Commercial Law

Introduction

Malta has a long history of commercial legislation from the Romans to the Napoleonic code, and the Commercial Code has stood the test of time, but the need for more modern legislation was felt soon after the Second World War ended.

Article 4 of the Commercial Code is what gives a definition of a trader. It is a person who by profession, exercises acts of trade, any commercial partnership is a trader. If a person is a trader by being a trader, that person has certain rights at law and also has certain obligations. A trader, in the eyes of the law, is viewed differently from any other person because the law gives him certain privileges and gives him certain duties. Historically, it was also important to determine whether a person was a trader or not to determine which court one would use to sue a person. Till 13 years ago, one would bring a case against a trader in the Commercial Court and not in the First Hall of the Civil Court. The rule is that there is no formality in virtue of which a person becomes a trader. Whether one is a trader or not is a question of fact. However, there is an exception to the rule. A commercial partnership is brought about by registration, contrary to a physical person, who can just become a trader. Therefore, upon registration, a commercial partnership becomes a trader, even if it does not register any act of trade.

Small businesses have grown in popularity in recent years. People are opening restaurants that cater to specific diets or focus their menus solely on certain ingredients. The rise of the smartphone and the app has created a field ripe with opportunities for anyone to create and sell a product while also growing as new small-business owners.

Let us start by understating what is Civil and commercial law.

Commercial law is the body of law that governs the rights, relationships, and activities of individuals and businesses engaged in commerce, merchandising, trade, and sales is known as commercial law or mercantile law.

Civil litigation is more “traditional” because it involves people, whereas commercial litigation involves businesses. Civil and commercial litigation are very similar in terms of procedure. Both proceed through the typical litigation steps.

Civil cases frequently revolve around one party, the plaintiff, seeking monetary compensation from the second party, the defendant. To be clear, civil litigation does not constitute criminal charges. Civil litigation, on the other hand, is a dispute between two parties, one of whom is seeking money from the other. Criminal charges or penalties are rarely an issue and are rarely what the plaintiff seeks. Civil litigation can address issues such as landlord-tenant disputes, divorce lawsuits, and medical malpractice. Civil litigations are frequently settled through agreement and rarely go to court. If the case does end up in court, the process can last anywhere from several months to several years. Unfortunately, the length of the process reflects the complexity of the case and the parties’ relationship.

The relationship and interplay between civil and commercial law.

Commercial law is frequently regarded as a branch of civil law because it deals with both private and public law issues.

Commercial law addresses all legal aspects of the business and/or people involved in and/or working with the business. Every business wants to thrive and grow. As a company expands, it attracts an increasing number of employees. These people are more than just customers; they are employees, partners, investors, buyers, and sellers, to name a few. Contracts must be honoured, transactions must be completed, and provincial commercial laws must be followed. All of these areas, and more, are covered by commercial law. The problem with commercial law is that not only are commercial laws constantly changing, but so is the business landscape. Take for example a mobile application or a machine learning system and AI (artificial intelligence).  Not only did it change to introduce a new avenue in business, but it also introduced the new litigation of cybersecurity and data privacy.

A mixed act is an act of trade for one of the parties and an act of a civil nature for the other party e.g. a sale of goods by a retailer (B) to a consumer (C). For B the sale is an act of trade since B purchased the goods with the object of reselling them (see art. 5 (a)) but for C the purchase is an act of a civil nature since C purchased the goods for his own use or consumption.

Which law is applicable: (i) commercial law; (ii) civil law; or (iii) either / or?

The law is silent; there is a lacuna but traditionally have adopted option (iii). They applied the Commercial Law where the defendant was a trader and the Civil Law where the defendant was a non-trader

They adopted this ‘applicable law’ rule on the basis of the jurisdictional rule contained in the COCP (Cap. 12) which was repealed in 1995.[1]

The following fall under Commercial Law: Provisions in civil law dealing specifically with
commercial matters, Provisions in civil law referred to in commercial laws.

Art. 49 of the Commercial Code

Importance of civil law as a source of commercial law not to be underestimated: commercial obligations; contracts e.g. sale, pledge, lease etc.

Civil Code 1142. The interest fallen due may bear other interest either, in virtue of the foregoing provisions, from the day of a judicial demand to that effect, or in virtue of an agreement entered into after the interest has fallen due, provided, in either case, interest be due for a period not less than one year.

Civil Code 1850. (1) It shall be lawful to stipulate for interest on a loan, whether of money or of goods or other movable things. (2) It shall also be lawful to convert into a new capital at interest, the amount of interest due, provided such interest be not due for a time less than one year. (3) Any other agreement for payment of interest on interest, is null.

What are the difference and why distinguish between commercial law and Civil?

Applicable Law: commercial matters are governed by (i) commercial law, (ii) usages of trade, (iii) civil law (art. 3, Commercial Code), (i) Differences in the law of obligations, Special provisions for emancipation of minors to trade (arts 9-13, Commercial Code)

Interest: in commercial matters, interest starts running from the day the obligation should have been performed; in civil matters, from the date of notification of a judicial act. Civil – 1141(1) “Where the obligation is of a commercial nature, or the law provides that interest is to run ipso jure, interest shall be due as from the day on which the obligation should have been performed. (2) In any other case, interest shall be due as from the day of an intimation by a judicial act, even though a time shall have been fixed in the agreement for the performance of the obligation”

Joint and Several Liability: in commercial matters codebtors and sureties are presumed to be liable jointly and severally (in solidum) (art. 115, Commercial Code); in civil matters, they are not (art. 1089, Civil Code). Civil 1089: ‘Joint and several liability is not presumed. If not declared by law, it must be expressly stipulated.” Commercial 115.

Implied Resolutive Condition: in commercial matters the implied resolutive condition brings about the dissolution of the contract ipso jure; in civil matters, the Court can grant time for performance of the obligation (art. 1068, Civil Code). Civil 1066.

Status of Trader: exercise of acts of trade by profession can give person the status of a trader (art. 4, Commercial code) who would then be subject to the duties of traders.

Bankruptcy is only applicable to debts of a commercial nature.

Procedural Law: trade books legally kept are evidence of their contents (art. 629, COCP) contrary to the rule scriptura non probat pro scribente.

Criminal Law: e.g. forgery of commercial documents is punished more severely.

Conclusion

Unity of Private Law, should we have a formal distinction between the Civil and Commercial Law? Some ‘civilian’ legal systems have eliminated the distinction e.g. Italy, the Netherlands

One of the main reasons for the distinction was that pre-1995 it was the Commercial Court which had jurisdiction in commercial matters. Act XXIV of 1995 amended the COCP so that the Civil Court now has jurisdiction both in respect of commercial matters as well as civil matters.

“In commercial matters, the commercial law shall apply: Provided that where no provision is made in such law, the usages of trade or, in the absence of such usages, the civil law shall apply” (art. 3, Commercial Code)

Hierarchy (order of priority):

• Commercial Law
• Usages of Trade
• Civil Law

Although, Civil law is the last in the hierarchy but it prevails over usage when the civil law rule is one of public policy. The Importance of civil law as a source of commercial law not to be underestimated: commercial obligations; contracts e.g. sale, pledge, lease etc

[1] “If the matter which forms the subject of the cause is of a commercial nature for the defendant only, the actions arising therefrom shall be triable by the Commercial Court; if it is of a commercial nature for the plaintiff only, the actions arising therefrom shall be triable by the Civil Court” (art. 36(3) COCP – Cap. 12)