Lecture Area 4:

The Commercial Code

LAWC215 Business Law

Dr. Andrew Dahdal

Table of Contents

Chapter 5 .............................................................................................................................. 2
Part I ..................................................................................................................................... 2
I. Introduction ................................................................................................................... 2
II. Commercial Activities ..................................................................................................... 3
A. Trading with a view to speculation. ............................................................................. 3
B. Resolving commercial disputes .................................................................................... 4
C. What kinds of activities are defined as ............................. 5
Expanding the scope of ........................................................... 6
Rebuttable presumption of commercial activity ............................................................. 7
D. Activities that are not deemed ............................................ 7
Artists ............................................................................................................................... 8
Professionals .................................................................................................................... 8
Farmers............................................................................................................................. 8
A. Who cannot engage in Commercial Activties? .............................................................. 9
Bankrupt ........................................................................................................................... 9
Convicted Person.............................................................................................................. 9
Part II .................................................................................................................................. 10
III. Defining ................................................................................................. 10
A. Who is/can be a Merchant? ....................................................................................... 10
Imposed classification .................................................................................................... 10
Commercial Companies ................................................................................................. 11
Government Ministries, Public Authorities and Government Corporations ................. 11
Small traders .................................................................................................................. 11
B. Minors and Business Ownership ................................................................................ 12
C. Obligations imposed on the Merchant ....................................................................... 12
Type of records required (paper) ................................................................................... 13
Use of records in disputes .............................................................................................. 14
Sanctions for failure to keep records ............................................................................. 15
IV. The Business ( ................................................................... 16

1
 A. Tangible elements of a business ................................................................................ 16
Goods ............................................................................................................................. 16
Industrial Machinery ...................................................................................................... 17
Business Furniture .......................................................................................................... 17
B. Intangible elements of the business........................................................................... 17
Intellectual property ...................................................................................................... 18
Commercial leases.......................................................................................................... 18
The right to communicate with customers .................................................................... 19
Licenses and trade data ................................................................................................. 19
Part III ................................................................................................................................. 21
V. Introduction .............................................................................................................. 21
VI. Specific types of Commercial Contracts ..................................................................... 21
A. Sale Contracts ........................................................................................................... 21
Vendor obligations ......................................................................................................... 21
Buyer obligations............................................................................................................ 21
An Instalment Sale ......................................................................................................... 21
Auction Sale .................................................................................................................... 21
Maritime commercial Law ............................................................................................. 21
B. Commercial agency ................................................................................................... 21
C. Banking Operations ................................................................................................... 21
VII. Commercial papers ................................................................................................... 21
VIII. Bankruptcy................................................................................................................ 21

Chapter 5

Part I

I. Introduction

Law number 27 of 2006 is main legal instrument creating rules and regulations for commercial
activities in Qatar. This chapter will not examine every part of the Commercial Code. Rather, it
will focus on those elements that help to define the nature of ‘commercial activities’, the
classification of persons engaging in commerce (including their rights and obligations) and the
legal understanding of a ‘commercial concern’ (being a business). Other topic areas such as
‘commercial papers’ and ‘bankruptcy’, whilst important, will only be discussed briefly. The rules
of contract law discussed in a previous chapter continue to apply to contracts in a commercial

2
context. As will be seen throughout this discussion, however, some of the details relating to
contracts, such as time limits for bringing an action, are shorter and more adapted to a business
environment. The rules of the commercial code are applicable to merchants1, and any person
(even if they are not classified as a ‘merchant’) engaging in commercial activities.2 This initial
definition of the scope of law requires that ‘merchant’ as well as ‘commercial activities’ are both
terms that are well defined.

II. Commercial Activities

A. Trading with a view to speculation.

Commercial Activities are defined as transactions entered into for the purpose of making a profit.
This is in contrast to civil transactions which are entered into for a reason other than making
profit. For example, if a person purchases a car with the intention of fixing/repairing it and selling
it at a higher price, this will be classified as a commercial activity. If, on the other hand, a person
purchases a car for their own personal use, decides that they do not like the car and then sells it,
this would be a civil transaction and not commercial activity. That does not mean that a person
in a civil context cannot make a profit. Indeed they can sell the car for a higher price than what
they bought it. The profit motive, however, cannot be the sole or even the dominant reason for
the original purchase and sale of the car. The intention to buy only in order to sell at a higher
price is known as ‘speculation’.3

A person engaging in speculation will be classified as having engaged in commercial activity. The
significance of this classification is that the rules of the Commercial Code now apply to the
transaction. In Qatar, unlike some other civil law jurisdictions4, if the Commercial Code applies to
one person in a transactions, the whole transaction is regulated by that law. If, for example, the

1
The term ‘trader’ is sometimes used interchangeably with ‘merchant’. In this chapter, only the term
‘trader’ will be used.
2
Article 1, Commercial Code.
3
Article 3, Commercial Code.
4
See Egypt. Dr. Mohammad Salem Book.
3
purchaser of a car is purchasing the car for themselves (i.e. they are not speculating), the
Commercial Code will still apply to this sale if the seller of the car is speculating.5

It should always be remembered, however, that a set of legal rules must always apply to any
transaction. The ‘speculation’ test determines whether the Civil Code or the Commercial Code
will apply.

B. Resolving commercial disputes

If the Commercial Code applies to a contract and a dispute arises between the parties, the
Commercial Code provides guidance on how the dispute is to be settled.

Although it is not explicitly mentioned in the law, the first point of examination is the contract
itself. If the contract fails to provide a clear answer to the dispute, Article 2 of the Commercial
Code provides the following hierarchy of sources:

1. The Contract (if nothing)

2. The Commercial Code (if nothing)
3. Other commercial legislation (if nothing)
4. Commercial Customs (local or Special customs are to be preferred over general customs)
(if nothing)
5. The Civil Code.
If all of these sources of guidance fail to provide a clear resolution to any dispute, there are always
the rules of Shar’ia upon which judges can rely. If Shar’ia also fails to provide a clear answer, the
judge is permitted to decide the outcome of the dispute based on what the judge deems to be
‘just and fair’ in the circumstances.

5
Article 10, Commercial Code. The law provides that the parties in such a situation may agree otherwise,
i.e. the Civil Code will apply.
4
 C. What kinds of activities are defined as ‘Commercial Activities’?
No law can ever completely address every different kind of possible activity within which humans
engage. In defining activities as ‘commercial’ or otherwise, the ‘speculation’ test is usually
applied. In order to simplify things, the Commercial Code also identifies certain activities as being
commercial by their very nature.6 These broad categories are deemed commercial activities.
These activities include:

1. buying movable goods or commodities for the purpose of selling them in their original
state/condition or after processing
2. purchase or leasing of movable goods or commodities for the purpose of leasing or sub-
leasing them
3. Facilitating the sale or leasing of movable goods or commodities within the meaning of the
above stated activities.
4. Buying land for the purpose of sale in its original form or after conversion (i.e. building on
it). Also the sale of the land is an activity that will be deemed commercial
5. Any activities associated with setting up and registering a commercial company
6. any business that facilitates commercial contracts

The Commercial Code also establishes that certain activities, if done ‘professionally’, will be
deemed commercial.7 These activities are not commercial activities by their very nature but can
be deemed to be so if the activity is carried out in a manner that is considered professional. The
term ‘professionally’ is not defined in the law. Things that may be taken into account in
determining whether an activity is being conducted professionally may:

i. Whether the activity is the main source of income for the person engaged;
ii. Whether the activity is being carried out regularly rather than merely once;
iii. Whether the activity is being carried out in an organised manner where records are
maintained.

6
Article 4, Commercial Code.
7
Article 5, Commercial Code.
5
The activities noted include:

1. Banking transactions;
2. Exchange, financial exchange, investment and finance business;
3. Operating business as an agent, broker, stock broker or commercial agent;
4. Supply contracts;
5. Public warehousing business and the mortgage on funds deposited therein;
6. Extraction operations of natural resources including mines, quarries, oil, gas and others;
7. All kinds of Insurance;
8. Business and activity associated with public facilities such as public stadiums, cinematography,
hotels, restaurants and auction houses;
9. Business and activity in education facilities and private hospitals;
10. Concessions of utilities, such as water, electricity and gas supply; and postal, telegraph,
telephone services. etc.;
11. Land, sea and air transport;
12. Maintenance, cleaning and other commercial services;
13. Business agencies, tourism, export and import, and customs clearance businesses, and
recruitment agencies.
14. Works related to printing, publishing, journalism, operating radio or television stations and
other news media, advertising, and the sale of books.
15. Industry, including that associated with agricultural investment, and subcontracting of
establishment and processing business.
16. The building and construction industry, including refurbishment and demolition.

The Commercial Code specifically addresses the transport industry. All activities related to
shipping and aviation are classified as ‘commercial activities’.8 Activities related to commercial
securities are also deemed commercial activities.9

Expanding the scope of ‘Commercial Activities’

Apart from those activities that are specifically noted in the Commercial Code as being
commercial by nature, or commercial if done professionally, a broader set or activities are

8
Article 6, Commercial Code. These include the building, sale, purchase, leasing, hire and repair of ships
and aircrafts; related lending and borrowing; work and labor contracts related to a ship’s or aircraft’s crew
and other employees; Any process or purchase or sale of accessories related to the air or sea transport;
any kind of related insurance.
9
Article 7, Commercial Code.
6
captured by Article 8. Any activities that are related or comparable to the activities specifically
noted in Article 4 to 7 will also e deemed to be commercial activities.

Rebuttable presumption of commercial activity

Any contracts or transactions entered into by a ‘merchant’ (as defined under the law – see
below), will be deemed to be a commercial activity. Importantly, this presumption can be
rebutted (rejected) if sufficient evidence can be presented to prove otherwise.

Generally in relation to all the activities noted in Article 4 to 7, the commercial nature of the
transactions are only ‘deemed’ (or ‘considered’) commercial on their face. What this means is
that with sufficient evidence it can be established that the buying and selling of goods, for
example, was not a commercial activity because there was no intention to make a profit. A
school, for example, may buy and sell school uniforms but this would not be for a commercial
purpose but rather these transactions are services designed to assist students and parents
comply with school policies.

D. Activities that are not deemed ‘commercial activities’

Some activities are exempt from being classified as commercial activities.10 There are various
reasons why this may be the case depending on the nature of the activities in question. Some of
the reasons why these activities are not deemed commercial activities relate to the difficulty in
identifying the buying and selling of goods or services. In the context of artistic works (see below),
an artist is not buying goods with the intention of selling them for a profit. It may be true that the
artists is buying goods, transforming them and selling the finished product, but the process of
transformation, and the skill and meaning involved in that experience, is really what is being sold.
Likewise with an author who is selling book they have written. It is not the paper and ink that is
being resold to a consumer, but the ideas and associated information contained in the book that
is being sold.

10
Article 11, Commercial Code.
7
These activities are regulated by the Civil Code rather than the Commercial Code.

Artists

The sale, by artists, of artwork they themselves have created will not be considered commercial
activity. Artistic expressions are understood to be inspired by something other than profit.
Although this might not always be the case and some inauthentic artists might create music,
produce movies or write novels11 for money, for moral reason, it is important (and indeed nice
to see) that the law recognises that profit ought not be the main driver of the artistic spirit.

Professionals

Professionals who are self-employed and engaged in professional services such as medicine, law,
and engineering will not be deemed to be engaging in commercial activities. A professional is
selling their knowledge and expertise rather than goods. They are creating the value rather than
buying and transforming anything. With other service providers such as banking, for example,
the customer is receiving a benefit from something the bank has bought (that could be a safe
place to keep their money or even funds that the bank is lending).12

Farmers

If a farmer grows crops and sells them from his own land (and not from a permanent shop or
factory), that activity will not be deemed a commercial activity. If the crops are processed using
available means and sold in another form (such as clean potatoes) the same rules apply. If the
processing is done in an established factory, such as a juice factory, the activity will then be
considered commercial. 13

11
Article 11 (2), Commercial Code.
12
Article 11(4), Commercial Code.
13
Article 11(4), Commercial Code.
8
 A. Who cannot engage in Commercial Activities?
The commercial Code directly addresses the situation of bankrupts and criminals in relation to
their ability to engage in commercial. Penalties for breaching such restrictions are harsh. A person
found trading while prohibited may be jailed for up to one year and/or fined up to QR 50 000. 14

Bankrupt

A Merchant who has previous declared bankruptcy within their first year of trading may not
engage in trade.15 As noted above, if such a person, despite being prohibited from trading, still
does engage in trade, they will still be classified as a Merchant (with all the obligations that
implies).16

Convicted Person

A person convicted of a ‘dishonesty offence’ (such as fraud, theft, false accounting etc.) shall also
be profited from engaging in trade. Other non-related offences such as driving violations or small
criminal violations will not prevent a person from engaging in trade. Even in such circumstances,
where the person has been convicted of a ‘dishonesty offence’, they may still engage in trade if
they have been rehabilitated.17

14
Article 20, Commercial Code.
15
Article 20, Commercial Code.
16
Article 13, Commercial Code.
17
The law does not define ‘rehabilitated’. Serving a jail sentence for an offence may be an example of
rehabilitation in this context.
9
Part II

III. Defining ‘Merchant’

The definition of a Merchant is important because the commercial code imposes certain
obligations and duties upon Merchants as compared with ordinary civilians. Even though any
contract or transaction entered into by a Merchant is deemed commercial (unless otherwise
proven), this does not mean that every commercial transaction renders that person a
Merchant.18 A person will be classified as a Merchant if they are carrying on a business in their
own name and this business is their occupation.19

A. Who is/can be a Merchant?

The person is a ‘sole-trader’ in the sense that they are running the business alone and not through
and other legal structure (such as a company – Although commercial companies would still be
considered as Merchants). Anyone engaged in promoting or advertising a commercial business
will be deemed a Merchant even if such activities are not their main occupation.

Imposed classification

The commercial code will classify any person as a Merchant who engages in commercial activities
but does do in a concealed manner. For example, if a person is using a fake name or the name of
another person to hide their own identity, they will still be classified as a Merchant. What is
important is who is actually satisfying the definition of a Merchant Appearances are not
determinative of who is and is not a Merchant.

Persons who have banned or prohibited from engaging in commercial activities, but who
nevertheless do engage in such activities (as their occupation) will still be deemed Merchants. 20

Whether the person is using a fake name or breaching a banning order, they cannot escape the
application of the Commercial Code and claim that the Civil Code ought to apply to them instead.

18
Article 14, Commercial Code.
19
Article 12, Commercial Code. The law is silent on whether it is relevant that the occupation is their
‘primary occupation’ or otherwise.
20
Article 13, Commercial Code. The person will also suffer sanctions for breaching their ban.
10
In some circumstances the Civil Code would be to the benefit of the person (for example, the
Commercial Code imposes an obligation on Merchants to maintain records whilst the Civil Code
contains no such obligation).

Commercial Companies

A commercial company is always considered a Merchant, even in circumstances where they are
not engaging in commercial activities.

Government Ministries, Public Authorities and Government Corporations

Government bodies such as ministries and government agencies (for example the Traffic
Department) are generally not deemed to be Merchants for the purposes of the Commercial
Code. This does not mean that the government cannot enter into contracts for commercial
purposes, or if they do, no law will apply. The Commercial Code will apply to transactions entered
into by government bodies (unless an exemption is granted), but that government body will not
be classified as a Merchant.

Companies established by the government who to which the government has contributed are
treated differently than other government bodies. These types of companies will be classified as
Merchants and subject to the obligations imposed on all other Merchants. Branches or offices of
companies incorporated or contributed to by foreign governments will be treated in the same
manner.21

Small traders

A small trader is a person who’s livelihood is dependant on small jobs or a basic trade. This class
of persons is exempt from being classified as a merchant and having all the burdensome
obligations imposed upon their activities. The relatively small scale of their operations and the
limited resources available to these small traders means that it would be an undue imposition to
expect them to maintain detailed records and comply with strict registration requirements.

21
Article 15, Commercial Code.
11
The definition of a small trader is not contained in the law and is subject to the regulations of the
relevant ministry.

B. Minors and Business Ownership22

Minors can generally be classified as Merchants in that they own shares or assets in a business.
They may have inherited those shares or otherwise obtained ownership of a business. As in the
case of contracts with minors, the court is once again in this context empowered and required to
base any decision on what will ultimately protect and serve the best interests of the minor. The
court may order that assets or business be sold or, alternatively, the continuation of the business
under the supervision of an appointed representative (agent). If the business is continued, the
arrangement between the minor and the representative is to be entered on the commercial
register and the minor will be liable only to the extent of the assets or funds committed to the
business. The minor may also file for bankruptcy, although bankruptcy will have no future
consequences on the minor and the minor will not be personally liable to creditors.

If the representative appointed to administer the business on behalf of the minor is suspected of
mismanaging the affairs of the business (or not acting in the best interests of the minor), the
court may order the removal of the representative. If the representative is removed, the interests
of third parties who have dealt with the representative are protected. The commercial register
must also be informed of the removal within 24 hours of the decision.23

C. Obligations imposed on the Merchant

The commercial code requires that anyone classified as a Merchant must satisfy certain
requirements. These requirements relate to book keeping and record keeping.24 If a Merchants
capital25 does not exceed QR 100 000, they are exempt from these requirements. 26 The rules
and regulations in this context are quite ‘old fashioned’ in that they generally refer to paper

22
Article 18, Commercial Code.
23
Article 19, Commercial Code.
24
Article 21, Commercial Code.
25
‘Capital’ is not defined in the law but usually includes value of inventory/stock, machinery and any money
held by the business.
26
Article 22, Commercial Code.
12
records. The Commercial Code, nevertheless, does state that if records are kept on a computer
and in electronic form, is exempt from Articles 22-26. Commercial records obtained from a
computer are to be treated the same way that traditional paper records are treated.27

Type of records required (paper)

The types of records that must be maintained include:

i. Original Daily Journal (ODJ). The ODJ must include all daily transactions and commercial
activities engaged in by the Merchant. Personal expenses, withdrawals and statements
are to be recorded on a monthly basis.28

ii. General Ledger (GL). All transactions recorded in the ODJ must be transferred to the GL
and organized, cross-references so as to give a clear picture of the financial position of
the Merchant and their business.29

iii. Inventory Record (IR). The IR is to contain all the records of the stock held by the Merchant
on a year by year basis.30

iv. All original correspondence (incoming and outgoing) and invoices are also to be
maintained.31

27
Article 35, Commercial Code.
28
Article 23, Commercial Code.
29
Article 24, Commercial Code.
30
Article 25, Commercial Code. Article 26 requires that the paper records are submitted to the Commercial
register within two months of the end of the fiscal year. The records are to be inspected and stamped by
the Commercial Register. No fees are to be imposed for the stamping. Furthermore, the records must not
contain any empty pages, footnotes, erasures or insertions. As noted above, these legal requirements are
not required for Merchants who maintain electronic records.
31
Article 27, Commercial Code. This requirement does apply to Merchants who maintain electronic records.
Merchants who carry out petty trades (as noted in Article 16) or who have capital amounting to under QR
100 000 are exempt.
13
All records relating to the commercial activities and transactions are to be kept for a minimum of
10 years from the date the transaction is completed. All correspondence and invoices are to be
kept for a minimum of 5 years. This includes the heirs of any business that is inherited.32

Use of records in disputes

A court may compel a Merchant to submit their records for inspection in the case of a commercial
dispute.33 In order to maintain some confidentially and privacy, the Court will examine those
parts of the records that are considered relevant to a dispute. The courts are generally reluctant
to give any party full open access to the records of a Merchant. Merchants can decline to provide
their records to the court as long as they have a ‘reasonable excuse’ (i.e. it will reveal confidential
trade secrets).34 If one party seeks to rely on the commercial records of a Merchant in the case
of a dispute, it is open to both sides to rely on those commercial records as evidence. 35

a. Merchant v. Merchant
If the commercial records are in accordance with all legal requirements, a Merchant is permitted
to rely on their own commercial records as evidence in any commercial dispute with another
Merchant. A Merchant is not permitted, however, to rely on the records contained in the books
of the opposing Merchant in a dispute.36 This position can perhaps be explained by the
unwillingness of the Courts to grant full open access to the records of a Merchant. This will
prevent ‘fishing expeditions’ where a Merchant in a dispute may seek to cast a ‘net’ over all of
their opponents records just to see if they catch anything that is helpful in the dispute.

b. Merchant v Civilian

32 Article 28, Commercial Code.

33 Article 29, Commercial Code.
34 Article 32, Commercial Code. In such situations, the Court will accept the sworn
testimony of the Merchant in relation to the contents of the records.
35 Article 31, Commercial Code.
36 Article 30, Commercial Code.
14
Merchant can use their own commercial records to prove a case against a civilian if the case
relates to the a debt arising from commercial activities. The Merchant is not permitted to use
their own records in their own defence against a claim from a civilian.37

Sanctions for failure to keep records

Failure to keep commercial records is punishable by a fine of no less that QR 1000 and no more
than QR 10 000.38

37 Article 31, Commercial Code.

38 Article 34, Commercial Code.
15
 IV. The Business (‘Commercial Concern’)

The actual business that is carried on by a Merchant consist of several components. Perhaps the
best way to conceptualise the ‘business’, is to view it as a bundle of rights that includes ownership
rights over physical property (tangible), and exploitation rights over non-physical property
(intangible).

It is important to know the legal scope of a business for several reasons. In the event that the
businesses to be sold, exactly what is being transferred need to be clear. The legal boundaries of
a business are important to ascertain for the purpose of valuation. A prospective buyer of
business needs to know how much they are getting and whether they are paying a fair price for
the business. The valuation of a business is also important in the context of commercial credit. If
a business owner is seeking to grow or expand their business, they may seek to borrow money
from a bank or creditor in order to finance such plans. Having a clear valuation of the business
helps in obtaining such funds. Creditors clearly know how much value can be secured against any
loan that is given.

A. Tangible elements of a business

The tangible elements of a business include the goods legally owned by the merchant (‘Goods’),
the tools and machinery used in the fulfilment of the commercial activities (‘industrial
machinery’) and any other physical property that is related to the running or administration of
the business (‘Business Furniture’).

Goods
The ‘goods’ in a business include everything that is to be sold to customers. It includes inventory
in storage that is not in the primary place of business, but is legally owned by the Merchant and
can legally be sold to customers.

Raw materials are considered goods if they are intended to be transformed and sold to customers
as finished goods. For example, aluminium sheets will be considered goods even if they sheets
are to be treated, cut and made into fences for ultimate sale to customers.

16
 Industrial Machinery
‘Industrial Machinery’ is a broad term that includes any property that is used to manufacture
goods. These may be machines in the traditional sense. For example, a machine located within a
factory that produces shoes would be ‘industrial machinery’. Alternatively, small tools that help
in the building of goods such as a drill for building furniture, will also be classified as ‘industrial
machinery’. Cars and other vehicles are generally considered industrial machinery.

Computers and more technical equipment present a greater conceptual challenge. Even though
they may not be physically producing anything tangible, computers are still vitally important in
the modern production process. As such, computers and more technical equipment should also
be considered ‘industrial machinery’ if they are related to the production process.

What if a computer is not producing anything physical, and it is merely being used for producing
designs, technical advice or other specialised IT services? The most sensible approach is to
determine if the computer is being used in the performance of a commercial activity, as opposed
to the internal administration of a business. If the computer is being used in the performance of
a commercial activity, it should be classified as industrial machinery.

If, on the other hand, a computer is being used for internal administrative purposes within the
business, that computer falls under the alternative category ‘business furniture’.

In reality the classification of a computer is not a tremendously important consideration. Both

categories (‘industrial machinery’ and ‘business furniture’) fall within the scope of what is legally
defined as a business.

Business Furniture

Business furniture includes all tangible property that is used to carry out or administer the
business. Office furniture, stationary and anything else that is neither intended to be sold to
consumers, nor used in the manufacture of final goods will all be classified as ‘business furniture’

B. Intangible elements of the business

Something that is tangible can be seen and physically touched. By contrast, ‘intangible’ elements
cannot be seen and touched physically but they do exist as legal rights that can be enforced.

17
When a business is sold, or transferred, the intangible elements can also be valued and sold with
the business. The intangible elements in a business can be divided into several sub-categories.

Intellectual property
In some instances, a business is based entirely on certain IP rights that the business is exclusively
permitted to exploit. For example, a business may be based on the manufacture of a particular
electronic device that is protected by a patent. No other person is permitted to produce and sell
that device because it is protected by a patent. Removing that patent from the business would
essentially destroy the business. Other IP rights that are important to business include
trademarks that identify and differentiate the business from its competitors.39 A business may
also have copyright over particular associated parts of a business such as music, a song or a
‘jingle’. A restaurant menu or artistic patterns on uniforms may also be capable of being
protected by copyright.

Commercial leases
The legal right to occupy some premises in the form of a lease to rent a shop-space is also an
intangible right that belongs to the business. The location of a business is sometimes a very
important feature of the entire enterprise. A good location can often mean the difference
between success and failure in a commercial context. The legal right to run a business from given
commercial space (in a mall for example) is based on a contract between the existing business
and the landlord. For the new owner of a business to take over the lease, the consent of the
landlord is essential. Given that there are no specific laws in the Commercial Code that address
the transfer of commercial leases, the rules contained in the Civil Code apply.40

Under the Civil Code, a tenant (current leasee) is permitted to assign the lease to someone else,
in this case the new owner of the business. This right, however, might be limited if the original
lease took account of the personality or identity of the original lease. For example, if a mall enters
a lease with McDonalds for a store in the food court and the contract specifically requires the

39
Trademarks, patents and other IP are defined and subject to the relevant IP laws that exist in
Qatar: Article 38, Commercial Code.
40See, generally, Articles 582-669, Civil Code. In particular, Articles 620-624 ‘Assignment of the
lease and Sub-lease’, Civil Code.
18
leased space is used for a McDonalds store, the tenant cannot assign or transfer the lease to a
new owner who will not use the premises for that purpose.41

The right to communicate with customers

Another intangible right that is noted in the Commercial Code is the right to communicate and
deal with customers. This is connected to the reputation of a business and allows the new owner
to continue dealing with existing customers of the business. Soliciting or communicating with
private citizens might be permitted by means of advertising, although more personal and direct
communication might otherwise be an invasion of privacy.

Licenses and trade data

A license relating to a business is also an intangible part of the business. An important issue to
note in this context is that only licences that are unrelated to the personal qualities, skills or
qualifications of an individual person can be transferred.42 For example, if the business involves
taking customers on a tour of the bay area around Doha, the new owner of the business may
receive ownership of the physical boats and trademarks associated with the business, but they
will not receive a boat sailing license from the previous owner. Since a boat sailing license is
connected to the skills of the person navigating the boat, the new owner would need to take a
test in order to obtain their own license.

Licenses may also apply to permissions granted by rights holders for the business to use, sell,
produce or otherwise exploit their goods or rights. For example, the Disney company might grant
a license to a clothes business allowing them to use the image of Mickey Mouse on t-shirts. The
new owner of the clothes business would also receive the license from Disney to continue to
produce t-shirts with Mickey Mouse on them. Another example would be if Coca-Cola licenses
their trademark to a restaurant allowing that restaurant to use the Coca-Cola trademark in their
own advertising this would allow the business to advertise to their customers we sell Coca-
Cola .

41 Article 620, Civil Code.

42 See Dr. Mohammad Abou Farag, Qatar Commercial Law (2014).
19
Trade data such as customer information, supplier contact details and the operating information
related to the business are all also intangible elements that can be transferred. Often when a
business is sold, there is a handover period where the old owner works alongside the new owner
in order to educate them about various aspects of running the business. This also has a
quantifiable value.

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Part III

V. Introduction

VI. Specific types of Commercial Contracts

A. Sale Contracts

Vendor obligations

Buyer obligations

An Instalment Sale

Auction Sale

Maritime Commercial Law

B. Commercial agency
C. Banking Operations

VII. Commercial papers

VIII. Bankruptcy

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