The Merchant/Trader

The trader is a person who performs, in his name and for his own account, commercial acts, in
a usual and professional manner.

The following activities are considered as commercial acts: purchase of goods for the purpose
of selling/ leasing them, banking operations, manufacturing,…

Traders’ obligations:
- Keep obligatory trade books (daily book, annual inventory book);
- Register his name on the Register of Commerce (Kept by a clerk in each Court of First Instance
& provides the public with complete information relevant to all traders operating in the
country)
Business Establishment
Business Establishment is:
• mainly constituted by incorporeal elements: the title to lease, the clientele
(customers), the business corporate name & the commercial sign.
• By way of accessories, by corporeal elements: the merchandise and the furniture.

The clientele is the main element of the definition of a Business

Establishment.

In case the sale contract of a business establishment does not

specify the elements, subject to the sale, the law provides that all
incorporeal elements are considered to be included.
Sale contract of a Business Establishment
• Obligation to offer to conclude the sale of BE with the owner of premises prior to its sale.
Owner/ • Right to request payment from buyer
Vendor • Obligation to not compete with buyer. This obligation should ALWAYS be limited in time & space: If not limited in time/
space, the contractual clause is reputed not written. In that case and in case of the absence of such contractual clause, the
of the vendor remains bound to the legal obligation of not competing. The judge will have to limit this obligation in time and space.
• Obligation to provide warranties to the buyer against defects of BE: i.e. accuracy of the revenue declared the past 3 years.
B.E • Loss of his quality of trader, unless he continues to carry out a commercial activity.

• Obtaining the quality of trader.

Buyer • Obligation to pay compensation to owner .
of the • Right to claim the transfer of the rent of premises from the previous owner of BE to him.
• Obligation not to change the nature of the BE.
B.E • Obligation to pay the rent of the premises to the owner of the premises.

Owner/
Lessor • Priority right to buy the business establishment
of • Obligation to lease the premises to the buyer of BE.
• Right to claim for a fair rent from the buyer of BE: raise of rent according to the cost of living, etc.
premise
s
COMPANIES:
CORPORATIONS & PARTNERSHIPS
• The contract establishing a company is a contract by which two or several persons put something in common
(contribution) in order to share out the profit that may result from it.

• Contribution may consist:

• In cash,
• In kind: movable or immovable things, or incorporeal rights.
• In Industry: the profession(s) of one partner or all partners.

• The company’s capital is formed of all contributions. If contribution consists of things other than cash, such things
must be evaluated.

• The company’s agreement should be notarized/signed before the Clerck of the Commercial Register.
• Once established, the company has a legal entity, allowing it:
• To contract under its own name and for its account.
• To file a lawsuit or may be sued before justice.
• To be creditor/ debtor of rights and obligations.
COMPANIES:
PARTNERSHIPS & CORPORATIONS
PARTNERSHIPS
Key role: Identity of the partners- All kind of
contributions are allowed
The legal entity of the partnership is often
confound with the identity of the partners
Partners jointly manage the business of the
partnerships, unless otherwise agreed. Each
partner is considered as trading personally
under the name of the company , acquiring
thus the legal capacity of a trader.
The company’s name should include the
names of the partners, followed by the terms
“& Co”
Partners are personally and jointly liable for all
partnership debts
The shares are not freely negotiable/ The shares
transferable transferable
CORPORATIONS
Key role: Contribution in cash/ kind
The legal entity of the corporation is
completely distinct from its shareholders
The corporation is managed by a manager/
board of directors.
Partners/Shareholders do not acquire the legal
capacity of a trader.
The corporation’s name may consist in an
innovative name
Shareholders/Partners are liable for the
company’s debt to the extent of their capital
contributions only
are freely negotiable/
GENERAL PARTNERSHIP
• A general partnership is formed of two or several parties who are personally and jointly responsible of the
company’s debts/liabilities.

• The company’s name should include the names of the partners, followed by the terms “and Partners”. Such
name must always correspond to the company’s actual members. Any alien to the company who agreed to
include his name in the company’s name shall be liable for its debts towards third persons.

• There are no specific requirements with respect to capital( no minimum Capital required): All kind of
contribution are accepted (cash, kind and industry).

• Partners jointly manage the business unless otherwise provided in the partnership agreement. Each partner is
considered as trading personally under the name of the company , acquiring thus the legal capacity of a trader.

• The insolvency of the partnership automatically results in the insolvency of the partners individually.