Commercial Agencies

(‫)الوكاالت التجارية‬

Business frequently expand (‫ )تتوسع‬to an extent where their owners

can no longer continue alone and they need the services of other people.
These people either become regular employees of the business owners
through a formal contractual relationship (‫ة‬$$‫ة تعاقدي‬$$‫)عالق‬, and are paid
salaries, or they become agents (‫ )وكالء‬with independent establishments (
‫ )مؤسسات مستقلة‬who cooperate with business owners and the remuneration
(‫ )بدالت‬is matter for agreement.

The commercial agency (‫ )الوكالة التجارية‬or representation (‫ )التمثيل‬is

the act by which a principal (‫ل‬$$‫ )الموك‬gives to an agent (‫ل‬$$‫ )الوكي‬or
representative (‫ل‬$$‫ )الممث‬the power to accomplish (‫ام‬$$‫ )القي‬commercial
transactions (‫ )صفقات تجارية‬for the principal or in the name of the latter (
‫)لحساب الموكل أو بإسمه‬, against certain remuneration (‫)لقاء بدالت‬. Specifically
the commission agent works under his own name but for the account of his
principal.

In case of litigation (‫ )الخالف‬between the principal (‫ )الموكل‬and the

agent (‫ )الوكيل‬or representative (‫)الممثل‬, the court (‫ )محكمة‬of the domicile
of the defendant (‫ )محل إقامة المدعى عليه‬shall have jurisdiction (‫)الصالحية‬.

The commercial agency –commission agency- ( ‫ )بالعمولة عقد الوكالة‬or

representation (‫ )التجاري التمثيل‬is a bilateral contract (‫)عقد ذو موجبات متبادلة‬,
therefore each party shall have to fulfill its obligations towards the other
party.

The contract shall be terminated at its expiry date or by mutual

consent (‫ )الرضى المتبادل‬of the parties. An abusive (‫ )التعسفي‬termination (
‫ )االنهاء‬shall give right to compensation (‫)التعويض‬.

This commercial cooperation (‫ )التعاون التجاري‬normally takes one of

the forms of the commission agency (‫ة‬$‫)الوكالة بالعمول‬, or commercial
representation (‫)التمثيل التجاري‬.

As to the broker (‫)السمسار‬, he is nothing more than a middleman (

‫ )وسيطًا‬or negotiator (‫ )مفاوضًا‬between parties.
 The Broker

(‫)السمسار‬

The broker’s activity is limited to bringing two parties (a seller and

a buyer) together and thereafter facilitating (‫ )تسهيل‬the development of a
contract which the parties may conclude (‫دان‬$$‫ )يعق‬exclusively at their
responsibility.

The broker is a middleman (‫ )وسيط‬or negotiator (‫ )مفاوض‬between

parties.

Unless agreed upon by the parties, the broker’s commission (‫)عمولة‬

is fixed by usage (‫ )العادة‬and custom (‫)العرف‬.

The commission shall be due only if the negotiator did reach the
conclusion (‫ )تم إبرام‬of the contract between the parties.

If it has been agreed that the expenses incurred (‫ )يتكبدها‬by the

broker shall be refunded to him, such expenses shall be due to him even
though his negotiations did not reach a successful issue (‫)نتيجة إيجابية‬.

A broker (‫ )السمسار‬differs (‫ )يختلف‬from a commission agent (‫الوكيل‬

‫ )بالعمولة‬in that:
a. The commission agent (‫ )الوكيل بالعمولة‬is entrusted (‫ )يعهد‬with the
possession (‫ )حيازة‬and control (‫ )مراقبة‬of the goods, while a broker
acts without control or possession of the property.
b. A commission agent may buy and sell in his own name, as well as
in that of his principal (‫)الموكل‬, while a broker, as such , cannot
ordinarily buy or sell in his own name.
c. A commission agent has a lien (‫ )حق الحبس‬upon the goods for his
charges (‫ه‬$$‫ )نفقات‬and commissions (‫ه‬$$‫)عمولت‬, while the broker has
neither control nor a lien upon the property.
 The Commercial Representative

(‫)الممثل التجاري‬

I. General Provisions

(‫)نظرة عامة‬

A- Definition of Commercial Representative

A Commercial Representative is an agent (‫ )الوكيل‬who carries out

negotiations (‫ )المفاوضات‬for effecting (‫ )إلتمام‬transactions (‫ )عمليات‬of sale,
purchase or lease (‫)التأجير‬, in the name of manufacturers (‫ )المنتجين‬and for
their own account (‫)ولحسابهم‬.

A merchant who, for his own account (‫)لحسابه الخاص‬, sells what he
buys on the basis of a contract (‫ )بناء لعقد‬which gives him the capacity (
‫ )صفة‬of representative (‫ )الممثل‬or sole (‫ )الوحيد‬and exclusive distributor (
‫ )الموزع الحصري‬shall also be considered a commercial representative.

The new law made a written agreement as an imperative (‫)إلزامية‬

rule.
B- The Nationality of the Commercial Representative

(‫)جنسية الممثل التجاري‬

A Commercial Representative must, in principle, be of Lebanese

nationality.

The Commercial Representative must necessarily have a

commercial establishment (‫ )مؤسسة تجارية‬in Lebanon.

In case the Commercial Representative is a juristic (‫ )معنوية‬entity (

‫ية‬$$‫ )شخص‬such as a Partnership or a Limited Liability Company, the
following conditions should be met:
1. The majority of the partners must be of Lebanese nationality.
2. The majority of the capital must be owned by Lebanese persons.
3. The partnership’s manager(s) must be of Lebanese nationality.

In case of a Joint Stock Company:

1. The totality (‫ل‬$$‫ )ك‬of its shares (‫هم‬$$‫ )األس‬should be registered
(nominative) shares (‫)أسهم إسمية‬.
2. The majority of its capital must be owned by Lebanese persons.
3. Two thirds of the members of its Board of Directors must be of
Lebanese nationality.
II: Scope of Application of Legislative Decree 34

(‫)نطاق تطبيق المرسوم المتعلق بالتمثيل التجاري‬

The Lebanese courts ruled that the exclusivity (‫ )الحصرية‬clause in

the Commercial Representation agreement shall apply to both parties.
This means that the supplier shall not sell the same products to another
merchant in the same territory and that the distributor shall not buy
similar products from any other supplier to sell them in the same
territory.

III: Application of the Exclusive Clause to third

parties

(‫)تطبيق بند حصر التمثيل على الغير‬

The provision (‫ )البند‬restricting the representation (‫ )التمثيل‬shall not

apply to third parties unless the agent (‫ )الوكيل‬concerned publicizes (‫)أعلن‬
it by registering it in the Commercial Register (‫)السجل التجاري‬, and at the
special register at the ministry of economy and commerce.

IV: When the supplier can cancel the agreement

concluded with the Commercial Representative

(‫)متى يحق للموكل أن يفسخ عقد التمثيل التجاري مع الممِثل‬

 The cancellation of the contract by the principal (‫ )الموكل‬without
fault (‫ )دون خطأ‬on the part of the representative (‫ )الممثل‬or other lawful (
‫ )مشروع‬reason, shall, notwithstanding any agreement to the contrary(
‫)بالرغم من كل اتفاق مخالف‬, entitle (‫ )يجيز‬the representation to claim (‫)المطالبة‬
compensation (‫ )تعويض‬equal to the damage sustained by him and the
profit lost in this respect.

Example on a lawful reason is: non-compliance (‫ )عدم تقيد‬of the

commercial representative with the provisions of the contract.

However what is not considered a lawful reason is: reorganization

(‫ )إعادة تنظيم‬of the supplier’s activities (‫ )أعمال المورد‬in the foreign market (
‫ارجي‬$$‫وق الخ‬$$‫ )الس‬with cancellation of the commercial representative’s
contract.

VI: Court Jurisdiction

(‫)صالحية المحاكم‬
Mandatory Jurisdiction of the Lebanese Courts (‫صالحية المحاكم اللبنانية‬
‫)اإللزامية‬

Notwithstanding any agreement to the contrary (‫)بالرغم من كل اتفاق مخالف‬,

the courts of the place where the commercial representative (‫ل‬$$‫الممث‬
‫اري‬$$‫ )اتج‬carries out his activities shall have jurisdiction in disputes (
‫ )النزاعات‬arising from the commercial representative contract (‫عقد التمثيل‬
‫)التجاري‬. In other words, the Lebanese courts only are competent when
such disputes arise (‫)ينشأ‬.
Negotiable Instruments
(‫)السندات التجارية‬

Negotiable instruments, known also as commercial papers, are

divided into methods of payment (‫ع‬$$‫يلة دف‬$$‫ )وس‬and instruments of
credit (‫)وسيلة إئتمان‬.

Methods of payment are: the documentary credit (‫)اإلعتماد المستندي‬,

the bill of exchange (‫)سند السحب‬, the letter of credit (‫)كتاب اإلعتماد‬, the
traveler’s check (‫ياحي‬$$‫يك الس‬$$‫)الش‬, and the check. Recently were added
credit cards that won’t be mentioned in this section.

The instrument of credit is the promissory note (‫)السند ألمر‬.

1. Promissory Note

(‫ساحب ومستفيد )السند ألمر‬

A Promissory Note is an unconditional (‫ )غير مشروط‬promise (‫)تعهد‬

made in writing, by one or more persons (the makers-‫ )الساحب‬to pay a
specified amount of money, at a specified time, or at sight (‫)لدى االطالع‬
(on demand) to another person called the beneficiary (‫)المستفيد‬.

In case the specified time for payment is not mentioned the

promissory note shall be payable at sight (‫)لدى االطالع‬.
 A Promissory Note is negotiable (‫داول‬$$‫ل للت‬$$‫ )قاب‬by endorsement (
‫)التظهير‬. Endorsement is the act of a payee, or holder of a bill (‫)حامل السند‬,
note, or other negotiable instrument, in writing his name upon the back
of the instrument, with or without further or qualifying words, whereby
the property of the instrument is assigned and transferred to another
person.(‫)تنتقل ملكية السند إلى شخص آخر بالتظهير‬.

The endorser (‫ المظّهر‬-‫ )المجّير‬becomes a party to the instrument and

is liable jointly and severally with the drawer (‫احب‬$$‫ )الس‬and previous
endorsers (‫ )المجّيرين السابقين‬for its payment.

All legal actions which the holder may institute (‫ )يّد عي‬against the
maker(s) of a Promissory Note ‫ ))الساحب أو محرري السند‬shall be barred by
the statute of limitation (‫زمن‬$$‫رور ال‬$$‫قط بم‬$$‫ )يس‬which is three years after
maturity date (‫)تاريخ االستحقاق‬.

As to legal actions (‫ )دعاوى‬of the holder (‫ )حامل السند‬against the

endorsers (‫)المظهرين‬, they shall be barred (‫ )تسقط‬at the end of one year as
of the date of the protest (‫ )االحتجاج‬submitted within the legal time limit (
‫)المدة القانونية‬.

Whenever the maturity day (‫ )يوم االستحقاق‬falls on a holiday, then

maturity shall be reported (‫ )يؤجل‬to the next working day, and payment
shall be legally due on the following working day.

This rule applies also to bringing legal action.

2. Bill of Exchange

(‫ سند السحب‬-‫مستفيد )الكمبيالة‬-‫مسحوب عليه‬-‫ساحب‬

A Bill of Exchange is an unconditional order (‫ )أمر غير مشروط‬in

writing addressed by one person (the drawer (‫ ))الساحب‬to another person
(the drawee (‫))المسحوب عليه‬, requiring the latter (‫ )هذا األخير‬to pay at sight,
or at a certain number of days after sight, or at a specified period of time,
a certain amount of money to a third person (the beneficiary (‫))المستفيد‬.

The difference between a Promissory Note and a bill of exchange

is that the bill of exchange implies the presence of a third party (the
drawee) other than the drawer (‫احب‬$‫ )الس‬and the beneficiary (‫تفيد‬$‫)المس‬,
although the beneficiary may be the drawer himself. The drawee will
commit himself by accepting the bill of exchange. This acceptance shall
be written on the instrument itself; however the mere signature of the
drawee will be enough evidence of his acceptance. The drawer is the
guarantor of acceptance and payment (‫)الساحب هو الكفيل للقبول واإليفاء‬.

Like the Promissory Note, the bill of exchange is negotiable, and

the endorser become a party to the bill and is liable jointly and severally
with the drawer and previous endorsers for its payment.

Also, the legal provisions applicable to endorsement, statute of

limitation, claims and legal actions concerning the promissory note
apply to the bill of exchange.
 3. The Check Account

‫ المستفيد‬-)‫ مسحوب عليه (دائمًا المصرف‬-‫ساحب‬

What is a check?

A check is an order for payment of money. This order is made

upon bank, and a payment is effected from a deposit of funds (‫األموال‬
‫ )المودعة لدى المصرف‬intended for payment at the request of the drawer (
‫)الساحب‬. In a check the drawer requests the bank to pay at all events a
certain sum of money to a certain person named the payee or beneficiary
(‫)أو المستفيد المدفوع له‬, or to a bearer (‫ )لحامله‬or to the drawer himself and
payable instantly on demand.

The Lebanese Law does not give a definition of the check but
describes it as including the following stipulations (‫)المشتمالت‬:
1. The word “check”
2. The name of the drawee (‫()المسحوحب عليه‬the bank)
3. The unconditional order to pay a determined amount of money (‫أمر‬
‫)غير مشروط بدفع مبلغ من المال‬
4. The place where payment shall be made
5. The date and place where the check is made
6. The signature of the check maker -drawer (‫)الساحب‬

The check is payable upon presentation regardless of the date of

payment mentioned therein, as checks are considered as liquid money.
 Once a check is issued, the maker (drawer) shall not be entitled to
object to its payment except in the following two special cases:
1. If the check is lost.( ‫)حالة ضياع الشيك‬
2. If the holder goes bankrupt (‫)حالة إفالس الحامل‬.
Moreover, the check maker will have to maintain with the drawee
(the bank) the amount of money stipulated in the check until
payment is made.

Penalties for issuing checks without provision

Persons issuing checks without provision (‫ة‬$$‫مؤون‬-‫يد‬$$‫)دون رص‬, or

without sufficient provision, or who withdraw a part or all of the
provision after issuing a check, or who give an order of non-payment of
a check for a cause other than the loss of the check or bankruptcy of the
holder are liable to a penalty ranging from three months to three years of
prison and a fine, together with the face value (‫ )القيمة اإلسمية‬of the check
and damages (‫)تعويضات‬.

In addition, whoever accepts a check knowing that it is without

provision is liable to same penalty?

Cashier’s check

(‫)الشك المصرفي‬

A cashier’s check- also known as certified check- is a check issued

by an authorized officer of a bank (‫ )صادر عن مسؤول ومفوض في المصرف‬and
directed to another person, evidencing that the payee (‫تفيد‬$$‫ )المس‬is
authorized to demand and receive from the bank upon presentation the
amount of the money mentioned in the check.

These types of checks could be drawn upon the central bank.

Crossed check

(‫)الشك المشطوب‬

A crossed check is a check crossed with two lines. The bank on

whom it is drawn must not pay the money for the check except to
another bank or to the bank’s client. That’s why such type of checks is
always deposited at a bank account and cannot be cashed upon its
presentation to the bank.