to 21 Rabih el Awwal 1414 H.
THE COMMERCIAL TRANSACTIONS LAW
Decree-Law no. 9/2016 dated
Decree-Law No. 14 dated
Zayed Bin Sultan Al Nahyan, President of the United Arab Emirates State,
to the perusal of the provisional
Law no. 1 of 1972, regarding the Jurisdiction of Ministries and the powers of
the Ministers and the amending laws thereof; and
Law no. 5 of 1975 regarding the Commercial Registry; and
Law no. 8 of 1980 to Regulate Labour Relations and the amending laws thereof;
Law no. 10 of 1980 regarding the Central Bank, Monetary System and Organizing of
Banking Profession; and
Law no. 18 of 1981 Regulating the Commercial Agencies, and amending laws
Law no 26 of 1981 regarding the Maritime Commercial Law, and amending laws
Law no. 8 of 1984 regarding Commercial Companies and amending laws thereof;
Law no. 9 of 1984 regarding Insurance Companies and Agencies, and amending laws
Law no. 5 of 1985 Issuing the Civil Transactions Law and amending laws thereof;
Law no. 22 of 1991 regarding Notary Public; and
Law no. 10 of 1992 Issuing the Law of Evidence in the Civil and Commercial
Law no. 11 of 1992 Issuing the Civil Transactions Law; and
Law no. 37 of 1992 regarding Trademarks; and
Law no. 44 of 1992 regarding the Industrial Regulation and Protection of
Patents, Industrial Drawings and Designs; and
upon the proposal of the Minister of Economy and Commerce, the agreement of the
Council of Ministers and the ratification
the Federal Supreme Council,
promulgated the following Law:
Commercial Transactions Law, hereby attached, is applicable.
provision contrary to the provisions of this Law shall hereby be repealed.
ministers and the competent authorities in the Emirates, each within his
concern, shall implement the provisions of this Law, and the Minister of Economy
and Commerce, after seeking the opinion of the competent authorities, shall
issue the necessary implementing regulation in respect thereof.
Law shall be published in the Official Gazette and shall come into force three
months subsequent to the date of its publication.
by Us at the Presidential
Palace in Abu Dhabi
On 21 Rabih al-Awwal 1414
Corresponding to 7 September 1993.
Zayed Bin Sultan
President of the
United Arab Emirates State
This Federal Law has been published in the
Official Gazette, issue no. 255 p. 5.
TRANSACTIONS LAW PRELIMINARY PART
provisions of this Law shall apply to merchants, as well as to all acts of
commerce carried out by any person even though he be not a trader.
Merchants and acts of commerce are governed by the agreement entered into by the
two contracting parties unless such agreement contradicts an imperative
commercial law provision.
In the absence of a specific agreement, the rules of commercial customs and
practices shall apply on all matters not provided for in this Law or any other
law governing commercial matters. Special or local customs shall have precedence
over general customs and, in the absence of a commercial custom, the provisions
governing civil matters shall apply to the extent they are not inconsistent with
the general principles of a commercial activity.
Private agreements or commercial customs rules in violation to public policy and
morals shall not apply.
matters regarding which specific Federal laws are issued shall be subject to the
provisions of such laws, and to the provisions hereof which do not contradict
with said laws.
Acts carried out by a merchant in relation with his trade. Unless otherwise
established, every act performed by a merchant shall be considered as related to
Speculative activities carried out by a person, though not a merchant, for the
purpose of realizing a profit.
Acts considered by law to be commercial.
Acts related to or facilitating an act of commerce.
following activities shall, by virtue of their nature, be considered as acts of
Purchase of commodities and other tangible and intangible movables with the
intention of selling same at a profit, whether sold in their present condition
or after their transformation or manufacturing.
Purchase or hiring commodities and other tangible and intangible movables with
the intent of hiring them out.
Sale or hiring out of commodities and movables purchased or hired as mentioned
Banking, exchange and stock markets operations as well as those of investment
companies, trust funds, financial establishments and all kinds of other
financial brokerage operations.
All kinds of transactions relative to commercial papers, irrespective of the
capacity of the persons concerned therein or of the nature of the transactions
for which such operations are carried out.
All kinds of sea and air navigation activities, including:
The construction, sale, purchase, chartering or freighting, repair or
maintenance of vessels and aircrafts, as well as sea and air cargos including
sea and air carriage.
The sale and purchase of vessel and aircraft requirements, tools or materials or
catering such vessels and aircrafts.
Loading and unloading operations.
Marine and aviation loans.
Employment contracts concerning captains and pilots of commercial vessels and
Incorporation of companies.
All kinds of insurance with the exception of cooperative insurance.
Establishments of sale by public auction.
Hotels, restaurants, movie halls, theaters, play grounds and amusement centers
Water, electricity and gas distribution activities.
Editing newspapers and magazines whenever the publication thereof is made with
the intent of making profit through the publishing of advertisements, news and
Post, telegraph and telephone operations.
Broadcasting and television activities as well as those of recording and
The activities of public warehouses and mortgages on property deposited
following activities are considered as an act of commerce if practiced as a
4- Commercial representation.
6- Purchase and sale of lands or real estates for the purpose of making profit
from selling same in their original status or after transforming or allotting
Real estate works whenever the contractor undertakes to supply the materials or
The income from extraction industries of natural resources.
Tourism, travel, export, import and customs clearing activities, as well as the
activities of services and recruitment offices.
Printing, publishing, photography, recording and advertising activities.
Activities relating to animal resources and fisheries.
Giving on hire or hiring third parties’ work for the purpose of rehiring
Letting or renting houses, apartments and rooms, furnished or unfurnished, for
the purpose of sub-letting same.
which may be deemed to be homogeneous to the activities herein provided for in
the above two Articles, due to the similarity of their characteristics and
objectives shall be considered as an act of commerce.
artwork made and sold by the artist himself, or by using the services of
workers, shall not be considered an act of commerce. The same applies to an
author who prints and sells his work.
The sale by a farmer of the produce obtained from land owned or cultivated by
him, even when the said produce has been transformed by means of tools he
usually employs, shall not be considered an act of commerce.
Where a farmer establishes a permanent trading shop or factory for the sale of
his produce in its original condition or after manufacturing, the sale in such a
case shall be deemed to be an act of commerce.
a contract is commercial with regard to one party and civil to the other party,
the provisions hereof shall apply to the obligations of both parties unless the
law states otherwise or there is an agreement between the parties to the
be deemed a merchant:
Every person performing, in his own name and for his own account, acts of
commerce while he is fully capacitated to perform these acts as a
Every company exercising a commercial activity or adopting one of the forms
prescribed in the Commercial Companies Law, even if such activity is a civil
person who advertises to the public, by any means, that he has established a
commercial place of business shall be deemed a merchant even if he does not
perform commerce as his normal profession.
capacity is established in respect of every person performing trade as a
profession, either under a pseudonym or under the cover of another person's
name, as well as in respect of the apparent person.
person who carries out a commercial activity although prohibited under specific
laws or regulations from practicing trade, shall be deemed a merchant and shall
be governed by the provisions of the present Law.
not have commercial capacity: State ministries, its departments, organizations
and public institutions, as well as public welfare institutions, associations,
clubs and self-employed persons not practicing trade. Commercial activities
carried out by such entities shall, however, be governed by this Law unless
otherwise excluded by virtue of a specific text.
capacity is established in respect of commercial companies formed, wholly or
partially owned by the State or public organizations and institutions. Unless
otherwise excluded by a specific provision, these entities shall be governed by
the provisions of the present Law.
who practice a simple craft or a small trade whereby they rely on their work to
gain some profit in order to secure their living rather than relying on cash
capital, shall not be subjected to the obligations incumbent on merchants
relating to keeping commercial books or registering in the Commercial Register
nor shall they be governed by the provisions of bankruptcy and composition.
The Ministry of Economy and Commerce shall, in consultation with the competent
authorities in the Emirates, determine the maximum number of individuals working
with them in such crafts and the capital to be invested such small trade.
18 – Commercial capacity
Any person who has attained 21 calendar years of age and is free of any legal
incapacity shall be apt to carry on commerce.
Nevertheless, a minor, whether under guardianship or custody, may practice
commerce whenever he attains 18 calendar years of age and is freely or
restrictively habilitated by the court to do so.
Where a minor or a legally incapacitated person has funds invested in commerce,
the court may order the withdrawal of these funds or approve the investment, as
may best serve his interests.
In case the court issues an order to continue the business, it shall grant the
person acting for him an absolute or restricted authority to perform all
activities required for this purpose.
The court may withdraw or limit the authority if there are reasons justifying
this measure provided it does not prejudice any rights acquired by a bona fide
20 – Registration and publication of the minor's continuance in trade or
withdrawal of authority
order issued by the court to continue with the business of the minor or the
legally incapacitated person, or to withdraw or limit the authority, must be
entered in the Commercial Register and published in two Arabic daily papers
issued in the State.
the court order the continuance of the business of the minor or the legally
incompetent person, his liability shall be limited to the extent of the funds
invested in such commerce. He may be declared bankrupt but the bankruptcy shall
not include funds not invested in the business nor shall it have any effect with
regard to the person of the minor or the legally incapacitated.
With due compliance with Article 11 of the Civil Transactions Law, the capacity
of a married woman to practice trade shall be regulated by the laws of her
A foreign wife who practices trade is assumed to have obtained her husband's
approval to do so.
Should the governing law authorize a husband to object to his wife practicing
the trade or to withdraw his previous permission, such objection or withdrawal
of permission should be entered in the Commercial Register and published in two
Arabic daily papers issued in the State.
The objection or withdrawal of permission shall have no effect except from the
date of its entry in the Commercial Register and newspaper publication, nor
shall it be prejudicial to the rights acquired by a bona fide third party.
It shall be assumed that a married foreign merchant has been married under the
ante nuptial settlement of separation of property unless otherwise stipulated in
the settlement contract concluded between the spouses. This settlement may not
be opposed to third parties unless it is entered in the Commercial Register and
a summary thereof has been published in two Arabic daily papers issued in the
Failure to record such entry in the Commercial Register and to publish its
summary, entitles a third party to prove that the marriage settlement was based
on a financial system more convenient to his interest than that of separation of
A foreign judgment ordering the separation of property ownership may not be
opposed to third parties except from the date of its entry in the Commercial
Register and publication of its summary in two Arabic dailies issued in the
No person other than a U.A.E. citizen may practice trade in the State, unless he
has one or more U.A.E. partners according to the conditions and within the
limits stipulated by the Commercial Companies Law.
Profession practitioners may not practice import and export activities.
Non-U.A.E. citizens practicing trade in the State prior to the effective date of
this Law and having no national partners, must adjust their status according to
the provisions hereof.
The following persons may not engage in commerce:
Every trader whose bankruptcy was declared during the first year of his
practicing trade unless he has been rehabilitated.
Any person who has been condemned for a crime of fraudulent bankruptcy,
commercial fraud, theft, fraudulent misrepresentation, breach of trust, forgery
or use of forged papers, unless he was rehabilitated.
Any person who violates the prohibition provided for in the above clause shall
be sentenced to imprisonment for a maximum period of one year and to a fine of
at least Dhs 5,000/- and not exceeding Dhs 100,000/-, or with either of these
penalties, in addition to have the trading premises closed in all cases.
requests, submitted by a merchant to the competent authorities and related to
his trade, shall not be accepted unless his name is recorded in the Commercial
The merchant shall keep such commercial books as may be required by the nature
and importance of his trade, in such manner as to show his financial status with
accuracy as well as all rights and liabilities he might have relative to his
In all cases, the merchant has to keep the following two books:
All the financial operations carried out by the trader as well as his personal
withdrawals shall be entered into the Daily book day by day.
The merchant has to use auxiliary Daily books to prove the details of his
commercial operations, in which case it is sufficient that he makes a global
entry of such operations in the Daily book at regular intervals, otherwise each
auxiliary book shall be deemed a Daily book.
following shall be entered in the General Ledger:
All accounting operations carried forward from the Daily book supported by
corroborating documents and in particular the accounts relative to the cash in
hand, bank, partners, creditors, debtors, revenues, withdrawals and
Details of the stocks available to the trader at the end of the financial year
or an a global statement thereof if the particulars are shown in separate books
or lists, in which case such books and lists shall be considered as
complementing the General Ledger.
A copy of the annual balance sheet and the profit and loss account.
The commercial books shall not contain any blank spaces, crossing out, erasure,
writing in the margins, scraping or insertion.
Prior to the use of the Daily book and the General Ledger, the pages thereof
shall be numbered and signed by the Commercial Registry office, to which the
merchant belongs, and stamped with the official seal of the said Authority,
showing the date of such procedure.
the pages of any of the said two books be filled up, the merchant has to submit
it to the same Authority to have it marked up to this effect after the last
entry made therein and before using the new book.
In case of discontinuation of the commercial activities in the business
premises, the trader or his heirs have to submit the said two books to the
Commercial Registry office to have them marked up to this effect.
Stamping with the official seal and the marking up shall, in the above-mentioned
instances, be free of charge.
merchant must keep true copies of the originals of all correspondence, telegrams
and invoices sent or issued by him for the purpose of his commercial activities.
He must, in addition, keep all incoming correspondence, telegrams, invoices and
other documents related to his trade. All such papers shall be kept in an
orderly fashion that facilitates checking them up and for a minimum period of
five years from the date of issue or receipt thereof.
merchant or his heirs should keep the commercial books and the documents
supporting the entries made therein for a minimum period of five years to run
from the date of marking up the book to the effect that it is out of use.
banks, companies or establishments specified in a decision taken by the Minister
of Economy and Commerce may keep, for the period mentioned in the two preceding
Articles the micro films (or any other modern technological device) instead of
keeping the originals of the books documents, correspondence, telegrams and
other papers related to their financial and commercial activities. Such micro
films shall have the same evidential value as the originals provided that the
rules organizing the use thereof for the purpose of this Article shall be set by
the Minister of Economy and Commerce. The said banks, companies and
establishments shall have to comply with such rules.
made in the commercial books by employees authorized by the merchant shall be
deemed as entries made by the merchant himself, and it shall be assumed that
such entries were made with his knowledge and consent until he submits proof to
court may, on its own motion or at the request of litigants, order the merchant
to produce his commercial books to extract therefrom what is of relevance to the
conflict submitted to it. The said court shall peruse these books, personally or
through an expert appointed by it to this effect.
The court may not order the merchant to produce his commercial books for the
perusal of his opponent unless the litigation submitted is related to an estate,
a partnership or the division of joint property to both of them.
In case of bankruptcy or composition, the commercial books shall be handed over
to the competent court, the receiver in bankruptcy or to the composition
commercial books kept by the merchant may be used as evidence in the lawsuits
lodged by or against them should they be related to their commercial activities
and according to the following rules:
The data entered in the commercial books - even if not regular according to the
law provisions - shall constitute a proof against the owner of these books.
However, a person wishing to extract
any evidence in his favor may not fractionalize the data entered therein.
The data duly entered in the commercial books according to the law provisions
shall constitute a proof in favor of the owner of these books against his
opponent trader, unless they are challenged by the latter on account of data
duly entered in his books according to the law provisions or by any other means
proving that they are not true.
In the event where both litigants' commercial books are regularly kept according
to the law provisions and the comparison mode between them shows a contradiction
in the data entered therein, the court must ask for another evidence.
In case of discrepancy in the data entered in both litigants' books, while the
books of one of them are regularly kept according to the law provisions and the
other trader's books are not, the data entered in the regular books shall
prevail, unless the opponent submits proof to the contrary. The same provision
shall apply if one of the litigants submits regular books and the other do not
one of the two merchant opponents rely for the validity of his claim on the
other opponent's commercial books, and should he admit in advance the
correctness of the data entered therein while the former refrains without
justification from producing such books to the court for perusal; this shall be
deemed a presumption that the facts required to be proved in the books are
correct. The Court may further administer suppletory oath to the Plaintiff as
to the validity of his claim.
using computers or other modern technological equipment in organizing their
trading activities, shall be exempted from the provisions of Articles (26, 27,
28, 29) of this Law. The data obtained from such computer or other modern
technological devices shall be considered as commercial books. The Minister of
Economy and Commerce shall issue a regulation determining the general guidelines
for the use of such data.
CONCERN, TRADE NAME, UNFAIR
TRADE MARKS AND DESCRIPTIONS
CONCERN, TRADE NAME AND UNFAIR COMPETITION
commercial concern constitutes a group of tangible and intangible assets
allocated for the practice of commercial activities.
The commercial concern includes all elements necessary to perform commercial
activities. Such elements are divided into tangible elements such as the goods,
equipment, machines and tools, and intangible elements such as the clientele
(customer contacts), goodwill, trade name, right to let, industrial, literary
and artistic property rights and licenses.
The tangible elements are not considered essential to the commercial concern,
contrary to the intangible elements since the existence of the concern depends
on the presence of one, at least, of these elements.
the event where the trader is the owner of the real estate in which he practices
his trade, such estate shall not constitute an element of the commercial
concern. Any provision to the contrary shall not be taken into
transaction aiming at the transfer of ownership of a commercial concern or at
the creation of a real right thereon, shall not be valid unless it is notarized
or authenticated by a Notary Public and entered in the Commercial
transaction must include the following data:
Names of the contracting parties, their nationalities and place of
Date and type of the transaction.
Type and address of the commercial concern and those elements agreed to be
included in the transaction.
Price of the tangible and intangible elements separately, if the transaction is
a sale, the portion of the price paid upon conclusion of the contract and the
mode of payment of the balance.
Specific covenants concerning the contracts and undertakings, if any, pertaining
to the commercial concern.
Agreements, if any, reserving to the seller the right of rescission or
cancellation or the institution of a privilege.
anything to the contrary, shall be deducted from the price paid, the price of
goods then the price of supplies and equipment and finally the intangible
Transfer of property of the commercial establishment shall take place, as
concerns the contracting parties and third persons, as of the date of recording
the transaction in the Commercial Register and the publication of its summary in
two Arabic daily papers issued in the State, with an interval of one week
between each, and after the expiry of the period fixed for filing the objection
against the said transaction.
In case the commercial establishment comprises elements subject to a special
scheme of advertising or registration, and unless otherwise provided by law,
advertisement made for the disposal of the trading premises does not replace the
special advertisement or registration.
disposal of the commercial concern shall only be recorded after completion of
the following formalities:
The employee in charge at the Commercial Registry shall, at the request and
expense of the purchaser, publish a summary of the sale contract in two Arabic
daily papers, issued in the State, with an interval of one week between the two
The summary published shall include the names of the contracting parties, their
nationalities and place of residence, designation of the business premises,
total price and an invitation to the creditors to submit their objections within
ten days from the date of the last publication.
Oppositions shall be lodged with the competent civil court in which jurisdiction
the commercial concern is located and they shall include the amount of the debt
and its cause.
The purchaser shall refrain from paying the price until the court decides on the
oppositions. The seller may request from the summary judge an authorization to
cash the price even prior to the examination of the oppositions should he
provide sufficient sureties for settlement of the creditors' rights.
Any opposing creditor or pledgee may offer to purchase the concern for himself
or for the account of a third party for a price superior by at least one fifth
to the price agreed upon.
The party opposed to the price shall deposit with the court treasury a sum equal
to at least one third of the original price in addition to the increase offered
The competent court shall notify the out-bidding offers to the two parties to
the sale agreement of the commercial concern. Twenty days after such
notification, the court shall decide the sale of the concern to the bidder
having offered the highest price.
Any person to whom the ownership of the commercial concern shall pass,
subrogates, by force of law, the disposing person in all the rights and
obligations arising from the contracts related to the commercial concern, unless
otherwise or if the contract is based on personal considerations.
The second party to the contracts referred to in the preceding paragraph may,
however, within ninety days from the date of notification of the disposal,
request the cancellation of these contracts provided he has serious reasons to
justify such cancellation and provided that he notifies the new owner, within an
adequate period, of his wish thereto.
The person to whom the title to the commercial concern has passed, shall fix a
date for the creditors, whose debts precede the date of the transaction, to
submit a statement of their debts in order to settle them. Such date is to be
published in two daily papers issued in the State one of which is in Arabic and
with an interval of one week between the two issues. The date fixed to the
creditors may not be less than ninety days from the date of publication. The
new titular of the title to the commercial concern shall be liable for the debts
whose owners have submitted a statement thereof within the stated period, if
they have not been settled within the said period.
The new owner of the commercial concern shall be discharged of the debts whose
owners did not submit a statement in their respect within the period as fixed in
the preceding paragraph.
The disposing party shall remain liable for the debts, related to the commercial
concern, which have arisen prior to the publication of the disposal unless he is
discharged thereof by the creditors.
an exception to the bankruptcy provisions, the seller of a commercial concern,
who did not receive the full price, may invoke, against the group of creditors
in the purchaser's bankruptcy, his right to rescind the sale contract of the
concern and recover it or his right of privilege, if he reserved for himself
such right in the sale contract and mentioned it in the contract summary
published in the newspapers. Such rescission, termination or privilege shall
only include the elements covered thereby.
The commercial concern may only be pledged to banks and financing
Where the pledge deed does not specify the elements covered by the pledge, it
shall then only cover the trade name, the right to let, the clientele
(customers' contacts) and the goodwill.
A pledge shall not be considered completed unless by a registered deed or
attested by a Notary Public and entered in the Commercial Register.
The pledge deed must contain a declaration by the debtor as to whether or not
the seller has a privilege over the pledged commercial concern, as well as the
name of the company which insured the concern, if any.
Entry in the Commercial Register shall secure a privilege right for five years
from the date thereof. Where the entry is not renewed within the said time
limit it shall be deemed to have been cancelled.
The said entry may be written off by mutual agreement of the concerned parties
or pursuant to a final court order.
pledgor shall be held responsible to keep the pledged commercial concern in good
Where the owner of the commercial concern fail to pay the price or the balance
thereof to the seller, or if he fails to pay the debt on the maturity date to
the creditor pledgee, the seller or pledgee may, after eight days from the date
of service of a notice on his debtor, who is in possession of the commercial
concern, submit a petition to the summary judge, requesting permission to sell,
by public auction all or some of the constituent elements of the concern which
are included in the seller's or pledgee's privilege.
The sale shall take place at the venue, date and hour and according to the
manner designated by the judge; and the sale shall be advertised for at least
ten days prior to its occurrence.
be considered null and void, any provision in the pledge contract granting the
creditor the right to acquire the property of the pledged commercial concern or
to dispose thereof without following the procedures prescribed in the preceding
seller, as well as the creditors pledgees, shall have over the sums resulting
from the insurance, in case they are overdue, the same rights and privileges as
those which they had over the insured items.
lessor of the place wherein lies the pledged furniture and equipment which are
used for exploiting the concern, may not exercise his privilege over more than
two years rent.
trade name of an individual trader consists of his first name and surname; it
may also contain particulars pertaining to the persons therein mentioned,
relevant to the kind of trade for which it is designated. However, it may
consist of an innovated nomenclature. In all cases, the trade name must conform
to the truth, or else it would be misleading or prejudicial to public policy or
names of commercial companies shall be governed by the specific law provisions
trade name shall be recorded in the Commercial Register in accordance with the
relevant law provisions. Once registered, no other trader may use such name for
his trade of a similar kind. Where the name and surname of a trader are similar
to a trade name previously recorded in the Register, he must add to his name
such particulars as would distinguish it from the trade name already
The trader shall write his trade name on the facade of his commercial concern,
and he must carry out his commercial transactions under his trade name.
A trader may not use the trade name of another trader after disuse or removal of
such name, except after the lapse of one year from the date of such disuse or
A trade name may not be disposed of independently from the commercial concern to
which it is allocated.
Should, however, the owner of the commercial concern dispose of it, such
disposal shall not include the trade name, unless such inclusion is explicitly
or impliedly provided for.
In the absence of an agreement to the contrary, recorded in the Commercial
Register, the person upon whom the title to the commercial concern devolves,
without its trade name, shall not be liable for the obligations of his
A person to whom the ownership of a commercial establishment is transferred, may
not use his predecessor's trade name, unless such name devolves unto him or the
predecessor authorizes him to use it; provided that he adds to the name such
particulars indicating the transfer of ownership.
Any one who violates the provisions of the preceding paragraph shall be
sanctioned to imprisonment or a minimum fine of (Dhs 10,000) Ten Thousand
Dirhams or by either of these two sanctions.
Any person to whom the ownership of a trade name is transferred, as a result of
the transfer of title to a commercial concern, shall succeed to his predecessor
in the rights and obligations accrued under the said trade name. Any agreement
to the contrary does not bind third parties except from the date of its entry in
the Commercial Register and notice served to the concerned parties to this
In case of denial and lack of legitimate excuse, the action in liability on
account of the predecessor's obligations, may not be heard after the lapse of
five years from the date on which the transfer of ownership of the commercial
trader may not induce the employees or workers of another competitor trader, so
that they assist him in usurping the customers of that other trader, or so that
they leave their employer's service and enter into his service or disclose to
him the secrets of his competitor. These acts are considered as unfair
competition calling for compensation.
trader may not propagate such matters as are inconsistent with reality regarding
the origin or description of his goods, or any other matters pertaining to their
nature or importance. Likewise, he may not declare falsely that he holds a
rank, degree or award, nor may he resort to any other misleading means, with the
intent to usurp the customers of a competitor trader; or else, he shall be
liable for compensation.
trader may not resort to fraud and deceit when marketing his goods, nor may he
propagate or publish false information tending to be prejudicial to the
interests of another competitor trader, otherwise he shall be liable for
trader may not issue to one of his ex-employees or ex-workers a certificate that
is inconsistent with reality, otherwise he shall be liable to compensate the
prejudice caused to any other trader who was mislead by such certificate.
Where a trade name is used by other than its owner without any agreement
authorizing him to do so, or where the owner uses it in a manner violating the
law, the concerned parties may ask the competent court to order the prohibition
of its use and to strike it off if it is entered in the Commercial Register. In
addition they may, when necessary, claim damages.
Any violation to the provisions of the preceding paragraph shall be punishable
by imprisonment and a minimum fine of (Dhs 10,000) Ten Thousand Dirhams or by
either of these two sanctions.
person engaged in the business of supplying information to commercial
establishments about the conditions of trade, who knowingly or through gross
negligence supplies misleading information about therefrom.
foregoing provisions shall be without prejudice to any other punishments
stipulated in other laws concerning the perpetration of acts specified
MARKS AND DESCRIPTIONS
marks and descriptions are regulated by the specific laws issued to this
OBLIGATIONS AND CONTRACTS
Unless otherwise provided for by law or agreement, where two individuals or more
assume a commercial debt, they shall be jointly liable for its settlement.
The foregoing provision shall also apply in cases where there are several
sureties in a commercial debt.
suretyship shall be commercial if the surety has guaranteed a debt which is
deemed with regard to the debtor to be commercial unless otherwise provided for
by law or agreement, or if the surety is a trader and has an interest in
guaranteeing the debt.
a commercial guarantee, the guarantors shall be jointly liable with each other
and with the debtor.
otherwise established, where a trader carries on for a third party, such
business or services as are related to his commercial activities, he is deemed
to have done so in return of a consideration to be determined according to the
custom and in the absence of such custom, it shall be determined by the
creditor is entitled to receive interest on a commercial loan as per the rate of
interest stipulated in the contract. If such rate is not stated in the contract,
it shall be calculated according to the rate of interest current in the market
at the time of dealing, provided that it shall not exceed 12% until full
the contract stipulates the rate of interest and the debtor delays payment, the
interest on the arrears shall be calculated on basis of the agreed rate until
otherwise followed by a commercial custom or bank practice, interest shall be
paid at the end of the year, if the loan is for one or more years, or on the
maturity date of the debt, if the loan period is less than one year.
agreed to the contrary, if the loan is for a specified term, the creditor shall
not be bound to accept payment prematurely, unless the debtor pays the interest
accruing for the remaining period of the loan term.
and authorizations issued by a trader for matters related to his commercial
activities shall not lapse upon his death, nevertheless, his heirs liable to pay
any compensation if they notify, in due time, the party who contracted with the
decedent of their intention to do so.
Where the commercial obligation is the delivery of a certain thing within a
specific season or a time of the year, the agreement between the parties should
be consulted in order to fix the time for delivery. In the absence of such
agreement, the custom prevailing in the country where the delivery is to take
place shall be followed.
The custom prevailing in the country, where the contract was concluded shall be
followed as to the method of measuring, weighing or counting the goods.
otherwise agreed, a creditor may not be compelled to accept performance of a
contract should the obligor fail to fulfill his obligation prior to the expiry
of the period fixed for performance.
the maturity of a debt is deferred and the debtor offers to settle it in
advance, he may not upon payment deduct a part of it except with the creditor's
consent, unless there is a provision in the agreement or the law to the
one of the contracting parties reserves the right to rescind the contract prior
to its execution, he shall forfeit his right to rescission if he performs his
obligations under the contract or if he consents to the other party's
performance of his obligations.
and notifications in commercial matters shall be made through the notary public,
by registered letter with acknowledgement of receipt or by cable.
may not grant the obligor in a commercial obligation a respite for payment nor
order to pay it by installments except with the obligee’s consent or under
general exceptional circumstances.
the debtor settles a commercial debt to the person holding the instrument of
such debt marked with acquittal or to the person holding a discharge from the
creditor, he shall be discharged from the debt.
otherwise agreed, where the commercial obligation is a sum of money, the amount
of which was known when the obligation arose, and the debtor delays payment
thereof, he shall be held liable to pay to the creditors, as compensation for
the delay, the interest fixed in Articles (76) and (77).
of interest on arrears is not conditioned upon the creditor proving that he
sustained damages as a result of such delay.
on arrears for delay of payment of commercial debts are due upon maturity,
unless otherwise provided in the law or in an agreement.
A creditor may claim complementary damages, to be added to the interest on
arrears without being required to prove that the prejudice in excess of said
interest was caused by the debtor's fraudulent conduct or gross fault.
Should, however, the creditor in claiming his right, causes, in bad faith, the
persistence of the dispute, the court may reduce the interest or it may not
award any interest at all for the period of the unjustified prolongation.
1- Any check for the payment of a sum of money or the delivery of goods, may be
negotiated by way of endorsement if payable to the order of the creditor or by
delivering it, if payable to bearer.
Endorsement or delivery shall result in the transfer of all rights arising from
the instrument to the endorsee or the new bearer.
3- In case of endorsement, the endorser shall guarantee payment of the right
established by the deed on maturity date, unless it is agreed in the endorsement
wording to restrict the guarantee to the existence of the right at the time of
Unless otherwise agreed in the wording of the endorsement, should the instrument
be drawn-up on account of a commercial transaction, the signatories thereto
shall be jointly liable.
In all cases, the debtor may not oppose to the bearer the pleas based on the
personal relationship between him and the author of the instrument or the
previous holders thereof unless the bearer had the intention, upon receiving the
instrument, to harm the debtor or if the plea concerns the lack of capacity of
The debtor may also refrain from paying the value of the instrument if it is not
delivered to him marked with discharge.
possession by the debtor of the debt instrument constitutes a presumption that
he has been discharged of the debt, until otherwise established.
otherwise provided by law or stipulated in the agreement, commercial obligations
of any amount whatsoever may be evidenced by all means of proof.
concerning commercial obligations between traders may not, in case of denial or
lack of legal justification, be admitted after the expiry of ten years as of the
date on which the obligation is to be met, unless the law specifies a shorter
otherwise provided, the general provisions stipulated in this Chapter shall only
apply to sales, concluded between traders concerning their trading
the two contracting parties fail to fix the price, the sale shall be concluded
at the price practiced in their dealings, and in the absence of previous
dealings between them, the prevailing price in the market. This is so unless the
circumstances of the case reveal the necessity of adopting a different
both contracting parties agree that the sale price shall be at the market rate,
then the price shall be determined at this rate at the time and place of
conclusion of the contract, unless otherwise stipulated in the agreement. In
case several market prices are practiced then the average price shall
two contracting parties may agree to delegate a third party to fix the price of
the item object of the sale. However, if such party fails to fix the price
within the prescribed term or, in the absence of such term, within an adequate
period, then shall be adopted the current market price at the time and place of
conclusion of the contract.
the price is estimated on basis of weight, the net weight is to be considered,
unless there is an agreement or custom to the contrary.
Where it is agreed by the two contracting parties that the purchaser shall
determine the shape,
or any other distinguishing feature of the item object of the sale, the
purchaser shall do so within the agreed period, or within an adequate time if no
fixed period has been agreed upon.
If the aforementioned time limit has lapsed and the purchaser did not determine
the features of the item sold, the vendor shall have an option to ask for the
rescission of the contract with damages, or to determine himself the said
features and notify the purchaser thereof. This determination shall be deemed
final if the purchaser does not object thereto within ten days from his
If no specific time for delivery has been determined, it should be done upon
conclusion of the contract unless the nature of the object sold necessitates
delivery at a different time.
Where it is agreed that the purchaser shall fix the date of delivery of the
object sold, the vendor is bound to deliver it on such date, with due
consideration as to the nature of the sold item and the period required its the
preparation so as to make it ready for delivery.
Until the effective or legal delivery to the purchaser of the object sold, the
consequences of its perishability is borne by the vendor.
Unless otherwise agreed, where the vendor, at the request of the purchaser,
sends the item object of the sale to other than the designated venue for
delivery, the consequences of its perishability shall be borne by the purchaser
from the date of delivering the item sold to the carrier.
Should the vendor fail, without pressing necessity, to comply with the
instructions of the purchaser regarding the method of transportation, he shall
be liable for the damages occurring to the item sold on account of such
The purchaser shall, unless otherwise agreed, bear the expenses incurred in
delivering the sold item in other than the place designated for delivery.
shortage occurring to the sold item upon its delivery shall not be taken into
consideration if custom allows such shortage.
the vendor fails to deliver the specific item sold, the purchaser may summon the
vendor to perform within an adequate period. In case the vendor fails to comply,
the purchaser shall have an option either to ask the court to force the vendor
to execute in kind by delivering to him the sold item- if possible- with payment
of damages when necessitated, or to consider the contract rescinded and claim
for damages, if justified, or to buy at vendor's expense an object similar to
the item sold and claim from him the difference between the price agreed upon
and the price paid by him in good faith to obtain such object. Where the sale
relates to an item having a known price in the market, the purchaser may claim
from the vendor the difference between the price agreed and the market price on
the date fixed for delivery, even though he did not buy an object similar to the
the two contracting parties agree that the sold item be the object of successive
deliveries, the purchaser may ask for the rescission of the contract if the
vendor fails to perform any of these deliveries on the fixed date. However, such
rescission shall not apply to the deliveries already executed, except where the
purchaser sustains serious prejudice due to the fractioning of the item
the purchaser fail to pay the price on the date agreed upon, the vendor, after
serving notice to the purchaser, may re-sell the goods. If the goods are sold in
good faith at a price less than the price agreed upon, the vendor shall be
entitled to claim from the purchaser the difference in price. Furthermore, if
the goods have a known price in the market, the vendor may claim from the
purchaser the difference between the price agreed upon and the market price on
the date fixed for payment, even though the sale did not effectively take
The purchaser, who has paid the price in full, may ask the vendor to give him a
list of the goods on which it is mentioned that the price has been paid.
Any person, having accepted, expressly or implicitly, a list of the sold goods,
shall be deemed as having agreed to its contents. Where the person receiving the
list, does not object to its contents within eight days from the date of
receipt, this shall be considered as an implicit acceptance, unless a longer
period has been agreed upon.
Where the purchaser refuses to take delivery of the item sold, the vendor may
ask the court to establish this fact and grant him permission to sell same under
the court supervision after the lapse of a period fixed by it and notified to
the purchaser. However, the court may order that highly perishable items be sold
without fixing a delay and without notice.
The total value of the sale shall be deposited with the treasury of the court,
after deducting all the expenses incurred by the vendor in order to settle the
dispute between him and the purchaser.
it is noticed after delivery of the sold object that the goods delivered are
different, in quantity or type, or if they are defective, rescission shall not
be granted to the purchaser unless it results, from such difference or defect,
the unsuitability of the goods sold for the purpose for which they were to be
used, or if they become difficult to be marketed. The court, upon rejecting the
application for rescission of the contract, may decide to reduce or complete the
price, depending on the deficiency or excess in quantity, the discrepancy in
type or the degree of defect. This is so unless there is an agreement or custom
In the instances referred to in the previous Article, the purchaser must notify
the vendor of the difference or defect, within fifteen days of the date on which
the item sold is effectively delivered to him, and he must file the action for
rescission or reduction of the price within sixty days of such delivery date.
However, if the defect is concealed and cannot be detected by ordinary
examination, the purchaser must then notify the vendor immediately when he
discovers it, and lodge the action in warranty of the defect within six months
of the date of actual delivery, unless there is an agreement to the
Should the purchaser fail to notify the vendor of the existence of a difference
or defect, or if he does not file the action for rescission, price reduction or
defect warranty within the periods hereinabove mentioned, as the case may be,
his action shall not be heard in case of denial or lack of legitimate excuse.
However, if the purchaser proves fraud on the vendor's part, the lawsuit shall
not be accepted if lodged after the lapse of one year from the delivery
The action instituted by the vendor to complete the price due to increase in
quantity or in the quality level, shall not be admitted after the lapse of sixty
days as of the date of actual delivery of the item sold.
Agreement may be reached as to exempting the purchaser from abiding by the
periods prescribed in the previous paragraphs or allowing the amendment of such
Where the item sold is a commodity protected by a registered trademark,
agreement may be reached in order to compel the purchaser not to re-sell it
below a specific price.
The court may order the non-compliance with this condition if it considers that
the commodity sold to be among the necessaries.
The purchaser's successors shall not be bound to observe the above condition,
except if they had knowledge or could have known about it.
supply contracts where the supplier grants certain advantages to the purchaser,
the latter may not be prohibited to buy similar goods as the item sold from
another supplier during a period exceeding five years from the date of
agreement. Any agreement on a longer period shall be reduced to five
TYPES OF COMMERCIAL SALES
contract of sale by installment shall be made in two copies and shall state the
specifications, which identify and determine the item sold, as well as the price
amount, the period and conditions of payment by installments. The seller shall
hand over to the buyer one of the duplicate copies of the said contract.
installments shall be paid at the place of residence of the seller, as stated in
the contract, unless otherwise agreed upon. Where the installments are collected
from the purchaser's place of residence, the purchaser may not charge additional
expenses. The discharge given for any installment paid shall be considered a
discharge of any preceding installments unless there is evidence to the
Where the purchaser fails to pay any installment of the agreed price, the
seller, after notifying him, may claim rescission with damages if justified.
However, if it is revealed to the court that the buyer has fulfilled the largest
part of his obligation, it may grant him a respite for payment and dismiss the
claim of rescission if he effects payment within the prescribed period.
In case a judgment in rescission is rendered, the buyer shall have to give back
the item sold to the seller. In return, the seller shall repay to the buyer the
installments received after deducting an amount equivalent to the cost of the
use thereof and another amount to compensate for the depletion occurring to the
object of the sale due to abnormal use, provided there is no provision to the
contrary in the sale agreement and further provided that the total sum paid to
the buyer does not exceed the original price with interests.
clause in the agreement providing that the full price shall be payable
immediately in case one of the installments is not paid on its maturity date,
shall only be valid if the buyer fails to pay despite the notice served upon him
and after the lapse of seven days from the date of this notification.
Should the seller retain title to the sold movable property until payment of the
full price installments, the purchaser shall acquire ownership thereto upon
payment of the last installment. As of the date of taking delivery of the sold
object, the purchaser shall bear the consequences of its deterioration.
Without prejudice to the provisions stipulated under the Part on Bankruptcy, the
condition related to the retention of ownership may not apply to a third party
unless it is included in a written agreement prior to the acquisition of his
the third party's right is subsequent to the contract of sale by installment,
the provision related to the retention of ownership may apply to such third
party, if the said provision is written in an agreement having a fixed legal
date prior to the commencement of the execution proceedings undertaken by the
creditors on the item sold.
purchaser may not dispose of the item sold before he has paid all installments,
save where the seller agrees to this in writing. Any disposal by the buyer in
violation of this provision, shall not bind the seller, unless the third party
proves his good faith, in which case the remaining installments shall fall
provisions of the preceding Articles regarding sale by installments, shall apply
even if the contracting parties have characterized the sale as a lease.
PUBLIC AUCTION SALE OF USED MOVABLES
The provisions of this Section shall apply to optional sales by public auction
of used movables.
Public auction sale shall mean any sale which any person may attend even if
bidding is restricted to a specific group of persons.
Used movables shall mean all movable properties the possession of which was
transferred to the consumer through any of property acquisition modes.
Without prejudice to the provisions of the Law on Civil Procedures and the laws
organizing certain kinds of sales, the movables referred to in the preceding
Article may not be sold by auction except through an expert auctioneer in a hall
specially allocated for this purpose, or at the venue where the movables are
originally located, or at such other place licensed for that purpose by the
competent authorities in the concerned Emirate.
2- A bona fide buyer may request the annulment of the sale effected in violation
of the provisions of the preceding Article and the action in nullity may not be
heard, in case of denial and lack of legitimate excuse, after the lapse of
thirty days as of the date of the sale.
3- The provisions of the two preceding paragraphs shall not apply to used items,
when the value of the items offered for sale by public auction does not exceed
(10,000) Ten Thousand Dirhams.
The auctioneer undertaking the sale by public auction shall keep a specific book
in Arabic, where he shall enter all the items intended for sale, the initial
estimation of their value and the names of those requesting sale. The auctioneer
shall further affix on the goods offered for sale numbered labels according to
their registration in the said book and shall enter therein the outcome of each
Any person who violates the provisions of the preceding paragraph shall be
penalized by a fine which may not exceed (10,000) Ten Thousand Dirhams and, in
case of recurrence, a maximum of (20,000) Twenty Thousand Dirhams, without
prejudice to any other penalty or disciplinary sanction provided in the
regulations organizing the practice of the auctioneers profession.
the initial estimation of the second-hand goods offered for sale at a public
auction exceeds the amount of Dhs 200,000 (Two Hundred Thousand Dirhams), the
auctioneer shall publish the same in one daily paper, or more, issued in the
State, one of which is in Arabic, seven days at least prior to the sale. He
shall fix one day prior the date of the sale for examination of the goods
The buyer who wins the auction shall pay half the price at the auction session
and the balance when he takes delivery of the object for which he was the
successful bidder, and the delivery must take place within one week of the date
on which the auction was knocked down.
Should the successful bidder fail to pay the balance or abstain from appearing
on the date fixed in the preceding paragraph in order to take delivery of the
item knocked down to him, the sale shall be repeated by public auction, as well,
within fifteen days of the delivery date. The successful bidder of the first
sale may not bid again in the second sale.
Where the second auction is awarded at a price less than that awarded at the
first auction, the buyer, who failed to pay the balance price or to appear in
order to take delivery of the item knocked down to him, shall be bound to pay
the difference. However, where the second auction is awarded at a higher price,
the increase shall be for the eventual seller.
The price shall be paid to the auctioneer, organizing the auction, who shall be
directly responsible for payment of such price to the person in favor of whom
the auction took place.
The person requesting the sale may not, either personally or through third
parties, bid on the goods offered by him for sale.
hall owner or the auctioneer, as the case may be, shall have a privilege, for
the fee or commission to which he is entitled, over the price of the item he is
selling at the public auction.
auctioneers’ profession, as well as the exploitation of auction halls,
shall be organized by a regulation to be issued by the Minister of Economy and
Commerce, in consultation with the local competent authorities.
prejudice to any severer sanction stipulated in another law, any person
violating the provisions of such decision, shall be sanctioned to pay a fine not
exceeding (5,000) Five Thousand Dirhams. Under all circumstances, the judge
shall order that the office or hall be closed, and the billboards and panels,
which the infringer used, be removed. The Court order shall be published at the
condemned party's expense, in two Arabic dailies issued in the State.
AUCTION SALE AND SALE AT REDUCED PRICES
SALE BY PUBLIC AUCTION
stores shall be prohibited from selling their goods at public auction, except in
one of the following instances and after obtaining the necessary authorization
from the local authorities:
Final liquidation of the commercial store.
Final discontinuation of trading in one or more of the items usually traded by
the commercial store.
Liquidation of one of the commercial store's branches, unless such branch is
located in the same city as the main office of the commercial store.
Moving the main store and branches thereof, from one Emirate to the other. In
such case, the liquidation must be effected within four months at most, and it
shall result in a prohibition to carry on the activity, discontinued due to the
liquidation, in such Emirate before the lapse of one year at least from the date
on which the auction was completed.
Clearance of the goods which have become defective due to fire, water leakage,
humidity, insects raging or the like.
- SALE AT REDUCED PRICES (DISCOUNTS)
A commercial store and its branches, located in the same city, may only sell at
reduced prices any item, twice at most during the same year, in case of seasonal
goods, and once for all other goods.
Discount sales may not continue for more than thirty days, and seasonal sales
may not start except after the lapse of five months at least after the end of
the preceding seasonal discount sales.
Shall be considered as discount sales any process intended to advertise for
sales at reduced prices.
Sales may only be effected or announced by any media means, after obtaining a
permit therefore from the competent authorities in the concerned Emirate. The
announcement shall state the starting and ending date of the sales and the
selling prices prior to and during such period. Persons holding a valid trading
license and registered in the concerned Chamber of Commerce may, alone, be
granted such permit.
The trader shall also observe any rules organizing sales and issued by the
competent authority in the concerned Emirate.
of the competent authority in the concerned Emirate shall have the right to
control the implementation of the provisions of Articles (129) and (130) of this
Law. They are entitled to this effect to enter the commercial store licensed to
carry out the clearance or sales, and to ask for papers and documents pertaining
to the operation, object of the permit, and to draw-up reports on any violation
to its provisions.
person violating the provisions of Articles (129), (130) and (131) shall be
sanctioned to a fine not exceeding (20,000) Twenty Thousand Dirhams and, in case
of recurrence, a maximum fine of (30,000) Thirty Thousand Dirhams, The author of
this violation may be prohibited from obtaining permits for discount sales for a
period of three years from the date on which he committed the violation.
KINDS OF INTERNATIONAL SALES
An F.O.B sale is one by which the item sold is delivered at the port of shipping
on board of the vessel designated by the buyer for its transport.
The buyer shall in this kind of sale execute the sea transport contract, pay
freightage and notify the seller within reasonable time of the name of the
vessel designated for the transport, as well as the place and date of shipment
and the time set for effecting it.
The buyer may entrust the seller with the execution of both transport and
insurance contracts for the goods for his account. The provisions of the agency
contract shall govern the relationship between the seller and the buyer, in this
The seller shall pack, wrap and transport the item sold to the port of shipping,
and freight it on board of the vessel designated by the buyer, on the specified
date and within the period set for freighting.
The seller shall bear the expenses of packing and wrapping as well as the costs
of checking, measuring, counting or weighing the item sold before freighting
The seller shall without delay notify the buyer that the item sold has been
freighted and he shall dispatch to him the supporting documents at the expense
of the buyer.
Where the item sold needs an export license or any other governmental license to
be exported outside the State, the seller shall be bound to obtain the license
at his own expense.
The buyer undertakes to obtain at his own expense the import license and the
other documents required for this purpose.
The seller is bound to obtain a certificate of origin for the item sold and
shall present it to the buyer, who, unless otherwise agreed upon, shall bear the
expenses related thereto.
seller shall provide the buyer with all assistance enabling him to obtain the
bill of lading and such other documents that have to be issued from the country
where the freighting of the item sold took place, in order to facilitate its
import or transit across another country. The buyer shall bear the expenses
incurred for the obtainment of such documents.
seller shall pay all the sums due in connection with the item sold, including
the export charges and the freight expenses up to the moment when the item sold
crosses, during its shipping, the barrier of the vessel. The buyer shall as well
bear the consequences of the damages that may occur to the sold item up to this
stage. However, any sums due or damages sustained thereafter shall be borne by
the arrival of the vessel, designated by the buyer for transporting the goods,
is delayed in reaching the port of loading, beyond the expiry of the time set
for freighting; or where the vessel departs the said port before expiry of the
said time limit; or if the vessel is unable to ship the goods for a reason that
cannot be attributed to the seller, the buyer shall be liable for the resulting
additional costs and the damages suffered by the item sold from the expiry date
of the time limit set for shipping, provided that the item sold has been, on
that date, designated in particular.
the buyer, fails to notify the seller about the name of the vessel at the
appropriate time or, if he reserves the right to fix the date of delivery during
a specified period, and he fails to do so, or, to designate the port of loading
but fails to issue specific instructions during the said period, he shall be
liable for the resulting additional costs and shall bear the damages occurring
to the sold item, from the expiry of the date of notification, or the period
agreed upon to designate the date for delivery, provided that the item sold has
been, on that date, designated in particular.
it is agreed that the item sold shall be delivered on the dock of the port of
loading, where the vessel designated by the buyer is anchored, the sale shall be
termed F.A.S., and such sale shall be governed by the provisions of the F.O.B.
sales, except the freighting of the goods on board of the vessel.
A C.I.F. sale is one concluded against a lump sum price covering the price of
the item sold, the maritime insurance charges and freight by vessel to the port
The goods shall be considered as having been delivered to the buyer upon
freighting it on the vessel, and the consequences of deterioration shall, from
that moment be borne by the buyer.
Where the seller did not take upon him to insure the goods, the sale shall be
deemed a (C.&F.) sale.
seller has to execute a merchandise transport contract with a reputable carrier,
according to the customary conditions, and to choose a vessel suitable to carry
similar goods as the items sold. The seller shall further pay the freight and
any other sums which the carrier might stipulate to be paid at the port of
The seller shall contract, with a reputable insurer, an insurance policy
covering the risks of transport of the merchandise sold and he shall assume all
the relative costs and expenses required.
The insurance policy shall be evidenced through a negotiable instrument in
accordance with the customary conditions, and the insurance amount shall not be
less than the price mentioned in the sale contract.
The seller shall only be bound to insure against the normal risks of transport.
He shall not be under obligation to insure against additional and war risks
unless so required by the buyer.
Where the insurance is contracted with a reputable insurer, the seller shall not
bear any responsibility towards the buyer for the inability of the insurer to
pay the insurance amount.
The seller is bound to pack and wrap the merchandise sold and ship it on board
the vessel within the period agreed upon, or customarily set, for shipping. The
seller shall bear the costs of packing, wrapping as well as the expenses of
checking, measuring, weighing or counting as required for freighting the
The seller shall, without delay, notify the buyer of the name of the vessel and
of the completion of the freighting operations.
Freighting of the item sold by the seller shall be evidenced by means of the
bill of lading, where the word "freight' is mentioned. However, if the bill of
lading states "under freight", the buyer shall have to prove that the freight
did not actually take place on the date mentioned in the bill.
However, if the bill of lading contains a statement, handwritten and signed by
the captain of the vessel, certifying that the goods were actually freighted on
the specified date, the buyer does not have to prove the contrary when
confronting the seller.
The seller is bound to obtain a due certificate of origin for the merchandise
sold and shall submit it to the buyer who, unless otherwise agreed, shall bear
the expenses related thereto.
The seller shall further provide such assistance as will be needed to enable the
purchaser to obtain the necessary documents, to be issued in the country where
freighting of the merchandise sold took place, in order to facilitate its import
or passage in transit through another country.
The seller shall pay all the sums due in connection with the merchandise sold,
until its freighting on the vessel, including the export fees.
Import fees as well as charges and expenses to clear the merchandise sold at the
port of unloading shall. However be borne by the purchaser.
seller shall bear the consequences of the damages, which may occur to the item
sold, up to the moment when it crosses the barrier of the vessel; such liability
shall thereafter devolve on to the buyer.
The seller shall, after freighting the merchandise, send without delay to the
buyer a clean negotiable bill of lading, addressed to the port of unloading.
There shall be attached to the bill of lading, a list of the goods sold, their
value, the insurance policy or a certificate in lieu thereof, in addition to any
other documents required by the buyer. Where the bill of lading refers, in
certain matters, to the condition of the charter of the vessel, a copy of the
latter shall also be attached to the bill of lading.
A bill of lading is deemed to be clean if it does not contain any express
additional conditions confirming the existence of defects in the item sold or in
the method of its packing or wrapping. These additional conditions do not
include a reference in the bill of lading to the prior use of the containers or
the wrappings or the non-liability for any damage that may be sustained because
of the nature of the item sold or of the carrier's ignorance of the contents or
weight of the packages.
The certificate substituting the original insurance policy, shall be issued by
the insurer and shall include the basic conditions provided for in the original
policy vesting unto the bearer the rights stated therein.
The buyer shall not be bound to accept the documents sent to him by the seller,
if they do not conform to the provisions of the sale contract. The buyer shall
be deemed to have accepted such documents if he does not raise any objection,
through the buyer’s bank, within seven days from the receipt thereof. The
objection shall be made by notice served in writing to the seller asking him to
forward documents conforming to the conditions agreed upon within a reasonable
period and the buyer may after the expiry thereof, claim rescission of the sale
and payment of damages, if relevant.
Where the buyer returns the documents for specific reasons or accepts them
subject to reservations, he may not thereafter make any objection for other than
the causes and reservations already made.
Where the buyer returns the documents without any legitimate reason, he shall be
liable to compensate the seller for whatever prejudice that may result
the vessel carrying the item sold arrives before the arrival of the documents or
where the documents are received incomplete, the seller shall immediately, upon
being informed thereof, do whatever necessary to enable the purchaser to obtain
a copy of the undelivered documents or to complete the missing ones. The seller
shall bear the expenses required for this purpose and any damages, if
due compliance to the provisions of Article (111), the buyer shall be bound to
take delivery of the goods sold upon their arrival at the agreed port. The buyer
shall bear such amounts as they become due on the goods sold during their
transport, as well as the expenses of discharge upon arrival, unless the carrier
has collected such amounts and expenses at the port of shipping, or where it is
agreed in the sale contract that they shall be borne by the seller (the sale
being C.I.F. until the discharge).
the buyer reserves the right to fix a date for shipping or to designate the port
of discharge, within a specified period, but fails to issue his instructions in
this respect within such period, he shall have to bear any additional
expenditure resulting therefrom. He shall also bear the consequences of the
deterioration of the goods sold until the expiry of the period set for shipping,
provided that the goods sold have been, on that date, specifically
it is revealed that the merchandise is not conform to the specifications
mentioned in the documents, but the discrepancy is within the limits customary
allowed, the buyer shall be bound to accept it with a reduction in price to be
assessed by the experts according to the practices prevailing at the port of
contract which includes conditions making the seller support the risk of damage
to the merchandise after shipment, or makes the performance of the contract
conditional on the safe arrival of the vessel, or which vests the buyer with an
option to accept the goods according to the contract or according to the sample
delivered to him at the time of contracting, shall neither be a C.I.F nor a
F.O.B. sale, but shall be deemed to be a sale conditional upon delivery at the
place of arrival.
SALE AT THE AIRPORT OF DEPARTURE
sale at the airport of departure is one by which the goods sold are delivered at
the airport of departure, by way of placing them at the disposal of the air
carrier designated by the buyer or chosen by the seller.
seller undertakes to deliver the goods at the airport of departure to the air
carrier or to his representative at the place and on the date agreed upon or at
the place designated by the buyer, after the conclusion of the contract.
Delivery shall take place according to the rules and practices applicable at the
airport of departure.
seller shall without delay notify the buyer, by any means of wire or wireless
communication, that the delivery of the merchandise has been completed.
Upon request of the buyer, the seller shall conclude a contract for the
transport of the merchandise, at the expense and responsibility of the former.
The seller may also do so in case the buyer did not issue any instructions,
within a reasonable time, concerning the transport of the merchandise and such
action is customarily practiced in commerce. The seller may refrain however from
concluding a transport contract, in which case he shall promptly notify the
Should the seller conclude the transport contract, he shall abide by the
instructions issued to him by the buyer and choose an airplane suitable to carry
merchandise of the same nature, according to the normal routing from the airport
of departure to the airport of arrival designated by the buyer, or to the
closest airport to the buyer's establishment.
The seller is under obligation to pay all fees and taxes due on the merchandise
as a result of its export.
The seller is also bound to provide the buyer with all the documents available
to him and required for taking delivery of the merchandise.
the air carrier or the other person designated by the buyer refrains from taking
delivery of the merchandise at the airport of departure, or otherwise if the
buyer does not provide the seller within a reasonable time with the instructions
required for the transport of the goods, the seller shall as promptly as
possible notify the buyer of this fact.
the instances where the seller is not bound to conclude the contract for the
transport of the merchandise, the buyer shall be bound to organize at his own
expense the transport operation of the goods from the airport of departure to
the airport of arrival. The buyer shall further designate the air carrier or his
representative or any other person to whom the goods are to be delivered, and he
shall notify the seller thereof, within a reasonable time.
the buyer does not notify the seller, within a reasonable time, of the
instructions required for the transport of the goods, the buyer shall bear all
the additional expenses resulting therefrom, as well as any damage that may be
sustained by the goods, from the date fixed for delivery, provided that the
goods were sorted or specifically designated.
the air carrier, or any other person designated by the buyer, refrains from
taking delivery of the goods, the buyer shall bear all the additional expenses
resulting therefrom. He shall as well bear the responsibility for any damage
that may be sustained by the goods, from the date on which the goods are ready
for delivery, provided that the goods were sorted and specifically
sale contract in the above international sales shall be independent and shall
not affect the relationship between the seller, the buyer and the carrier in the
transport contract, or between the buyer and the bank in the documentary credit
A commercial pledge is a bailment on a chattel in security of a commercial
With the exception of the restrictions stipulated herein or in any other law, a
commercial pledge may be established by all means of proof, as between the
contracting parties or as concerns third parties.
A commercial pledge shall have no effect against the debtor or a third party,
unless possession of the pledged chattel passes from the pledgor to the pledgee
or to such other person as is appointed by both contracting parties and remains
in the possession of either of them who received it until the extinction of the
pledge; or to place the pledged chattel under joint possession in such a manner
as to prevent the pledgor to dispose thereof independently from the pledgee.
The pledgee or the third person shall be deemed to hold possession of the
mortgaged chattel if it is placed at his disposal in such a manner as will lead
others to believe that it has been put under his custody; or if he receives a
deed representing the pledged chattel vesting unto its holder exclusively the
right to take delivery thereof.
Possession of rights passes by the delivery of the title thereto. Should the
title be deposited with a third party, the delivery of the deposit receipt shall
be deemed as the delivery of the title itself, provided the title is
unambiguously described in the receipt and provided that the depositary accepts
possession thereof for the account of the pledgee. In such case, the depositary
shall be considered as having waived every right he had, to retain the title for
his own account for a reason existing prior to the pledge, unless he had
reserved such right when he accepted to hold possession of the title for the
account of the pledgee.
Where the pledged chattel consists of registered securities, its pledge shall be
made in writing through an assignment of these securities mentioning on it that
it has been made as collateral. This assignment shall be entered in the
registers of the Body issuing such securities. The rank of the pledgee shall be
determined as of the date of such entry.
As for securities to order, the pledge thereof shall be effected by an
endorsement stating that the value is for pledge or for guaranty or any other
statement to this effect.
In a commercial debt the debtor may pledge to his creditor, through a written
instrument, a debt owed to him by a third party. Should this be the case he has
to deliver to his creditor/pledgee the title evidencing such debt.
The pledge of a debt shall have no effect against the debtor on whose debt the
pledge was effected, unless such pledge is notified to him or unless he accepts
it. Likewise, it shall have no effect against a person other than the said
debtor, unless the pledgee holds possession of the title to this pledged
The rank of the debt shall be determined as of the established date of
notification or of acceptance.
pledgee is bound to take all the necessary measures to safeguard and assure the
maintenance of the pledged object. Where this object is a commercial paper, the
pledgee shall, on the maturity date, take the necessary measures to protect the
right established therein and collect it. The pledgor shall be bound to pay all
expenses incurred by the pledgee in this respect.
pledgee shall use, for the account of the pledgor, all the rights and
procedures relevant to the pledged object, to receive its value, profits,
interests and any other sums accruing therefrom. He shall however deduct the
sums received from the amount of the expenses incurred on behalf of the pledgor,
then, from the interests, then, from the principal amount secured by the pledge,
unless the agreement provides otherwise.
pledgee shall, when requested by the pledgor, deliver to him a receipt showing
the nature, type, quantity, weight and other distinguishing features of the
Where a pledge is laid on fungibles it shall be maintained even if the pledged
object has been replaced by another of the same kind.
Where the mortgaged article is not fungible, the pledgor may replace it by
another object, provided that this is agreed upon in the pledge contract and
that the pledgee accepts the substitute, without prejudice to the rights of a
bona fide third party.
Where the pledgor fails to pay the debt secured by the pledge on its maturity
date, the pledgee, after the lapse of seven days from the date of service of
notice on the debtor to pay, may ask the court to authorize him to sell the
pledged object. This request shall be decided promptly. The court shall
determine the mode of payment.
The pledgee shall recover by privilege his debt, principal, interests and
expenses incurred in claiming it, from the price resulting from the sale.
otherwise agreed, if the pledge is laid on several properties, the pledgee is
entitled to designate the property to be sold. Under all circumstances, the sale
may only cover what is sufficient to settle the pledgee’s right, except
where the item sold is indivisible.
the market price of the pledged property decreases and becomes insufficient to
secure the debt, the creditor may fix a suitable time limit for the debtor to
complement the security. Should the pledgor refuse to do so, or where the time
limit expires and the pledgor fails to complement the security, the creditor may
ask, even before the maturity date for the sale of the pledged property in
accordance with the procedures set forth in Article (172).
the pledged item is subject to perishing, deterioration or decrease in value, or
where its possession necessitates the incurring of exorbitant expenses and the
pledgor is unwilling to replace it by another item, either the creditor or the
pledgor may petition the court requesting an authorization to sell it forthwith
and determine the method of sale. In this case the pledge is transferred to the
price resulting from the sale.
Shall be null and void, every agreement concluded at the time or after the
laying of a pledge which vests the pledge,, in case the debtor does not settle
the debt on the maturity date, with the right to acquire or to sell the
mortgaged item, without observing the provisions and proceedings provided for in
However, after the maturity of the whole debt or an installment thereof, it may
be agreed that the debtor shall assign to the creditor the whole or part of the
pledged property in settlement of the whole debt or part thereof.
the pledged article is an instrument, the nominal value of which has not been
paid in full, the pledgor shall, when called upon to pay the unpaid portion,
provide the pledgee with the amounts required to pay such portion, at least two
days before the maturity date. The pledgee may, in default thereof sell the
instrument according to the proceedings provided for in Article (172).
IN PUBLIC WAREHOUSES
Deposit in public warehouses is a contract pursuant to which the warehouser -
whether an individual, a company or a public entity - undertakes to receive and
store goods for the account of the depositor or any other person to whom title
or possession thereof passes by virtue as evidenced by the instrument relative
No public warehouse vested with the right to issue negotiable instruments
representing the goods deposited therein, may be established or exploited except
by virtue of a license issued by the competent authority in the concerned
Emirate, and according to such terms and conditions as are laid down by the
Minister of Economy and Commerce in consultation with the local competent
Any warehouse where goods are received for deposit, in consideration of which no
storage and pledge deed are issued, shall not be subject to the provisions of
Any person exploiting a public warehouse shall cover it with an insurance
against the risks of fire, damage and theft.
The warehouser may not practice, in any capacity, either in his name or for the
account of third parties, any commercial activity having for object goods of the
same kind as the goods he is licensed to keep in his warehouse and issue
documents representing such goods.
The foregoing provision shall apply if the person in charge of exploiting the
warehouse is a company where one of its partners, owning at least ten percent of
its capital, practices a commercial activity included among the restriction
The depositor shall provide the public warehouse with correct data about the
nature, type, value and quality of the goods deposited.
The depositor is entitled to examine the goods delivered, for his account, to
the public warehouse and to take samples thereof.
The warehouser shall be responsible for the goods handed over to him up to, ands
not in excess of, the amount estimated by the depositor.
The warehouser shall not be liable for any damage to, or shortage in, the goods
if resulting from a force majeure or from the nature of the goods, their
packaging or belting.
warehouser may, after notifying the depositor, apply to the court, to which
jurisdiction the public warehouse pertains, to grant him permission to sell the
goods deposited if they are subject to rapid deterioration, in which case the
court shall designate the method of sale.
The depositor shall receive from the warehouser a storage receipt showing the
depositor's name, occupation and domicile, as well as the type, nature and
quantity of the goods deposited, the name and location of the warehouse, name of
the insurer of the goods -if any- and such other particulars as are required to
identify the goods and indicate their value.
A pledge deed stating all the data mentioned in the storage receipt shall be
attached to each storage receipt.
The warehouser shall keep a true copy of the original of the storage receipt and
the pledge deed.
the goods deposited in respect of which a storage receipt and a pledge deed have
been issued are fungible, they may be replaced by goods of the same nature and
quality provided a stipulation to this effect has been included in both the
storage receipt and the mortgage deed. In this case all the rights and
privileges of the receipt or deed holder shall apply to the replacement
The storage receipt and the pledge deed may be issued in the name or to the
order of the depositor.
Where the storage receipt and the pledge deed are made to the order of the
depositor, he may assign them together or separately by endorsement.
The endorsee of a storage receipt and a pledge deed or of either may request
that the endorsement be recorded on the copy kept by the warehouser with mention
of his domicile and occupation.
The endorsement of the storage receipt and the pledge deed must be dated.
Where the pledge deed is separate from the storage receipt, the endorsement must
be accompanied by an authorization condition and include the sum of the debt
secured by the pledge, the maturity date, the creditor's name, occupation,
domicile and the signature of the endorser.
The endorsee shall be entitled to ask that the pledge deed endorsement as well
as any relevant particulars be recorded in the books of the warehouse and that
the pledge deed be marked up with such endorsement and particulars.
The holder of both the storage receipt and the pledge deed is entitled to take
delivery of the goods deposited. However, he may request that the goods be
divided into several batches and that he is provided with a storage receipt and
pledgee deed for each batch.
The holder of the pledge deed alone without the storage receipt shall have a
right of pledge on the goods deposited.
The holder of the storage receipt only, without the pledge deed, has the right
to recover the goods deposited provided that he pays the debt secured by the
pledge deed, if such debt is due. He may, otherwise, recover the goods before
the maturity date of the debt, as long as he deposits with the warehouser a
sufficient sum to pay off the debt with its interest and expenses until it falls
due. This provision shall apply if the debt is due and the holder of the pledge
deed does not come forward to cash it. Recovery of the goods deposited may be
restricted to one part thereof of after paying a sum proportionate to the value
of such part.
the debt secured by the pledge deed is not paid on its maturity date, the holder
of the pledge deed, separate from the storage receipt, may request the sale of
the goods pledged by following the procedure set forth in Article (172).
The pledgee shall have a priority right over all the creditors for recovering
his right from the cost of the goods after deduction of the following
Taxes and duties due on the goods.
Judicial expenses incurred for the joint interest of the creditors.
Expenses incurred for the safekeeping, storage and sale of the goods.
Any amount exceeding the sum due to the holder of the pledge deed shall be paid
to the holder of the storage receipt if he is present at the time of the sale of
the goods, otherwise, the amount shall be deposited with the treasury of the
court ordering the sale.
The holder of a pledge deed may not have recourse against the debtor or the
endorsers until execution has been carried over the mortgaged goods and the
resulting amount proved to be insufficient to pay off the debt.
The holder of a pledge deed must have recourse against the endorser within
fifteen days from the date on which goods are sold, otherwise action shall be
rejected in case of denial.
Under all circumstances, the holder of a pledge deed shall forfeit his right of
recourse against the endorsers if he fails to commence the execution
proceedings, over the mortgaged goods, within thirty days from the maturity date
of the debt.
the goods suffer an accident, the holder of the storage receipt or the pledge
deed shall have, over the face value of the insurance, which becomes payable
upon the occurrence of such accident, all rights he has over the goods.
In case the storage receipt is lost or damaged, the concerned person may apply
to the civil court to which jurisdiction the public warehouse pertains, for an
injunction ordering the warehouser to deliver him a copy of the said receipt, on
condition that he establishes his ownership thereof and provides a guarantor or
a sufficient security.
In case of loss or damage of the pledge deed, the person concerned may obtain
from the court an injunction ordering the debtor to pay the secured debt upon
maturity; provided that he produces a guarantor or a sufficient security. If the
debtor fails to execute the injunction, the person in whose favor the injunction
was issued may request that the goods pledged be sold by following the procedure
stipulated in Article (172), provided that the endorsement has been recorded on
the copy kept by the warehouser, and that the notice requiring payment contains
the particulars of such endorsement.
The guarantor provided, in case of loss of the storage receipt, shall be
discharged from liability upon recovery of the goods or by the lapse of three
years if no claim is addressed to the warehouse for the recovery of the
The guarantor provided, in case of loss of the pledge deed shall be discharged
from liability by the lapse of three years from the date of recording the
endorsement in the books of the public warehouse.
Where the depositor fails to recover the goods on expiry of the deposit
contract, the warehouser may request the sale thereof by following the
proceedure provided for in Article (172). He shall recover the sums due to him
from the proceeds of the sale and hand over the balance to the depositor or
deposit such balance with the court treasury for the depositor's account.
The provision of the preceding paragraph shall also apply if the deposit is made
for unspecified duration and one year elapsed after the depositor fails to apply
for the recovery of the goods or expresses his willingness to carry on with the
contract of deposit.
Without prejudice to any severer punishment, any person who establishes or
exploits a public warehouse without obtaining the license stipulated in
paragraph (2) of Article (178) shall be sentenced to imprisonment and a fine
ranging between (5,000) Five Thousand Dirhams, as a minimum and not exceeding
(20,000) Twenty Thousand Dirhams or with either of these two penalties.
In case of conviction, the court may order the closure of the warehouse until
the violator obtains the required license, as it may also order the liquidation
of the warehouse.
stock exchange market may not be opened in the State except pursuant to the
approval of the Council of Ministers. A Federal law shall be enacted to
regulate the operations of such market.
agency shall be commercial when it relates to commercial activities.
Unless otherwise agreed, a commercial agency shall be against
Where the agent's fee has not been fixed in the agreement or has not been
specified by the law, it shall be determined according to customs and, in the
absence thereof, shall be estimated by the court.
remuneration shall be due to the agent by the mere execution of the transaction
assigned to him, or if he proves that it was not executed due to reasons
attributed to the principal. In all other cases, the agent shall only be
entitled to a consideration for his efforts and expenses in accordance with
customs, if any, or pursuant to the court's estimation.
otherwise agreed, the commercial mandate, although absolute, shall apply only to
the commercial agency agreement covers a specific commercial transaction, the
agent may carry out all the actions required to execute such transaction without
need to obtain an authorization from the principal.
The agent shall abide by the compulsory and express instructions of the
principal, and if he violates them without an acceptable excuse, the agent may
refuse the transaction. However, as concerns advisory instructions issued by the
principal, the agent shall be free to act within the scope of the general
objectives set by the principal to his agent.
In the absence of any instructions issued by the principal concerning the
transaction, the agent shall delay its conclusion and request instructions from
the principal, unless the delay in completing the transaction may cause damage
to the principal or unless the agent is authorized to act without instructions
from the principal.
the agent implements the tasks assigned to him under conditions that are more
favorable than those stipulated in the agency agreement, he may not keep for
himself the difference which in such case belongs to the principal, unless
otherwise agreed upon.
the goods or items held by the agent for the account of the principal are
subject to rapid deterioration or devaluation and no instructions were received,
within a reasonable time, from the principal, the agent may summarily request
from the court an authorization to sell them according to the method determined
agent may refrain from performing the work entrusted to him where performance
requires extraordinary expenses which have not been paid by the principal,
unless agreed upon between the two parties or unless there are previous dealings
between them requiring from the agent to pay such expenses.
the agent refuse to execute the transaction entrusted to him, he has to notify
forthwith this refusal to the principal. In such case, the agent shall safe keep
the goods and other things kept with him for the principal until he receives
instructions in this respect. If these instructions are not received in due
time, the agent may request the court for an authorization to deposit the goods
and other things with a trustee to be appointed by it.
agent is liable for the destruction and deterioration of the goods and other
items which he keeps for the principal, save where such damages or losses result
from a foreign cause beyond the agent's control or from a defect that is
inherent to the goods or items.
agent shall not be bound to insure the articles which he keeps for the principal
unless the latter so requires, or where insurance is obligatory according to the
law or custom, or if the nature of the article so dictates.
The agent may not constitute himself as a second party to the transaction
assigned to him for conclusion except in the following instances:
If the principal authorizes him to do so.
If the principal's instructions concerning the transaction are express and
specific, provided the agent has implemented them accurately.
If the transaction is related to a commodity which has a fixed price in the
market and the agent has bought it for himself or has sold it to the principal
from his above instances.
The agent, in these cases, is not entitled to any remuneration in consideration
third party dealing with the agent may request the right to peruse the agency
contract, the correspondence and other documents establishing the agent's
authority. Any restrictions to the agent's authority may not be opposed to a
third party, unless the latter had knowledge of such restrictions at the time of
agent has to inform the principal of the transactions he concludes for the
agent shall submit to the principal on the agreed date, or on the date
determined by custom or by their previous dealings, a true account of the
business carried out for his account. Should this account include premeditated
false particulars, the principal may reject the relevant transactions, and shall
further be entitled to claim damages. The agent shall not receive any
remuneration for the said transactions.
agent may retain possession of the goods and other articles dispatched to,
deposited with or delivered to him by the principal, to guarantee payment of the
fees and expenses due to him by the principal.
party to the commercial agency contract may terminate it at any time. No
indemnity is due except if the termination occurs without prior notice or at an
undue time. Where the contract is made for a fixed term, it may only be
terminated for a serious and acceptable reason, otherwise compensation will be
the absence of a known domicile, to the principal, in the State, the domicile of
his agent shall be deemed to be his domicile. He may be sued and official papers
served on him, at this domicile, with regard to the business conducted by the
agent on behalf of his principal.
conduct of the commercial agency business shall be organized by specific laws
enacted for this
TYPES OF COMMERCIAL AGENCIES
contract Agency is a contract pursuant to which a person undertakes to carry on
continuously against remuneration, in a specific area of activity, promotion and
negotiation in order to enter into transactions for the benefit of the principal
and in return of a remuneration. The agent's task may include the conclusion
and execution of transactions in the name of the principal and for his
contracts agent shall carry out the business of his Agency and manage his
commercial activity in an independent manner, and shall bear alone the expenses
necessary to conduct such business.
the contract stipulates that the contracts agent is to set up showrooms or
warehouses for the goods or maintenance and repair installations, the contract
term may not be less than five years, except if otherwise agreed.
The contracts agent may not receive the principal's dues, unless the principal
vests him with this right, in which case the agent may not make any reduction or
grant a respite without special authorization to this end.
The contracts agent may receive the applications related to the implementation
of the contracts entered in through him, as well as any complaints concerning
the non-implementation of such contracts. He shall further be deemed as the
representative of his principal in the cases relevant to said contracts, whether
as plaintiff or defendant, in the area of the agent’s activity.
The principal must pay the agreed remuneration to the agent.
Unless otherwise agreed, the remuneration may be a percentage of the transaction
value, to be calculated on basis of the sale price to the customers.
contracts agent shall be entitled to remuneration for the transactions concluded
or for those whose non-conclusion is due to the principal's act, unless the
contract stipulates otherwise.
principal shall provide the agent with all the information necessary for the
implementation of the agency contract.
The contracts agent shall be bound to safeguard the principal's rights and he
may take all the precautionary measures to this effect. He must as well provide
the principal with the information pertaining to the market conditions in the
area of his activity.
The contracts agent may not, even after termination of the contractual
relationship, divulge the principal's secrets that may come to his knowledge as
a result of the execution of the agency contract.
the event where the principal substitutes the contracts agent by a new agent,
this latter shall be jointly responsible with the principal for the payment of
the indemnities decided by the court to the previous agent whenever it is
established that the dismissal of the previous agent was a result of collusion
between the principal and the new agent.
an exception to the rules of jurisdiction provided for in the Code of Civil
Procedures, the court within whose jurisdiction lies the place of implementation
of the contract, shall be competent to look into all conflicts arising from the
agreement appointing the Contracts Agent.
distribution contract whereby a trader undertakes to promote and distribute the
products of an industrial or commercial establishment in a specific area on an
exclusive distributorship basis, shall be considered as a Contracts Agency and
be governed by the provisions of Articles (220), (225) and (226) hereof.
case of denial and lack of legitimate excuse, all cases arising from an
agreement of Contracts Agency are not admissible after the lapse of three years
from the expiry of the agency agreement.
A Commission Agency is a contract whereby the agent undertakes to carry out in
his own name a legal act for the account of the principal against a commission
to be paid by the latter.
Where the commission agent carries out the legal act in the name of the
principal, he shall be subject to the general provisions governing the
Where the commission agent sells at a lower price or buys at a higher price than
that fixed by the principal, and this latter wishes to refuse the transaction,
the principal must notify his refusal to the agent within one week from the date
on which he was informed of the conclusion of the transaction, otherwise he
shall be considered as having accepted the price.
The principal may not reject the transaction if the agent accepts to bear the
Where the commission agent buys for the account of the principal, goods of a
type or category that is different from that ordered by the principal, this
latter shall not be bound to accept them.
Where the commission agent buys goods which are conforming to those ordered but
in a larger quantity, the principal shall be bound to accept only the quantity
which he has ordered.
the commission agent conclude a contract with terms more favorable than those
specified by the principal, the benefit of these terms goes to the principal and
the agent has to account on basis of the true conditions according to which the
transaction was concluded.
Where a commission agent, who is asked to sell, grants the buyer, without the
authorization of the principal, a respite for payment of the price or accepts
that it be made by installments, the principal may require the agent to pay the
whole price immediately, in which case the commission agent may retain for
himself the price difference and its interests, if any.
Nevertheless, the commission agent may grant a respite for payment of the price
or make the price payable by installments without the principal's authorization,
if it is customarily acceptable in the area where the sale was effected, save
where the principal's instructions bind the agent to sell on payment in advance
the principal instructs the commission agent to sell against deferred payments
and this latter sells for payment in advance at a lesser price, the principal
may not require him to pay the price until maturity of the term fixed by him. In
this case, the commission agent shall be bound to pay the price fixed for a sale
on term basis.
A commission agent may not change the trademarks affixed on the goods received
by him from the principal or for the principal's account.
Where the commission agent has in his possession several goods of the same kind
dispatched to him by different principals, he must put a distinctive label on
A commission agent may disclose the name of the principal for whose account he
enters into contract unless the principal requires him not to do so. The
disclosure of the principal's name shall not result in a change in the nature of
the agency as long as the commission agent enters in contract in his name.
The commission agent must disclose to the principal the name of the third party
with whom he contracts if the principal requires him to do so. In default
thereof, without an acceptable excuse, he may be considered as having guaranteed
the implementation of the transaction.
Under all circumstances, the commission agent shall be bound to prove the
existence of the third party with whom he contracted, should the principal so
A commission agent and the third party with whom he entered into contract shall
be reciprocally bound to each other.
Unless otherwise provided by law, the third party with whom the commission agent
has entered into contract may not have direct recourse against the principal,
neither may this latter have direct action against such third party.
In addition to his right to a possessory lien, the agent shall have a privilege
over such goods and other items dispatched to, deposited with or delivered to
him by the principal.
The said privilege shall secure the agent's remuneration and any expenses and
sums paid by him on behalf of the principal or advanced to the latter. In
addition, he shall be liable to pay the interests accrued and other amounts that
may be due because of the agency, irrespective whether such amounts have been
paid before delivery of the goods and items or while still in the possession of
The said privilege is established without regard to whether the debt has arisen
from business related to the goods or items that are still in the agent's
possession or to other goods or articles which had previously been deposited
with, delivered to or dispatched to the agent.
The agent shall not be entitled to the privilege referred to in the foregoing
Article, unless he is in possession of goods or articles for the principal's
account; and such possession shall materialize in the following instances:
Where the agent has in fact received the goods or articles.
Where the goods or articles were placed at his disposal in a public warehouse or
Where he legally had possession of the goods before their arrival pursuant to
the bill of lading or any other bill of carriage.
Where he has exported the goods and has retained possession thereof pursuant to
a bill of lading or any other bill of carriage.
In case the goods or articles subject to privilege have been sold and delivered
to the buyer, the agent's privilege shall pass to the price.
agent's privilege shall have priority over all other privileges, except judicial
expenses and sums due to the Government.
The execution proceedings adopted for a commercially pledged object shall apply
to the execution on goods and articles held in possession of the agent.
However, where the agent is in charge of selling the goods or articles held in
his possession, he may execute by selling them without having to comply with the
proceedings referred to in the preceding paragraph, unless he fails to abide by
the principal's express instructions issued in respect of the sale.
Where the commission agent who is in charge of the sale is declared bankrupt
before cashing the price, the principal may claim payment of the price directly
from the buyer.
Where the commission agent who is in charge of purchasing is declared bankrupt
before he takes delivery of the purchased item, the principal may claim its
delivery directly from the seller.
A commission agent shall not guarantee the third party with whom he contracted
in the fulfillment of his obligations unless he assumes expressly this
guarantee, or if such guaranty is provided for by law, or if it is customary in
the area where he carries on his activity.
A commission agent who guarantees the contracting party in the fulfillment of
his obligations, shall be entitled to an additional remuneration to be
determined by the court in the absence of an agreement or custom in this
commission agent may not delegate to a third party the task entrusted to him,
unless he obtains the permission of the principal to do so. Should he fail to
comply with this provision the person delegated shall have no right to a
possessory lien or to a privilege except to the limit of the debt due to the
original commission agent.
commercial representation is a contract pursuant to which the commercial
representative undertakes to enter into transactions in the name and for the
account of his principal, on a permanent basis and within a specific area.
commercial representative shall not warrant the implementation of the
transactions concluded through him, unless he had expressly agreed to such
guarantee or in case the custom in the area where he carries on his activity
dictates such a guarantee.
The trader shall be liable for any transactions and contracts entered into by
his representative within the limits of the authority allowed by him.
Where the representative is appointed by several traders, they shall be jointly
If the representative is mandated by a company, it shall be responsible for his
acts and the partners' responsibility shall depend on the type of company.
Where the limits of the authority vested in the commercial representative have
not been determined, the authority shall be deemed general and comprehensive for
all the transactions related to the kind of trade which the representative has
been authorized to carry out.
The trader may not oppose against a third party that the authority is limited
unless he establishes that such third party was aware of such limitation.
commercial representative shall carry out in the name of the trader who
delegated him the commercial activities which he has been authorized to
undertake. He has the obligation, when signing, to put next to his name in full,
the full name of the trader and shall indicate his capacity as commercial
representative, failing which he shall be personally liable for his own acts.
Third parties may, however, have direct recourse against the trader in respect
of the transactions concluded by the representative in connection with the trade
which he has been authorized to carry on.
commercial representative may represent the trader in the lawsuits arising out
of the commercial transactions carried on by him.
commercial representative shall be jointly liable with the trader for observing
the law provisions related to unfair competition.
commercial representative may not effect, for his own account or for the account
of a third party, any commercial transaction of the kind included in his
representation agreement, without obtaining an express approval to do so from
the trader who had appointed him.
it is agreed that the commercial representative shall be the exclusive general
representative for the trader in the agreed area, the representative shall be
entitled to a commission for each transaction entered into for the account of
the trader in such area, even if the trader has concluded it by himself or if it
were concluded through a person other than the commercial representative.
is a contract pursuant to which a broker undertakes to another person, against
remuneration, to look for and mediate in the negotiations with a second party in
order to conclude a specific contract.
Where the broker's remuneration is not fixed in the law or the agreement, it
shall be determined according to custom. In the absence of a custom, the judge
shall estimate it commensurately with the effort exerted by the broker and the
time spent in carrying out the work assigned to him.
The judge may reduce the remuneration agreed if it is not commensurate with the
nature of the transaction and the effort exerted by the broker. No reduction may
be decided if the remuneration is fixed in the agreement or has been willingly
paid by the customer after conclusion of the contract resulting from the
A broker shall not be entitled to remuneration unless his intermediation results
in the conclusion of the contract between the two parties. The contract is
deemed concluded once both parties have agreed on all the substantial matters
Unless otherwise stipulated by the law or by custom, the broker shall be
entitled to receive his remuneration by the mere conclusion of the contract even
if not performed.
Where the contract is made conditional upon a condition precedent, the broker
shall receive his remuneration only when the condition is materialized.
Where the contract cannot be concluded for a reason attributable to the
customer, the broker shall be entitled to compensation commensurate with the
the contract object of the broker’s intermediation is rescinded, the
broker may claim payment of his remuneration or keep it, in case already
received, unless fraud or gross error is established on his part.
the broker mediates for the conclusion of a legally prohibited transaction, he
is not entitled to any remuneration in consideration thereof.
The broker shall be entitled to remuneration only from the party to the
transaction who has asked for his intermediation.
Where the broker’s intermediation has been requested by both parties, each
of them shall be severally liable to the broker for payment of the remuneration
owed by him, even if they had agreed that either one of them will bear the
broker's remuneration in full.
broker, even if commissioned by one party to the transaction, has the duty to
give both parties a true and faithful description thereof and inform them of all
circumstances known to him; he shall be liable to them for any fraud or fault
committed by him.
broker may not recover the expenses incurred by him in the execution of the task
assigned to him unless otherwise agreed, in which case said expenses shall be
payable even if the contract has not been concluded.
broker may not claim his remuneration or recover his expenses if he has acted to
the detriment of one party in favor of the other party who did not commission
him, or where he has obtained a promise from such other party, contrary to the
requirements of good faith, to obtain a benefit for himself.
broker may not constitute himself as second party to the contract for which he
is mediating unless the contracting party authorizes him to do so, and in such
case he shall not receive any remuneration.
A broker shall record in his books all the transactions completed through his
endeavors and must keep the relevant documents. He shall further deliver a true
copy of the original of all the foregoing to any contracting party requiring
them. These books shall be subject to the provisions applicable on commercial
In case of sale according to samples, the broker is required to keep the sample
until the buyer, without reservation, accepts the goods, or until all conflicts
are settled between the two parties in this respect.
broker shall be liable to compensate any damages resulting from the destruction
or loss of documents, papers or items delivered to him and related to the
transaction for which he is intermediating, unless he proves that such
destruction or loss was due to a force majeure.
broker may not act as intermediary for persons who are reputed for their
insolvency or if he knew them to be incapacitated.
A broker is not required to guarantee the solvability of the two parties to the
transaction in which he intermediates. He shall bear no liability for the
implementation of the said transaction or for the value and quality of the goods
related thereto, unless it is established that he committed an act of fraud or
fault and he is held for guarantee under the agreement or the law.
The broker shall however be jointly liable for the implementation of the
transaction with the contracting party if he has over and above his remuneration
an interest therein.
Where a broker delegates another person to perform the task assigned to him
without being authorized to do so, he shall be liable for the proxy's act as if
such act had emanated from him; and both the broker and his proxy shall be
Where the broker is authorized to appoint a proxy without any designation of the
person of such proxy, the broker shall only be liable for his fault in choosing
his proxy or his fault in the instructions issued by him to the proxy.
Under all circumstances, the person who has assigned the broker may have direct
recourse against the proxy.
several brokers have been mandated for one contract, they shall be jointly
liable for the task entrusted to them, unless they have been authorized to act
several persons mandate one broker for a joint task, they shall be jointly
liable towards him for the execution of the mandate, unless otherwise
in the stock exchange and commodities markets shall be governed by the laws and
regulations enacted for this purpose.
contract of transport is one by which the carrier undertakes to transport,
against a fee, by his own means of transport, a person or a thing from one place
the exception of sea transport, the provisions stipulated under the present Part
shall apply to all kinds of transport regardless of the carrier's capacity,
without prejudice to those provisions stipulated in special laws concerning
certain kinds of transport and in the international transport conventions
applicable in the State.
provisions of this Part shall apply to transport even if it is associated with
operations of another nature, as long as such operations do not constitute the
main objective of the contract.
A contract of transport and the commission agency contract for transport is
concluded by the mere acceptance of an offer, unless both parties agree to defer
such conclusion until the time of delivery. The contract may be established by
all means of proof.
The receipt by the carrier of the thing subject of carriage shall be deemed as
an acceptance from him of the offer made by the consignor.
In boarding the means of transport, the passenger is considered to have accepted
the offer made by the carrier, unless it is established that the passenger's
intention was not to conclude a transport contract.
Where the carrier uses different forms of contracts and the two parties have not
agreed to adopt a specific form, the contract is deemed concluded according to
the form including the general conditions.
Where the two parties agree to adopt a specific form, the conditions stated
therein shall be indivisible.
Where the carrier holds a monopoly over one kind of transport or over the
exploitation of specific lines of transport, he shall be bound to accept all the
applications submitted to him, save where an application is contrary to the
prescribed transport conditions or where it is impossible for the carrier to
execute it for reasons beyond his control.
Where the applications exceed the capacity of the transport means that the
carrier is licensed to use, he shall accept such applications according to their
dates of submission, so that the application first submitted shall have
precedence over subsequent applications, unless some of such applications have
priority pursuant to the carriage conditions.
carrier's liability shall extend to his acts and those employed by him should
they be performed in the course of rendering their services. Shall be considered
a subordinate, every person employed by the carrier for the performance of his
obligations under the transport contract.
In the execution of the transport contract, explosion of the transport means,
their burning, derailing, collision or any other accident attributed to the
tools and machines used by the carrier in the performance of the transport, is
not considered force majeure. This is so, even if the carrier establishes that
he has adopted precautionary measures to guarantee the suitability of said
transport means for work and to prevent the damage that may occur.
Neither shall be considered a force majeure, the accidents attributed to sudden
death, or physical or mental weakness which befall the carrier's employees at
work, even if the carrier proves that he had taken precautionary measures to
guarantee their physical and mental fitness.
carrier shall not be liable to compensate any damage arising from transport
disruption or deviation from its routing in order to provide assistance to any
sick, injured or endangered person.
In the performance of the transport contract, fraud shall mean every act or
omission committed by the carrier or the persons employed by him with the intent
to cause damage.
Gross fault shall mean every act or omission committed by the carrier or the
persons employed by him with imprudence coupled with awareness of the damage
that may result therefrom.
OF PERSONAL PROPERTY CARRIAGE _
The consignor shall be required to provide the carrier with the particulars
concerning the recipient's name and address, destination of the carriage, kind
of things intended for carriage, as well as their value, weight, volume,
quantity, mode of packing and wrapping, number of parcels included, and any
other particulars as are sufficient to identify the thing required to be
transported, in addition to the delivery term and the routing to be
The consignor shall be answerable for any damages arising from the false or
insufficient data provided by him.
The bill of lading shall contain, in particular, the following data:
Date of the bill and the place of its issuance.
Names and places of residence of the consignor, recipient, carrier and the
carriage commission agent, if any.
Places of departure and destination.
The particulars related to the identification of the things carried and their
Date fixed for execution of the transport operation.
The freight and other expenses indicating whether they are payable by the
consignor or the recipient.
Freighting and unloading conditions, type of transport means required to be used
for carriage, the routing to be followed, determination of liability and any
other special conditions that may be included in a carriage contract.
The bill of lading may be issued in the name of a specified person, to his order
or to bearer.
The carriage deed shall be negotiated according to the rules governing
assignment of rights, if issued to a named person, by endorsement, if issued to
order and by delivery where it is issued to bearer, this not being concerned
with the carriage of the goods or possession thereof.
The consignor may require the carrier to hand him a copy of the bill of
Where no bill of lading is issued, the consignor may require the carrier to give
him a receipt signed by this latter evidencing the receipt of the thing carried.
Such receipt has to be dated and must include the sufficient particulars to
identify the thing carried and the freight charges.
bill of lading and the receipt issued and signed by the carrier evidencing the
receipt of the thing carried shall constitute a proof that the particulars
stated therein are correct. Any person contesting such particulars shall have to
prove the contrary.
The rights and obligations arising from the carriage contract shall not bind the
recipient unless he accepts such rights and obligations either expressly or
The receipt by the recipient of the bill of lading or of the thing intended for
carriage, as well as claiming its delivery or issuing instructions to this
effect, shall be deemed as a tacit acceptance of the rights and obligations
arising from the carriage contract.
The consignor shall deliver to the carrier the thing to be carried and the
documents necessary for the execution of the transport. The consignor shall be
answerable where such documents are insufficient or not corresponding to the
truth, and he shall as well be liable for the loss of such documents or, in case
of negligence, in using them or in case of abuse thereof.
Where the carriage requires special preparations, the consignor shall notify the
carrier accordingly within sufficient time prior to the delivery of the thing to
Delivery shall take place at the place of business of the carrier, unless
Where, owing to the nature of the thing, special preparations should be made for
its carriage, by wrapping it, packing or strapping the consignor shall have to
take such precautions as would protect it from perishing or being damaged and
would not expose the other persons or things carried with it to injury or damage
respectively. Where carriage is conditioned by a specific mode of packing,
wrapping or strapping, the consignor shall be required to abide by such
The consignor shall be further liable for the damages arising from the defect in
packing, wrapping or strapping and the carrier shall be jointly responsible with
the consignor for such damages if he has accepted to perform the carriage with
his knowledge of such defects. The carrier shall be deemed to be aware of the
defect where it is apparent or where it is of the type which cannot be concealed
to an ordinary carrier.
A carrier may not exonerate himself from the liability for the damage or loss of
one of the things carried, by proving that the damage has arisen from a defect
in the packing, wrapping or strapping of another thing. Any agreement to the
contrary shall be void.
A carrier has the right to examine the things to be carried, in order to verify
their condition and the authenticity of the particulars provided by the
consignor in this respect.
Where such an examination requires the opening of the wrappings or containers,
the consignor shall be notified to attend the examination. Where the consignor
fails to show up on the date fixed, the carrier may effect the examination in
his absence and, unless otherwise agreed, have recourse against the consignor
for the examination costs.
Where the examination shows that the condition of the thing does not allow its
carriage without damage, the carrier may refuse to transport it or may carry it
after taking from the consignor a declaration that he is aware of the condition
of the thing to be carried and that he agrees to its being transported. In such
case, it is required to write down in the bill of lading the condition of the
thing and the consignor's declaration.
receipt by the carrier of the things to be carried without any reservations
shall constitute evidence that he received them in good condition and in
conformity with the particulars stated in the bill of lading. Should the carrier
claim the contrary, he shall have to prove it.
The carrier is bound to ship the thing to be carried and stack it on board of
the ordinary means of carriage, unless otherwise agreed upon.
Where the consignor requires that the freighting be made on board a specific
type of means of transport, the carrier shall not be held liable for the damage
resulting from the use of such type of transportation.
The carrier must follow the routing agreed upon, and in the absence of an
agreement for a specified route, the carrier shall take the shortest
However, a carrier may change the route agreed upon or take a longer one where a
necessity arises compelling him to do so. In such case, the carrier shall bear
no responsibility for the delay and other damages which may result from the
change of route, unless fraud or gross fault is established on his part or on
the part of the persons employed by him.
The carrier shall be responsible for the safety of the thing during the
performance of the carriage contract.
Where the safekeeping of the thing during carriage necessitates re-strapping,
repair of the wrappings, increase or decrease thereof or any other necessary
measures, the carrier shall perform this and pay any costs required therefore,
unless otherwise agreed. Notwithstanding the foregoing, and unless otherwise
agreed, the carrier shall not be bound to take any extraordinary measures in the
transport such as supply food and water to animals, provide medical services or
other services or irrigate the plants.
The carrier shall unload the thing on arrival, unless this is carried out by the
recipient or another person pursuant to an agreement, a law, a regulation or
instructions. In such case, the carrier shall not be liable for any damages
resulting from the unloading.
In all cases, the carrier shall bear the unloading costs unless otherwise
is not required at the place of the recipient, the carrier shall notify him of
the arrival of the thing carried and of the time on which he may take delivery
The recipient has to receive the thing on the date fixed by the carrier,
otherwise he shall bear the storage fees. On the expiry of the date set for
delivery, the carrier may carry the thing to the recipient's place in against an
additional freight charge.
The recipient is entitled to examine the thing before receiving it, and if the
carrier refuses to avail him from exercising this right, the recipient may
refuse to take delivery thereof.
Where the thing to be carried is still in the possession of the carrier, the
consignor may order him to refrain from executing the transport, to stop it or
to return the thing to him. He may also ask him to direct it to a person other
than the original recipient, or to any other place, or issue any other
instructions, provided that the consignor shall pay the freight charges and
expenses of that part already transported and compensate the carrier for any
damage he may have sustained as a result of the new instructions. Where the
consignor has received a copy of the bill of lading, he should return it to the
carrier so that he enters therein the new instructions signed by the consignor,
failing which, the carrier may refrain from executing such instructions.
The right to issue instructions concerning the thing carried, shall pass on to
the recipient upon receiving the bill of lading or upon express or implied
acceptance of the carriage contract. In this case, as well, the bill of lading
should be returned to the carrier to enter therein the new instructions signed
by the recipient, failing which the carrier may refrain from executing these
No new instructions related to the thing to be carried may be issued, after its
arrival and notice is given to of the consignee to receive it or invite him to
carrier is bound to execute the instructions issued to him by whoever is
entitled to give them, pursuant to the provisions of the foregoing Article,
unless the carriage conditions prohibit same, or unless it is impossible for the
carrier to execute such instructions. The same applies if execution of these
instructions would cause a disturbance in the traffic, or if the value of the
thing carried is not sufficient to cover the expenses incurred by the carrier
due to the execution thereof. In all such cases, the carrier shall notify the
person who issued the new instructions of his abstention from executing them and
the reason for such abstention. This abstention shall not entail the liability
of the carrier unless unjustified.
Where an obstacle prevents the commencement of carriage, or if the transport is
disrupted during its execution, or if the recipient does not appear to take
delivery of the thing carried, or if he reports but refuses to receive it or pay
the freight charges or expenses due, the carrier shall notify the consignor
accordingly and seek further instructions. As an exception to the provisions of
Article (296), the carrier must in this case implement the instructions received
by him from the consignor, even if he fails to return the copy of the bill of
lading given to him by the carrier.
If the carrier does not, in due time, receive the instructions of the consignor,
he may ask the court to ascertain the condition of the thing and authorize him
to deposit it with a trustee for the account and at the responsibility of the
Where the thing is subject to damage, deterioration or devaluation, or when its
maintenance costs are exorbitant, the court may order that it be sold in the
manner prescribed by it and the price be deposited with the court treasury for
the account of the persons concerned.
consignor shall pay to the carrier the freight charges and the other costs that
may accrue, save where it is agreed that they be borne by the recipient, in
which case, both the consignor and the recipient shall be jointly liable to pay
them to the carrier.
carrier is not entitled to freight charges on account of things that perished
due to a force majeure.
Where a force majeure prevents the execution of carriage no freight shall accrue
to the carrier. However if said force majeure obstructs its completion, the
carrier shall be entitled to receive the freight for the part performance
Under all circumstances, a carrier may claim payment of the freighting and
unloading costs and other necessary expenses.
payer shall have the right to claim the recovery of the sum paid over and above
the agreed freightage, or that stipulated in the carriage conditions.
The carrier may retain the thing carried until payment of the freight, expenses
and other amounts due to him because of the carriage.
The carrier shall have a privilege on the price resulting from the forced
execution over the things carried in order to recoup the freightage and other
sums that are due to him because of the carriage. The provisions relative to the
procedures of execution on commercially mortgaged things shall apply in this
From the moment the carrier receives the thing to be carried, he shall be liable
for its total or partial loss, deterioration and the delay in delivery.
The thing shall be deemed totally damaged if the carrier fails to deliver it or
to notify the recipient to take delivery thereof within thirty days from the
expiry of the date fixed for delivery. Where such date is not fixed the
thirty-days period begins to run as of the expiry of the period required to an
ordinary carrier to execute the carriage under the same circumstances.
carrier shall not be liable for the damage or deterioration of the thing after
delivery thereof to the recipient, to the customs authority agreed upon or to
the trustee appointed by the court as depositary of the thing, save where fraud
or gross fault is established on the part of the carrier or his employees.
The carrier shall not be answerable for any usual decrease in weight or volume
that occurs to the thing during carriage, owing to its nature, unless it is
proved that such decrease is attributed to another cause.
Where the bill of lading covers several things divided into groups or parcels,
the decrease allowed shall be determined on basis of the weight of each group or
parcel, in case such weight has been specified separately in the bill of lading
or if it could have been determined.
the thing is carried under the custody of the consignor or recipient, the
carrier shall not be liable for its damage or deterioration, unless fraud or
gross fault is proved on his part or on the part of the persons employed by
carrier may not exonerate himself from liability regarding the damage or
deterioration of the thing, or the delay in delivering it, save where he proves
a force majeure, a defect inherent to the thing carried, a fault committed by
the consignor or recipient, or an act of Government.
Any provision exonerating the carrier from liability for total or partial
perishing or deterioration of the thing, shall be null and void; also, any
provision exonerating the carrier from said liability if arising from the acts
of his dependents shall be null and void. Any condition that binds the consignor
or recipient, in any capacity whatsoever, to pay all or part of the cost of
insurance against the carrier's liability, shall be deemed exoneration from
The carrier, however, may stipulate his total or partial exoneration from
liability for delay.
The carrier may put as a condition the limitation of his liability for the total
or partial perishing or deterioration of the thing, provided that the indemnity
agreed shall not be fictitious and remains subject to the court's estimation in
case of conflict.
The indemnity agreed upon shall not be due, if the carrier proves that the
recipient did not sustain any damage.
Where the damage value is less than the amount of the agreed indemnity, the
judge may reduce such amount to make it equivalent to the damage value. Should
the damage exceed the agreed indemnity amount, it is not permissible to claim
more than such amount, unless it is established that the carrier or his
dependents have committed fraud or a gross fault, in which case the carrier
shall be bound to compensate for the damage in full.
condition for limitation of, or exoneration from, liability for delay shall be
in writing, otherwise it shall be considered as null and void. Where the
carriage contract is made out on printed forms, the said condition must be clear
and written in a manner that draws the attention, failing which the court may
consider it null and void.
carrier may not avail himself of the condition of limitation of, or exoneration
from, liability for delay where fraud or gross fault is proved on his part or on
the part of his dependents.
Where the thing to be carried perishes or deteriorates and its value is not
indicated in the bill of lading, the indemnity shall be assessed on basis of its
real value at the venue time of arrival, unless otherwise stipulated by law or
agreement. Save where the perishing is total, the indemnity shall be estimated
while taking into account the value of the allowed decrease in pursuance to the
provision of Article (298).
Where the value of the thing carried is indicated in the bill of lading, the
carrier may contest such value and prove, by all means of evidence, the real
value of the thing.
With the exception of the two cases of fraud and gross fault committed by the
carrier or his dependents, the carrier shall not be liable for the loss of the
thing entrusted to him for carriage, where such thing consists of money, bonds
and securities, jewelries or any other valuable object, except to the extent of
the express written particulars provided by the consignor at the time he
delivered the thing for carriage.
Indemnity for total perishing and indemnity for delay may not be
Indemnity for delay may not be adjudged in case of partial perishing except for
the part which did not perish.
Under all circumstances, the indemnity adjudged may not exceed the amount which
would accrue in the event of total perishing of the thing.
the thing deteriorates, perishes in part or its delivery is delayed, so that it
may no more serve its purpose and if the carrier's liability for such
deterioration, perishing or delay is established, the claimant for compensation
may abandon the thing to the carrier against an indemnity to be estimated on
basis of the total perishing of the thing.
Where the compensation is paid due to the perishing of the thing, and, within
one year of such payment, the thing is found, the carrier shall notify forthwith
the person who received the compensation, informing him of its condition and
inviting him to inspect it at the place where it was found, the place of
departure or the place of destination whichever is convenient to him.
If the person who received the compensation fails to send his instructions
within fifteen days of his notification, or if he sends them but fails to report
on the date fixed by the carrier for inspection, or if he reports but refuses to
recover the thing, the carrier may then dispose of it.
Where the person who received the compensation requests that it be returned to
him, he is bound to reimburse the compensation received after deduction of the
expenses of the claim and a sum equivalent to the damage sustained due to the
delay in delivering the thing.
Receipt of the things carried and payment by the consignee of the freightage
shall invalidate any lawsuit against the carrier if the defect that had occurred
thereto is apparent. However, if such defect is not apparent, it may be
established, but the case lodged for said defect shall be admitted only if
notice is served, in respect thereof,
seventy hours from the time of receipt, and if the claim is submitted to the
court within thirty days, adding to both periods the time required for
The condition of the goods shall be established either by the competent
authorities or by an expert summarily appointed by the court.
The provisions of this Article shall not apply where it is established that the
defect was a result of fraud or gross fault committed by the carrier or his
subordinates, or where it is established that the carrier and his subordinates
have intentionally concealed the defect.
Where several carriers undertake successively the performance of one carriage
contract, the first carrier shall be liable towards the consignor and the
recipient for the whole operation. Any provision to the contrary shall be null
Each of the carriers, subsequent to the first, shall not be liable towards this
latter or towards the consignor or recipient, except for the damage that has
occurred in that part of carriage performed by him. Where it is impossible to
determine the part during which the damage occurred, the compensation shall be
divided between all the carriers in proportion to each carrier's share in
the freight, and in case one of such carriers is insolvent, his share shall
be divided between the others in the same proportion.
Shall be exonerated from liability, the carrier who proves that the damage did
not occur during the part of carriage executed by him.
of the consecutive carriers may require that the thing be examined and its
condition established on delivery thereof to him by the previous carrier. Where
he receives it without making reservations, it shall be assumed that he received
it in good condition and conform to the particulars stated in the bill of
lading, until the contrary is proved.
last carrier is responsible towards the preceding ones for claiming payment from
the recipient of the sums due because of the carriage. He has the right to
collect such sums on their behalf and take all the legal measures for collection
thereof, including the use of the right of withholding the thing and the right
of lien over the thing that is subject of carriage.
there is denial and lack of legitimate excuse the following may not be
The cases lodged against the carrier, on ground of delay, perishing or damage
arising from a contract of carriage of things, after the lapse of six months in
respect of carriage inside the State, and after the lapse of one year in respect
of overseas carriage, as of the date of delivery of the thing to the consignee,
or the customs or to the trustee appointed by the court as depositary of the
thing. In case of total perishing of the thing carried, the period shall run
from the expiry of the date stipulated in paragraph (2) of Article (304).
The case lodged by one carrier as a recourse against the consecutive carriers
pursuant to paragraph (2) of Article (318), after the lapse of sixty days of the
date of payment of the compensation or of the date on which official claim for
compensation has been filed.
principal, or persons under his authority, having committed fraud or gross fault
may not oppose the plea of "non hearing" stipulated in the foregoing
OF CARRIAGE OF PERSONS
The passenger shall pay the fare on the date agreed, or the date stated on the
carriage lists or as is customary; he shall further abide by the carrier's
instructions in respect of the carriage.
The carrier undertakes the transport of the luggage carried by the passenger
during the trip, and the passenger shall not be bound to pay any fare for the
transport of such luggage, provided they do not exceed the limit set in the
carriage tariff or the customary limits.
Where a force majeure prevents the commencement of carriage or where before
execution thereof, circumstances occur rendering the carriage a danger to
people's lives, the carrier shall not be liable to indemnify the non-execution,
neither shall he be entitled to receive the fare in respect thereof.
2- Where the force majeure or the danger to people's lives arise after
commencement of execution of the carriage, the carrier shall receive only the
fare due for that part of carriage which was executed.
carriage is impossible because of the death or illness of the passenger or due
to other compelling impediments, the carriage contract is rescinded and the fare
shall not be payable.
Where the passenger renounces to travel prior to its commencement, he shall
notify the carrier of his renunciation before the date set for execution of the
carriage and, in case of extreme necessity, such notice may be given the same
Where notification is effected according to the preceding paragraph, the carrier
shall not be entitled to a transport fare. However, he may claim for
compensation of the damage sustained by him because the passenger has renounced
the passenger gives up the idea of pursuing the trip after its commencement, the
full fare shall be payable, unless his renunciation is attributed to extreme
necessity, in which case he shall only pay the fare corresponding to the
executed part of carriage.
otherwise agreed, and without prejudice to the provisions of the two foregoing
Articles, where the passenger fails to report on the time fixed for carriage, he
shall pay the full fare and he may, whether he paid the full fare before or
after the date fixed, require that the carriage be executed on a later
Where carriage is cancelled prior to commencement or completion thereof due to a
reason attributable to the carrier, his subordinates or the means of carriage
used by him, the passenger shall not be bound to pay the fare, without prejudice
to his right for compensation if justified.
Where carriage is disrupted after commencement for a reason attributed to the
carrier, his subordinates or the means of carriage used by him, the passenger
may renounce to pursue the trip and the carrier shall, in this case, bear the
costs of carrying the passenger to the place agreed. However, the passenger may
choose to wait until the carriage traffic resumes and he shall not be required
in such case to pay any additional fare.
passenger may, prior to commencement of execution, assign the carriage ticket,
unless it is made out in the passenger's name or it is issued to him for special
The carrier shall prepare for the passenger a seat in the class agreed upon, and
this latter may recover from the carrier the difference in case he is compelled
to travel in a lower class than the one indicated on his ticket.
Where the passenger pays an additional fare in consideration of special
advantages, he may claim that such additional fare be reimbursed to him if the
carrier fails to provide the corresponding advantages.
The carrier may withhold the passenger's effects to secure payment of the fare
and the cost of food or other things provided to him during the performance of
the carriage contract.
The carrier shall have a priority right over the price of the passenger's
effects to recover the cost of carriage and other amounts due to him because of
the carriage. The proceedings of execution of a commercial pledge shall apply in
The carrier is bound to carry the passenger and his effects up to the place of
destination on the date agreed upon, and if no date is specified then within the
time limit required by an ordinary carrier had he been in the same
2- The carrier may, prior to carriage commencement or during the trip, examine
the passenger's effects in his presence, to ensure their conformity to the
The carrier shall secure the safety of the passenger for the duration of the
performance of the carriage contract, and any agreement exonerating the carrier
from such liability shall be null and void.
Performance of the carriage contract covers the period between the moment the
passenger starts to board the means of transport at the place of departure,
until he disembarks at the place of arrival. Where there are quays or platforms
for the means of transport to lay by, the performance of the contract shall
cover the period lying between the moment the passenger embarks the quay or
platform at the place of departure and his exit therefrom at the place of
Where necessity arises during the trip to change the means of transport, the
liability shall not cover the period of transfer of the passenger from one means
of transport to the other that is not in the custody of the carrier or his
The carrier shall be liable for the delay in arrival and for such corporeal or
incorporeal injuries sustained by the passenger during the performance of the
The carrier shall not be exonerated from the liability, stipulated in the
preceding paragraph, unless he proves that the delay or injury is due to force
majeure or to the passenger's or third party's fault.
Any provision fully or partially exonerating the carrier from liability in
regard to bodily injuries sustained by the passenger, shall be null and
Any condition which aims to make the passenger, in any way, pay all or some of
the insurance expenses against the carrier's liability shall be deemed as being
an exoneration from liability.
The carrier may put as a condition his total or partial exoneration from
liability for the delay of the passenger’s arrival and for other than the
bodily injuries which may be sustained by him during carriage.
The condition exonerating from liability must be in writing, otherwise it shall
be considered null and void. Where the carriage contract is executed on printed
forms, the condition must be clear and written is such manner as to draw the
attention, failing which the court may consider it null and void.
The carrier may not prevail himself of the condition exonerating him from
liability in full or in part where fraud or gross fault is proved on the part of
the carrier or his subordinates.
The passenger shall be bound to guard the effects and animals which he is
permitted to carry with him, and the carrier shall not be liable for any loss or
damage which may occur thereto, save where the passenger proves that such loss
or damage is due to fault of the carrier or his subordinates.
The passenger shall be liable for the damage caused to the carrier or to third
parties as a result of the effects or the animals which he carries with
As for the effects that are delivered to the carrier, carriage thereof shall be
governed by the provision stipulated in relation to the carriage of
Where a passenger dies or falls ill in the course of performance of the carriage
contract, the carrier shall take such measures as are deemed necessary to
safeguard his effects until they are delivered to the persons concerned.
Where any of the persons concerned is present at the place of occurrence of
death or illness, he is entitled to intervene to supervise the measures adopted
by the carrier to safeguard the effects and to request from the carrier to
deliver to him a declaration that the passenger's effects are in his
heirs and dependents of the passenger, to whom he is indebted to alimony, lodge
an action for liability arising from the carriage contract, in case of death
incident or at the lapse of a period thereafter.
AGENCY FOR CARRIAGE
Commission agency for carriage is a contract by which the agent undertakes to
enter into a carriage contract in his own name and for the account of his
principal, and where necessary, to by the principal. A commission agent for
carriage shall be as concerns the consignor in the same status as a
Where the commission agent undertakes carriage by his own means, he shall be
governed by the provisions of the carriage contract, unless otherwise agreed
the exception of the provisions stipulated in this Chapter, the provisions of
commission agency shall apply to commission agency for carriage.
principal may at any time cancel the order for carriage before the commission
agent enters into the carriage contract, in which case he shall be bound to
reimburse to the commission agent, the expenses incurred by him and compensate
him for any work performed.
The commission agent shall execute his principal's instructions, and in
particular those instructions related to the date of carriage, the selection of
the carrier, the carriage means and the route to be followed.
The commission agent may not charge his principal’s account any freightage
exceeding the one agreed upon with the carrier. Any advantages obtained from the
carrier by the commission agent shall benefit to the principal, unless otherwise
agreed upon in the agency contract or dictated by custom.
commission agent for carriage shall guarantee the safety of the passenger or the
article carried, and any agreement to the contrary shall be null and void.
Where the carriage relates to goods, the commission agent shall as of the time
of receiving the goods be wholly or partly liable for the perishing, damaging or
delay in the delivery of such goods. He may not deny his liability, unless he
proves a force majeure, an inherent defect of the goods, or a fault of the
principal or the consignee.
Where the carriage relates to persons, the commission agent shall be liable for
the delay in arrival, and for corporeal or incorporeal injuries as are suffered
by the passenger in the course of performing the carriage contract. The
commission agent may not deny his liability, except by proving a force majeure
or a fault committed by the passenger.
Whatever the case may be, the commission agent may have recourse against the
carrier where relevant.
Any provision exonerating wholly or partially the commission agent for carriage,
from the bodily injuries suffered by the passenger, shall be null and
A provision which imposes on the passenger, in any manner whatsoever, the
payment of all or some of the insurance costs against the liability of the
commission agent, shall be deemed to be an exoneration stipulated in the
The commission agent for carriage may provide for his total or partial
exoneration from the liability due to the perishing, damaging or delay in the
delivery of the goods carried, as well as from the liability arising from the
delay of the passenger's arrival or bodily injuries sustained by him during
The condition of exoneration from liability must be in writing, otherwise it
shall be considered null and void. Where the commission agency contract is
executed on printed forms, such condition must be clear and written in such
manner as to draw attention, otherwise the court may consider it as
The commission agent for carriage may not prevail himself of the condition of
total or partial exoneration from liability in cases of fraud or gross fault
committed by him or his subordinates, or by the carrier or his
The principal and passenger shall each have direct recourse against the carrier
to claim the rights arising from the carriage contract. The carrier shall also
have direct recourse against each of the principal and passenger to claim such
rights. In all cases, the commission agent must be summoned as a party in the
The passenger in the carriage contracts of persons and the consignee in the
carriage contract of things shall have direct recourse against each of the
principal, carrier and commission agent for carriage with respect to the rights
arising from the carriage contract.
the commission agent pays the carriage fare/freightage to the carrier, he shall
subrogate him in his rights.
original commission agent is a guarantor of the commission agent for carriage
appointed by him, except where the consignor has appointed the intermediary
agent in his agreement him with the original agent.
provisions of Articles (321) and (322) hereof, shall apply to nonsuit as
concerns the litigation arising from the commission contract for carriage.
PERTAINING TO AIR CARRIAGE
Within the provisions of this Law, air carriage means the carriage of persons,
luggage and goods by airplanes in consideration of a fair/freightage.
Luggage referred to in the foregoing paragraph, means articles which the
passenger is allowed to carry with him in the airplane or which are delivered to
the carrier for safe custody during the carriage.
prejudice to the international conventions to which the State is a party, the
provisions of this Part shall apply to air carriage, with due consideration to
the specific provisions stipulated in the following Articles.
air carrier shall be held liable for the damage sustained as a result of a
passenger's death, wound or bodily injury occurring during air carriage or
during any of the operations of the passenger's boarding to, or disembarkation
from, the airplane.
An air carrier is held liable for the damage sustained due to the perishing,
loss or damaging of the registered luggage and goods, if the accident that
caused the damage occurred during the air carriage.
Air carriage includes the period when the luggage and goods are in the custody
of the carrier during the flight or during the presence of the airplane at the
airport or in any place where the airplane has landed.
Air carriage shall not cover the period during which the luggage or goods are
carried by land, sea or river outside the airport. However, where such carriage
is necessary to load the luggage or goods, to deliver or transfer them from one
airplane to another, in implementation of an air carriage contract, it is
presumed, until otherwise established, that the damage resulted from an accident
that occurred during the air carriage period.
air carrier shall be held liable for the prejudice caused by the delay in the
arrival of the passengers or the registered luggage or the goods.
air carrier shall not be liable for such small personal belongings which are
retained in the custody of the passenger during the travel and for which the
carrier is not answerable unless the passenger proves that the carrier or his
subordinates failed to take the necessary measures to prevent the occurrence of
In case of carriage of persons, the compensation, to which the carrier is
condemned to pay in case of the passenger’s death or injury, may not be
less than the amount of the prescribed Sharia blood money, but it may exceed
this amount by mutual agreement.
In case of carriage of luggage and goods, the compensation amount may not exceed
Dhs 150 (One Hundred Fifty Dirhams) for each kilogram, unless it is agreed to
exceed this sum. Nevertheless, where the consignor on delivering the luggage or
goods submits a specific statement indicating that he attaches special
importance to the delivery of the same in safe condition at the place of
arrival, due to its value, and if he pays such additional freightage as is
required by the carrier for the same, the carrier shall be bound to pay
compensation according to the value indicated by the consignor, except where the
carrier proves that such value exceeds the real value of the luggage and
Where one parcel is lost, damaged or delayed and this has an effect on the value
of the other parcels covered by the same carriage application form, the total
weight of such parcels shall be taken into consideration upon determination of
the extent of liability.
As regards such personal or small articles as would remain in the custody of the
passenger during the flight, the compensation adjudged to each passenger for the
perishing or damaging of such articles, may not exceed the sum of Dhs 3000
(Three Thousand Dirhams).
An air carrier may not avail himself of the limitation of liability, as
stipulated in this Article, where it is proved that the damage was the result of
an act or omission by the carrier or his subordinates, either with intent to
cause damage or due to imprudence coupled with awareness that a damage might
result therefrom. Where the act or omission is committed by the subordinates, it
must be also established that it was committed in the course of performance of
air carrier shall be held liable within the limits set in the preceding Article,
irrespective of the capacity of the litigants in the liability lawsuit.
Where an action for compensation is brought against one of the carrier's
subordinates, he may plead the limitation of liability stipulated in Article
(359), where it is proved that the act which caused the damage was perpetrated
by him during the performance of his services.
However, no subordinate of the carrier may plead the limitation of liability,
where it is established that the damage was the result of an act or omission by
him, either with intent to cause damage or with imprudence coupled with
awareness that a prejudice is likely to result therefrom.
The airway bill must contain a statement that the carriage is being made in
accordance with the limited liability provision stipulated in Article (359),
otherwise the carrier or his subordinates shall not have the right to avail
themselves of such provision.
Any condition exonerating the air carrier from liability or determining it at
less than what is
in Article (359), shall be null and void, except where the object carried has
perished or has sustained damage due to its nature or to an inherent
the recipient receives the luggage or goods at the place of arrival without
reservation, it shall constitute a presumption that he has received them in good
condition and in conformity with the conditions of the airway bill, unless
Where the luggage or goods arrive damaged, the recipient must serve a notice on
the carrier immediately upon discovery of the damage within no more than seven
days, in respect of luggage, and twenty-four days in respect of goods, from the
date of their receipt. In case of delay, the notice must be sent within
twenty-one days at the most from the day on which the luggage or goods are
placed at the disposal of the recipient.
The notice may be addressed in the form of an objection as a protest written in
the airway bill upon taking delivery of the luggage or goods.
The action for liability against the carrier is not admitted if the notice is
not served within the time limits specified in this Article, unless the
plaintiff proves that the carrier or his subordinates have exercised fraud or
swindling in order to evade such time limits or to conceal the damage sustained
by the luggage or goods.
Where the carriage is free of charge, the air carrier shall not be held liable,
unless it is proved that he or his subordinates have committed a fault, in which
case the carrier shall be liable within the limits stipulated in Article
Carriage is deemed free of charge where it is performed without consideration
and the carrier is not a professional carrier. However, where the carrier is a
professional one, the carriage shall not be considered free of charge.
aircraft pilot may impose compulsory measures upon all the persons on board, and
he may expel any person or remove any article whose presence on board the
aircraft might constitute a threat to its safety or good order.
air carrier shall be exonerated from liability if he proves that all the damage
was due to the fault of the injured person. The carrier's liability may be
reduced by the court, where it is proved that the fault of the injured person
has contributed to cause the damage.
plaintiff shall have an option to file his case before one of the following
The court within whose jurisdiction the carrier's domicile is situated.
The court within whose jurisdiction the head office of the carrier's activity is
The court within whose jurisdiction the carrier has an establishment or a
business concern which has concluded the contract on his behalf.
The court of the place of destination.
stipulation bringing an amendment to the rules of jurisdiction hereinabove
referred to, shall be null and void, if provided for before the occurrence of
case of successive carriage performed by several successive carriers, each
carrier shall be deemed a party to the carriage contract in respect of the stage
performed by him. However, the carrier having entered into a successive carriage
contract shall assume the liability for all the stage agreed in the contract,
even if he has not personally performed it wholly or partially.
right to bring the action in liability against the air carrier or any of his
subordinates may not be heard after the lapse of two years from the day on which
the airplane arrived or was supposed to arrive, or from the day on which the
carriage was interrupted.
DEPOSITS AND ACCOUNTS
A bank cash deposit is a contract by which one person delivers a sum of money,
by any means of payment, to the bank that undertakes to return it upon request
or according to the agreed conditions.
The bank acquires ownership of the deposited money, and it shall be entitled to
dispose of it for the needs of its own activity, with an obligation to return
its equivalent to the depositor; in the same currency as that deposited.
Save where otherwise agreed upon, the money deposit is due for restitution on
demand; the depositor may at any time dispose of the balance or any part
The foregoing right may be made conditional upon the serving of a prior notice
or the expiry of a specific period.
where the deposit is intended for investment, a cash deposit shall be considered
a debt and set-off may be made between a cash deposit and a debt owed to the
bank by the depositor. Any agreement to the contrary shall be null and
the bank issues a savings deposit book, it must be in the name of the person in
whose favor the book is issued. Deposits and withdrawals shall be entered
therein; the particulars entered in the book and signed by the bank official,
shall constitute an evidence for proving the said particulars, as between the
bank and the person in whose favor the book was issued, and any agreement to the
contrary shall be null and void.
otherwise agreed upon, the deposits and withdrawals shall be effected in the
branch of the bank where the account was opened.
the depositor has several accounts in one bank or in the same branch of a bank,
each account is deemed as being independent of the other, unless otherwise
due observance of the provisions of Article (391) hereof, a money deposit
contract does not vest the depositor with the right to draw from the bank sums
in excess of the sums deposited. Where the bank carries on operations that cause
the depositor's balance to be over drawn, the bank must forthwith inform the
depositor in order to adjust his situation.
otherwise agreed, the bank is bound to send to the customer a statement of his
accounts once every month.
first paragraph of Article 379 was replaced by virtue of Clause (a) of Article
of Federal Decree-Law No. 14 dated 27/09/2020 to read as follows:
bank may open a joint account, including a deposit account, or any other
account, for two or more persons with equality among them, unless otherwise
agreed and proven by the bank and provided that the following provisions are
The joint account shall be opened by all its owners or by one person holding a
power of attorney from the owners of the joint account duly authenticated by an
official competent authority. Mode of withdrawals from such account shall be
determined in accordance with the agreement of the account owners.
Where the balance of a joint account's co-owner is seized, said seizure shall be
valid on the distrainee's share of the account balance as of the day on which
the bank is served with the notice of the seizure. In such a case, the bank
shall freeze withdrawals from the joint account up to the equivalent of the
seized share. The co-owners of the joint account, or whoever represents them,
shall be informed of the seizure within no more than five days as of the date of
Where the bank is effecting a set-off between the various accounts of a co-owner
of a joint account, it may not include such joint account in the set-off, except
with the written consent of the other co-owners.
(4) of Article 379 was replaced by virtue of Clause (a) of Article
of Federal Decree-Law No. 14 dated 27/09/2020 to read as follows:
Upon the death or legal incapacity of a co-owner of a joint account, the other
co-owners shall give notice to the bank of that fact within no more than ten
days from the date of death or incapacitation. The bank shall thereupon freeze
withdrawals from the joint account as of the date of notification within the
limits of this person’s share of the balance on the day of his death or
incapacitation pending the appointment of his
A bank transfer is an operation according to which the bank enters a specified
sum in the debit side of the person ordering the transfer and the same amount in
the credit side of another account, pursuant to a written order from the
The following may be achieved through the foregoing operation:
The transfer of a specified sum from the account of one person to another
person's account, each of whom having an account with the same bank or in two
The transfer of a specified sum from one account to another both of which are
opened in the name of the person who has ordered the transfer, in the same bank
or in two different banks.
The agreement between the bank and the customer ordering the transfer shall
regulate the conditions of issue of the order which, however, may not be made to
the bank transfer is effected between two branches of the same bank or between
two different banks, every objection emanating from third parties regarding this
transfer must be addressed to the branch or the bank where the beneficiary's
account is opened.
transfer order may be effected in respect of sums which are actually entered in
the account of the person ordering the transfer, or in respect of sums which may
be entered in such account within a specified period as is agreed with the
may be agreed that the beneficiary may in person present the transfer order to
the bank where the account of the person ordering the transfer is opened, rather
than it being notified to such bank by the said person.
The beneficiary shall acquire ownership of the amount object of the bank
transfer as of the time it is debited to the account of the person ordering the
transfer; the latter may revoke the transfer order until such entry is
However, where it is agreed that the beneficiary shall submit the transfer order
to the bank in person, the person ordering the transfer may not countermand the
transfer order, with due compliance to the provisions of Article (389).
debt in settlement of which the transfer is made shall remain outstanding with
its securities and supplements until the value has been actually credited to the
may be agreed to postpone the execution of specified transfer orders, whether
they were sent directly by the person ordering the transfer or presented by the
beneficiary, until the end of the day in order to have them executed with other
orders of the same kind and presented to the bank on the same day.
Where the transfer order is addressed directly by the person issuing the order
to the bank, the latter may, if the balance of such person is less than the
value indicated in the transfer order, refuse to execute the order provided it
notifies without delay such refusal to the person ordering the transfer.
Should the transfer order be presented by the beneficiary, the bank shall credit
his account with the partial consideration, unless rejected by the beneficiary.
The bank shall have to mention on the transfer order the crediting of the
partial consideration or the beneficiary's refusal of the transfer.
Where several beneficiaries present themselves to the bank at the same time and
the value of the transfer orders held by them exceed the balance of the person
ordering the transfer, they shall be entitled to require the distribution of the
insufficient balance between them, each according to his share.
Should the bank refuse to execute the transfer order or the beneficiary refuse
to accept the transfer of the partial consideration in accordance with
paragraphs (1) and (2) hereinabove, the person ordering the transfer shall have
the right to dispose of the balance of his account.
In case the bank fails to execute the transfer order on the first working day
following the day on which it is presented, the order shall within the limits of
the non-executed part, be considered as null and void and must be returned to
the person who presented it against a receipt. Where an agreement is reached for
a longer period, the transfer order that has not been executed shall be added to
the orders submitted on the following days.
case of death of the person ordering the transfer, the bank shall, as of the
date on which it has been informed of the death, stop the execution of the
transfer orders issued by him. Where the beneficiary dies, the bank shall carry
on with the execution of the transfer orders.
Where the beneficiary is declared bankrupt, the person issuing the order may
stop the execution of the transfer order even if the beneficiary has received it
The declaration of bankruptcy of the person issuing the transfer order shall not
bar the execution of the transfer orders issued by him if submitted to the bank
prior to the issuance of the judgment declaring bankruptcy, unless the COURT
current account is a contract between two persons pursuant to which the rights
and debts arising from their mutual relationship are converted into entries in
the account, to be set off against each other, so that the final balance
resulting upon the closure of the account shall alone constitute a payable
A bank may open a current account for its customer where the operations carried
out by said bank are coupled with the opening of a credit or the granting of
fiduciary facilities in his favor.
It may be agreed that the account shall not be overdrawn from the customer's
side thus resulting in a continuous credit balance. It may also be agreed that
said account shall be overdrawn on both sides, which means that it could have a
debit or credit balance with regard to both parties.
order to enter payments in a current account, the following conditions should be
That they be money or fungibles of the same nature in order to apply
compensation between them.
That they arise from debts, certain in their existence and determined as to
That they be handed over to the payee on ownership basis.
two parties may keep several current accounts, as long as each account is
restricted to one specific kind of operations or currencies.
contract of current account shall result in the following:
Transfer of ownership of the monies and funds delivered and entered in the
current account to the recipient party.
entry of a commercial paper in the current account is valid provided its value
shall not be taken into account if it is not paid on maturity date, in which
case it may be returned to its owner and a counter entry is made in the manner
stipulated in paragraph (2) of Article (407).
Particulars, as a whole, entered in a current account, before closure of the
account and extraction of the final balance, are indivisible.
Compensation may not take place between one particular entry in a current
account and another in the same account.
Particulars entered into the current account shall not forfeit the rights of
both parties regarding contracts and transactions from which such particulars
Save where otherwise agreed, each party to a current account may at any time
dispose of his credit balance.
All debts arising from business relations between both parties to the current
account, shall be entered, by force of law, in said account, save where such
debts are secured by legal or contractual securities.
Nevertheless, debts secured by contractual securities, whether they have been
established by the debtor or a third party, may be entered in the current
account, where all the concerned parties have expressly agreed on such
Where it has been agreed to enter a debt secured by a contractual security in
the current account, such security passes to guarantee the balance of the
account on closure to the extent of the amount of the debt, regardless of any
changes that may
to the account during its course of operation, save where otherwise agreed
Where the law provides for specific measures to be taken for contracting the
security or for being opposed to third parties, such security shall not pass to
guarantee the current account balance and may not be used as evidence except
from the date of carrying out the said measures.
the debts due to either party are entered in the current account they shall lose
their special characteristics and independent existence and shall neither,
thereafter, be susceptible to settlement separately, nor to compensation or
suing or to nonsuit.
Where the particulars of a current account include cash debts computed in
various currencies or non-fungible items, both parties may agree to have them
entered in the current account, provided they are entered under separate
sections with due regard to the similarity in the payments included therein and
further provided that both parties declare that the account maintains its unity
in spite of its several sections.
The balances of said separate sections must be transferable so that it would be
possible, within the time limits specified by both parties or at the most when
closing the account, to effect a compensation between the various sections to
extract a single balance.
Payments, made by the customer, into the current account shall not bear interest
unless otherwise agreed upon. Interest shall be computed on basis of the rate
agreed upon; where the rate of interest has not been fixed in the agreement, it
shall be computed on basis of the rate prevailing in the market at the time of
dealing, provided that it does not exceed 12%.
Interests shall run on the debit balance as of the date of closure of the
account, save where otherwise agreed.
Where a time limit has been fixed for the closure of the account it shall be
closed on the expiry of said limit; it may be closed beforehand by agreement of
Where a time limit is not set for the current account it may be closed at any
time at the will of either party, with due observance of notice periods agreed
upon or as is customary.
In all cases, the account shall be closed on the death of either party, his
becoming legally incapacitated, his being declared bankrupt, or by the winding
up of the juristic person, crossing off of the bank from the list of banks
operating in the State, or upon the bank ceasing its operations.
current account, between the bank and its customer, shall be deemed closed at
the end of the bank's financial year. Such closing shall not be considered as a
final closure of the account, which shall remain open with its balance being
carried forward to the same current account. The said account shall resume
functioning on the next working day.
the current account is closed, the debit balance is deemed a debt immediately
due, unless both parties agree otherwise, or where some of the transactions that
must be entered into the account are still in process and if completed would
modify the balance. In this latter case, the debt shown in the balance shall
fall due as of the working day following the last entry required by such
general rules governing the non admittance of the case on account of the period
of limitation shall apply on the balance of the debt and its interests.
the debt entered into the current account is extinguished or is reduced due to a
cause subsequent to its entry therein, such entry must be cancelled or reduced,
as the case may be, and the account amended accordingly.
creditor of either party to the account may lay a garnishment on the credit
balance of the garnishee at the time of laying the garnishment.
Where either party to the current account is declared bankrupt, any mortgage
made on his properties after the date fixed by the court for the cessation of
payments may not be opposed against the general body of creditors, in order to
guarantee the eventual balance of the debt to the extent of the debit balance at
the time when the mortgage is imposed.
Nevertheless, the mortgage may be opposed against the body of creditors, as to
the difference-if any- between the debit balance at the time when the mortgage
is decided and the balance at the time of closing the account, where it is
established that the mortgagor was aware, when the mortgage was decided, that
the debtor had ceased payment.
Where the resultant of the discount of a negotiable instrument is entered in the
current account but the value thereof is not paid on the date of maturity, the
person discounting the bill may cancel the entry of its value into the current
account by a cross entry, even though the person who presented it for discount
has been declared bankrupt.
A cross entry means the entry of a sum equal to the value of the negotiable
instrument in addition to the expenses in the debit side of the current
No cross entry may be made except as concerns the negotiable instruments that
remained unpaid on their maturity dates. Any agreement to the contrary shall be
null and void.
case of denial and lack of legitimate excuse, legal action for the rectification
of the current account shall not be heard with regard to entries made one year
after the date of receipt of the statement of account, even if such legal action
is based on an error, omission or repetition of such entries. As an exception to
this rule, the period is extended to five years from the date of closing the
account, in the two following instances: if during the one year period a party
has notified the other that he maintains his right of rectification of the
account, or where the customer proves, regarding a current account opened with a
bank, that throughout the said period he did not receive from the bank any
statement of account.
A bank loan is a contract according to which the bank delivers to the borrower a
sum of money as a loan or enters such sum in the credit side to his account with
the bank according to the conditions and time limits agreed.
The loan may be secured by guarantees.
The borrower shall be bound to repay the loan and its interests to the bank
within such time limits and according to such conditions as are agreed.
bank loan is considered a commercial act irrespective of the capacity of the
borrower or the purpose for which the loan is allocated.
A bank guarantee is an undertaking issued by a bank to settle the customer's
debt to a third party, in accordance with the conditions agreed and included in
the guarantee deed, and which may be for a definite or indefinite period.
A bank guarantee entails joint liability.
bank guarantee may be issued under different forms, among which:
Signing by the bank on a negotiable instrument as an accessory guarantor or
gives such guarantee on a separate paper thus allowing the guarantee of several
negotiable instruments together at one time.
Making an independent contract of guarantee.
A letter of guarantee is addressed by the bank to the client's creditor pursuant
to which the bank guarantees its client in the fulfillment of his
bank guarantee is considered a commercial act, regardless of the capacity of the
guaranteed person or the purpose for which it is issued.
letter of guarantee is an undertaking issued by a bank (the guarantor) at the
request of one of its customers (the person making the order) to pay a certain
specified or determinable sum to another person (the beneficiary),
unconditionally and without restrictions, unless the letter of guarantee states
otherwise, where payment is requested within the period stated in the letter.
The letter of guarantee shall specify the object for which it has been
The bank may require the submission of a security in consideration of issuing
the letter of guarantee.
The security may be in cash, commercial or financial instruments goods or an
assignment to the bank by the ordering person of his right towards the
beneficiary may not assign his right, arising from the letter of guarantee, to a
third party but with the bank’s approval.
The bank may not refuse payment to the beneficiary for a cause relating to the
bank's relationship with the ordering person or the relation of this latter with
In exceptional cases, the court may at the request of the ordering person levy
seizure on the guarantee amount with the bank, provided that the ordering person
relies for his claim on serious and solid grounds.
bank shall be discharged from liability towards the beneficiary if within the
validity period of the letter of guarantee no request for payment is received
from the beneficiary, unless it had been expressly agreed to renew said term
prior to its expiry.
the bank pays to the beneficiary the sum agreed in the letter of guarantee, it
shall subrogate him in his recourse against the person issuing the order up to
the limits of the amount paid.
The opening of a credit is a contract pursuant to which the bank places at the
disposal of the customer a certain specified sum of money, which the customer
has the right to draw at one go or at several intervals.
A credit is opened either for a definite or indefinite term.
contract of credit opening is not considered a loan and the customer is not
bound to use the credit opened in his favor.
Where the credit is opened for an indefinite term, the bank may at any time
cancel it, provided notice of cancellation is sent to the beneficiary at least
thirty days before the date set for the cancellation. Any agreement that vests
the bank with a right to cancel an indefinite term credit without prior notice,
or at a shorter notice period, shall be null and void.
Unless otherwise agreed, and in all cases, the credit opened for an indefinite
term shall be deemed cancelled, if the beneficiary does not use it, after the
lapse of six months from the date on which the beneficiary was notified of such
The bank may not cancel the credit before the expiry of the specified term
except where the beneficiary dies, becomes legally incapacitated, stops payment
- even though a judgment declaring his bankruptcy is not issued- or commits a
gross fault in using the credit opened in his favor.
Where the customer, in whose favor the credit has been opened, is a company,
such credit shall expire also upon annulment of the company or upon expiration
of its term.
a substantial decrease occurs to the real or personal securities presented by
the customer, the bank has the right to require an additional security or reduce
the credit amount in proportion to such decrease.
credit may not be assigned save with the approval of the bank which opened
contract of opening a credit is considered a commercial activity, regardless of
the capacity of the customer or the purpose for which the credit is
contract of opening a credit shall specify the maximum amount of the credit as
well as the method of using it.
A documentary credit is a contract pursuant to which a bank opens a credit at
the request of its customer (the person ordering the opening of the credit)
within the limits of a specified amount and for a definite term in favor of
another person (the beneficiary) against a security of documents representing
goods freighted or intended for freight.
A documentary credit contract is deemed to be independent of the contract that
caused the opening of the credit, and the bank shall remain foreign to such
documentary credit shall contain a time limit date for its validity and for
presenting the documents for payment, acceptance or discount.
the date set for the expiry of the validity of the credit falls on a bank
holiday, its validity shall be extended to the next following working day. The
validity of the credit shall not extend beyond other than holidays even when the
expiry of the validity coincides with the date of disruption of the banks
business due to force majeure, unless there is an express authorization to this
effect from the person ordering the opening of the credit.
The papers concerning the opening of the documentary credit or its confirmation
or notice thereof shall precisely specify the documents in consideration of
which the operations of payment, acceptance or discount are executed.
A bank that opened a letter of credit must comply with the conditions of
payment, acceptance and discount as agreed in the credit contract, if the
documents representing the goods are conform to the particulars and conditions
provided for in the contract.
A documentary credit may be revocable or irrevocable.
A documentary credit shall be irrevocable, unless expressly agreed
A documentary credit may either be divisible or transferable, or indivisible or
A revocable documentary credit shall not create any obligation on the bank
towards the beneficiary; the bank may at any time amend or cancel it of its own
accord or at the request of the person who ordered the credit to be
The bank and the person ordering the opening of the credit shall be jointly
liable towards the beneficiary if the bills of lading submitted, within the
validity period and prior to the cancellation of the documentary credit
contract, are in conformity with the particulars and conditions contained in the
Where the documentary credit is irrevocable, the obligation of the bank shall be
absolute and direct towards the beneficiary and any bona fide holder of the
document drawn in implementation of the contract that originated the opening of
the documentary credit.
An irrevocable documentary credit may neither be cancelled nor amended, save
with the agreement of all the concerned parties.
An irrevocable documentary credit may be confirmed by a bank other than the one
that opened it. Such confirming bank shall in turn assume an absolute and direct
obligation towards the beneficiary and any bona fide holder of the document
drawn in implementation of the documentary credit contract.
A mere notice of the opening of the irrevocable documentary credit sent to the
beneficiary through a bank, other than the one that opened the documentary
credit, shall not be deemed to be a confirmation of the credit by such other
The documents must be presented to the bank before the expiry of the validity of
the credit, otherwise the bank may reject them, unless the person ordering the
opening of the credit requests that they be accepted and the bank consents to
such a request.
The bank must ascertain that the documents required are available, that their
contents are in full conformity with the conditions of the letter of credit and
that they fully conform with each other.
bank is only under obligation to ascertain that the documents are, on their face
value, in conformity with the documents required in the letter of credit; and it
shall not be bound to check if the goods are in conformity with their relative
the bank accepts the documents, it shall immediately send them to the person
ordering the opening of the credit, and if it rejects the same, it shall
forthwith notify the rejection to the beneficiary, indicating the reasons
The beneficiary may not assign the credit in whole or in part to another person
or persons, unless so authorized by the bank and provided it is expressly
stipulated in the letter of credit.
The bank may not split the performance of the credit, except with the
authorization of the person ordering the opening of the credit.
Unless otherwise provided in the credit contract, the assignment may only be
Assignment is made by endorsing the letter of credit, if it is made to order, or
by taking delivery thereof if it is to bearer. In case it is nominative, the
procedures of transfer shall apply.
The person ordering the opening of documentary credit shall be bound to repay to
the bank the amount it has paid to the beneficiary, within the limits of the
credit opened, in addition to the expenses disbursed in this respect.
As a security to its entitlements, the bank shall have the right to retain the
documents it receives from the seller as well as the right to lay a mortgage on
the goods represented by these documents.
Where the person ordering the opening of the credit fails to pay to the bank the
value of the shipping documents, that are conform to the conditions of opening
the credit, within one month from the date he is notified of the receipt of said
documents, the bank may sell the goods by adopting the execution proceedings on
commercially mortgaged goods.
Should the goods perish or be damaged, the mortgage right shall pass to the
Nevertheless, the bank and its client may, after arrival of the documents of the
credit financed by said bank, agree that the debtor client assigns the goods
subject of the documentary credit or part thereof to the bank, in settlement of
the debt due to the bank, in whole or in part. The bank shall then allow the
customer to take delivery of such goods on trust basis and sell them on behalf
and for the account of the bank, according to the terms and conditions agreed to
by both parties. The customer's liability shall in this case be that of a
commission agent, and the bank shall have all the rights of a principal over
such goods or their price.
ON COMMERCIAL PAPERS
Discount is a contract pursuant to which a bank undertakes to pay in advance the
value of a commercial paper to the beneficiary in consideration of transferring
the ownership of such paper to the bank.
The bank shall deduct from the sum paid, to the beneficiary of the discount, the
interest on the paper's amount plus a commission. It may be agreed to effect the
discount against a fixed lump sum.
Unless otherwise agreed, interest is calculated on basis of the time that lapses
from the date on which the commercial paper is presented for discount until its
Commission shall be estimated on basis of the value of the commercial
The bank shall acquire the ownership of the discounted commercial paper and
shall exercise all the rights of the bearer as he may have recourse against the
signatories of the paper.
The bank shall further have towards the beneficiary of the discount an
independent right to recover the sums it had placed at his disposal, keeping the
interest and commission received.
shall be done with due compliance with the provisions related to the current
account and the bank shall exercise such right within the limits of the unpaid
papers, regardless of the cause of non-payment of the discounted papers.
Where the value of the paper is not paid or the customer goes bankrupt, the bank
may reserve for itself the right to make a reverse entry to the value of the
commercial paper and the expenses in the debit side of its customer's account,
who shall endorse the paper to the bank.
Should the customer have no current account with the bank, he shall be bound to
repay to the bank the value of the commercial paper and the expenses.
by acceptance is a contract in which the bank plays the role of the drawee; it
accepts in this capacity a commercial paper drawn on it by its customer or
another party who deals with such customer and the bank undertakes to pay the
value upon maturity.
the bank pay the value of the commercial paper it has accepted, it shall enter
its value together with the expenses incurred in the debit side of the
customer's account. The bank shall have recourse against the client for the sums
paid by virtue of the credit opened in favor of the customer and used as a
consideration for payment of the commercial paper that it had undertaken to
OF COMMERCIAL PAPERS
bearer of a commercial paper may endorse it to the bank in terms of proxy
endorsement, in which case the bank becomes a proxy in the collection of the
commercial paper for the account of the endorser.
maturity of the commercial paper the bank must claim payment from the drawee or
the author of such paper. Once payment is made, the bank shall enter the value
of the paper in the credit side of the customer's account, and if payment is not
made the bank shall make a protest or establish the non-payment and in both
cases the expenses shall be charged to the customer's account.
The bank shall be liable for fault or omission in the execution of his
2- The bank may stipulate its exoneration from liability for delay in drawing up
the protest. Such stipulation shall be effective between the customer and the
bank, unless an act of fraud or gross fault is attributed to the bank, but shall
not have effect on the other endorsers.
procreation resulting from a proxy endorsement shall terminate by the death or
incapacity of the endorser.
ON FINANCIAL SECURITIES
SECURED BY FINANCIAL SECURITIES
Lending secured by financial securities is a loan secured by mortgage.
2- Should the financial securities be registered instruments, mortgage thereof
shall be made in writing by virtue of an assignment stating that it is given as
a guarantee, marked on the instrument itself and entered in the records of the
issuing party. However, where the financial securities are instruments to
bearer, they shall be treated as material movables and mortgage thereof may be
established by all means of evidence.
Ownership of the mortgaged financial securities shall pass on to the creditor
The bank shall have the right to retain such instruments.
bank must preserve the mortgaged securities, by collecting their profits,
receiving their value upon depreciation and deducting such sums from the
the bank does not recover its dues on maturity date, it may apply to the
competent court for authorization to sell the mortgaged instruments by public
auction or at their price in the stock exchange market and collect his dues from
the sale price before any other creditor
the instruments are presented by a person other than the debtor, the owner
thereof shall not be bound to pay the debt guaranteed by the mortgage, except in
his capacity as a guarantor in rem.
third party appointed by the two contracting parties to keep the possession of
the mortgaged instruments, shall be deemed as having waived his right to detain
them for any reason prior to such mortgage, unless he had reserved such right
when he accepted to take possession of the mortgaged instrument for the account
of the mortgagee creditor.
the full value of an instrument is not paid at the time its presentment for
mortgage, the debtor shall upon maturity of the unpaid part, pay it two days at
least prior to its maturity date; otherwise the mortgagee creditor may petition
the court to sell the instrument, in accordance with the provisions of Article
(453) hereof, then he shall settle the unpaid part from the proceeds of the sale
and keep the balance as a guarantee instead of the mortgage.
lien of the mortgagee creditor shall remain valid in the same rank as between
the contracting parties and towards third parties, over the profits of the
mortgaged instrument, its interests, the papers replacing it and its value if
paid before its maturity date.
OF FINANCIAL SECURITIES
deposit of financial securities with a bank is a contract by which the customer
delivers to the bank the financial securities which have been agreed to be
deposited, and the bank gives the customer a receipt upon taking delivery of
such securities. Such receipt shall contain the contract conditions and the
number of the financial securities, but the said receipt shall neither represent
the securities deposited nor replace them, it shall be deemed as a mere
instrument to prove the contract.
In preserving the financial securities deposited with it, the bank shall
exercise such care as is exercised by a depository who receives remuneration and
shall take to that effect all the precautionary measures as is required by the
banking customs; any agreement which exonerates the bank from such obligations
shall be null and void.
The bank shall be held liable for the perishing or theft of such financial
securities, except where this is the result of a force majeure.
specifically authorized by the client, the bank may not use the financial
securities deposited with it, whether by disposing, or mortgaging the same or
exercising the rights derived therefrom.
The bank shall undertake the management of the financial securities deposited
with it, by collecting the profits and value of such due or redeemed securities,
and it shall notify the customer/depositor of the operations relating to the
said securities, such as replacement or renewal thereof, and place the collected
sums at the disposal of the depositor and credit them to his account.
The bank shall inform the depositor of every matter or right relevant to the
financial security and requiring his approval or is dependent on his choice.
Where the depositor's instructions are not received in due time the bank shall
dispose of the matter in such manner as is beneficial to the depositor who shall
bear the expenses.
The bank shall be held liable where it fails to fulfill its obligations and
damage is caused to the customer as a result of such failure.
The bank shall be entitled to a remuneration against the obligations it assumes,
such remuneration shall, in case of absence of agreement, be determined
according to custom, with due consideration given to the number and value of the
financial securities deposited.
As a guarantee for the bank's remuneration, it shall have a possessory lien over
the financial securities deposited and shall refrain from returning same until
recovery of its right, in addition to the privilege prescribed by the law
concerning the expenses disbursed for the preservation of a movable
The bank must return the financial securities deposited with it upon demand of
the depositor with due consideration to the time needed for preparation of the
securities for such return.
The return shall be effected at the same place where the deposit was made.
Unless otherwise agreed or provided by law, the bank must return the same
securities which had been deposited and not securities of the same kind with
financial securities must be returned, as the case may be, to the depositor in
person, his legal representative, his heirs or his personal proxy even if it is
mentioned in the security that it is owned by someone else.
Where the bank loses possession of the financial securities for a reason beyond
its control, it shall be entitled to file a claim for recovery of the same from
their actual possessor.
Where the financial securities issued to bearer are lost or stolen, the bank
shall inform the issuer of such securities of the fact and instruct him to
refrain from paying the profits or value of said securities, in case of
redemption or maturity, to whoever presents himself for the purpose.
an action-at-law is brought claiming that the securities deposited with the bank
have become due, the bank shall directly notify the depositor accordingly and
shall abstain from returning the securities to him until the action is decided
by the judicial authorities.
OF SAFE DEPOSIT BOXES
Rental of safe deposit boxes is a contract pursuant to which the bank undertakes
to place a certain specified safe deposit box at the disposal of its
customer/lessee, to be used for a certain specified period against a fixed
The bank shall caretake the leased safe deposit box, provide for its security
and fitness for use by taking all such measures as are imposed by the banking
The safe deposit box is opened with two keys, one of which is handed over by the
bank to the customer lessee and keep the other one with it. The bank may not
give a duplicate of the key to any other person, neither may it grant access to
the safe deposit box or allow it to be used except by the customer himself or
his authorized agent.
The key delivered to the lessee shall remain the property of the bank and must
be returned to it on termination of the lease.
The bank may use other means such as automated control or plastic cards
The bank is responsible for the safety, custody and usability of the safe
deposit box and may not deny responsibility except by proving a force majeure or
the act of some other person considered as such.
The bank may not avail himself of the exoneration from liability clause where
fraud or gross negligence is proved to have been perpetrated by it or by its
The lessee undertakes to use the safe deposit box as is customary and to pay the
rental agreed on the maturity dates.
The lessee of a safe deposit box may not place therein any object detrimental to
its safety or the safety of the place where it is located.
Unless otherwise agreed with the bank, a lessee may not sublet the safe deposit
box or part of it nor may he assign the lease to a third party.
Unless otherwise agreed, where a safe deposit box is leased to several lessees,
each one of them may use it separately.
Where one of the lessees dies, the bank may not, after becoming aware of the
death, give permission for the opening of the safe deposit box, except with the
approval of all concerned persons or pursuant to a court order.
bank shall keep a register where the dates and times on which the lessee opens
the safe deposit box are entered.
the bank finds out that the safe deposit box is in danger or that it contains
dangerous articles, it shall forthwith notify the lessee to report to the bank
premises immediately and either empty the box contents or remove the dangerous
items therefrom. Where the lessee fails to report on the date fixed, the bank
may request the court, in whose jurisdiction the bank is located, permission for
opening the box in order to empty it or to remove such dangerous items
therefrom, in the presence of the person assigned by the court for the purpose.
A report of the facts shall be drawn up wherein the box contents shall be
listed. Where the danger threatening the safe deposit box is imminent, the bank
may, open the box, under its own responsibility, and empty it or remove any
dangerous articles therefrom, without any notice or permission from the court.
This shall be performed by a committee consisting of at least three of the bank
officers who will draw up a process-verbal of which one copy shall be notified
to the customer.
Where the lessee fails to pay the rent of the safe deposit box on its due dates,
the bank may, after the lapse of fifteen days, or other period agreed upon, from
the date of serving him a notice requiring payment, consider the contract as
automatically rescinded and recover the box, after sending notice to the lessee
that he must report to the bank, open the box, empty its contents and deliver
its key. The notice shall be valid if sent to the last address specified by the
lessee to the bank.
Where the lessee fails to report on the date set or if the contract term
expired, the bank may, after serving notice on him, apply to the court in whose
jurisdiction the bank is located, for permission to open the safe deposit box
and empty it in the presence of a person designated by the court to that effect,
who shall prepare a report of the fact, listing down the contents and signed by
him and the bank. The court may order that the contents be deposited with the
bank, or with a trustee appointed by the court, until they are handed to their
owner or until a court order is issued to dispose thereof.
bank shall have a possessory lien over the contents of the safe deposit box and
a privilege over the price resulting from the sale of its contents for
recovering the rent and the accruing expenses.
An arrestment of, and a distress on, the contents of the safe deposit box may be
The seizure shall be laid by notifying the bank of the contents of the deed by
virtue of which such attachment is levied, and by requiring the bank to state
whether it has leased a safe deposit box to the distrainee. Upon receiving such
notice, the bank shall forthwith bar the distrainee from using the box and
notify him without delay that the seizure was levied on the safe deposit
Where the seizure is an arrestment, the lessee may request to the court to
remove the seizure from all or part of its contents.
If the seizure is a distress, the bank shall be bound to open the safe deposit
box, empty its contents in the presence of the distrainer and the execution
officer and notify the lessee of the date fixed for the opening of the safe. On
the date fixed, an inventory of the box contents shall be made, and such
contents shall be delivered to the bank or the trustee appointed by the court,
until they are sold in accordance with the procedures set by the court.
Where the safe deposit box contains papers or documents not included in the
forced sale, they must be handed to the lessee. However, if the lessee is not
present at the time of opening the box, such papers or documents shall be
delivered to the bank for safekeeping after placing them in an envelope sealed
with the stamps of both the execution officer and the bank delegate, until they
are claimed by the lessee.
The distrainer must pay the bank a sum sufficient to secure the rent of the safe
deposit box for the duration of the seizure.
in the instances provided for by the law, the bank may not open a leased safe
deposit box or empty its contents except with the permission of the lessee and
in his presence, or in execution of a court order or decision.
AND TYPES OF COMMERCIAL PAPERS
papers are instruments written according to forms determined by the law,
representing a right having for object a specific sum of money payable on mere
sight, or after a definite or determinable time. The commercial papers are
negotiable through commercial means and are customarily recognized as a payment
instrument instead of money.
papers include bills of exchange, promissory notes, bearer instruments, checks
and other papers drawn for commercial transactions and which is customarily
accepted as a means of payment in transactions.
bill of exchange (draft) is a commercial paper that includes an order from the
drawer to the drawee for the payment of a specific sum of money to the
beneficiary at mere sight or at a definite or determinable time.
promissory note is a commercial paper pursuant to which its maker undertakes to
pay a specific sum of money to another person (the beneficiary), at mere sight
or at a definite or determinable time.
instrument to bearer is a commercial paper by which its maker undertakes to pay
a specified sum of money to the order of the bearer at mere sight or at a
definite or determinable time.
check is a commercial paper containing an order issued by the drawer to a bank
(the drawee) to pay, on the date indicated therein as being the date of issue, a
specific sum of money to the order of a third person, being the beneficiary, or
the bearer thereof.
A BILL OF EXCHANGE
bill of exchange must contain the following particulars:
The expression "Bill of Exchange" written in the text thereof and in the
language in which the bill is written.
An unconditional order to pay a specific sum of money.
The date and place of making the bill.
Signature of the drawer.
First name and surname of the drawee.
Name of the person to whom or to whose order payment must be made (the
Date of maturity and place of payment.
instrument which does not contain any one of the particulars mentioned in the
aboveArticle shall not be deemed a bill of exchange except in the following
Where the bill does not indicate the date of maturity, it shall be considered as
being payable at sight.
Where the place of payment of the bill is not stated therein, the place
indicated next to the drawee's name shall be considered as the place of payment
and the drawee's residence at the same time. The bill shall be payable at the
drawee's place of residence if there is no condition of payment in another
the place of making the bill is not stated therein, it shall be deemed made in
the place mentioned next to the drawer's name; and where such place is not
expressly stated, the place of making the bill shall be considered as being the
place where the drawer has signed it.
A bill of exchange is either signed or thumb-printed.
Two witnesses must testify that the thumb printer has affixed the print before
them fully aware of what he has signed.
Where the bill amount is written in letters and in figures at the same time, the
sum indicated in letters shall prevail in case of discrepancy.
Where the amount is written several times either in letters or in figures, the
lesser sum shall prevail in case of discrepancy.
A bill of exchange may not contain more than one amount.
Where a bill of exchange is drawn in a currency having a nomenclature which is
common between the two countries of making and payment, without specifying the
currency intended, the currency of the country of payment shall prevail.
A bill of exchange may be signed by more than one drawer.
A drawer may authorize a third party to sign the bill of exchange on his behalf,
in which case the third party must prove his capacity upon signing the
The sum stated in the bill of exchange may not be conditioned upon payment of
interest unless it is made payable at sight or after a specific period from
The rate of interest must be mentioned in the bill itself otherwise the
condition is null and void.
Interest shall run as of the date of making the bill if no other date has been
Whoever signs without authority a bill of exchange on behalf of another person
shall be held personally liable thereunder. Once he pays it, he is entitled to
the rights of the person on whose behalf he alleged to represent.
The same provision shall also apply to the proxy who exceeded the limits of his
a bill of exchange bears forged signatures, or signatures of fictitious persons,
or of persons who have no capacity to bind themselves; or where the signatures
do not bind their signatories for other reasons, or do not bind those persons on
whose behalf the bill is signed, the obligations of other signatories on the
bill shall nevertheless remain valid.
of a person lacking full legal capacity, that has not been authorized to
practice commerce, and those of a person totally incapacitated, arising out of
signing on a bill of exchange in any capacity whatsoever, shall be null and void
in regard to themselves only; and they may prevail themselves of such nullity
against any bearer of such bill.
A bill of exchange may be drawn to the order of the drawer himself.
It may also be drawn on its drawer.
It may as well be drawn for the account of another person.
The form of a bill of exchange shall be governed by the law of the State where
it is made.
The capacity of the obligor of a bill of exchange is determined according to his
national law and where such law makes a renvoi to the law of another country,
this latter shall apply.
Where the governing law considers the obligor as a person lacking legal
capacity, his obligation under the bill shall nevertheless remain valid if he
signed the bill in a State under whose laws he is deemed to have full legal
bill of exchange may be made payable at the place of residence of another
person, whether at the place of the drawee's residence or any other place.
The drawer of a bill of exchange shall guarantee its acceptance and its
He may put as a condition to be exonerated from the guaranteeing acceptance,
however any condition of exoneration from guaranteeing payment shall be deemed
null and void.
OF A BILL OF EXCHANGE
A bill of exchange is negotiable by endorsement even when it does not contain an
express stipulation that it is drawn "to order".
A bill of exchange is not negotiable when the drawer stipulates therein that it
is not "to order", or any other term purporting the same meaning, save in
accordance with the provisions governing the transfer of a right.
Endorsement may be made to the drawee regardless to whether he accepted the bill
of exchange or not, endorsement may also be made to the drawer or to any other
obligor; all the foregoing persons may re-endorse the bill of exchange.
Subject to the provision of Article (503) hereof, the endorsement must be
unconditional and any condition attached to the endorsement is deemed
Partial endorsement is null and void.
Endorsement to bearer shall be deemed a blank endorsement.
Endorsement shall be written on the bill of exchange itself, or on an attached
paper, and shall be signed by the endorser.
Endorsement may be restricted to the endorser's signature (blank endorsement),
in which case the endorsement must, in order to be valid, be written on the back
of the bill of exchange or on the attached paper.
transfers all the rights resulting from the bill of exchange to the
case of a blank endorsement, the bearer may:
Fill in the blank by writing his name or any other person's name.
Re-indorse the bill of exchange in blank or to another person.
Deliver the bill of exchange to another person without filling in the blank and
without indorsing it.
The endorser shall guarantee the acceptance and payment of the bill of exchange,
unless otherwise agreed upon.
The endorser may prohibit its re-endorsement, in which case he shall not be
liable towards any person upon whom the bill of exchange shall pass on through a
possessor of a bill of exchange shall be deemed to be its lawful bearer when he
proves that he is entitled thereto by successive endorsements even if the last
one is in blank. Crossed endorsements shall in this regard be considered
inexistent. Should another endorsement succeed the one made in blank, the
signatory of this last endorsement shall be deemed the person to whom the right
to the bill has passed on following the blank endorsement.
a person loses possession of a bill of exchange the bearer shall not be bound to
surrender it if he proves his right thereto in accordance with the preceding
Article, save where he has acquired it in bad faith or if he had committed a
gross fault in order to acquire it.
prejudice to the provision of Article (493), a debtor who is sued for a bill of
exchange may not invoke against its bearer the pleas based on his personal
relationships with the drawer or with one of its previous bearers, except where
the bearer's intent at the time of acquiring it was to prejudice the
Where the endorsement includes the expression "value for collection" or "value
for receipt" or any other expression indicating a delegation of power, the
bearer may exercise all the rights arising from the bill of exchange, including
the right to file an action in his own name and may only indorse the bill as
The obligors may not in this case raise against the bearer the pleas which they
may invoke against the endorser.
Where the endorsement includes the term "value for guarantee" or contains any
other expression indicating mortgage of the right established by the bill of
exchange to the endorsee, the bearer may exercise all the rights arising from
the bill of exchange. Nevertheless, where the bearer endorses the bill of
exchange, such endorsement shall be deemed made for proxy.
The obligors of the bill of exchange may not in this case invoke against the
bearer the pleas based on their personal relationship with the endorser, save
where the bearer's intent, at the time of acquiring the bill of exchange, was to
cause harm to the debtor.
An endorsement made after the maturity date shall produce the same effects as an
endorsement prior to such date; however, an endorsement subsequent to a
non-payment protest or after the expiry of the time limit set by law for making
the protest, shall only produce the same effects as for the transfer of
Unless otherwise established, an endorsement which does not bear a date shall be
deemed to have been made before the expiry of the time limit fixed for the
protest, unless the contrary is proved.
endorsement may not be predated; a predated endorsement shall be considered a
FOR PAYMENT OF A BILL OF EXCHANGE
drawer of a bill of exchange or the person for whose account it was drawn is
bound to make available with the drawee consideration for its payment.
Nevertheless, the drawer for the account of another shall be held personally
liable towards the endorsers and the bearer of the bill of exchange,
exclusively, for providing the consideration for payment.
for payment is deemed to be available when, on the maturity date of the bill of
exchange, the drawee is indebted to the drawer, or to the person who ordered the
drawing, for a specific sum of money due and at least equal to the amount of the
bill of exchange.
The acceptance of a bill of exchange is considered a presumption that the
consideration required for payment is available with the acceptor; this
presumption may only be rebutted as to the relation between drawee and
In case of denial, the drawer alone shall be bound to prove, irrespective
whether the bill of exchange was accepted or not, that the drawee had the
consideration for payment on the maturity date. If he fails to do so, he shall
be a guarantor for payment even if the protest was made after the time limit
prescribed by law. In case the drawer proves that consideration is available and
continues to be available until the date on which protest was supposed to be
made, he shall be discharged to the extent of such consideration, save where it
had been used in his interest.
The title to the consideration for payment passes by operation of the law to the
consecutive bearers of the bill of exchange.
Where the consideration for payment is less than the amount of the bill of
exchange, the bearer shall be vested in regard to such deficit in the
consideration with all the rights vested upon him for the entire
The provision stipulated in the preceding paragraph shall also apply in the
event where the consideration for payment is subject of dispute, is uncertain or
not due on the maturity date of the bill of exchange.
drawer shall, even when the protest is made after the statutory time limit,
deliver to the bearer of the bill of exchange the documents required to obtain
the consideration for payment. Should the drawer be declared bankrupt, this duty
is incumbent upon the trustee. The bearer of the bill of exchange shall in all
cases assume all the expenses incurred in this respect.
drawer’s bankruptcy shall result the forfeiture of the delay given for
payment and the maturity date of the bill of exchange shall become due. The
bearer, to the exclusion of the other drawer's creditors, shall be entitled to
obtain satisfaction from the consideration for payment available with the
Where the drawee is declared bankrupt and the consideration for payment is a
debt on him, such debt shall be included in the assets of the bankruptcy.
Where the drawer has with the drawee goods, commercial papers, financial
securities or any other funds that may be recovered according to the bankruptcy
provisions, and if such funds are expressly or implicitly allocated for payment
of the value of the bill of exchange, the bearer shall have a priority to
recover his right from the value thereof.
Where several due bills of exchange concur on a single consideration
insufficient to pay them all, priority in recovering their
shall be given in accordance with the order of their drawing dates.
Should the said bills of exchange be drawn on the same date, the bill bearing
the drawee's acceptance shall have priority otherwise, the bill for which
consideration for payment has been allocated shall have priority over that
containing a provision of non-acceptance which shall rank last in the order of
bearer or any possessor of a bill of exchange may, during the period from its
drawing up to the date of its maturity, present it to the drawee at his place of
residence for acceptance.
The drawer of a bill of exchange may condition that it be presented for
acceptance either on a specific date or without fixing any date.
He may also condition that it be not presented for acceptance, unless it is due
for payment with a person other than the drawee, or in a place other than his
domicile or due for payment on a specific period after sight.
He may as well stipulate that it be not presented for acceptance before a
Every endorser may condition the bill of exchange upon its presentment for
acceptance on a specified date or without specifying any date, unless the drawer
had stipulated that it must not be presented for acceptance.
bill of exchange that is due for payment after a specified period from sight
must be presented for acceptance within one year of its date. The drawer may
abridge or extend such time limit and every endorser may only abridge such time
The drawee may require that the bill of exchange be re-presented for acceptance
on the next day following the first presentment and any interested person may
not allege that such request was rejected, unless it has been mentioned in the
The bearer of a bill of exchange presented for acceptance shall not be bound to
surrender it to the drawee.
Acceptance shall be written on the face of the bill of exchange with the word
"accepted" or with any other expression having the same meaning and shall be
signed by the drawee.
The mere signature of the drawee on the face of the bill of exchange shall be
deemed as an acceptance.
The date of acceptance should be stated on the same day on which it occurred if
the bill of exchange is due for payment after a specified period after sight, or
where it is stipulated that it must be presented for acceptance within a
specified period pursuant to a condition pertaining thereto, unless the bearer
requires that the date of acceptance be stated on the same day of
Where the acceptance is undated, the bearer may in order to safeguard his rights
have recourse against the endorsers, and the drawer must establish this fact by
a protest made in due course.
The acceptance must be unconditional; however the drawee may restrict it to one
part of the amount of the bill of exchange.
Any modification to the particulars of the bill of exchange relating to the
wording of the acceptance shall be deemed as a refusal of acceptance;
nevertheless the acceptor shall remain bound by the contents of the acceptance
Where the drawer stipulates in the bill of exchange a place for payment other
than the drawee's domicile without specifying the name of the person to whom
payment is to be made, the drawee may specify his name upon acceptance; if he
fails to do so, the accepting drawee shall be bound to make the payment at the
place designated therefor.
Where the bill of exchange is due for payment at the drawee's domicile, the
drawer may specify in the acceptance wording an address where the payment must
Where the drawee accepts the bill of exchange he shall be bound to pay its value
on the maturity date.
In the event of non-payment the bearer may, even if he is the drawer himself,
have direct recourse against the accepting drawee by filing a lawsuit based on
the bill of exchange claiming all what may legally be claimed.
Where the drawee crosses out his acceptance stated on the bill of exchange
before returning it, the acceptance shall be deemed as rejected and the crossing
out as having occurred before the bill of exchange is returned; unless otherwise
Nevertheless, in the event where the drawee notifies in writing his acceptance
to the bearer or to any other signatory, he shall be bound towards them by such
A BILL OF EXCHANGE
Payment of a bill of exchange in whole or in part may be guaranteed by a
Such backing may be given by any person even if one of the signatories of the
bill of exchange.
Backing is written on the bill of exchange itself or on an extension annexed to
it, in any wording indicating the backing and signed by the backer.
Such backing is deduced from the mere signature of the backer, on the face of
the bill of exchange, unless such signature is executed by the drawee or the
The wording of the guarantee shall include the name of the guaranteed person
otherwise it shall be deemed as issued for the drawer.
The backer shall be liable in the same manner as the guaranteed person.
The liability of a backer remains valid even if the guaranteed liability is void
for any reason whatsoever other than a defect in form.
Where a backer pays the bill of exchange, all the rights arising therefrom shall
be vested on him towards the guaranteed party and every obligor by virtue of the
bill towards this latter.
Backing may be given on a separate paper indicating the place where it was
A backer who has given his guarantee on a separate paper shall only be liable
towards the person in whose favor the backing was given.
OF THE BILL OF EXCHANGE
A bill of exchange must include one single date of maturity.
The drawer may specify the date of maturity of the bill of exchange in any of
the following manners:
After the lapse of a specified period from sight.
After the lapse of a specified period from the date of its formation.
A bill of exchange which stipulates dates of maturity other than those mentioned
in the two foregoing paragraphs shall lose its characteristic as a commercial
1- A bill of exchange which is due for payment at sight shall be payable on mere
presentment, and it must be presented within one year from the date of its
formation; the drawee may abridge or extend this time limit but the endorsers
may only abridge same.
The drawer may stipulate that the bill of exchange which is due for payment at
sight be not presented before the lapse of a specified term; in which case the
time for presentment is calculated as from the lapse of said term.
The time of maturity of a bill of exchange, due for payment after a period from
sight, is calculated as from the date of acceptance or from the date of
Where no protest was made, the acceptance that does not bear any date shall be
deemed as having occurred towards the acceptor on the last day of the time limit
set for presenting the bill of exchange for acceptance according to Article
Where a bill of exchange is drawn one month or more after its date or after
sight, it shall fall due on the corresponding date of the month during which
payment is to be made; in the absence of a corresponding date in the month
during which the bill of exchange must be paid, it shall fall due on the last
day of such month.
Where the bill of exchange is drawn for one month and a half or for several
months and a half after its date or after the date of sight, computation must
begin with the full months and the expression "half a month" shall mean fifteen
Where the bill of exchange is due for payment on a specific date in a country
where the calendar is different from that of the country of issue, the date of
maturity shall be deemed as having been determined according to the calendar
where payment is to be made.
Where the bill of exchange is drawn between two countries having different
calendars and it is due for payment after a certain period from its date, the
date of drawing shall be adjusted to the corresponding day of the calendar of
the country of payment and the date of maturity shall be determined accordingly.
The date of presentment of the bill shall be determined according to the
The foregoing rules shall not apply when it appears from a condition in the bill
of exchange or in its wording that different rules should be applied.
OF THE BILL OF EXCHANGE
The bearer of a bill of exchange must present it for payment on the date of
Presenting a bill of exchange to any of the legally recognized clearing houses
shall be tantamount to presenting it for payment.
Where a drawee pays the bill of exchange, he is entitled to recover it from the
bearer and on which is written that it was paid and this mention is signed by
The bearer may not refuse partial payment.
In the event of partial payment, the drawee may require that such payment be
stated on the bill of exchange and a relative discharge issued to him. The
drawer, endorsers and any obligor under the bill of exchange shall be discharged
up to the amount paid and the bearer shall protest the outstanding amount.
The bearer of a bill of exchange is not compelled to collect its amount before
the maturity date.
Where the drawee pays the amount of the bill of exchange before its maturity
date, he shall bear any consequences resulting therefrom.
pays the value of a bill of exchange on the maturity date without valid
objection shall be discharged, unless he had committed fraud or gross fault. He
must ascertain the regularity of the endorsements sequence but he is not bound
to verify the authenticity of the signatures of the endorsers.
Where payment in the United Arab Emirates of the value of the bill of exchange
is stipulated in a currency which is not officially in circulation therein,
payment shall be made in the national currency according to the rate of exchange
prevailing on the maturity date. Where payment is not effected on the date of
maturity, the bearer shall have an option to claim payment of the value of the
bill of exchange estimated in the national currency according to the rate of
exchange prevailing either on the date of maturity or on the date of payment.
The current custom in the place of payment shall apply for the conversion rate
of foreign currency unless the drawer had fixed on the bill itself the rate on
basis of which the payable sum shall be calculated.
The provisions of the foregoing paragraph shall not apply in the event where the
drawer had expressly stipulated that payment of the bill of exchange must be
made in the foreign currency specified on the bill itself, subject to the
special laws concerning currencies and the control over foreign transfers.
Where the value of a bill of exchange is specified in a currency having a common
denomination in several countries but a different value in the country of
drawing and the country of payment, it shall be assumed to mean the country of
Where a bill of exchange is not presented for payment on the date of maturity,
any debtor thereon may deposit its value with the treasury of the court within
whose jurisdiction the place of payment is located. Such deposit shall be at the
bearer's account and under his responsibility and against a receipt to be issued
to the depositor stating the amount of the sum deposited, the date of drawing of
the bill of exchange, the date of maturity thereof and the name of the person in
whose favor it was originally drawn.
Where the bearer claims payment from the debtor, this latter must hand to the
bearer the deposit receipt against the surrender of the bill of exchange on
which it is marked that payment was made by virtue of the said instrument. The
bearer shall in this case receive the sum deposited with the court against such
instrument, and if the debtor fails to hand the receipt for the deposit to the
bearer, he shall be bound to pay the value of the bill of exchange.
against the payment of a bill of exchange or refrainment therefrom is only
acceptable in case of loss of the bill or in case of bankruptcy of its
Where a non-accepted bill of exchange drawn-up in several copies is lost, the
person entitled to its value may claim payment by virtue of one of its other
Where a bill of exchange is drawn in several copies and the copy which bears the
acceptance is lost, payment thereof may not be claimed on the strength of
another copy except by order of the president of the competent court and against
providing a guarantor.
person who has lost a bill of exchange- whether accepted or not- and is unable
to present one of the other copies, may apply to the president of the competent
court for an order to have its value paid, provided that he proves his title
thereto, and provides a guarantor.
In the event of refusal to pay the value of a lost bill of exchange after
claiming payment thereof pursuant to the provisions of the two foregoing
Articles, its owner must prove such refusal in a protest to be made the day
following the date of maturity, and notify the same to the drawer and endorsers
in such manner and within such time-limits as is provided for in Article
The protest must be made within the time limit mentioned in the preceding
paragraph even though an order from the competent court could not be obtained in
of the value of a bill of exchange on the date of maturity following a court
order in the cases referred to in Articles (544) and (545) discharges the debtor
guarantor referred to in Articles (544) and (545) shall be discharged from his
obligation after the lapse of three years without raising a claim or filing a
The owner of a lost bill of exchange may obtain a copy thereof through the
person who has endorsed the bill to him and the latter is bound to assist him
and authorize him to use his name in order to claim from the previous endorser
and so on from one endorser to the other until reaches the drawer.
Every endorser shall execute his endorsement on the copy of the bill of exchange
handed over by the drawee after marking it as being in lieu of the missing
Payment may not be claimed on the strength of such copy except by order of the
competent court and after submitting a guarantee.
All expenses incurred in this respect shall be borne by the owner of the bill of
AND RECOURSE AGAINST THE OBLIGORS OF A BILL OF EXCHANGE
bearer of a bill of exchange, in case of non-payment on the date of maturity,
shall have recourse against the endorsers, drawer and other obligors
A bearer may have recourse against the obligor of a bill of exchange prior to
the date of maturity in the following cases:
Total or partial non-acceptance.
Bankruptcy of the drawee, whether he accepted the bill of exchange or not, or
when he suspends payment even if he has not been declared bankrupt or when an
ineffective attachment is levied on his property.
Bankruptcy of the drawer of the bill of exchange which has been drawn under the
condition of non-presentment for acceptance.
The guarantor may request a respite for payment when recourse is exercised
against him in the two cases provided for in Clauses (b) and (c) of the
foregoing paragraph, by applying to the court of first instance, in whose
jurisdiction his domicile is located, within three days from the date of
recourse. Where the court considers the application justified to grant the
respite, it shall determine in its decision a time limit for payment provided it
does not exceed the date set for maturity; and the court decision in this
respect shall not be subject to challenge.
Where the maturity date of a bill of exchange falls on an official or banking
holiday, payment thereof may only be claimed on the following working day.
Likewise, no action may be taken in relation to the commercial paper, such as
presentment for acceptance or protest, except on a working day.
When an action concerning a commercial paper must be taken within a specified
time limit, and the last day of such time limit falls on an official or banking
holiday, the time limit shall be extended till the next day.
The intervening holidays shall be calculated within the time limit.
The first day of the time limit shall not be taken into account when calculating
statutory or contractual time limits related to commercial papers.
of non-acceptance or of payment of the bill of exchange must be established by a
protest for non-acceptance or a protest for non-payment, which shall be made
through the competent notary public, provided that one copy thereof shall be
delivered to the addressee of the protest.
The protest shall include an exact literal transcript of the bill of exchange
with all the particulars stated therein, as to its acceptance, endorsement,
guarantor, payment of its value if applicable and any other particulars. The
protest shall also contain the notice to pay the value of the bill of exchange,
whether the person liable to accept or pay such value was present or absent, the
reasons of non-acceptance or non-payment, the inability or refusal to sign and
the amount paid from the value of the bill of exchange, in case of partial
The protest for non-acceptance or non-payment shall be served at the domicile of
the obligor of the bill of exchange or at his last known domicile.
competent notary public shall enter day by day all the papers related to the
protest in chronological order in a special register having numbered pages and
competent notary public shall, during the first ten days of every month, send to
the competent Commercial Registry Office a list of the protests for non-payment
entered during the previous month and the said Office shall keep a special
register to enter such protests. Every person may have access to such Register
and obtain a copy thereof against payment of the prescribed fees. The said
office shall publish a bulletin containing such protests.
A protest for non-acceptance must be made within the time-limits set for
presentment of the bill of exchange for acceptance. Should the first presentment
for acceptance according to Article (522) fall on the last day of such time
limit the protest may be made on the following day.
Where the bill of exchange is due for payment at sight, the protest for
non-payment shall be made according to the conditions stipulated in the
foregoing paragraph relative to the protest for non-acceptance.
Where the bill of exchange is due for payment on a specified date or after a
certain period from the date of drawing or of sight, the protest for non-payment
must be made on either of the two days following the date of maturity.
The protest for non-acceptance waives the need for presenting the bill of
exchange for payment and for making a protest for non-payment.
other instrument shall replace a protest except in the instances where the law
Where the drawee suspends payment, whether he has accepted the bill of exchange
or not, or in case an ineffective attachment is levied on his property, the
bearer of the bill of exchange may not have recourse against the guarantor,
except after presenting the bill to the drawee for payment and making a protest
Should the drawee be declared bankrupt, whether he has accepted the bill of
exchange or not, or in case of bankruptcy of the drawer of the bill of exchange
who had stipulated its non-presentment for acceptance, submission of the
bankruptcy judgment shall be sufficient to enable the bearer to exercise his
rights of recourse against the guarantors.
The bearer of a bill of exchange must notify its drawer, and the person who has
indorsed it to him, of the non-acceptance or non-payment thereof within the four
working days following the date of protest, or the date on which it is presented
for acceptance or payment if it contains the stipulation of "recourse without
expense". Every endorser shall, within the two working days following his
receipt of the notice, be bound to notify in his turn his endorser of the
receipt of such notice, giving him the names and addresses of the previous
notifiers, and so on from one endorser to the other until the drawer. The time
limit shall, as concerns each endorser, start to run as from the date on which
he received the notice from the preceding endorser.
When one of the signatories of the bill of exchange itself has been notified
according to the previous paragraph, it shall also be necessary to notify his
backer within the same period.
Where one of the endorsers has failed to state his address or has stated it in
an illegible manner, it shall be sufficient to notify his previous
Any person bound to serve a notice, may do so in any manner whatsoever, even by
returning the bill of exchange itself.
The person bound to send a notice, must prove that he did so within the
prescribed time limit prescribed. Such time limit shall be deemed to be observed
if he delivers the registered letter containing the notice to the Post Office
within the said time limit.
The person bound to serve notice shall not forfeit his rights if he fails to do
so within the prescribed time limit, but he shall be required-when relevant- to
compensate the damage resulting from his negligence, provided that the
compensation shall not exceed the amount of the bill of exchange.
The drawer, every endorser or backer may exempt the bearer from the obligation
of making the protest for non-acceptance or non-payment upon recourse, if there
is a stipulation in the bill of exchange of "recourse without costs" or "without
protest" or any other stipulation having the same meaning and signed by
However, this stipulation shall neither exempt the bearer from presenting the
bill of exchange within the prescribed time limits nor from serving the required
notices. Any person opposing to the bearer the non-observance of such time
limits shall have to prove his allegation.
Where the drawer has stipulated the condition of "recourse without costs", the
effects of such stipulation shall apply to all the signatories; however if such
stipulation is made by an endorser or backer, its effects shall apply to him
Where the drawer has himself made this stipulation and the bearer nevertheless
protests, the latter shall bear alone the costs, but if the stipulation is made
by an endorser or a backer, recourse may be exercised by all the signatories for
the costs of protest, if made.
Persons who have committed themselves under a bill of exchange shall be jointly
liable towards its bearer.
The bearer may have recourse against the obligors, jointly or separately,
without having to observe the order of their obligations.
The right of recourse of each signatory on the bill of exchange shall, if he
pays its value, be established against the obligors towards him. Court action
taken against any of such obligors shall not prevent the right of recourse
against the others even if they are subsequent to the obligor against whom the
action has been initially instituted.
The bearer of a bill of exchange may claim, from the person having a right of
recourse against him, the following:
The principal sum of a non-accepted or non-paid bill of exchange, along with the
agreed interest, if stipulated.
The interest calculated according to the prevailing banking rate as of the date
The costs of the protest, notices and any other expenses.
In case of recourse exercised before the maturity date of the bill of exchange,
a sum equal to the official discount value on the date of recourse at the place
where the bearer's domicile is located, shall be deducted from the value of the
bill of exchange.
has paid the value of the bill of exchange may claim from the obligors committed
towards him to reimburse him the sum paid as well as the expenses
courts may not grant a respite to pay the value of the bill of exchange or to
undertake any procedure related thereto, except where provided for in the
Any obligor who by way of recourse is called upon or is likely to be called upon
to pay a bill of exchange, may, if he effects payment, demand that the bill,
together with the protest and a receipt for the amount paid, be delivered to
Any endorser having paid the bill of exchange may strike off his endorsement and
all subsequent endorsements.
case of recourse exercised after a partial acceptance, the person who has paid
the non-accepted part of the value of the bill of exchange, may require its
bearer to prove such payment of the bill itself and deliver him the respective
discharge. Furthermore, the bearer shall be bound to hand him a certified true
copy of the original bill of exchange together with the protest, in order to
enable him to exercise his right of recourse against others for the amount paid
The bearer of a bill of exchange shall forfeit his right, under the rules of the
Exchange Act, to have recourse against the drawer, endorsers and other obligors,
except the acceptor, on the expiry of the time limits set for the undertaking of
Present the bills of exchange due for payment at sight or at a certain specified
period after sight.
Make a protest for non-acceptance or for non-payment.
Present the bill of exchange for payment in case it contains a stipulation of
"recourse without costs".
Nevertheless, the drawer shall not benefit from such forfeiture, except where he
proves that he made available the consideration for payment on the maturity
date; in which case the bearer may only have recourse against the drawee.
Where a bill of exchange is not presented for acceptance within the time limit
set by the drawer, the bearer shall forfeit his right of recourse based on both
the non-acceptance and non-payment, unless it is revealed from the wording of
the stipulation that the intention of the drawer thereby was to relieve himself
from guaranteeing the acceptance.
Where the endorser stipulates in his endorsement a date for presentment of the
bill of exchange for acceptance, he may alone take advantage of such
Where due to a force majeure a bill of exchange is not presented or protested
within the prescribed time limits, such time limit shall be extended.
The bearer shall, without delay, notify his endorser of the force majeure; such
notice dated and signed by the bearer shall be transcribed on the bill itself or
its extension; such notices to be served by each endorser to his previous
endorser up to the drawer according to Article (560).
On cessation of the force majeure, the bearer shall without delay present the
bill of exchange for acceptance or payment, then make the protest when
Where the force majeure continues for more than thirty days calculated as of the
maturity date, recourse may be exercised against the obligors without the need
to present the bill of exchange or make a protest.
Where the bill of exchange is due for payment at sight or at a certain specified
period after sight, the time limit of thirty days shall run from the date the
bearer notifies his endorser of the force majeure, even if such date is prior to
the expiry of the time limits set for presentment of the bill of exchange. The
sight period shall be added to the thirty day time limit, if the bill of
exchange is due for payment at a certain specified period after sight.
Matters related to the person of the bearer or any person delegated by him to
present or protest the bill of exchange shall not be deemed to be a force
bearer of a bill of exchange protested for non payment may levy an a
precautionary attachment, without need to submit a guarantee, on the properties
of the drawer, acceptor, endorser, backer or any other obligors under the bill
of exchange, subject to the provisions stipulated for such attachment in the
Civil Procedures Code, except the production of a guarantee.
Any person having a right of recourse against the other obligors under the bill
of exchange, may recover his right by drawing a new bill of exchange on one of
his guarantors, to be payable at sight at the place of residence of the
guarantor, unless otherwise provided.
A recourse bill of exchange shall cover the amounts mentioned in Articles (563)
and (564), in addition to any commissions and other fees prescribed by
Where the drawer of a recourse bill of exchange is himself the bearer, its
amount shall be determined on the same basis as that adopted to fix the value of
a bill of exchange due for payment at sight, drawn from the place where the
original bill of exchange was payable to the place of the guarantor's
Where the drawer of a recourse bill of exchange is an endorser, its amount shall
be determined on the same basis as that adopted to fix the value of a bill of
exchange due for payment at sight, drawn from the place of the drawer’s
domicile to the place of the guarantor's domicile.
In case there are several recourse bills of exchange, the drawer of the original
bill or any endorser of such bill, may not be asked to pay more than the value
of one recourse bill of exchange.
OF THE BILL OF EXCHANGE
The drawer, endorser or backer of a bill of exchange may name the person who
shall accept or pay the bill, when necessary.
With due observance of the conditions set forth in the following Articles of
this Chapter, a bill of exchange may be accepted or paid by any person
intervening for the interest of any party liable there under who may be subject
of a recourse.
The intervening person may be a third party as he may also be the drawee who
refused acceptance or any obligor under the bill of exchange; however he may not
be the drawee who accepted.
The intervening party must, within the two working days following the
intervention, notify the party in whose favor the intervention took place;
otherwise he shall be held liable when relevant, to compensate any damages
sustained as a result of negligence, provided that such compensation shall not
exceed the amount of the bill of exchange.
Acceptance of intervention shall occur in all cases where the bearer of an
acceptable bill of exchange has a right of recourse prior to the date of
Where the bill of exchange names an acceptor or a payor where necessary of the
value at its place of payment; the bearer may not in this case, prior to the
date of maturity, have recourse neither against the person who made such
nomination nor against his subsequent signatories; save where he presents the
bill of exchange to its nominated acceptor or payor where necessary and such
nominee refrains from accepting it and the bearer proves such refrainment with a
The bearer may in other cases refuse to accept intervention, and if he accepts
it he loses his right of recourse prior to the maturity date against the party
in whose interest the intervention was made and against his subsequent
of intervention shall be done by writing it on the bill of exchange itself and
shall be signed by the intervener. The name of the person in whose interest the
intervention was made shall also be mentioned thereon, otherwise, it shall be
deemed to be effected in favor of the drawer.
The acceptor of intervention shall have the same liability, towards the bearer
of a bill of exchange and the endorsers subsequent to the person in whose
interest the intervention was made, as that incumbent on this latter.
The party in whose interest the intervention was made and his guarantors may in
spite of the acceptance of the intervention, require the bearer to surrender to
them the bill, the protest and the quitclaim, if any, against payment of the
amount stated in Article (563).
A bill of exchange may be paid by intervention in all cases where, upon or prior
to maturity date, the bearer thereof has a right of recourse against those
liable there under.
Such payment shall be effected by paying the entire sum which was supposed to
have been paid by the person in whose interest the intervention was made.
Payment must take place at the latest on the next day following the last day on
which the protest for non-payment may be made.
Where the acceptors of a bill of exchange by intervention or those designated
for payment thereof, where necessary, have a domicile at the place of payment,
the bearer must present the bill of exchange for payment to all such persons and
if relevant he shall serve them a protest for non-payment at the latest on the
day following the last day on which such protest may be made.
Where the protest is not made on that date, the person designated for payment of
the bill of exchange, where necessary, or the person in whose interest the
intervention was made as well as the subsequent endorsers shall be discharged
from their liability.
the bearer of a bill of exchange refuses payment by intervention, he shall
forfeit his right of recourse against the person who would have been discharged
by such payment.
Payment by intervention shall be established by writing a quitclaim on the bill
of exchange, stating the name of the party in whose interest payment was done;
otherwise the payment by intervention shall be deemed to be made in favor of the
The bill of exchange and the protest - if made- must be surrendered to the
person who paid by intervention.
The party having paid by intervention shall acquire all the rights arising
therefrom against the person in whose interest payment was made and against
those persons liable under the bill of exchange towards such party. However, the
person who paid by intervention may not re-indorse the bill of exchange.
The subsequent endorsers to the person in whose interest payment was made shall
be discharged from liability.
Where several persons offer to pay a bill of exchange by intervention, the
person whose payment shall discharge the biggest number of those liable on the
bill shall have preference. Where this rule is knowingly violated, the
intervener for payment shall forfeit his right of recourse against any person
who has been discharged had this rule been observed.
DRAWN IN SEVERAL COPYIES
A bill of exchange may be drawn in several copies conform to each other. In such
case, each copy shall be numbered and shall state the total number of copies
issued, failing which each copy shall be deemed to be a separate bill of
The holder of a bill of exchange which does not stipulate that it is the only
copy, may require copies thereof at his own expense. He shall to that effect
refer to his endorser who shall be bound to assist him to refer to the previous
endorser, and so on up to the drawer.
Every endorser shall enter his endorsement on the new copies.
Payment of a bill of exchange on the strength of one of its copies is a
discharge of liability even when it is not stipulated therein that the payment
shall nullify the effect of the other copies. Nevertheless, the drawee shall
remain liable for payment on the strength of each copy signed by him for
acceptance and which he failed to recover.
An endorser who has indorsed the copys of a bill of exchange to different
persons, as well as his subsequent endorsers, shall be liable on the strength of
all the copies bearing their signatures and which have not been recovered by
person who sends any copy of the bill of exchange for acceptance, must state on
the other copies the name of the person who has possession of such copy, and
this latter shall surrender it to the lawful bearer of any other copy. Where he
refuses to surrender it, the bearer shall have no right of recourse unless he
makes a protest stating:
that the copy sent for acceptance has not been surrendered to him despite the
fact that he requested it.
That the acceptance or payment was not effected on the strength of another
AND ALTERATIONS OF THE BILL OF EXCHANGE
The bearer of a bill of exchange may make photocopies thereof.
The photocopy shall fully conform to the original of the bill of exchange, along
with any endorsements or any other particulars entered therein; he shall also
indicate on the copy the limit where the duplication from the original
The copy may be indorsed and have an alternate backer in the same manner as on
the original and the copy shall have the same effects as the original.
The name of the person having possession of the original shall be mentioned on
the copy of the bill of exchange, and such holder shall be bound to surrender
the original to the lawful bearer of the copy.
Where the holder of the original refrains from surrendering it, the bearer of
the copy shall have no right of recourse against the endorsers or alternative
backers of the bill, unless he makes a protest where he states that the original
has not been surrendered to him although he has requested it.
Where after the last endorsement and before making the copy, a phrase is written
on the original purporting that the bill of exchange may not be indorsed after
that date except on the copy, in such case each endorsement subscribed on the
original shall be deemed null and void.
an alteration is made to the text of the bill of exchange, the persons who sign
after such alteration shall be liable according to the altered text, but the
persons who signed prior to such alteration shall only be liable in accordance
with the original text.
OF THE LIMITATION PERIOD BARRING
not be heard, in case of denial and in the absence of legitimate excuse, the
The action resulting from the bill of exchange and lodged against the acceptor
after the lapse of three years from the date of maturity.
The action lodged by the bearer against the endorsers or the drawer after the
lapse of one year from the date of the protest made within the prescribed time
limit or from the date of maturity, if the bill contains a stipulation of "
recourse without expenses".
The action lodged by the endorsers against each other or against the drawer
after the lapse of six months from the day on which the endorser has paid the
bill of exchange or from the day on which the action was lodged against
a case is instituted, the limitation period provided for in the foregoing
Article shall run only from the date of the last procedure taken on the
periods stipulated in Article (587) shall not apply if a judgment is rendered on
the debt or if the debtor acknowledges the debt in a separate deed, which
entails renewal of the debt.
interruption of the limitation period barring from hearing the case shall have
no effect except with regard to the person against whom the procedure
interrupting the said period was taken.
promissory note shall contain the following particulars:
The order condition or the expression: "promissory or order note" written in the
body of the note in the same language as that in which it was written.
An unconditional undertaking to pay a specified sum of money written in figures
and in letters.
Name of the payee of to whose order it is payable.
Date and place of making the note.
Signature of the maker of the note (the person who wrote it).
note which does not contain any of the particulars stated in the foregoing
Article shall not be considered a promissory note except in the following
Where the maturity date is not stated, the promissory note shall be deemed
payable at sight.
Where the place of payment or the maker's domicile is not stated, the place of
making the note shall be considered the place of payment and the domicile of the
Where the place of making the note is not stated, it shall be deemed to have
been made at the place indicated next to the maker's name or at the place where
he effectively signed the note.
The maker of a promissory note shall be liable in the same manner as the
acceptor of a bill of exchange.
The promissory note which falls due after a certain specified period from sight
must be presented to the maker within the time limit stipulated in Article
(509), to be marked up with an entry that it has been sighted; such entry must
be dated and signed by the maker.
The period from sight shall begin only from the date of such entry.
Where the maker refrains from effecting such entry, his refusal shall be
established by virtue of a protest of non acceptance and the date of the protest
shall be deemed to run from the date of the protest.
The provisions concerning the bill of exchange in regard to capacity, the number
of copies photocopies, endorsement, maturity and payment thereof, recourse for
non-payment, cases where respite for payment may not be granted, precautionary
attachment, protest, calculation of time-limits and working days, recourse by
drawing a recourse bill of exchange, payment by intervention, prescription of
actions-at law, shall apply to promissory notes, inasmuch as they are not
inconsistent with the nature of a promissory note.
Furthermore, the rules concerning bills of exchange which are made payable at
the domicile of any third party or at a place other than that where the drawee's
domicile lies, stipulations of interest, discrepancies in the particulars
pertaining to the sum due for payment, the effects of signatures by persons
having no capacity to contract, forged signatures, signatures of fictitious
persons, signatures which are not binding or those subscribed by persons having
no authority or acting beyond the authority granted to them, shall also apply to
In addition, the provisions pertaining to alternative backers shall apply to
promissory notes, provided that if the name of the guaranteed is not mentioned
in the text of the guarantee this latter shall be deemed to be made in favor of
the maker of the promissory note.
to the provisions stipulated in this Part, the provisions concerning bills of
exchange shall apply to checks, inasmuch as they are not inconsistent with the
nature of a check.
check shall contain the following particulars:
The word "check" written in the text of the instrument in the language in which
the text is written.
An unconditional order to pay a specific of money.
The name of the person who is under obligation to pay (the drawee).
The name of the person to whom or to whose order payment should be made.
The date and place of issuing the check.
The signature of the person who issued the check (the drawer).
instrument which does not contain one of the particulars mentioned in the
foregoing Article shall not be considered a check except in the following
If the place of payment is not stated, the place indicated next to the drawee's
name shall be deemed to be the place of payment; if several places are mentioned
next to the drawee's name, the check shall be deemed due for payment at the
first place indicated. Where the check is void of any such particulars, it shall
be deemed to be due for payment at the place of the drawee's head office.
Where the place of drawing is not stated, the check shall be deemed to be drawn
at the place indicated next to the drawer's signature; and if no such place is
stated, it shall be deemed to be drawn at the place where it was effectively
Checks issued and due for payment in the State must be drawn on a bank.
Each bank delivering a check book containing blank checks payable from its
treasury, must write on each check the name of the account owner who received
the checkbook as well as his account number.
Drawing may be done by way of applications in writing set by the bank for this
purpose and acceptable by it as to form.
The signatures on checks and on the special written application forms shall
conform to the specimen and approved signatures registered at the bank; and the
account owner shall be liable towards the bank whether such account is creditor
A check may not be issued unless the drawer has with the drawee, at the time of
drawing the check, funds which he can dispose of by check pursuant to an express
or implicit agreement.
Whoever draws a check in person, or through a person receiving an order to draw
it for his account, shall deposit sufficient consideration for its payment.
Nevertheless, the drawer for the account of others is personally liable towards
the endorsers and the bearer, to the exclusion of all others, to provide the
required consideration for payment.
The drawer alone must prove, in case of denial, that the drawee of the check had
at the time of its drawing sufficient consideration for payment; if he fails to
do so he shall be liable to pay the check even when he protests for non-payment
after the period prescribed by law.
was replaced by virtue of Clause (a) of Article 1 of Federal Decree-Law No. 14
to read as follows:
A check is not susceptible to acceptance; an acceptance written on the check
shall be deemed inexistent.
The drawee may add its confirmation on the check thus indicating the
availability of the consideration for payment with the drawee on the date of
making such confirmation. The drawee's signature on the face of the check shall
be deemed as a confirmation.
Where the drawee has sufficient consideration to pay the value of the check in
full or in part, it may not refuse to confirm the check if the drawer or the
bearer so requests.
The consideration for payment of a check that is confirmed in full or for its
outstanding balance after partial payment thereof shall remain blocked with the
drawee and under its responsibility in favour of the bearer until the lapse of
the time limits set for the presentment of the check for payment.
check may be made payable to:
A named person with an express provision "to order" or without it.
A named person with the provision "not to order" or any other provision having
the same meaning.
To bearer of the check.
check made payable in favor of a named person and containing the provision " or
to bearer" or any other expression having the same meaning, shall be deemed to
be a check to bearer; where the name of the beneficiary is not stated, the check
shall be deemed to be "to bearer".
check due for payment in the State and containing a provision "not negotiable",
shall not be paid except to the person who received it marked as such.
A check may be drawn to order of the drawer himself.
It may also be drawn for the account of another person.
It may not be drawn on the drawer himself except in the event where it is drawn
between branches of the same bank or between such branches and the bank’s
head office, provided that the check drawn is not made payable" to
stipulation in the check for the payment of interest shall be deemed
drawer guarantees the payment of the check and any condition exonerating the
drawer from such guarantee shall be deemed inexistent.
debt is not renewed by the creditor's acceptance to receive a check in payment
of his debt; the principal debt shall remain outstanding together with all its
securities until the value of the check has been paid.
A check made payable to a named person shall, regardless of whether it is
expressly made "to order" or not, be negotiable by endorsement which may even be
to the drawer or another obligor, who may in their turn re-indorse it.
A check made payable to a named person may not be negotiated if marked "not to
order" or any other expression having the same meaning, except according to the
provisions relating to the transfer of rights.
A check made payable to bearer shall be negotiated by hand.
Unless otherwise provided, an endorser is liable for payment of the check.
An endorser may ban re-endorsement of a check, in which case he shall not be
liable for payment thereof to such persons who acquire it by a subsequent
to the drawee shall be tantamount to a quitclaim, except where the drawee bank
has several branches and the endorsement was made to a branch other than that on
which the check was drawn.
endorsement written on a check to bearer renders the endorser liable in
accordance with the provisions governing recourse but such endorsement shall not
result in making the instrument a check to order.
holder of a check negotiable by endorsement shall be deemed to be its lawful
holder whenever he proves that he has title thereto by virtue of consecutive
endorsements, even though the last one is a blank endorsement.
endorsements shall in this respect be considered inexistent and when another
endorsement is made subsequently to the blank endorsement, the person who signed
such endorsement shall be deemed to be the person who has acquired title to the
check by virtue of the blank endorsement.
a person loses possession of a check, regardless of whether it is a check to
bearer or endorsable, the person on whom such check has devolved shall not be
bound to surrender it if he proves his right in the manner stipulated in the
foregoing Article, save the cases where he acquires it in bad faith or where he
perpetrates gross fault in order to obtain such check.
Endorsement made subsequent to protest or after the expiry of the time limit set
for presentment of the check shall only produce the effects of a transfer of
Where an endorsement is not dated, it shall be deemed to have been made prior to
the protest or before the expiry of the time limit set for presentment of the
check, unless it is otherwise established.
Endorsements may not be predated; otherwise such predating shall be considered
as a forgery.
A backer may guarantee the payment of a check, in whole or in part.
This guarantee must be from a third party other than the drawee and may also be
one of the signatories of the check.
Partial endorsement, as well as the endorsement made by the drawee, are
An endorsement to bearer shall be deemed to be a blank endorsement.
was replaced by virtue of Clause (a) of Article 1 of Federal Decree-Law No. 14
to read as follows:
A check is due for payment on the date stated thereon as being its date of issue
and may not be presented for payment before such date.
Where the consideration for payment is less than the value of the check, the
drawee shall make partial payment up to the amount available therewith unless
the bearer refuses. In case of partial payment, the drawee shall write the
amount of every partial payment on the back of the check and the bearer shall
receive the original check and a certificate of such payment. The bearer’s
right of recourse for the outstanding balance shall be established by the
original check on the back of which the amounts of the partial payments are
written in accordance with Article 635bis of this Law, or by means of a protest
after the time limits set out in Article 632 of this Law have lapsed.
The drawee shall notify the Central Bank of the account holder data, in
accordance with the rules and regulations issued by the Central Bank to this
effect, in any of the following cases:
In the absence of sufficient consideration for payment of the check that may be
withdrawn on its due date.
If after issuing the check, the drawer recovers all the consideration for
payment such that the check cannot be paid.
If the drawee pays part of the check in accordance with Clause (2) of this
A check drawn and made payable in the State or abroad shall be presented for
payment within six months.
The time limit mentioned in the previous paragraph shall run from the date
stated on the check as being the date of issue.
Presentment of a check to a bank or reserving its value by telephone or cable
from such bank with the drawee bank, as well as presentment thereof to a legally
recognized clearing house is tantamount to presentment for payment.
a check is drawn between two countries using different calendars, the date of
its issue shall be adjusted to the corresponding date in the calendar of the
place of payment.
The drawee may pay the value of the check even after the expiry of the time-
limit set for presentment.
Objection by the drawer to the payment of the check shall not be entertained
except when it is lost or if the bearer becomes bankrupt.
The bank must pay the check in spite of the drawer's objection in cases other
than those stipulated in the foregoing paragraph. The court shall refrain from
issuing an order to stop payment even where an action is filed to examine the
merits of the case.
incapacity or bankruptcy of the drawee, after giving a check, does not affect
the application of the provisions relating thereto.
Where several checks are presented at the same time and the consideration for
payment is insufficient to pay their entire value, the dates of their issue
shall be taken into consideration.
Where all checks presented originate from the same checkbook and have the same
date, the check bearing the first serial number shall be deemed to have been
issued before the others, unless otherwise established.
Where a check is payable in the State in other than its currency, its value
must be paid on the date of presentment in the currency of the United Arab
Emirates converted at the rate of exchange prevailing on the date of payment.
Where payment is not made on the date of presentment, the bearer shall have the
option to require payment of the value of the check converted into the currency
of the State at the rate prevailing either on the date of presentment or of
Where the check is presented for the first time after expiry of the time limit
set for presentment, the rate of conversion shall be that prevailing on the
expiry of the said time limit.
The rate prevailing in the market shall be applied for the conversion of the
foreign currency; however, the drawer may specify on the check itself the rate
that shall be applied to the amount that has to be paid.
Where the value of the check is stated in a currency having a common
nomenclature, but its value in the country of issue is different from that in
the country of payment, it shall be supposed that the currency of the country of
payment is intended.
surety who has committed himself in case of loss of the check made to order,
shall be discharged of his liability after six months if no claim is made nor an
action is lodged within the said time limit.
Where a check "to bearer" is lost or destroyed, its owner may file with the
drawee an objection to payment of its value, stating in such objection the check
number, its sum, the name of the drawer and such other particulars which may
help to identify the check, as well as the circumstances of the loss or
destruction. Should it be impossible to provide some of these particulars, the
reasons therefor must be stated. Where the objector has no domicile in the
State, he must designate an elected domicile therein.
When the drawee receives the objection, he must refrain from paying the value of
the check to whomever having possession thereof and must set aside the
consideration for payment until the matter is decided.
The drawee shall at the objector's expense publish the number and sum of the
check which was lost or destroyed, together with the name of the drawer, the
name of the objector and his address, in one Arabic daily paper issued in the
State. Any disposal related to the check after the date of publication shall be
null and void.
The possessor of the check mentioned in the foregoing Article may contest the
objection with the drawee who must receive the check from him against receipt
and notify thereafter to the objector the name of the possessor of the check and
The objector must file an action claiming title to the check within thirty days
of the date of his receipt of the notice.
If the objector does not file the action claiming title to the check within the
time limit mentioned in the preceding paragraph; the possessor of the check must
obtain a judgment from the summary judge ordering that the objection be
disregarded, in which event the possessor of the check shall be deemed to be the
owner in regard to the drawee.
the objector files an action claiming title to the check, the drawee may not pay
the value of the check, except to the party to the litigation who produces a
final judgment establishing his title to the check or an amicable settlement
approved by both parties acknowledging him as the title holder.
the possessor of a check fails, within six months from the date of filing the
objection stipulated in Article (625), to claim payment of the check, the
objector may within the following month lodge an action before the competent
court against the drawee, in order to obtain a judgment granting him title to
the check and an authorization to cash its value.
the objector fails to initiate the action stipulated in the preceding paragraph
or where a judgment is rendered dismissing said action, the drawee must
re-credit the consideration for payment to the drawer's account.
CHECKS AND CHECKS CREDITED TO ACCOUNT
The drawer or bearer of a check may cross it, the crossing shall have the
effects stated in the following Article.
Crossing shall be by drawing two parallel lines on the face of the check.
Crossing may be general or special.
When no writing is made between the two lines or the word "bank" or any other
word indicating the same meaning is inserted therein, the crossing is general;
whereas, if the name of a specified bank is inserted within the two lines, the
crossing is special.
A general crossing may be transformed into a special one, but a special crossing
cannot be changed to a general crossing.
Striking off the crossing or the name of the bank inserted between the two
lines, shall be deemed as it never occurred.
A drawee may not pay a check bearing a general crossing except to one of his
clients or to a bank.
A drawee may not pay a check bearing a special crossing except to the bank whose
name is written between the two lines or to the customer of such bank if this
latter is the drawee; however, the said bank may entrust another bank to cash
the amount of the check.
A bank may not receive a crossed check except from one of its clients or from
another bank; nor may it cash the value of such check for the account of other
than such persons.
Where the drawee fails to observe the foregoing provisions, he shall be liable
for damages not exceeding the value of the check.
The expression "client" in this Article means every person having an account
with the drawee and having obtained from him a checkbook or having the right to
obtain such book.
The drawer or bearer of a check may stipulate that it be not paid in cash, by
writing on the face of the check " to be credited to the account" or any other
expression indicating the same meaning; in which case the drawee may only
discharge the value of the check by making entries in his books, in lieu of
The striking off the statement "to be credited to the account" shall be
Where the drawee fails to observe the foregoing provisions, he shall be liable
for damages not exceeding the value of the check.
to the provisions of Articles (628), (629) and (630), the check shall remain
negotiable and enjoying all the characteristics of other checks.
The bearer of a check may have recourse against the drawer, endorsers and other
obligors liable thereby if he presents it within the prescribed time limit but
remained unpaid and this fact is established by protest. In lieu of the protest,
failure to pay may be established by a statement from the drawee mentioning the
date of presentment of the check, provided that such statement is dated and
written on the check itself.
The inscription of the statement mentioned in the preceding paragraph may not be
refused when requested by the bearer, even where the check stipulates
"recourse without expenses"; however, the drawee may request a grace period not
exceeding three working days following the presentment of the check, even if the
check is submitted on the last day of the presentment period.
from paying a check shall be established, in the manner provided for in the
first paragraph of the preceding Article, before the expiry of the time limit
prescribed for presentment; if the check is presented on the last day of such
time limit, the refrainment from paying may be proved on the next working
bearer reserves his right to have recourse against the drawer, even when he
fails to present the check to the drawee, make a protest or take a similar
action within the prescribed time limit; save where the drawer has provided the
consideration for payment and such consideration has remained available with the
drawee until the expiry of the time limit for presentment of the check, then
such consideration ceased to exist due to an act not attributed to the
Where due to a force majeure a check cannot be presented, or a protest made or
an alternative action taken within the prescribed time- limits, such time limits
shall be extended.
The bearer must without delay notify whoever endorsed the check to him of the
force majeure and affix such notice dated and signed by the bearer on the check
itself or on a rider thereto. Such notices shall be done in an uninterrupted
sequence from one endorser to his predecessor and so on up to the drawer
according to Article (560).
On cessation of the force majeure, the bearer must, without delay, present the
check for payment then make a protest or, when necessary, take an alternative
Where the force majeure continues to exist for more than fifteen days computed
from the day on which the bearer served notice on his endorser of the force
majeure; even when such date happens to be before the expiry of the time limit
prescribed for presentment of the check, recourse may be exercised against the
obligors thereof, without the need to present the check, or make a protest or
take an alternative action.
Shall not be considered a force majeure, any matters related to the person of
the bearer of a check or to the person in charge of presenting the check or
making the protest or taking an alternative action.
following new article numbered 635bis was added by virtue of Article 2 of
Federal Decree-Law No. 14 dated
check whereto a notice of unavailability or insufficiency of funds is affixed by
the drawee shall constitute a writ of execution under the Implementing
Regulation of aforementioned Federal Law No. 11 of 1992, and its bearer may
request its full or partial compulsory execution.
provisions, procedures and rules set out in the Implementing Regulation referred
to in this Article shall govern the execution thereof and the challenge thereto.
AND PLURALITY OF COPIES
The drawee shall alone be liable for the damages resulting from the payment of a
check bearing a forged signature of the drawer or where the particulars stated
in its text have been altered, unless he proves that a gross fault was committed
by the drawer whose name appears on the check resulting in such forgery or
alteration. Any stipulation to the contrary shall be deemed inexistent.
The drawer shall be particularly deemed to be at fault, if he fails to exercise
due care to keep the checkbook delivered to him.
A check, other than one to bearer, may be drawn in several copies conform to
each other, if drawn in the United Arab Emirates and due for payment in a
foreign country or vice versa.
Where a check is made in several copies, each copy shall be numbered on the face
thereof otherwise it shall be considered as an independent check.
case of denial and lack of legitimate excuse the following shall not be
Actions of recourse by the bearer of a check against the drawer, endorsers and
other obligors for the payment of its value, after two years from the expiry of
the time limit set for presentation thereof.
Actions of recourse by the obligors against each other after the lapse of one
year from the date on which one of them has paid the value of the check or from
the date of the judicial claim lodged against him for payment thereof.
Action of the bearer against the drawee after three years from the expiry of the
time limit set for presentation of the check.
The foregoing time limitations shall neither apply to a drawer who has not
provided a consideration for payment or has provided it then withdrew it in
whole or in part, nor to the actions against all obligors who have realized an
Despite the expiry of the time set for hearing the lawsuit, the defendants must
when required to do so certify under oath that they have discharged the
Furthermore, their heirs or other successors shall certify under oath that they
are not aware that the decedent was still liable for the debt when he
Where a lawsuit is initiated, the time limitations stated in Article (638) shall
not apply except from the day of the last action taken thereon.
Such time limitations shall not run if the debt is adjudicated or when it is
acknowledged by a separate deed resulting in the renewal of the debt.
Interruption of the above time limitations shall have effect only in regard to
the person against whom the action interrupting the time limitation is
was replaced by virtue of Clause (a) of Article 1 of Federal Decree-Law No. 14
to read as follows:
be punished by a fine not less than 10% of the value of the check and of a
minimum of AED 5,000 (five thousand dirhams) and not more than double the value
of the check whoever commits any of the following acts:
Declaring deliberately and contrary to the truth that the consideration for
payment of the check is unavailable or less than the value of the check.
Refusing in bad faith to pay a check drawn on the bank and having consideration
for payment to a bearer against whom no valid opposition was made.
Refraining from inscribing the statement referred to in Article (632) of this
Refraining from paying a check partially, issuing a certificate to this effect
or delivering the original check in accordance with the provisions of Clause 2
of Article 617 of this Law.
following new article numbered 641bis (1) was added by virtue of Article 2 of
Federal Decree-Law No. 14 dated
be punished by a fine not less than 10% of the value of the check and of a
minimum of AED 1,000 (one thousand dirhams) and not more than double the value
of the check whoever endorses or delivers a bearer check to a third party while
being aware that such check is unfunded or non-withdrawable.
fine shall be doubled in case of recidivism.
following new article numbered 641bis (2) was added by virtue of Article 2 of
Federal Decree-Law No. 14 dated
be punished by imprisonment for a period not less than six months and not
exceeding two years, and a fine not less than 10% of the value of the check and
of a minimum of AED 5,000 (five thousand dirhams) and not more than double the
value of the check, or by either of these penalties, whoever commits any of the
Ordering or requesting the drawee prior to the date of drawing a check, to
refrain from paying the check he has issued in cases other than those set out in
Articles 620 and 625 of this Law.
Closing the account or withdrawing all the funds therein prior to issuing a
check or prior to presenting it to the drawee for payment, or having a frozen
Deliberately writing or signing a check such as to prevent its payment.
penalty shall be doubled in case of recidivism.
following new Article numbered 641bis (3) was added by virtue of Article 2 of
Federal Decree-Law No. 14 dated
be punished by imprisonment for a period not less than one year and a fine not
less than AED 20,000 (twenty thousand dirhams) and not exceeding AED 100,000
(one hundred thousand dirhams) whoever commits any of the following acts:
Forging or faking a check, or imputing it to a third party through the
alteration of its data by addition, by deletion or by the other means set out in
Article 216 of aforementioned Federal Law No. 3 of 1987, with the intent of
causing harm to a third party and for the purpose of using it in respect of what
it was forged for.
Knowingly using a forged or fake check.
Knowingly accepting amounts paid by a forged or fake check.
Wrongfully using or benefitting from a check that is duly drawn in the name of a
third party, or whose use is associated with a fraud.
Knowingly importing, manufacturing, acquiring, possessing, selling, offering or
presenting equipment, tools, technological programs, information or data used in
committing forgery as provided for in this Article.
following new Article numbered 641bis (4) was added by virtue of Article 2 of
Federal Decree-Law No. 14 of
prejudice to any more severe penalty prescribed by any other law, shall be
punished by imprisonment for life and a fine not less than AED 500,000 (five
hundred thousand dirhams) and not exceeding AED 1,000,000 (one million dirhams)
whoever commits the offences set out in Article 641bis (3) of this Decree-Law
for a terrorist purpose.
was replaced by virtue of Clause (a) of Article 1 of Federal Decree-Law No. 14
to read as follows:
the court has condemned a person for any of the offences set out in Article
641bis (1) through Article 641bis (3) of this Law, it may order that an excerpt
of the judgment be published at the expense of the convicted person in two
widely circulated daily papers, one in Arabic and the other in English, issued
in the State, or in two electronic means of publication, one in Arabic and the
other in English, as specified by decision of the Minister of Justice, provided
that the publication includes – in any case- the name, domicile and
occupation of the convicted person and the penalty imposed thereon. Publication
shall be required in case of recidivism, and in case of condemnation for the
offence set out in Article 641bis (4) of this Law.
was replaced by virtue of Clause (a) of Article 1 of Federal Decree-Law No. 14
to read as follows:
the court condemns a person for any of the offences set out in Article 641bis
(1) and Article 641bis (2) of this Law, it may order the withdrawal of the check
book from the convicted person and prohibit the delivery of new check books to
him for a period not exceeding five years.
convicted person shall be punished by a fine not less than AED 50,000 (fifty
thousand dirhams) and not exceeding AED 100,000 (one hundred thousand dirhams)
if he fails to hand over his check books that are in his possession to the
concerned banks within fifteen (15) days from the date of being notified to do
the event that any bank violates the order provided for in the first and second
paragraphs of this Article, it shall be punished by a fine not less than AED
100,000 (one hundred thousand dirhams) and not exceeding AED 200,000 (two
hundred thousand dirhams).
following new article numbered 643bis (1) was added by virtue of Article 2 of
Federal Decree-Law No. 14 dated
the court condemns a person for any of the offences provided for in Article
641bis (3) of this Decree-Law, it shall order the confiscation of the seized
objects acquired as a result of the crime or used in committing it, without
prejudice to the rights of bona fide third parties.
any case, confiscation shall be ordered if the manufacturing, acquisition,
possession, sale or offer for sale of the seized objects constitutes a crime
perse, even if these objects do not belong to the accused.
it is impossible to seize any of the objects provided for in this Article, or
where it is impossible to order their confiscation on account of their relation
to the rights of bona fide third parties, the court shall impose a fine
equivalent to their value at the time of the crime.
following new article numbered 643bis (2) was added by virtue of Article 2 of
Federal Decree-Law No. 14 dated
the court condemns a person for any of the offences provided for in Article 641
through Article 641bis (4) of this Decree-Law, it may prohibit the convicted
person from practicing a business or professional activity for a period not
exceeding three (3) years if the crime was committed on account of or in
connection with this activity.
be punished by imprisonment for a period not less than one year and a fine not
less than AED 50,000 (fifty thousand dirhams) and not exceeding AED 100,000 (one
hundred thousand dirhams), or by either of these penalties, whoever commits the
same crime again after the issuance of the prohibition order set out in the
preceding paragraph of this Article.
was replaced by virtue of Clause (a) of Article 1 of Federal Decree-Law No. 14
to read as follows:
a criminal action is brought against the drawer for one of the offences related
to checks as provided for in this Law, this shall not affect the ability to take
compulsory execution measures with respect to the check or to take judicial
measures in accordance with the provisions, procedures and rules set out in
Article 635bis, nor shall it affect the right of the beneficiary or the bearer
of the check to claim damages pursuant to the procedures prescribed by the
following new article numbered 644bis (1) was added by virtue of Article 2 of
Federal Decree-Law No. 14 dated
the cases of committing any of the offences set out in this Chapter, in the name
or for the account of a legal person, the person in charge of the actual
management shall only be punished if he is proven to be aware of the offence, or
has committed same in his interest or in the interest of a third party.
no responsibility on the part of the natural person is proven as specified in
the preceding paragraph, the legal person shall be punished by a fine not less
than that prescribed by the law for the offence and not exceeding five times
said fine. A judgment may be issued to suspend the legal person’s licence
to practice the activity for a period not exceeding six months. In case of
recidivism, a judgment shall be issued to revoke the licence or dissolve the
legal person, as the case may be, and the judgment shall be published at the
expense of the legal person in two widely circulated newspapers, one in Arabic
and the other in English, issued in the State, or in two electronic means of
publication, one in Arabic and the other in English, as specified by decision of
the Minister of Justice.
shall not preclude the imposition of any additional penalties prescribed by the
provisions of the second paragraph of this Article shall not apply to the
licensed financial institutions that are governed by aforementioned Federal
Decree-Law No. 14 of 2018.
following new article numbered 644bis (2) was added by virtue of Article 2 of
Federal Decree-Law No. 14 dated
criminal lawsuit shall be terminated in the offences set out in Article 641bis
(1) and Article 641bis (2) of this Decree-Law if the full or outstanding value
of the check is paid prior to the commencement of the compulsory execution
proceedings prescribed in Article 635bis of this Decree-Law, or reconciliation
is reached or the full or outstanding value of the check is paid prior to the
issuance of a final judgment. In the event that reconciliation is reached after
the judgment becomes final, execution shall be stayed.
AND PREVENTIVE COMPOSITION
5 (Articles 645 to 900) was abrogated by virtue of Clause (2) of Article 230 of
Federal Decree-Law no. 9/2016 dated 20/07/2016, thus a mention is in order.