provided in the contract of employment, commercial travellers and representatives may not carry on private business. Where they carry on private business, they shall lose their compensation as provided in Art. 42 and 43.
2.    The provisions of Art. 30 (2) shall apply where commercial travellers and representatives have been authorised to carry on private business.

Art. 40. – Acting on behalf of other traders.

1.    Unless otherwise agreed, commercial travellers and representative may not act on behalf of traders other than the trader to whom they are bound. Where they act on behalf of other traders, they shall lose their compensation as provided in Art. 42 and 43.
2.    In no case may they act on behalf of a trader selling goods or offering services similar to the goods sold or the services offered by the trader to whom they are bound.

Art. 41. – Remuneration.

1.    Commercial travellers and representatives shall be paid by salary or on commission or both.
2.    The remuneration shall be fixed by the contract of employment or, where not fixed, by custom.

Art. 42. – Compensation in case of termination of contract.

Where the trader terminates the contract without good cause, commercial travellers and representatives who are bound by a contract entered into for an undefined period of time shall be entitled to fair compensation fixed in accordance with Art. 2583 of the Civil Code.

Art. 43. – Compensation on account of clients introduced.

Where a contract entered into for an undefined period of time is terminated by the trader or where a contract entered into for a specified period of time is not renewed by the trader, no fault being attributable to the commercial traveller or representative, the commercial traveller or representative shall be entitled to     compensation equal to the profit derived from the customers introduced or goodwill created or extended by him.

Chapter 4. Commercial Agent

Art. 44. – Definition.

  1.  A commercial agent is a person or business organisation, not bound to a trader by a contract of employment and carrying out independent activities, who is entrusted by a trader with representing him permanently in a specified area and dealing or making agreements in the name and on behalf of the trader.
    2.    Unless otherwise provided in the agency agreement, contracts entered into by a commercial agent shall become effective without confirmation by the trader.
    3.    A commercial agent normally acts as agent and may act as broker. He is a trader.

    Art. 45. – Commercial agent exclusive agent.

Unless otherwise provided in the agency agreement, a commercial agent shall be the exclusive agent of the principal in the area specified in the agreement.

Art. 46. – Duties of commercial agent.

  1.  A commercial agent shall safeguard the principal’s interests with the care due by a good trader.
    2.    He shall:
    a.    Carry out all instructions of the principal;
    b.    Inform the principal of all contracts negotiated or entered into by him;
    c.    Send to the principal periodical reports on his activities and all such information as may be required on the state of affairs within the area where he acts.
    3.    Where the agency agreement comes to an end, a commercial agent may not take advantage of or disclose trade secrets revealed to him by the principal or of which he learned in the course of his duties as an agent.

    Art. 47. – Prohibition from carrying on private trade.

  2.  A commercial agent may carry on any private trade which is not similar to the trade carried on by the principal. The agency agreement may be cancelled and damages may be due where the agent carries on trade similar to the trade carried on by the principal.
    2.    Unless otherwise provided in the agency agreement, a commercial agent may not act in the area specified in the agreement on behalf of traders other than the principal.
    3.    In no case may a commercial agent act, in the area specified in the agency agreement, on behalf of traders who carry on a trade similar to the trade carried on by the principal. The agency agreement may be cancelled and damages may be due where the agent disregards this prohibition.

    Art. 48. – Duties of principal.

The principal shall, to the best of his ability, enable his agent to carry out successfully his duties under the agency agreement, in particular by making all necessary information and samples available to him.

Art. 49. – Repayment of expense.

Unless otherwise agreed, current costs and expenses of the agency shall be borne by the commercial agent and are not subject to repayment by the principal. The agent shall only be entitled to the repayment of expenses occasioned by dealings made on behalf of the principal and of such special expenses as were made by him on the order of the principal.

Art. 50. – Remuneration.

  1.  A commercial agent shall receive remuneration for all dealings negotiated or made by him. Unless otherwise provided, he shall receive remuneration for all dealings made, in the area where he acts, either by the principal himself or by another agent of the principal.
    2.    A commercial agent shall receive remuneration even where dealings made by him are not carried out by the principal.
    3.    The remuneration shall be fixed in the agency agreement or, where not fixed, by custom.

    Art. 51. – Agent personally to carry out his duties.

A commercial agent may not assign the agency agreement and may not substitute a third party for himself, as an agency agreement is made on the basis of the personal qualifications of the agent.

Art. 52. – Termination of agency agreement.

  1.  An agency agreement shall terminate:
  2.  Where the period of time for which it was entered into express;
    b.    Where the agent, being a person dies, becomes incapable or is declared bankrupt;
    c.    Where the business organisation acting as agent is wound-up.
  3.  Either party to an agency agreement made for an undefined period of time may terminate it on notice. Notice need not be given where there is good cause for termination.
    3.    The period of notice shall be fixed in the agency agreement or, where not fixed, by custom. It shall not be less than one month during the first year of service and not less than two months after the first year.

    Art. 53. – Compensation due in case of termination.

Where the principal terminates without good cause an agency agreement entered into for an undefined period of time, the agent shall receive fair compensation     which shall be fixed having regard in particular to the time for which he acted on behalf of the principal and to the customers introduced or goodwill created or extended by him.

Art. 54. – Uncompleted business upon termination.

  1.  Whenever an agency agreement terminates, the agent or his heirs or the business organisation having acted as agent shall receive remuneration for all contracts negotiated or entered into prior to the termination of the agreement.
    2.    Upon termination of the agreement, all remunerations and expenses due shall be paid forthwith by the principal.

    Art. 55. – Prohibition from carrying on similar private trade on termination of the agreement.

  2.  The agency agreement may provide that, upon termination of the agreement, the commercial agent shall not carry on the same trade as the principal or act as commercial agent or representative for a trader carrying on the same trade as the principal.
    2.    Notwithstanding any provision to the contrary, any such prohibition shall not be effective for more than five years.

    Chapter 5. Commercial Brokers

Art. 56. – Definition.
1.    A commercial broker is a person or business organisation who, independently, professionally and for gain, brings parties together for the purpose of their entering into an agreement such as a contract of sale, lease, insurance or carriage.
2.    A commercial broker is a trader, regardless of the parties he brings together and of the nature and object of the contract for the completion of which he acts as an intermediary.

Art. 57. – Notice to parties.

  1.  Unless customary or otherwise agreed, a commercial broker shall, where the parties have agreed to enter into a contract, inform both parties of the terms of the proposed contract.
    2.    Unless customary or otherwise agreed, the proposed contract shall not become effective unless it is confirmed by both parties.

    Art. 58. – Liability of broker.

A commercial broker shall be liable for any damage he causes to either     party.

Art. 59. – Remuneration.

  1.  A commercial broker shall receive remuneration when the contract for the completion of which he acted as an intermediary is entered into, whether such contract is performed or not.
    2.    Unless customary or otherwise agreed, the remuneration shall be paid only by the party having required the services of the broker.
    3.    The remuneration shall be fixed in the agreement or, where not fixed, by custom. The court may reduce the agreed remuneration where it appears excessive and disproportionate to the services rendered by the broker.

    Chapter 6. Commission Agents

Art. 60. – Definition.

  1.  A commission agent is a person or business organisation who, independently, professionally and for gain, undertakes to buy or to sell in his name, but on behalf of the principal, goods, movables or any other thing of a similar nature, or to enter in his name but on behalf of the principal into a contract of carriage of goods.
    2.    A commission agent is a trader, regardless of the parties and of the nature and object of the contract.

    Art. 61. – Civil Code applicable.

The provisions of Art. 2234-2252 of the Civil Code shall apply to contracts of commission.

Art. 62. – Stock brokers.

  1.  Stock brokers are commission agents.
    2.    Unless otherwise provided by law, they shall be subject to the provisions relating to contracts of commission.

 

 

TITLE III. ACCOUNTS

 

Chapter 1. Keeping of Accounts Compulsory

Art. 63. – Traders and Business Organisations.

1.    Any person or business organisation carrying on trade shall keep such books and accounts as are required in accordance with business practice and regulations, having regard to the nature and importance of the trade carried on.
2.    The provisions of Art. 66-70 of this Code shall apply.

Art. 64. – Petty traders.

Petty traders may be exempted from keeping accounts on such conditions as may be prescribed.

Art. 65. – Special rules applicable to business organisations.

Nothing in this Title shall affect the special provisions of Book II of this Code applicable to business organisations.

Chapter 2. Books and Accounts to be kept

Art. 66. – Entry of dealings.

1.    Every trader shall keep a journal where he shall make daily entries of all his dealings regardless of the nature of such dealings or of the manner in which they were carried out.
2.    He may at least once a month balance the proceeds of such dealings and shall in such a case preserve all documents necessary for checking these dealings day by day.

Art. 67. – Inventory and balance sheet.

1.    When beginning to carry on his trade, every trader shall prepare an inventory and a balance sheet.
2.    A trader shall also, at the end of each financial year, prepare an inventory of his assets and liabilities and balance his accounts for the purpose of preparing the final balance sheet and the profit and loss account. The balance sheet and the profit and loss account shall be entered in special books.

Art. 68. – Keeping of books.

1.    The books required under Art. 66 and 67 shall be kept in chronological order without any blanks or alterations.
2.    They shall be given a serial number and initialed by the prescribed authority. The number of pages of which the books consist shall be specified by the prescribed authority on the last page of each book.

Art. 69. – Preservation of books.

All books and accounting documents shall be preserved for ten years from the date of the last entry in such books or from the date of such documents.

Art. 70. – Correspondence.

Originals of all letters, messages or telegrams received and copies of all letters, messages or telegrams sent shall be filed and preserved for ten years.

Chapter 3. Books and Accounts Admissible Evidence

Art. 71. – Evidence in favour of party keeping books.

Where a dispute arises between traders as to their commercial activities, the court may, notwithstanding the provisions of Art. 2016 of the Civil Code, admit as evidence in favour of a party books and accounts which have been kept by such party according to the provisions of the preceding Articles.

Art. 72. – Evidence against party keeping books.

1.    Books shall prove against the party producing them.
2.    A party who avails himself of books may not conceal any part of such books that may contradict his claim.
Chapter 4. Keeping of Accounts

Art. 73. – Scope of application of this Chapter.

1.    The provisions of this Chapter shall apply to all commercial business organisations and to all persons carrying on a trade on such conditions as may be prescribed.
2.    Special requirements may be prescribed in respect of certain kinds of traders or business organisations. These requirements may differ according to the nature and importance of the trade carried on.

Art. 74. – Assets in the balance sheet.

  1.  The balance sheet shall show, as assets, all the debit balances and, as liabilities, all the credit balances.
    2.    The assets shall appear in the following order:
    a.    Establishment expenses;
    b.    Fixed assets;
    c.    Stocks;
    d.    Short term or liquid assets;
    e.    The results (Debit balance of the Profit and Loss Account).

    Art. 75. – Liabilities in the Balance Sheet.

The liabilities shall appear in the following order:
1.    The proper capital account and reserves;
2.    Profits brought forward and renewal funds;
3.    Provisions and long term debts; personnel pension funds, if any;
4.    Short term debts;
5.    The result (Credit balance of the Profit and Loss Account).

Art. 76. – Amortisations, provisions, adjustment accounts.

  1.  Amortisations and provisions for depreciation shall appear under the respective headings of the assets in the balance sheet.
    2.    The adjustment accounts shall appear in the assets or liabilities side of the balance sheet following the accounts to which they relate.

    Art. 77. – Establishment expenses.

Establishment expenses are expenses made on the formation of the undertaking or on the undertaking acquiring its permanent means of working.

Art. 78. – Fixed assets.

  1.  Fixed assets consist of assets used for working, assets not so used, assets completely amortised, and assets in course of being amortised.
    2.    Assets used in working are any assets acquired or manufactured by the undertaking not for sale or for transformation but to be used in a lasting manner as instruments of work.
    3.    Assets not used for working are any assets acquired or manufactured by the undertaking by virtue of the employment of capital and not for use as instruments of work.
    4.    Assets completely amortised are those still in use but whose value is entirely written off.
    5.    Assets in course of being amortised are those which are still not written off at the end of the financial year.

    Art. 79. – Stocks.

Stocks are goods, materials, supplies, semi-finished and finished products works in progress and packing materials.

Art. 80. – Capital and reserves.

  1.  The capital is the original value of the elements put at the disposal of the undertaking by the owner or partners by way of contributions in cash or in kind.
    2.    All profits preserved for the undertaking and not forming part of the capital shall constitute a reserve.

    Art. 81. – Balance carried forward.

The balance carried forward is made up of previous years’ profits which have not been distributed or transferred to reserves, or of previous years losses which have not been covered by subsequent profits.

Art. 82. – Amortisations and provisions.

  1.  Amortisation is the accounting measurement of the loss sustained by the fixed assets that necessarily depreciate with time.
    2.    The provisions for risks are intended to provide for definite risks, namely clear precise losses, which are foreseen at the end of the financial year.
    3.    The provisions for depreciation are intended to provide for the reduction in the value of some of the assets which can reasonably be expected.

    Art. 83. – Adjustment accounts.

The adjustment accounts are intended to correct debts and amounts owing not written in ordinary accounts so that only those effective debts and monies owing     appear at any particular financial year.

Art. 84. – Valuation.

  1.  Fixed assets shall appear in the balance sheet at their value of origin or if they have been revalued at their revaluation.
    2.    Merchandise, materials, supplies, packing materials in stock at the date of inventory shall be valued at their cost price.
    3.    Immovable assets shall appear in the balance sheet at their purchase price.
    4.    Wastes (remains of materials and refuse proceeding from manufacture) shall be valued at the ruling price at the date of the inventory or in the absence of a ruling price at their probable value of realisation.
    5.    Products or works in progress shall appear at their cost on the day of the inventory.

    Art. 85. – Provisions for depreciation.

If the real value of merchandise, materials, semi-finished products, finished products and packing materials in stock on the day of the inventory is less than the cost price, the trader or commercial business organisation shall constitute equivalent provisions for depreciation.

 

 

TITLE IV. THE COMMERCIAL REGISTER

 

Chapter 1. Organisation of the Commercial Register

Art. 86. – Local and central registers.

The commercial register shall consist of:
1.    Local registers kept in each Taklay Guezat, and
2.    A central register kept at the Ministry of Commerce and Industry.

Art. 87. – Official commercial gazette.

1.    All principal or subsidiary entries and all complementary entries, alterations or deletions sent to the central register shall be published in the official Commercial Gazette.
2.    Regulations may permit of the publication of extracts only.

Art. 88. – Publicity.

1.    Publicity through the commercial register shall be effected, with regard to persons, by the entry of declarations made by such persons before the authorities responsible for keeping local registers. Entries in the commercial register shall have effect as from the working day following the day when the entry was made.
2.    The provisions of Book II of this Code shall apply to entries of declarations made by business organisations.

Art. 89. – Keeping of local registers.

Local registers shall be kept in each Taklay Guezat by a person appointed by the Ministry of Commerce and Industry.

Art. 90. – Central Register.

1.    The central register shall be kept in Addis Ababa by a special department of the Ministry of Commerce and Industry which shall be known as the Department of the Central Commercial Register.
2.    The Department shall:
a.    Collect from all local registers all information relating to any registered person;
b.    Ensure that the provisions of the law regarding commercial registers are complied with;
c.    Ensure that publications under Art. 87 are effected;
d.    Receive and preserve such acts, documents and notices regarding business organisations as are provided in Book II of this Code.

Art. 91. – Liability.

Officials in charge of commercial registers shall be personally liable for any damage caused by them or by employee appointed by them.

Art. 92. – Communication of entries to third parties.

Any person on payment of the prescribed fee may require the official in charge of a local or the central register to deliver to him a copy of any extract from the register or, where there is no entry for which he is searching a certificate to the effect that there is no entry.

Art. 93. – Particulars on business papers.

All registered traders shall specify on all papers used in their business the Taklay Guezat in which they are registered and their registration number.

Chapter 2. Entries in the Commercial Register

Section 1. General Provisions

Art. 94. – Entries.
Entries in the commercial register shall consist of all principal, subsidiary or complementary registrations, and of all alterations and deletions.

Art. 95. – Manner of making entries.

(1) Entries shall be made upon a written statement made by the persons seeking registration.
(2) Entries may be cancelled as of right as provided in Art. 114.

Art. 96. – Form of statement.

(1)    A statement under Art. 95 (1) shall be in writing and in three copies signed by the person seeking registration or his representative, and shall be handed to the official in charge of the local register.
(2)    All necessary documents, if any, shall be annexed to the statement.
(3)    The statement shall be made within two months from the occurrence of the fact to be registered.

Art. 97. – Accuracy of statements.

1.    The official in charge of the register shall verify the accuracy of the statement made by the person applying for registration. Where a person applies to be registered as a trader, the official shall ascertain whether the applicant fulfils the legal requirements for carrying on the trade in respect of which registration is sought.
2.    The official shall check all documentary evidence supporting the statement and the conformity of the statement to such evidence.
3.    The official may require the applicant to produce such further documents or information as may be necessary.

Art. 98. – Application how dealt with.

1.    The official in charge of the register shall make an entry of all statements which appear to be correct and shall return a copy of the statement to the applicant. The date of registration and the registration number, if any, shall be specified on such copy.
2.    Two different types of numbers shall be used according to whether registration is sought by a person or a business organisation.
3.    The official shall keep a copy of the statement and shall file it.
4.    The third copy shall be sent to the Department of the central commercial register.

Art. 99. – Disputes between applicant and official.

Any dispute arising between the applicant and the official in charge of the register shall be decided on by the Minister of Commerce and Industry.

Section 2. Registration

Art. 100. – Persons to be registered.

1.    Any Ethiopian or foreign person or business organisation carrying out commercial activities within the Empire of Ethiopia shall be registered.
2.    The provisions of sub-art (1) shall apply in particular:
a.    To any Ethiopian or foreign person who is a trader within the meaning of Art. 5 of this Code;
b.    To any Ethiopian or foreign business organisation which is a commercial business organisation within the meaning of Art. 10 of this Code;
c.    To any foreign public undertaking carrying out commercial activities and to any commercial representatives or agents of foreign States, public institutions or undertakings.
3.    Special regulations applicable to undertakings under sub-art. (2), (c) shall be prescribed.

Art. 101. – Application for registration compulsory.

1.    A person shall not be registered as a trader unless an application to this effect is made by the said person or his attorney.
2.    The application shall be made within two months from the day on which the trader began to carry on his trade.
3.    The power of attorney shall be annexed to an application made by an attorney.

Art. 102. – Cancellation of registration of former trader.

Where an existing business is sold or let out for hire, the purchaser or lessee shall not be registered for so long as the registration of the former trader has not been     cancelled in the register.

Art. 103. – Place of registration.

1.    The application for registration shall be made at the registry of the Taklay Guezat within whose jurisdiction the person seeking registration carries on his trade. Where the applicant carries on several trades, he shall make the application at the registry in the Taklay Guezat within whose jurisdiction the principal place of business is situate.
2.    Where the head office of the business is abroad, the trader shall make the application at the registry in the Taklay Guezat within whose jurisdiction the principal branch or agency is situate.

Art. 104. – Summary registration.

1.    No trader shall be principally registered in more than one local register nor shall he be registered under more than one registration number in one register.
2.    Where a trader carries on a trade or is in charge of branches or agencies at places other than the place where he is principally registered, he shall make an application to be summarily registered in those places and a reference shall be made to the principal place of registration.

Art. 105. – Particulars in respect of principal registration.

Where a trader makes and application for principal registration, he shall state:
a.    His name;
b.    His date and place of birth;
c.    his nationality;
d.    his private address;
e.    where he is a minor, the date on which he was authorised to carry on trade by the family council;
f.    Where he is married, the place and date of the marriage and whether or not a marriage settlement was made and the date and the place where or person with whom such settlement was deposited, if any;
g.    the objects of the trade;
h.    whether he created the business or acquired or leased it and in the latter cases, the name of the former trade and all necessary information regarding the registration of the former trader;
i.    the trade-name;
j.    The special designation under which he trades, if any;
k.    the address of the business;
l.    the address of other business, branches or agencies, if any, which the trader operates either at the place of registration or in any other places;
m.    The names of the managers, if any, and whether their powers are limited to the management of a branch;
n.    The date on which the licence for carrying on the trade was granted, if any.

Art. 106. – Particulars in respect of summary registration.

Where a trader makes an application for summary registration, he shall state:
a.    His name;
b.    his nationality;
c.    his private address;
d.    the trade name of the business, branch or agency;
e.    the address of the business, branch or agency;
f.    the objects of the trade;
g.    the name of the manager and whether his powers are limited to the management of a branch;
h.    the date on which the licence for carrying on the trade was granted, if any;
i.    the reference to the principal registration, the place where it was made and the registration number.

Art. 107. – Commercial business organisations.

The relevant provisions of Book II of this Code shall apply to registration of commercial business organisations.

Section 3. Alteration of Entries and Additional Entries

Art. 108. – Alteration of entries.

1.    Any registered person shall, within two months from the occurrence of a fact making necessary and alteration in the particulars of registration, apply for the entry to be altered.
2.    An application under sub-art. (1) may be made by any legally interested person.
3.    In particular, the dismissal of the manager shall be entered.

Art. 109. – Additional entries in respect of persons.

1.    Any registered person shall apply for the following additional entries to be made where necessary:
a.    The marriage of the trader, the place and date of the marriage and whether or not a marriage settlement was made, the date and the place where or the person with whom the settlement was deposited, if any;
b.    The dissolution of the marriage on the decision of the family arbitrators or by the court;
c.    The judgment declaring the trader incapable;
d.    an objection of the spouse, if any;
e.    the setting aside of an objection under Art. 18 of this code;
f.    the appointment of new managers;
g.     the opening of new branches or agencies. Where a new branch or agency is opened, it sha1l be summarily registered in the register of the Taklay Guezat where such branch or agency is situate.
2.    An application under sub-art. (1) may be made by any legally interested person.

Art. 110. – Additional entries in respect of business organizations.

The relevant provision of Book II of this Code shall apply to additional entries in respect of commercial business organisations.

Art. 111. – Judgments in bankruptcy.

The relevant provisions of Book V of this Code shall apply to additional entries of judgments relating to bankruptcy or schemes of arrangement.

Section 4. Cancellation of Entries

Art. 112. – Cessation of trade.

Any registered person shall apply for the registra1ion to be cancelled within two months from his ceasing to carry on his trade or where he lets his business out for hire.

Art. 113. – Death of trader.

1.    The heirs of a deceased trader shall apply for the registration to be cancelled within two months from the dearth.
2.    Where the heirs carry on the trade under joint ownership, they shall apply for a new registration to be entered.
3.    Where the joint ownership is dissolved, the entry made under sub-art. (2) shall be cancelled and the person to whom the business is assigned shall apply for a new registration to be entered.

Art. 114. – Entries cancelled as of right.

1.    Cancellation may be ordered as of right by the Minister of Commerce and Industry in particular Where he knows that a business has ceased to operate or that a trader been declared incapable to trade or to carry on the registered trade.
2.    The order of cancellation shall be notified by the Minister of Commerce and Industry to the trader concerned and to the official in charge of the Industry where the cancellation is to be entrered.

Chapter 3. Sanctions

Section 1. Penal Provisions

Art. 115. – Failure to register.
Whosoever fails to register or to cause an entry to be made in the register in accordance with the provisions of this Code shall be guilty of an offence and shall on conviction be liable to the penalties provided in Art. 428 of the Penal Code.

Art. 116. – Inaccurate statements.

Whosoever intentionally makes inaccurate statements in relation to registration sha1l be guilty of an offence and shall on conviction be liable to the penalties provided in Art. 387 of the Penal Code.

Section 2. Civil Sanctions

Art. 117. – Effect of registration.
1.    All registered persons or business organisations shall be deemed to be traders, unless the contrary is proved.
2.    Registered persons or business organizations shall not be permitted to prove that they are not traders and shall incur all liabilities which the status of trader entails.

Art. 118. – Effect of failure to register.

  1.  Any person who fails to register in accordance with the provisions of this Code may not hold himself out to be a trader to third parties, but he shall be liable as though he were a trader.
    2.    The relevant provisions of Book II of this Code shall apply to business organisations.

    Art. 119. – Effect of failure to cancel entries.

Any registered person who assigns his business or lets it out for hire shall, until his registration is cancelled, be jointly and severally liable for all debts incurred by the assignee or lessee.

Art. 120. – Effect of entries.

  1.   Any person who caused an entry to be made in the register shall not be permitted to show that such entry is inaccurate unless an application is made for such entry to be a1tered.
    2.    Third parties shall not be permitted to prove that they did not know of a fact entered in the commercial register.

    Art. 121. – Facts relating to persons not to affect rights of third parties.

The following facts shall not affect the rights of third parties in good faith where they have not been entered in the commercial register:
a.    the minority of the trader;
b.    the marriage of the trader;
c.    the marriage settlement of the trader;
d.    the dissolution of the marriage of the trader;
e.    the judgment declaring the trader incapable;
f.    an objection under Art. 16 of this Code;
g.    the limitation of the powers of a manager to the management of a branch or agency;
h.    the dismissal of a manager.

Art. 122. – Facts relating to business organisations not to affect rights of third parties.

Facts relating to business organisations which do not affect the rights to third parties where they have not been entered in the commercial register are prescribed by Book II of this Code.

Chapter 4. Final Provisions

Art. 123. – Matters to be prescribed.
Regulations shall be made by the Ministry of Commerce and Industry for
the purpose of carrying into effect the provisions of this Title relating to:
a.    foreign public undertakings under Art. 100 (2) (c);
b.    the manner of keeping local registers and the central register;
c.    the manner of numbering registrations;
d.    documentary evidence to be produced;
e.    forms for making applications;
f.    fees to be paid on registration and on delivery of copies or extracts from registers;
g.    publication of the official commercial gazette, notices to be published   therein and costs of such publication;
h.     any other matters which may or shall he prescribed.

 

 

TITLE V. BUSINESS

 

Chapter 1. General Provisions

Art. 124. – Definition.

A business is an incorporeal movable consisting of all movable property brought together and organised for the purpose of carrying out any of the commercial ac1livities specified in Art. 5 of this Code.

Art. 125. – Traders and businesses.

1.    Every trader operates a business.
2.    A trader may operate several businesses for the purpose of carrying out various commercial activities.
3.    A trader may operate a business in the capacity of owner, usufructuary or lessee. Only the person who operates the business shall be deemed to be a trader and the owner or lessor of the business shall not be regarded as a trader.

Art. 126. – Principal business and branches.

1.    A business may consist of one principal business or of a principal business with branches or agencies which shall be deemed to be part of the business.
2.    The head office of the business shall be at the place where the trader operates his principal business.
3.    Where a branch or agency is sold or let out for hire without the principal being sold or let out for hire, such sale or lease shall be deemed to be a sale or lease of a business and the head office of such business shall be at the place where the assignee or lessee operates the branch or agency.

Chapter 2. Elements of a business


Section 1. Consistency of a Business

Art. 127. – Goodwill and incorporeal elements.
1.    A business consists mainly of a goodwill.
2.    A business may consist of other incorporeal elements such as:
a.    the trade-name;
b.    the special designation under which the trade is carried on;
c.    the right to lease the premises in which the trade is carried on;
d.    patents or copyrights;
e.    such special rights as attach to the business itself and not to the trader.

Art. 128. – Corporeal elements.

A business may consist of corporal elements such as equipment or goods.

Art. 129. – Assets and liabilities.

1.    A business shall normally not include the assets and debts of the trader, with the exception of the right to the lease of the premises.
2.    Nothing in this Article shall affect the special rules provided in Art. 2587 of the Civil Code and in Art. 159 and 673 of this Code.

Section 2. Goodwill and Unfair Commercial Competition

Art. 130. – Definition of goodwill.

The goodwill results from the creation and operation of a business and is of a value which may vary according to the probable or possible relations between a trader and third parties who may require from him goods or services.

Art. 131. – Preservation of goodwill.

A trader may preserve his goodwill by instituting proceedings for unfair competition or by setting up the legal or contractual prohibitions provided in Art. 30, 40, 47, 55, 144,158, 159,204 and 205 of this Code.

Art. 132. – Unfair commercial competition.

A trader may claim damages under Art. 2057 of the Civil Code from any person who commits an act of competition which amounts to a fault.

Art. 133. – Cases of unfair competition.

1.    Any not of competition contrary to honest commercial practice shall constitute a fault.
2.    The following shall be deemed to be acts of unfair competition:
a.    any acts likely to mislead customers regarding the undertaking, products or commercial activities of a competitor;
b.    any false statements made in the course of business with a view to discrediting the undertaking, products or commercial activities of a competitor.

Art. 134. – Effect of unfair competition.

1.    The court may, in cases of unfair competition:
a.    Order  that damages be paid  by the unfair competitor; and
b.    Make such: orders as are necess8l!y to put an end to the unfair competition.
2.    The court may in particular:
a.    Order the publication, at the costs of the unfair competitor, of notices designed to remove the effect of the misleading acts or statements of the unfair competitor, in accordance with Art. 2120 of the Civil Code;
b.    Order the unfair competitor to cease his unlawful acts in accordance with Art. 2122 of the Civil Code.

Section 3. Trade-Names

Art. 135. – Definition.
1.    A trade-name is the name under which a person operates his business and which clearly designates the business.
2.    The relevant provisions of Book II of this Code shall apply to firm-names used by business organisations.

Art. 136. – Family Name of trader or assumed name.

The trade-name’ may be the trader’s family name, with or without his  surname, or an assumed name, but all business papers shall be signed by the trader in his own name.

Art. 137. – Trader’s Name.

1.    Every trader may carry on his trade under his family name, with or without his patronymic:
Provided that Art. 45 of the Civil Code shall apply where such name or patronymic is likely to create confusion in a manner prejudicial to the interests of another trader.
2.    Where proceedings for unfair competition are instituted by reason of confusion created by the use of the trader’s name, the court may order that damages be paid by the trader who created confusion and may, in addition, order such trader to include his surname or patronymic in his trade-name so as to obviate confusion.

Art. 138. – Assumed name

1.    Every trader may carry on his trade under an assumed name provided such name is not likely to create confusion in a manner prejudicial to the interests of another trader.
2.    Where proceedings for unfair competition are instituted by reason of confusion created by the use of an assumed name, the court may order that damages be paid by the trader who created confusion and may, in addition, prohibit such trader from using the assumed name.

Art. 139. – Assignment of trade-name.

1.    The trade-name may not be assigned except together with the business to which it refers.
2.    The trade-name may not be used by the new trader unless it is followed by the name of such trader and by the words “successor” or “lessee”. The new trader may only use his own name in signing commercial papers.

Section 4. Distinguishing Marks

Art. 140. – Definition.
1.    A distinguishing mark is the name, designation, sign or emblem affixed on the premises where the trade is carried on which clearly designates the business.
2.     The use of a distinguishing mark is not compulsory.

Art. 141.  – Choice of distinguishing mark.

1.    A trader may choose any distinguishing mark.
2.    Damages may be claimed on the ground of unfair competition where the distinguishing mark is likely to create confusion in a manner prejudicial to another trader having used an identical or similar distinguishing mark.

Section 5. Right to the lease of the premises

Art. 142 – Civil Code applicable.

Without prejudice to the provisions of this Section, the provisions of the
Civil Code shall app1y to the right to the lease of the premises in which the trade is carried on.

Art. 143. – Nature of the trade carried on.

Where the contract of lease specifies the nature of the trade to be carried on by the lessee, the contract may be cancelled where the lessee carries on a different trade.

Art. 144. – Prohibition of trade by the lessor.

1.    After the contract of lease has been entered into, the lessor may not carry on in the same building a trade similar to the trade carried on by the lessee.
2.    Where the lessor disregards the prohibition provided in sub-art. (1 , he shall be liable for damages and his business may be closed.

Art. 145. – Prohibition from assigning or sub-letting.

1.    Notwithstanding the provisions of Art. 2959 of the Civil Code, any provision in the contract of lease which prevents the lessee from assigning the contract of lease or from sub-letting the premises to the person who buys his business, or which makes such assignment or sub-lease dependent on the lessor’s consent, shall be of no effect.
2.    Any provision which prevents or restricts a trustee in bankruptcy from exercising his rights under Art. 1062 of this Code shall be of no effect.

Art. 146. – Termination of contract of lease.

1.    Where a business is mortgaged, the lessor shall inform the creditors when he terminates the lease or he intends amicably to terminate the lease or to enforce a provision for termination made in the contract.
The lease shall terminate not earlier than one month following such notice to the creditors.
2.    Where notice is not given, the termination of the contract of lease shall not affect creditors having secured rights on the business.

Art. 147. – Lessee declared bankrupt.

1.    Any clause in the contract of lease providing that the contract shall terminate as of right where the lessee is declared bankrupt shall be of no effect.
2.    Where the lessee declared bankrupt, the trustee may exercise his rights under Art. 1040 and 1062 of this Code and the lessor may exercise his rights under Art. 1060 and 1061 of this Code.

Section 6. Patents and Literary or Artistic Copyright

Art. 148. – Patents.
1.    A business may consist of patents relating to registered inventions, trade-marks, designs and models.
2.    Patents shall be subject to the provisions of special laws.

Art. 149. – Literary and artistic copyright.

1.    A business may consist of literary or artistic copyright.
2.    The provisions of Art. 1647-1674 of the Civil Code shall apply to literary or artistic copyright.

Chapter 3. Sale of a business
Section 1. General Provisions

Art. 150 – Civil Code applicable.
Without prejudice to the provisions of this Chapter, the provisions of Art. 2266-2367 of the Civil Code shall apply to the sale of a business.

Art. 151. – Scope of application of this Chapter.

1.    The provisions of this Chapter regarding the sale of a business shall apply:
a.    to any sale or assignment, even under a disguised form;
b.    to any sale by auction at the request of joint owners.
c.    to any distribution accompanied by compensation, where such sale, assignment or distribution relates to a business or its goodwill or to a branch or agency assigned without the principal business being assigned or the goodwill of such branch or agency.
2.    The provisions of this Chapter shall not apply to the sale of individual parts of a business other than the goodwill, unless such sale entails or conceals the sale of the business or of the goodwill of a business.

Sections 2. Formalities

Art. 152. – Sale to be in writing.
The sale of a business shall be null and void unless evidenced in writing.

Art. 153. – Particulars in the contract of sale.

The contract of sale shall specify:
1.    the turnover and profits made during the last three financial years or since the business was created or acquired by the seller, where such creation or acquisition took place less than three years before the sale;
2.    Where the business is carried on in premises let out for hire, the date on which the contract of lease was made and is to expire and the same and address of the lessor;
3.    The mortgages on the business, if any.

Art. 154. – Cancellation of the contract.

1.    The court may cancel the contract of sale on the applicatit1n of the buyer where it is of opinion that the buyer was injured by the failure to comply with any of the requirements provided in Art. 153.
2.    The court may cancel the contract of sale or reduce the price of the sale on the application of the buyer where it is of opinion that the buyer was injured by any inaccurate statement made under Art. 153.
3.    Proceedings under sub-art. (1) and (2) shall be instituted during the year within which the contract was made.

Section 3. Duties of the Seller

Art. 155. – Duty to hand over.
1.    The seller shall hand over the business to the buyer.
2.    Unless otherwise agreed, the sale of a business implies the sale of all the conhtituent parts of such business.
3.    The seller shall enable the buyer to take over the goodwill by handing to him all necessary documents and information.
4.    The provisions of the Civil Code and of special laws shall apply to the assignment of patents and copyrights.

Art. 156 – Books and accounts.

1.    On the day of the sale, the seller and the buyer shall check all accounts and prepare an inventory of all accounting documents and books.
2.    The seller shall retain all his books and accounting documents and the correspondence sent or received by him, but he shall, notwithstanding any provision to the contrary, keep them available or inspection by the buyer for a period of two years.

Art. 157. – Commercial correspondence.

The seller shall hand to the buyer all correspondence relating to the business which he may receive after the sale of the business.

Art. 158. – Seller prohibited from competing.

  1.  During five years from the sale, the seller shall refrain from doing any act of competition likely to injure the buyer. He may not carry on, in the vicinity of the business he sold, a trade similar to the trade carried on by the buyer.
    2.    The contract of sale may specify the extent of such prohibition which shall in no case exceed five years.

Art. 159. – Right of the subsequent buyers.

A prohibition under Art. 158 shall be deemed to be an element of the business and may be enforced by the buyer and his heirs end by any subsequent buyer.
Section 4. Duties of the Buyer
Art. 160. – Duties of the Buyer.
The buyer shall pay the price in the manner provided in the contract or, where no special provision is made, in cash. Notwithstanding any agreement to the contrary, the provisions of Art. 162 of this Code shall apply.

Art. 161. – Publication of the sale.

The buyer shall ensure that notice of sale is published in accordance with the provisions of Art. 164-170 of this Code.

Art. 162. – Prohibition from disposing of proceeds of sale.

  1.  After the sale, the price of the sale shall not be paid to the seller until the period of time for making applications to set aside expires or, where any such application has been made, until the right of the creditors have been sett1ed by agreement or by the court and such creditors have been paid.
    2.    Until that time, no payment t or assignment of the claim shall affect the rights of the seller’s creditors.
    3.     The contract of sale may provide that the buyer shall deposit the price of the sale with a third party. Any such deposit shall discharge the buyer from his liabilities to the seller but the buyer shall remain liable to the seller’s creditors.

Art. 163. – Guarantee of the seller.

Until he is fully paid, the seller shall be secured by a legal mortgage and shall have the right to cancel the contract as provided in Art. 173-176 of
this Code.

Section 5. Publication of the Sale and Rights of the Seller’s Creditors

Art. 164. – Publication of the sale.
1.    Where a business is sold, the buyer &hall ensure that a notice to this effect is published in the official commercial gazette and in a news-paper   empowered to publish legal notices circulating in the Taklay Guezat where the head office of the business is situate.
2.    Where the business sold comprises branches or agencies situate in different places, the notice under sub-art. (1) shall be published in a newspaper empowered to publish legal notices circulating in the Taklay Guezat where each branch or agency is situate.

Art. 165. – Particulars to be published.
Notice under Art. 164 shall show:
a.    the names and addresses of the seller and buyer;
b.    the objects and address of the business;
c.    the objects and address of any branch or agency which may have been sold with the business.
d.    the date and nature of the contract of sale;
e.    the price of the sale;
f.    the address for service at the place where the business in situate.

Art. 166. – Time within which to publish notices.

  1.  Notices under .Art. 164 shall be published during the month within which the sale took place.
    2.     Late notice shall be va1id, but the buyer may be liable for any damage caused to the seller or to the seller’s creditors reason of the delay.

Art. 167. – Application to set aside.

  1.  Within one month from the publication of the last notice, any creditor of the seller may, even where his claim is not due, move the court to set aside the proceeds of the sale and shall notify the buyer at his address for service.
    2.    The application shall show the name and address of the creditor and the amount and basis of the claim.
    3.    Where notices under Art. 164 have not been published or did not contain all the particulars required under Art. 165, an application to set aside may be made at any time.
    4.    Until the application is decided on, the buyer or third party with whom the proceeds of the sale have been deposited may not dispose thereof and the provisions of Art. 162 shall apply.

Art. 168. – Application rejected.

The buyer may move the court reject an application which is not correct in form, or which is late or made without good cause.

Art. 169. – Distribution of the proceeds of the sale.

  1.  The proceeds of the sale shall be distributed by agreement or by order of the court between the creditors having a claim secured by the business and the creditors having made an application to set aside.
    2.    The surplus, if any, shall be handed to the seller.

Art. 170. – Overbid by creditors.

  1.  Creditors under Art. 169 (1) may move the court to order that the business be sold by auction where the price of I1he sale is insufficient to meet their claims.
    2.    The court shall order the sale by auction and the price of the sale shall be higher by one tenth than the price specified in the contract of sale.
    3.    Where no third party presents himself at the sale, the business shall be sold to the creditor making the highest bid.

    Chapter 4. Mortgage of a business
    Section 1. General Provisions

Art. 171. – Mortgage possibilities
1.    A business may be mortgaged.
2.    Mortgage of a business flows from the law or a contract.
3.    Any mortgage, whether legal or contractual, shall be registered.

Art. 172. – Mortgage under the law.

  1.  The following persons shall have their claims secured by a legal  mortgage on the business:
    a.    the seller of a business, for so long as the price of the sale has not been ful1y paid to him;
    b.    The creditors of bankrupt trader.
    2.    The relevant provisions of Book V of this Code shall apply to a mortgage under sub-art. (1) (b).

Section 2. Mortgage of the seller and action for the cancellation of the contract of sale

Art. 173. – Legal mortgage.
1.    Where a person sells a business and the price of the sale is not fully paid to him, the payment of the price or such part thereof as is still due shall be secured by a legal mortgage on the business sold.
2.    The provisions of sub-art. (1) shall not apply unless the sale was made in writing and the mortgage has been registered in the manner provided by law during the month within which the sale took place.

Art. 174. – Action for the cancellation of the contract.

The seller who is not fully paid may cancel the contract of sale. The cancellation of the contract shall not affect third parties unless the mortgage has been registered as provided by law and the possibility of bringing an action for cancellation has been entered in the register in which the mortgage was registered.

Art. 175: – Registration of legal mortgage.

  1.  The entry of the legal mortgage in the register shall show:
    a.    the names and addresses of the seller and buyer;
    b.    the date and nature of the contract of sale and the price of the sale;
    c.    the amount of the purchase price paid;
    d.    the conditions for demanding payment and the rate of interest:
    e.    the possibility of bringing an action under Art. 174;
    f.    the objects and address of the business;
    g.    the scope of the mortgage;
    h.    the address of any branch or agency mortgaged with the principal business, if any.
    2.    The mortgage shall apply to such parts only of the business as are expressly specified in the entry.

Art. 176. – Bringing of action for cancellation.

  1.  The seller who cancels the contract on the ground that he has not been fully paid (Art.174) shall, whatever the part of the price still due, take back the whole business in its condition on the day of cancellation, but not including new parts acquired after the contract of sale was made.
    2.    The increase or reduction in the value of the parts sold shall be taken into account in settling, the rights of the seller and buyer.

    Section 3. Contractual Mortgage

Art. 177. – Conditions of contractual mortgage.
1.    Any person who is capable under civil law and who owns a business may mortgage such business notwithstanding be does not operate it himself.
2.    The mortgage shall be in writing and shall be registered during the month within which the mortgage deed is drawn up.

Art. 178. – Registration.

  1.   The entry of the mortgage in the register shall show:
    a.    the names and address of the mortgagor and mortgagee;
    b.    the date and nature of the mortgage deed;
    c.    the claim secured by mortgage, the conditions on which it may become due and the rate of interest;
    d.    the objects and address of the business;
    e.    the scope of the mortgage;
    f.    the address of any branch or agency mortgaged with the principal business, if any.
  2.  The mortgage shall apply to such parts only of the business as are expressly specified in the entry.

Section 4. Manner of Registering Mortgages

Art. 179. – Place of registration.
1.    The mortgage shall be registered by the official entrusted by the Ministry of Commerce and Industry with keeping in each Taklay Guezat the register of mortgages of businesses.
2.    I1he mortgage shall be entered in the register kept in the Taklay Guezat within whose jurisdiction the business is situate.
3.    Where the business comprises branches or agencies situate outside the jurisdiction of the Taklay Guezat, the mortgage shall be entered in the register kept in each Taklay Guezat within whose jurisdiction each branch or agency is situate.

Art. 180. – Removal of the business.

  1.  A debtor who wishes to remove his business shall inform the secured creditors. The debt shall become due immediately where such notice is not given or removal is effected earlier than one month from such notice.
    2.    Creditors may exercise their rights under Art. 188 where they are of opinion that the removal would reduce the value of the business.
    3.    Where creditors agree to the removal and the business removed remains within the same area of jurisdiction, the creditors shall apply for the entry in the register to be varied accordingly. Where the business is removed, to another place, the creditors shall ensure that a new entry is made in the register kept in the Taklay Guezat within whose jurisdiction the new head office is situate.
    4.    Where an entry is varied or a new entry is made under sub-art. (8), such varied or new entry shall have effect as from the day of the original entry.

Art. 181. – Principal claim and interest.

Registration shall have the effect of securing two years interest in the same rank as the principal claim.

Art. 182. – Duration of registration.

Registration shall secure the claim for five years from the date of registration and shall cease to have effect where not renewed before the expiry of five years.

Art 183. – Cancellation of registration.
Registration shall be cancelled either where all interested parties so agree in writing or following a final judgment by the court.

Art. 184. – Communication of entries to third parties.

Any person on payment of the prescribed fee may require the official in charge of the register of mortgages to deliver to him a copy of any extract from the register or, where there is no entry for which he is searching, a certificate to the effect that there is no entry.

Art. 185. – Liability.

The official in charge of the register of mortgages shall be liable for failing to make the entries he is required to make and for any error or omission committed in delivering a copy or a certificate under Art. 184.

Art. 186. – Regulations.

  1.  Regulations shall specify:
    a.    the manner of keeping registers of mortgages;
    b.    the manner of making or canceling entries.
    2.    The fees to be paid on registration and on delivery of extracts or certificates under Art. 184 shall be prescribed by law.

    Section 5. Rights of Secured Creditors

Art. 187. – Business assigned or let out for hire.
1.    Notwithstanding any provision to the contrary, the debtor may assign his business or let it out for hire.
2.    It may be provided that the mortgage shall become due on the business being assigned or let out for hire. Such provision shall be of no effect unless it is entered in the register.

Art. 188. – Reduction of the guarantee.

Where the debtor reduces or is likely to reduce the value of the business in particular by removing it, by failing to pay the rent of the premises in which the trade is carried on or by reducing the stocks, any secured     creditor may demand that new sureties be produced and, where not     produced, may move the court to order that his claim be paid forthwith.

Art. 189. – Attachment of business.

  1.  A secured creditor whose claim is not paid on becoming due may move the court to order attachment of the business with a view to causing it to be sold by auction. Attachment may not be effected earlier than one month from the creditor having demanded payment and not having been paid.
    2.    Any provision to the effect that a credit may, failing payment, attach the business or cause it to be sold without complying with the requirements of the law, shall be of no effect.

Art. 190. – Right to follow the business.

  1.  A secured creditor may claim the business from a third party, as the mortgage follows the business into whatever hands it may fall.
    2.    The third party may avoid attachment by paying fully all secured creditors.

Art. 191. – Scope of mortgage.

  1.  The mortgage charges the business in its condition at the time of attachment, whatever the importance or value of its parts at that time.
    2.    The mortgage shall apply to such parts only of the business as are expressly specified in the entry.

Art. 192. – Preferred rights.

  1.  Secured creditors shall have a preferred right on the proceeds of the sale of a business.
    2.    As between secured creditors, rights shall rank in accordance with the date on which such rights have been registered. Mortgages registered on the same day shall rank concurrently.
    3.    The legal mortgage of the seller shall rank before contractual mortgages.

Art. 193. – Mortgages may be set up against the creditors of a bankrupt person.
The relevant provisions of Book V of this Code shall apply where     registered mortgages on a business are set up against the creditors of a     bankrupt person.

Chapter 5. Hire of a Business

Art. 194. – Civil Code applicable.
1.    A business may be let out for hire.
2.    Without prejudice to Art. 195-205 of this Code, the provisions of Art. 2896-2974 of the Civil Code shall apply where a business is let out for hire.

Art. 195. – Publication of the contract of lease.

  1.  A contract of lease shall not affect the rights of third parties unless it is in writing and it is published, on the application of either party in the official commercial gazette and in a newspaper empowered to publish legal notices circulating at the place where the head office of the business is situate.
    2.    Notices published under sub-art. (1) shall show:
    a.    the names and addresses of the lessor and lessee;
    b.    the date and nature of the contract;
    c.    the objects and address of the business;
    d.    the period of time for which the contract ill entered into.

Art. 196. – Registration.

The owner of the business let out for hire shall cause his name to be struck off and the lessee shall cause his name to be entered in the commercial register in accordance with the provisions of Title IV of this Book.

Art. 197. – Liability of the lessor.

Until the provisions of Art. 195 and 196 have been complied with and within one month from such formalities having been completed, the owner shall be jointly and severally liable with the lessee for any debt incurred by the lessee in operating the business.

Art. 198. – Particulars on business papers.

The contract of lease may be cancelled where the lessee fails to add the word “lessee” on all his business papers.

Art. 199. – Duties of lessee.

The contract of lease may be cancelled where the lessee fails to pay the agreed rent on the agreed day or does not operate the business with the care due by a good trader and in accordance with the objects of such  business.

Art. 200 – Guarantee.

  1.  In addition to the rent, the contract of .lease may provide that the lessee shall produce sureties to guarantee the fulfilment of his obligations towards the lessor or third parties.
    2.    Notwithstanding any provision to the contrary, the sureties shall be fully returned to the lessee upon the termination of the lease, where the lessee has fulfilled his obligations and no application is made by the creditors within the period of time specified in Art. 202 (3).

Art. 201. – Lessee personally to carry out his duties.

The lessee may not assign the contract of lease without the written consent of the lessor, as a contract of lease is made on the basis of the personal qualifications of the lessee.

Art. 202. – Termination of contract of loose to be published.

  1.  Where the contract of lease terminates, notices to this effect shall be published as provided in Art. 195 (1).
    2.    Notices published under sub-art (1) shall show:
    a.    the names and addresses of the lessor and lessee;
    b.    the objects and address of the business;
    c.    the date of termination of the contract;
    d.    the amount of the guarantee under Art. 200, if any.
    3.    The owner of the business shall be liable to third parties where the sureties under Art. 200 are returned to the lessee earlier than one month from the publication of the last notice.

Art. 203. – Debts of lessee shall become due.

Any claim which a creditor may have against the lessee shall become due on the termination of the contract of lease.

Art. 204. – Prohibition of trade by the lessor.

  1.  During the currency of the contract of lease, the owner of the business may not compete with the lessee by creating or acquiring a business having similar objects.
    2.    Where the owner disregards the prohibition provided in sub-art. (1), he shall be liable for damages and his business may be closed.

Art. 205. – Prohibition of trade by the lessee.

  1.  The parties may agree that, upon the termination of the contract of lease, the lessee shall not compete with the owner of the business by carrying on a trade similar to the trade carried on by the owner.
    2.    Any such prohibition shall not be effective for more than five years.

Chapter 6. Contribution of a Business to a business organisation

Art. 206. – Contribution to be published.
Where a business is contributed to a business organisation being formed     or in operation, notices to this effect shall provided in Art. 195 (1)

Art. 207. – Particulars to be published.

Notices published under Art. 206 shall show:
1.     the name and address of the contributor;
2.    the objects and address of the business contributed;
3.    the firm-name, nature and head office of the business organisation to which the contribution is made;
4.    the date of the memorandum of association.

Art. 208. – Objection to contribution.

  1.  During the month within which the last publication under Art. 206 was made any creditor of the contributor may, even where his claim is not due, send a notice to the head office of the business organisation to which the contribution was made to the effect that he objects to the contribution.
    2.    Where no publication was made or it is invalid, a creditor may make his objection at any time.

Art. 209. – Steps taken by partners.

  1.  Within one month from an application under Art. 208 being made any partner may move the court to dissolve the business organisation under formation or to cancel the contribution made to the business organisation in operation.
    2.    Where an application under sub-art. (1) is not made, the business organisation shall be jointly and severally liable with the contributor where the contribution is cancelled.
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