Chapter 2

Nature of Commercial Law

Q1: what is the definition of commercial law?

“That branch of law which is concerned with rights and duties arising from the supply of
goods and services in the way of trade”.

Q2: why the commercial law is pragmatic (practical) and responsive?

Because: a- it is constantly changing and developing.
b- it facilitates commercial practices of the business community.

Q3: What is the Scope of Commercial Law (Subject matter of Commercial Law)?
1- Material Theory.
2- Personal Theory.

Material Theory
Q4: Explain the Material Theory as a scope of Commercial Law?
it was introduced by Latin Law jurists, including Arab, who distinguish between civil &
commercial & mixed transactions.
Commercial Law applies to commercial transactions whether
a) it was practiced by trader or non-trader.
b) professionally or practice incidentally for one time.

the transactions is considered as commercial when:

a) a transaction is commonly practiced in the commercial environment.
b) the law or jurists specify them as Commercial.

Criticism: it enlarges the scope of commercial law, because there are transactions
which should be practiced professionally to be considered as commercial.
 Personal Theory
Q5: When Commercial Law is applied according the Personal Theory?
every activity: a) done by trader
b) who practices trade professionally  is subject to commercial law

*Therefore, the law should identify the terms “trader” and “profession” to decide the
scope of commercial law.

Q6: How did the Personal Theory evolve? (historical background)

- the subject matter of Commercial Law is  the person.
- in the Middle East ages, merchants (traders) in Europe traveled to fair (market) their
goods.
- the law in these countries did not serve the nature of commercial transactions.
- traders created new rules + applied to their disputes in a special courts where the
judges were traders  decide the case quickly
- this law was called (lex mercatoria) or the law of merchants.
- these rules were based on traders’ customs & practices and became international law
applied uniformly across Europe.

Q7: Did Bahraini law adopt material or personal theory?

Bahraini law adopted both, a combination of material and personal theory.

 as BLC provides that its provisions shall be applies to 

a) traders, and
b) all commercial transactions performed by any person even if he is not a trader
 Chapter 3
Sources of Commercial
Law Q8: what are the sources of commercial law?
1- Commercial Legislation:
a) Domestic (National) Legislation
b) Regional Legislation
c) International
Conventions 2- Commercial
Contracts
3- Commercial Customs
4- Civil Law
5- Principles of Islamic Sharia
6- Principles of Natural Law and the Rules of Equity

Q9: what does commercial legislation mean?

- legal rules made by proper authority in order to regulate commercial acts.
- Eg. National Legislation in Bahrain is made by  National Assembly.

Q10: What does domestic legislation

mean?
- it’s an internal commercial legislation.
- based on commercial policy to respond to social needs.

 Eg. 1) establishing Bahrain Commercial Register

2) rule regulate institutions & operations rendering (providing) financial services.

Q11: what does regional legislation

mean?
 it’s an external commercial legislation that is shared between neighbor states to
promote political and economic relationship.
examples: GCC Economic Convention, and EC Rules

 it is separate from national law, but closely linked to it, because  it improves the
progress of national commercial law in each member state.
Q12: What does International Convention mean? and when does it bind the member state?
 a Convention is: set of agreed or generally accepted standards or criteria often taking
the form of a custom.
 It is given the force of law (binding), when the member states:
a) ratifies the convention, and
b) incorporated in its domestic law.
but, if the convention allows member states to make reservation or declaration to
some of its provisions, and a state does so  such provisions do not binds that
state.

Nature of the Legislation

Q13: What is Mandatory rule?

Mandatory rule is a legal rule that parties cannot agree otherwise
 Can be defined through the scrutiny of (examining) 
a) the context, or
b) legislator intention when the law was drafted or amended (changed).

the purpose for these rules:

a) establish certain policies.
b) protect certain interests
c) abolish certain practices.

 if a mandatory rule in BLC contradicts with other sources of Commercial Law 

mandatory rule in BLC shall be applied.

Q14: What is Supplementary rule?

Supplementary rules are the rules that applied if the parties did not agree otherwise.
Therefore, parties can agree to apply other rules not provided in the legislation.
 it serves as an explanatory text for the intention of  the parties
Eg. BCL:
addressed the “Solidarity” between debtors as it states that: persons collectively obliged
in respect of a commercial debt shall be jointly liable, unless otherwise provided by the
Law or agreement of the parties.”
Q15: What is meant by commercial contracts?
Legally binding commercial agreement (whether upon goods or services) between two or
more parties in which they are obligated to do or restrain from doing particular things

Q16: What is the definition of commercial customs?

“Unwritten rule which has obtained the force of law in a particular locality”

Q17: What are the conditions of commercial customs?

1- the rule should be unwritten.
2- practiced for a long period of time.
3- to believe that it has become legally binding.

Q18: When shall we apply commercial customs?

Legally, Commercial Customs is the third source of Commercial Law, therefore it is
applied in the absence of an relevant rule in the:
a- commercial legislations (whether in BLC or other statutory
law). b- commercial contract (whether explicit or implicit
terms).
c- another accepted custom.
 in practice, a custom should be reasonable fair & proper & an honest person would
adopt.

Q19: which custom shall have the preference, private and local customs or general custom?
According to BLC, private and local custom shall have the preference over the general
custom.

Q20: How to prove the existence of a specific custom?

it can be proved through all methods of proof including witness.

Q21: What does Commercial Usage mean? and when it is applied?

 Commercial usage has the same characteristics of commercial customs except that
traders do not believe such rule is binding.
 like custom, it should be reasonable  fair & proper & an honest person would adopt.

 Bahrain Law of Commerce was silent about commercial usage. However, for
its application it should not contradict with:
a- commercial legislations (whether BLC or other relevant statutory
law). b- the commercial contract (whether implicit or explicit terms).
c- an established custom.
Q22: What is Civil Law? and when it is applied?
it is a body of general rules that define individual private relations.
 some commercial matters are dealt in both  Commercial Legislation + Civil law, such
as sale contract, mortgage, agency, commission agency, but  Civil Law is more
general than Commercial Legislation.
- it is applied in the absence of an applicable rule in: commercial legislation, contract,
custom.

Q23: What is the difference between the Latin and Anglo-Saxon system? Which system did
Bahraini law adopt?
a- Latin system: it is applied according to written law such as Civil & Commercial
legislation. b- Anglo – Saxon system: based on previous cases (precedents).
 Bahraini law has adopted the Latin system.

Q24: When Principles of Islamic Sharia is applied?

Principles of Islamic Sharia is the fifth source of Commercial Law, therefore it will be
applied in the absence of a related rule in:
1- Commercial Legislation. 2- Commercial Contract.
3- Commercial Custom. 4- Civil Law.
it provides the judge with space of freedom.

Q25: What does Principles of Natural Law, and Rules of Equity mean?
Principles of Natural Law:
 it is defined as “a body of principles that are considered to be inherent in nature and
accepted universally, in determining whether human conduct is right or wrong”.
its concept deduced from: a) the nature of man & society & things. and
b) that there is a perfect justice given to man by nature and
the law should conform to it.
it provides the judge with space of freedom.
Rules of Equity:
it is “the application of justice through flexible idea and concept, that varies from one
person to another”.
Q26: When they are applied?
 when all the previous sources are silent regarding the relevant issue.
 PART TWO - Chapter one

Q27: what are the conditions for a natural person to enter into a civil contract?
1- complete the age of 21 (full capacity, fully mature, legal
age) 2- the capacity not withdrawn or restricted by the
law.

Limitation to Age minor’s transactions can be done through two stages of age 
Non-Discretion & Discretion Age
Q28: what is Discretion and Non-Discretion Age?
1- Non-Discretion Age (minor under 7 years old): cannot enter into a contract, all his acts
 void.

2- Discretion Age (minor Completed 7 years old but under 21): if the contract
is: a- absolutely beneficial to the minor  valid.
b- absolutely prejudicial to the minor  void.
c- profitable and detrimental at the same time (in between)  voidable, if it is in the
interest of the minor

Q29: When does a minor with discretion lose the right to void the contract?
1- if the minor licenses the transaction after reaching the age of 21.
2- if before minor reaches 21 , and the license was granted by his:
a) guardian b) trustee c) Minors’ Guardianship Council.

Limitation to Mental Health

Q30: list the capacity impediments related to mental health? how an interdiction decision is
issued?
Mental illness: 1- Insanity and Imbecility.

2- Prodigality and Feeble-Mindedness.

 Shariaa court can issue an interdiction decision if it is satisfied with medical reports
and documents that a person suffers from one or more of the above impediments.
Q31: Is a contract concluded by an insane or imbecilic person
valid?
If the contract was concluded:
1- after the registration of interdiction decision: the contract is void.

2- before the registration of interdiction decision: the contract is valid unless:

(a) his case is commonly known at contract time.
(b) the other party was aware of his case,
in such two exceptions the contract is  void.

Q32: Is a contract concluded by prodigal or feeble-minded person valid?

If the contract was concluded:
a- after the registration of interdiction decision: provisions applicable to the person at
the
Discretion Age are applied:
 absolutely beneficial  valid.

 absolutely prejudicial  void.

 profitable and detrimental at the same time (in between)  voidable for the
interest of the prodigal or feeble-minded.

b- before the registration of interdiction decision: the contract is valid, but it will be
void or voidable in the case of: exploitation or collusion by the other party.

Q33: How can a Capacity get back to Normality?

 a minor will gain his full capacity once reaching the legal age (21-year-old).
 if an interdicted person for mental impediments recovered  a decision by the Shariaa
court should be obtained, based on the medical reports.

Q34: When do we apply commercial law on a transaction?

1- If the transaction itself is commercial.
2- If the transaction performed by a trader.
Q35: What are the conditions of trader as a natural person?
1- legally capacitated.
2- to practice trade professionally.
3- in his own name and for his own account.

Q36: What is the age of the commercial capacity?

reaching 18 years old. (different than the civil capacity 21 years old)

Q37: If a minor has met the above requirements, does he need to get a license from his
guardian to conduct commercial transactions?
No, the minor will be considered as fully capacitated in all transaction of trade such as
sales, purchases, lending, borrowing, adjudication, reconciliation, arbitration concerning
money used in trade.

Q38: What if incapacitated minor or restrained person (interdicted) owns money in a

commercial business (eg. Company through inheritance, will)
There are 2 possibilities:

 Court may order the liquidation of his money and withdrawal of his funds from such
business.

 court may allow his continuation in the business, whichever is beneficial, provided that:
a) court issue an order of continuation.
b) activities are conducted by the guardian.
Q39: What are the imposed restrictions on guardian?
1- Guardian is not permitted to perform certain transactions without a permission from
the Guardianship Council, such as:
a- Transferring rights and debts.
b- arbitration and conciliation unless it related to management.

2- If there are serious reason to believe  guardian mismanages the money, court may:
withdraw or limit its authority, without prejudice to the third parties who acted in
good faith.

All such court orders (whether to continue the business, withdraw or restrict the
authority), shall be:
a- entered in the Commercial
Registry. b- published in the Official
Gazette.

Q40: Is the guardian considered as trader?

No, because he is not practicing trade in his own name and for his own account.

Q41: Is the minor or restrained person (interdicted) considered as trader?

YES, because Bahraini Law of Commerce permits the declaration of bankruptcy of minor
and restrained person and  it is an established practice that bankruptcy declaration is
only applicable to traders.

Q42: Does minor responsible for traders’ duties?

Yes, such as declaration of bankruptcy.

Q43: What is the effect of bankruptcy declaration on minor or restrained person?

1- bankruptcy shall not include funds not invested in business because their
responsibility is limited to money used in trade.

2- bankruptcy shall not affect them in person  cannot be imprison or deprived from
civil and professional rights.
 PART TWO
Chapter TWO

Q44: what do commercial institution employees mean? are they traders?

Persons who work in the commercial institution and do the commercial transaction in the
name and for the benefit of their employer. Therefore they are not considered as traders
even if they:
a) conduct the work professionally,
b) shared in profit or.
c) participated in management

Q45: are the directors, chief executive & managers of Partnerships Company considered as
traders? Why?

YES, both the company and its managers are considered as traders.

 Because their liability is not limited to their shares in the company, it extends to their
personal funds.

Q46: are the directors and managers of the Shareholding and Limited Liability Companies
considered as traders? Why?
 NO, only the company is considered as trader.
 Because they are appointed or elected to manage the company while their
liability is limited to their shares and not their personal funds.

Q47: what is the definition of Commercial Representative?

 a person appointed by a trader through a contract of employment,
 to carry on any of his business activities,
 whether at his business premises (place of business), or at any other place.
Q48: does BLC consider the commercial representative as
trader?
 Generally NO, because:
a- BLC stipulates that his relation is governed by an employment contract (not
independent).
b- Representative performs the commercial acts in the name & for the account of
the trader, therefore, when representative conducting a commercial act:
 trader’s name must be mentioned next to his name.
shall mention that his is a commercial representative.

c- Their relation is governed by the vicarious liability principle -> the employer
(trader) is liable for representative’s acts performed within its authority limit.

 However, Commercial Representative may be considered as independent from

employer, therefore  trader, if he did not state the name of his employer and his
position.
in such case: (i) the representative would be personally liable for the transaction,
(ii) but the third party would have the right to recourse against the trader
for transactions conducted within representative’s authority.

Q49: What are the types of the authorities that commercial representative may have?
 General and limited (specific) authorization.
 However, to protect third parties  limited authorization shall be considered as
general
 unless proved otherwise.

Q50: What does Commercial Agency mean?

Representing a principal in the distribution of goods and services, or displaying them for
sale or circulation for profit or commission.

Q51: is a Commercial Agent considered as trader? what is the difference between civil and
Commercial Agency?
YES, Commercial Agent conducting the activities in a professional manner while Civil
Agent does not.
Q52: what are the conditions of Commercial Agent?
1- the commercial agency shall be registered in the Commercial Agencies Register at
Ministry of Commerce.

2- must be Bahraini.

3- commercially capacitated.
4- not been declared bankrupt unless he has been
reinstated. 5- not been convicted for:
a- a felony, or
b- a punishment limiting his freedom for a crime affecting his honour or
integrity, or c- any crime against the economy. 
unless he reinstated

Q53: what is the definition of Commission Agent?

a contract whereby an agent acts in his name and on behalf of the principal in
consideration for a remuneration (fee).

Q54: what are the conditions of the Commission Agent?

performs the activities : 1) in a professional manner

2) as an enterprise

Q55: What is the liability of the Commission Agent?

A) Commission Agent is responsible toward the principal with regard performing the
agency contract.

B) Commission Agent is solely and directly liable to third parties with whom he
contracts, and such third parties are directly liable to the Commission Agent.
 Therefore  third parties and the principal have no right of recourse against
each other, unless otherwise provided by the Law.
Eg.  a third party seller cannot sue the principal asking him to pay the price
of goods sold to the Commission Agent, he should sue the agent.
 Brokerage

Q56: what does a Brokerage contract mean?

a contract whereby a broker undertakes to another person to look for a second party and
mediate in the conclusion of a certain contract for a fee.

Q57: is a brokerage contract a type of agency contracts?

NO, because the broker does not conclude the contract on behalf of another party, his
role is to mediate and coordinate between two parties who  conclude the contract
themselves.

Q58: is conducting brokerage considered as a commercial act?

BLC stipulates that brokerage is a commercial act once performed in a
professional manner. Therefore  a single brokerage act cannot be considered as a
commercial.

--------------------------------------------------------------
Foreign Traders
Q60: What are the restrictions imposed on foreign person to establish a commercial company
in Bahrain?
There are restrictions on companies such as:
a) General Partnership Company  only by Bahraini unless exemption granted by Minister
of
Commerce & Industry.
b) Limited Liability Company  shall have a Bahraini partner holding at least 51% of the
capital.

Q61: which law applicable to the Foreign Married woman who practices trading?
Her capacity is regulated by  the law of the country of her nationality.
Q62: are there any restrictions imposed by Bahraini law on foreign married woman?
 Bahraini Law assumes that the foreign married woman practices business with the
permission of her husband.

 If: a) the applicable law grants the husband the right to object to his wife’s business, or
b) the husband withdraws his previous permission:
 the objection or withdrawal shall be entered in the Commercial Registry +
published in a local newspaper.
Q63: Does Bahraini Law apply on Foreign Married woman the separation of property system?
 Bahrain law assumes that a foreign wife is married on separation of property system,
unless the financial agreement between the spouses provides otherwise.

The financial agreement between the spouses shall not affect third parties unless:

a) the agreement entered in the Commercial Registry

b) published in the Official Gazette

----------------------------------------------------------------------------------
-

Small Craftsmen

Q64: What does Small Craftsmen mean?

a person who is practicing an occupation that requires modest overheads (expenses),
uses: a) his manual power, or
b) machines with low mechanical power, or
c) small number of workers

to acquire an income which would secure his daily living expenses.

Q65: which law is applicable to Small Craftsmen?

 Generally: Civil Law is applied, because their opportunity to speculate (making profit)
is limited.

But, if invested a large amount of capital, or employed a large number of workers, or

used more sophisticated machines -> trader & commercial law which impose number
of obligations on the trader will be applied to him.
 Intellectual Professionals

Q66: What do Intellectual Professionals mean?

Certain persons possess notable capacity in writing, painting, sculpting, acting, singing,
playing music and directing plays or movies. They can be owner of copyrights, patents and
trademarks.
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Liberal Professions

Q68: what do Liberal Professions mean?

Occupations that require special training in the liberal arts or sciences, such as lawyers,
engineers, architects, doctors, accountants and pharmacists.

Q69: which law is applicable to the Liberal Professions?

Generally, Civil Law is applicable.

 But, if the profession exceeds its scientific boundaries making the speculation the
main factor  commercial activity and commercial law is applied.
Eg. - Doctor who treats the patients in his small clinic  civil act
- Doctor who establishes a hospital in which the commercial activity is dominant

commercial act & commercial law is applicable.
 Small Farmers

Q70: What do small farmers mean?

Farmers who are directly involved in cultivating the land, whether as owners or using that
land as beneficiaries, in order to sell the land products.

Q71: Which law is applicable to small farmers?

Generally, Civil Law is applicable.

But, if the farmer:

a) transforms the products by him, using machines with high mechanical power,
or a small number of workers, or
b) establishes a shop or factory to regularly sell his products, whether in its original
form or being transformed 
such activity shall be considered as commercial

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Disguised and Ostensible Trader

Q72: What do Disguised and Ostensible person mean?

Disguised person is a person who disguises behind another person which is legally eligible
(capacitated/ competent) to perform commercial activities in his name (the ostensible),
but for the account of the disguised person.

Q73: is the Disguised person considered as a trader, and why?

YES, because the commercial activities are conducting for his account, and he takes the
responsibilities for such activities.

Q74: is the Ostensible person considered as a trader? and Why?

 Jurists Opinions: 1- not trader, since he does not perform the commercial act for his
account.
2- Trader, because a person who conducts fraud (cheating) should not
be allowed to escape the provisions applied to the traders, hence, he
is obliged to comply with all traders obligation.

 BLC: considered him as a Trader.

 False Impersonation

Q75: what does false impersonation mean?

a person who falsely alleges (claims) to be trader, in the newspapers or pamphlets
(circulars, leaflets) or documents or such other media.

Q76: does BLC consider an impersonator person as a trader?

 YES, both jurists and BLC agree that an impersonator person shall be considered as a trader.

 But, this assumption can be rebutted (to prove otherwise) by establishing that such
person has not actually practiced any trading activity. It can be rebutted through any proof
methods.
 Part Two Chapter Three
Legal Persons (juristic
person)

Q77: What does a Legal Person mean?

Group of persons or properties, who seek to achieve a certain goal, and it is recognized
by the law .

Q78: Can a Legal Person enjoy the rights available to natural person? If yes, are there any
restrictions?
 YES, the legal person enjoys many of natural person rights such as:
the right to have a name, to litigate, an independent financial status, capacity,
domicile, to be represented (through its representative which expresses the legal
person will).

 YES, there are some restrictions:

a) characteristics confined to the human nature such as: birth, incapacity due to the
age or mental impediments, heritage limitations

b) any other limitations specified by the legislator, which varies according to each
state legal system.

Q79: When can a legal person be considered as a trader?

 There are two criteria to consider the legal person as a trader:
a) objective criterion: practice commercial activities professionally, regardless of the
form that company takes.
b) formal criterion: to take one of the forms that stipulated by the law, regardless
of its object.

 BLC: adopts the formal criterion, as it states “a trader is any company takes any of
forms stipulated by the Commercial Companies Law for any object”.
- for this reason Bahraini law stipulates: “if a civil company takes a commercial form,
regardless of its purpose, it shall be subject to all the provisions applicable to
commercial companies”.
Eg: physician Association: if it takes the form of Joint Stock or Partnership Co.  the
company is civil in nature + the law considers it as trader + subject to provisions
applied to commercial companies.

Q80: Are government ministries, municipalities, societies, clubs considered as traders? and
which Law governs their commercial activities?
  Although such state bodies may practice some commercial activities directly or
through ministers, municipalities or agencies, they are not considered as a trader.
Therefore  not obliged by the obligation imposed on traders such as keeping
commercial books, to have a commercial name, registration in the commercial register
and avoiding unfair competition.
because  their main purpose is not to speculate, but rather to provide better
services & meet public needs.

 However, when conducting commercial activities, provisions of BLC shall be applied to

the transaction itself.

Q81: Are Companies established or acquired by the State & others public institutions
considered as traders?
 If their acts are mainly based on commercial business  Yes.
 obliged by the obligation imposed on traders unless the law otherwise provides.

Q82: Are Foreign organizations performing commercial activities in Bahrain considered as

traders?
 Yes, and even if they are owned by a foreign country.
 shall comply with trader’s obligations unless the law otherwise provides.
---------------------------------------------------------------------------------------------------
Companies as a legal person
Q83: What is the definition of a company?
Bahraini Law defines a company as “a contract whereby two or more persons, undertake
to participate in a financial project by providing a contribution of money or service, to
share the profits or losses of the project".

Q84: When does a commercial company acquire the legal personality?

When it is registered in the Commercial Registry, unless otherwise provided by the Law.

Q85: Are the companies based on personal or financial consideration?

it depends on the type of the company:
a) Companies based on personal consideration:
- the personal factor dominates. - members forming the company are partners.
- members can be collectively and severally responsible for the company debts.

b) Companies based on financial or economic consideration:

- the financial factor dominates. - eg.: Joint Stock Co., Limited Partnership by
Shares.
 Part Three Chapter
1 Commercial Title

Q86: who should hold a Commercial Title?

Traders, whether Natural Persons or Commercial Companies.

Q87: what does Commercial Title mean?

every denomination (name) by which a natural or a legal person practices a commercial
activity.

Q88: what are the obligations imposed on a trader (as a natural person) with regard to
Commercial Title?
As the Commercial Title becomes part of the trader’s personality & distinguishes him from
other commercial titles:
1- should be registered in the Commercial
Registry. 2- it should contain the trader’s name
and surname.
3- it may contains extra information, such as the type of the performed trade or an
invented name, but it shall be:
a) consistent with the actual business conducted, and

b) not misleading or injurious (harmful) to the public interest.

4- if the Commercial Title is similar to one previously registered in the Commercial

Registry, trader must add what should distinguish his Title from the one previously
registered.

5- Trader must conduct his business transactions and sign all documents under that title

6- display the Commercial Title at the entrance of his business premises (place of
business).
Q89: what are the obligations imposed on Companies with regard to Commercial Title?
Commercial Companies Law states that:
A- General Partnerships Company: The company Commercial Title
shall: 1- consists of:
a) all partners’ names, or
b) the name of one or more of them accompanied by (& Co.) or by a similar
word giving the same meaning.
2- be followed by (A Bahraini Partnership Company) or (BPC).
3- be consistent with the status quo (existing status, the object) of
the Eg. “Khalid Ali (& Co.) for import & export, BPC”, or
“Khalid Ali (& Associates) for import & export, BPC”.

B- Limited Partnerships:
1- shall only include the names of the general partners (joint partners) who are
jointly liable to the extent of all their property.
2- if there is only one partner who is liable in all his property, the word (& Co.) shall
be added to his name.
3- shall not include the name of the limited liability partner (who are liable to the
extent of their shares in the capital only). If it is included with his knowledge, he
shall be  liable as a joint partner towards third parties acting in good faith.

C- Joint Stock Company: The company Commercial Title

shall: 1- indicates its objectives.
2- not be derived from the name of a natural person unless:

a) the company objective is to invest a patent registered in the name of that

person, or
b) the company acquires, when established or thereafter, another commercial
institution and used that institution’s name as its own.
3- be followed by the phrase (A Bahraini Joint-Stock Company) or (B.S.C.).
 D- Limited Partnership by Shares: The company Commercial Title:

1- shall consist of the name of a joint partner or more, who are jointly liable to the
extent of all their property.
2- shall not include the name of the limited liability partner (who are liable to the
extent of their shares in the capital only). If it is included with his knowledge, he
shall be liable as a joint partner towards third parties acting in good faith.
3- an invented denomination (name) or a name derived from the company’s
objective may be added to the title of the company.

E- Company with Limited Liability: The company Commercial

Title: 1- may be derived from its objective.
2- may include the name of a partner or more.

3- must be followed by the phrase (with Limited liability) or (W.L.L.) which should
be mentioned in all the company’s contracts, invoices, advertisements, papers
and publications, otherwise  company’s managers shall be jointly liable + to
the extent of their private property towards third parties.

F- Sole-Owner Company (Single Person Company): The company Commercial

Title: 1- may be derived from its objective.
2- must be associated with the name of its owner + followed by the phrase Sole-
Owner Company or (S.O.C.).

G- Holding Company:

 a holding company may take the forms of: Joint Stock Company, a Limited Liability
Company or a Sole-Owner Company.
 company name must contain the phrase (Holding Company) or (H.C.)

Q90: what is the difference between Commercial Title and Commercial Name?
 Commercial Title is to distinguish between the trader and other traders, while
Commercial Name is to distinguish between the business premises of the traders
and other premises.
 However, Bahraini law used the two terms interchangeably.
Q91: what is the difference between Commercial Title and Trademark?
 Trademark: is a name, symbol, logo used to identify a product or service.

 Trademark is to distinguish the commodities (products) offered in the market,

which enables the consumer to be sure about the goods he is looking for.

Q92: what is the difference between Commercial Title and models, designs and patents?
They are non-material element sof business premises, which can be transferred with
business premises when it is disposed. Therefore, they are more attached to business
premises rather than Commercial Title.

Q93: Who is protected by the registration of Commercial Title?

it protects all those involved in the commercial transaction, and not confined to the
trader.

Q94: How does the registration of Commercial Title protect the interest of the Title holder?
1- the ownership will be publicly known by publishing the registration in the Official
Gazette, therefore, no one may claim his unawareness of such ownership.
2- other traders will not be allowed to use such Title in the same type of trade, otherwise

title holder has the right to claim compensation for damages.

Q95: How does the registration of Commercial Title protect other traders?
They will own their different Title which will distinguish them from other traders.
For this reason, a trader when intend to register a Title, he should make sure that it is not
similar to commercial titles already registered, otherwise he has to add other particulars
to his title to create such distinction.
Q96: Can a Commercial Title owner makes changes to his Title?
Yes, but any changes in the Title should to be  updated in Commercial Registry +
published in the Official Gazette.
 Part Three - Chapter 2
Commercial
Registration

Q97: What is Commercial Register?

a book wherein the names of Bahraini and foreign traders shall be registered, whether as
individuals or companies, whether they keep in Bahrain a main office, a centre for the
company, a branch, an agency.

Q98: What does this book contain?

all particulars stipulated by the law and every amendments (change) thereon.

Q99: What are the functions of the Commercial Register?

1- Reliable Information source
In order to ensure the safety of their contracts  the law allows others to obtain
from the Commercial Register information about the legal and financial status of
the trader whether he was an individual, company.

2- Effective Statistical Tool

 Commercial Register is like a collection of figures about the capital movement
and investment modes, it can provide the State and specialists information
about:
a) Diversity of capital invested.
b) Number & types of commercial companies & their nationalities.
c) Projects size
 This character paves the way for the next function.

3- Economic Planning Base (Economical function)

 the statistical information mentioned above assists in economic planning.
 based on such statistics, the state can draw its economic strategy & direct the
commercial activities through  adopting policies that achieve present and
future economic goals.
 4- Legal Promulgation Institution (Legal Function)
 Third parties cannot claim their unwariness of the registered data, therefore, such
data can be used as  a proof against other parties.
 Conversely, unregistered data cannot be used against third party unless he was
aware about it from other sources.

Q100: When shall the application for Commercial Registration take place?
two duplicate forms must be signed and submitted to the commercial registry within
one month of: a) opening the business premises, or
b) the date of acquiring business premises.

Q101: Who should apply for the Registration?

Traders + who have business premises in Bahrain

1- Traders: ONLY Traders, whether a natural or legal person, local or foreign.

Therefore it does not include:
a) a person who is not conducting the commercial activities professionally.
b) Joint Venture Company (Association in Participation), although it is a
commercial person, but it has no legal personality.

2- who have a business premises in Bahrain: if the trader does not have such
premises  not obliged to register. Eg  roving traders.

 when the above requirements have been satisfied, registration staff must check the
validity of the documents, and may ask the applicant for further documents.

Q102: What is the legal effect of

Registration? 1-
Registration as a
presumption:
 Registration creates a simple presumption that the registered person is a
trader.
 Such presumption can be rebutted, whether when commercial registrar
checks the application, or if any other person proves otherwise.
 2- Conclusiveness of Registration information:
 the rule is that  third party cannot claim unawareness of a legal rule once
they are published and made available by law.
 since commercial register functions as a legal promulgation institution 
entries and information contained in the register are conclusive against others.

Q103: What is the effect on trader non-compliance with Commercial Registration rules?
There are 3 types of penalties: penal, administrative and civil.

 Fines (penal punishment): Trader (whether natural or legal) shall pay a

fine 1- not less than BD50 and not exceeding BD500 if:
a) the application for initial registration (new), or renewed, or supplementary
registration was not submitted within period stipulated by the law. In such case,
the court shall oblige the violator to pay the fees stipulated in the regulations.

b) the entry or renewal fees stipulated by the regulations were not paid in due date.

c) the entry was not deleted from the commercial register.

d) the commercial register number was not fixed on the trader's stationary
(documents) or at the trader's business premises.

e) the commercial activity was performed though the initial application, renewal or
supplementary application for a new activity was rejected.

2- Where the violation continues for 30 days from the date when the court decision
becomes final, court shall impose a new fine not less than double the minimum &
not more than double the maximum limits.

 Closure (administrative punishment):

1- when performing the activity without being registered in the commercial

register, or if some of the conducted activities have not been registered.
2- when providing false documents or forged seals or signatures.

 Claim for compensation (civil remedy):

 a trader should pay compensation if non-compliance caused damages to third
parties.
 a trader cannot use against third parties any information which should have been
registered but not registered.
 Q101: Can the trader object to the rejection or closure decision?
Yes, he can appeal to the High Court within 30 days from the date of  issuing the
decision or notifying him.

Q104: What are the cases where the Registration should be writing off (deleted)? and who shall
apply for it?
1- When trader abandon his commercial activities  the trader

2- Trader’s demise (death) trader’s heirs, if they decided to discontinue their

testator’s trade .

3- Company Liquidation  liquidator. Writing off should be after the liquidation

because when the Company is under liquation (during dissolution), it retains its
legal personality.

Q105: When shall the Registration be deleted (writing off)?

 an application to write off should be submitted within one month from the
date of the incident which dictates the deletion.

 but if such application has not been submitted within the time stipulated by the law

“Commercial Registrar” at the Ministry shall be entitled to write off the registry.
 Part Three - Chapter Three
Keeping Commercial Books

Q106: who is obliged to keep Commercial Books?

Traders who their capital exceeds BD 10,000 whether local or foreigner, natural person or
company.

Q107: what are the functions of keeping Commercial Books?

1- Evaluating Trader’s commercial
status. 2- Evidence of proof for
traders.
3- Basis for financial evaluation (taxation).
4- Reference for Bankruptcy cases

Q108: How can keeping Commercial Books evaluate Trader’s commercial status?
By balancing his assets and liabilities, and insures that the liquidity can face his
obligations.

Q109: How can keeping Commercial Books create an evidence of proof for traders?
 The general rule is that a person cannot create an evidence to proof his case,

 But in order to achieve stability in commercial transactions, legislator allows the

trader to use his commercial book as evidence.

Q110: How can keeping Commercial Books help traders in their financial evaluation?
When commercial books kept in legal and order way  can be used as a reliable
source to estimate quantum(amount) of taxes to pay.
otherwise he should 
refer to many documents or accept a haphazardly(random) assessment

Q111: How can keeping Commercial Books help the trader in his Bankruptcy?
1- When a trader stops paying his commercial debts, he may avoid being declared
bankrupt through apply for a composition with his creditors, provided that he acted in
good faith, and he can prove that through submitting his commercial books.
2- If the bankrupt trader hides his commercial books, he may be convicted of negligence
or fraudulent bankruptcy, while he can use his books to prove that his bankruptcy was
due to unforeseen circumstances.
Q112: what are the types of the books that trader must keep?
1- Compulsory Commercial books.
2- Optional Commercial books.

Q113: What are the Compulsory Commercial books & documents according to Bahraini Law?
1- Basic Journal book.
2- General ledger book.

Q114: What is Basic Journal book?

a book wherein the trader shall enter: all his
a) commercial transactions on daily basis & in details. and
b) personal withdrawals which may be recorded in total every month.

Q115: What does Basic Journal book

contain? 1- Trader’s commercial
transactions:
 shall be entered on daily basis according to the transaction date
 Eg.: 1- selling & buying
2- receiving & paying debts
3- endorsing commercial papers to others, or endorsed by others

2- Trader’s personal withdrawals:

 can be entered in total every month.
 Eg.: trader & his family’s personal expenses.

Q116: What is General ledger book?

 The Book where to all the accounting operations shall be aggregated and transferred
from Basic journal book, on a periodical basis and based on the supporting
documents.
 Eg. for transferred Accounts: cash, bank, partners, creditors, debtors, revenues,
expenses and withdrawals.

Q117: What are the functions of General ledger book?

 Helps trader to make an inventory for movable & immovable property, commercial
papers and securities, cash possession, cash at bank. (inventory is made at the end of
a specific period).
  trader would be able to prepare his trial balance.
Q118: What are the document copies that a trader must keep?
Trader must keep true original copies of all the incoming and the outgoing
correspondence, telegrams and other documents relating to his trade.

Q119: How can keeping such original copies assist trader?

1- support his Commercial books entries.
2- can be compared with contradicted documents submits by others.

Q120: list examples for optional commercial books.

1- Ancillary Journal book (subsidiary Journal
book) 2- Draft commercial books
3- Cash books
4- Commercial papers
books 5- Store books

Q121: What does Ancillary Journal book (subsidiary Journal book) contain?
 it contains details of various commercial transactions types.
 it shall be sufficient to record the aggregate(total) of these transactions in the
Basic Journal book on regular basis.
 If the last procedure is not followed  every subsidiary journal shall be
considered as a Basic Journal book.
Q122: Can a traders use electronic accounts instead of keeping Commercial Books?
YES, Minister of Industry and Commerce is authorized to exempt specific establishments,
companies and banks from keeping commercial books if  they use electronic accounts
for their transactions.

Q123: Which books shall be presented to the Ministry of Commerce & Industry?
Basic Journal Books + General Ledger.
Q124: When shall these books be presented to the Ministry of Commerce & Industry?
1- Before using the books:
- the concerned person in the ministry will  number + sign + stamp every page +
state the total number of pages.
- Why? To avoid hiding or replacing some of the pages.
2- When the book pages are fully used:
the concerned person in the ministry will  make notation (mark) on the last entry +
state the book closing date .
- Why? Because these books should be maintained for specific period, which starts
from closing the books. Therefore the ministry will know  when this period
starts.

3- at the end of the financial year:

the concerned person in the ministry will verify the number of used pages before
starting the entries of the next year.

4- Cessation (stop, discontinue) of business

- if a decision to discontinue the business made by  trader or his heirs (in the case
of trader’s death), the books shall be presented to the concerned directorate in
order to make a notation of such discontinuation.

Q125: What is the legal effect of entries made my trader’s employees?

Bahraini law considered entries made by authorized employees as entries made by
the trader himself.

Q126: can the trader claim his unawareness of the commercial books entries?
- Bahraini law presumes that entries made by authorized employees, have been made
with  his knowledge + consent
- however  the trader can prove otherwise.
Q127: for how long a trader must keep his commercial books and relevant documents?
1- commercial books & supporting documents:
10 years commences from  the date of closing the commercial books by the
ministry.

2- Commercial correspondence (such as telegrammes, faxes, emails):

5 years commencing from the date of dispatching or receiving such documents.

Q128: are there any exceptions for the above periods?

YES, Bahraini Law allows banks and companies to:

 use microfilms for commercial books and relevant documents and correspondence
for the above periods (10 & 5 years), provided that a trader 

 keeps the original copies of all above books & documents for at least two years.

Q129: Can traders use microfilms as an evidence to prove their case? (conclusiveness of proof)
YES, Bahraini Law considers microfilms copies as admissible evidence which have the
exact effect of the original documents.

Q130: What are the legal consequences for trader non-compliance with book-keeping
provisions?

1- Failure to maintain compulsory books (i.e. Basic Journal book & General ledger) 
fine of not less than BD 100 and not exceeding BD 1000.

2- Officers authorized by the Minister of Commerce  have the power to enter to

business premises to insure the compliance, in the case of any violation, they have
the power to draw up the required report.

Q131: when hearing a dispute, can the court ask a trader to submit his Commercial Books?
YES, the Court may:
a) on request of one of the litigant, or
b) by the court initiative 
order the submission of the books to examine them
Q132: can the court appoint someone to examine the books? and how does the examination
take place?
 YES, the Court may:
a) examine the commercial books by itself, or
b) through an expert who is appointed for this purpose.

 The trader remains the owner & possessor of the books, therefore examination
shall be  in his presence & under his supervision.

Q133: does Bahraini Law oblige the trader to surrender (leave the possession) of his
commercial books to others (such as his opponent)?
Generally NO, because doing so will permit the other party to closely know the trader’s
financial status and his commercial secrets. But there are exceptions:
1- the court may ask the trader to leave the books possession to the court in order to
enable his opponent to examine them in disputes relating to:
a) estates b) companies c) division of common property

2- in case of bankruptcy or composition, books shall be delivered to:

a) the court, or b) the receiver, or c) composition officer.

Q134: can a trader use his commercial books as evidence against non-traders?

Generally NO, but there is one exception, if:

1- the particulars contained in the commercial books can be used as a basis for judge to
ask one of the parties to take a suppletory oath, and

2- the case can be proved by witness.

Q135: can a trader use his commercial books as evidence against other traders?
Yes, and 3 conditions should be met:
1- the opponent must be a trader:
- so both parties would be traders.
- it enable the judge to compare the entries made by both traders in their books.

2- dispute must be about commercial transactions, whether the commerciality was

natural or accessory.

3- The books relied upon are the compulsory commercial books, which are
maintained according to the law.

Q136: can others use commercial books as evidence against its owner?
Yes they can, whether:
a) The compulsory books are legally kept or not.

b) the transactions is commercial or civil.

c) between two traders or a trader and non-trader

Q137: When others use trader’s commercial books against its owner, can they apportion the
entries? and why? (to depend on some information in the book and ignore others which
may not serve their case).
NO, they cannot.
- Because depending on trader’s own books against him is considered as 
admission and the admission is inapportionable.
 Part Three - Chapter Four
Avoiding illegal
competition

Introduction
- a trader while performing commercial activities is not totally free, and he is always
subject to restrictions based on social economical & political considerations.

- such restrictions are imposed by the law such as national legislations & International
conventions to protect traders from illegal & unfair practices he may face while
performing his business.

- Traders may also restrict themselves by an agreement between each other.

Q138: What is illegal competition?

An act which contradicts the rules, usage and honest practices established in commercial
transaction.

Q139: When should trader abstain from committing competition?

When he is prevented by:
a) legislation (illegal competition)
b) agreement (contractually avoided competition or non-compete contract )

Q140: what are the types of illegal competition?

1- harming the competitor reputation & create a confusion with his business premises,
products and activities.
eg.: a) infringement of the trader’s trademarks, signs, patents.
b) use a commercial title similar to his competitor.

c) propagate (spread) incorrect information about his competitor to distort facts

related to his products.

2- causing trouble in his competitor’s business premises

eg. a) instigating his workers to leave or allure them to attract his competitor’s clients.
b) offering money to his competitor’s workers to get information & learn his
business secrets.
3- committing fraud or deception against other trader
 eg: a) when a trader grants an ex-employee a good conduct certificate to
mislead another trader.
b) when a person whose profession is to provide financial information to other
traders, who intentionally or due to his negligence provides false information
in respect of trader’s conduct or their financial status.

Q141: What are the legal consequences for non-compliance with illegal competition
provisions?
1- Claim for compensation:
- Based on the general legal principles of liability in tort in civil law  any fault
causes damage to another person, shall oblige the wrongdoer for compensation.
- BLC entitled trader to take a legal action against the wrongdoer and claim for
compensation.
- The fault would take place when the trader, through his competition commit one
or more of the above acts.
- Some writers believe that the fault can be materialized (happens) by violating the
accepted rules in the commercial environment.

2- penalties:
The penalty can be: a) Fine not exceeding BD 500 or imprisonment. or
b) both (fine & imprisonment).

Q142: What is contractually avoided competition (non-compete contract)?

an agreement between two or more traders to abstain from competing.
Eg.: when a trader purchases a business premises from another trader, they can conclude
an agreement which prevents the seller from opening a similar premises in the same
area.

Q143: What are the conditions of a valid non-compete contract?

1- The prohibition should not be eternal (forever/for endless time) or for very long
period, it should be for  reasonable time.

2- Prohibition should be related to specific activity and not all commercial activities in
general. Eg.: a sale agreement for business premises of mobile phone shop, if the
buyer wants to include a non-compete provision in the contract it should be about
mobile phones only. If one of the two above conditions are not met 
the non-compete agreement shall be void
Q144: What are the legal consequences of non-compliance with the non-compete contract?
 The violator’s liability is based on the contractual liability, which entitles the other
trader to take a legal action demanding for:
1- Compensation for the loss or damages, such compensation can be a
specific amount agreed previously in the contract, or left to the court
decision.
2- Contract revocation.
3- Close the business premises which was opened in breach of the contract.

 To take such legal action, the violation & the legal action should be made within the
prohibition period agreed in the contract, after that time, parties will be released
from their contractual obligations.
 Part Three - Chapter five
Business Premises

Q145: What does business premises mean?

traders premises and the rights related to it.

Q146: What are the elements of the business premises?

1- Material elements.
2- Non-material elements.

Q147: What does the material elements of business premises include?

1- Industrial equipments.
2- Business furniture.
3- Goods.

Q151: What does the non-material elements of business premises include?

1- customers 2- commercial trade name 3- The sign

4- right to lease 5- trademarks 6- patents

7- drawing and patterns.

Q169: Which elements fall outside the business premises elements? not part
1- Real Estate: because BLC stipulates that: “a disposal of the premises shall not include
the immovable property where the place of business is located, and every condition to
the contrary shall be deemed null and void”.

2- Personal Furniture: furniture confined to trader’s personal use are not included
though exist in the premises, especially where the trader resides(live) in his business
premises.

3- Commercial Books:

 not element & cannot be transferred with the premises because:

a) trader is obliged to maintain the Basic Journal Book & General Ledger for 10
years from the date of closing such books.
 b) trader must submit the above books to the Ministry of industry & Commerce
when he ceases his business.

 If the trader transferred his business premises ownership during the 10 years
period, he shall not abandon his books to the buyer.
- however, some legislations permit the new owner to examine the books,
Bahraini Law was silent in this regard, therefore  it is left for the parties
agreement.
 Part Four: Commercial
Transactions Chapter one:
Concepts of Distinction
Introduction:
- Some writers in Common Law countries defines commercial transaction as “those acts or
series of acts, involving business negotiations, such as buying, selling, and resulting in a
change of legal right and duties of the participants”

- This definition is not comprehensive because it only refers to the acts which are
considered as commercial which is similar to that of Bahraini legislator.

- Jurisprudence attempted to distinguish between commercial & civil transactions through

certain concepts.

Q174: What are the concepts established by jurists to distinguish between Commercial and Civil
acts?
1- The concept of Speculation 2- The concept of Circulation
3- The concept of Enterprise 4- The concept of Commercial
Profession 5- The concept of Cause

Q175: What does the concept of Speculation mean?

- it has been introduced by French jurists.

- it is based on the objective of the transaction which is to make profit through
speculation.

- BLC adopted this concept in certain transactions as it provides: “Commercial

transactions are such transactions performed by any person, with the intent of
speculation”.

Q176: What does concept of Circulation mean?

- a transaction is commercial if it deals with movement of commodities, money & other
trade tools.
- it starts when the product loses its stillness until it reaches the consumer.

- Eg: a) transportation of material to the factory or commercial

centers b)transfer the material by the commercial centers to
consumers
c) accessory transaction necessary to facilitate the circulation.
 - it excludes (does not include):

a) exploitation & production of raw materials (the first producer)  because no

prior circulation.
b) when a product reaches to consumer as a final destination  because no
following circulation.

Q177: What does concept of Enterprise mean?

- a transaction is commercial if it is performed by an enterprise.

- an enterprise consists of two elements:

a) professionalism: performing the acts regularly, continuously and habitually to

make living.
b) in an organized system: to have material elements such as capital & workforce.

- all transactions performed through the enterprise  commercial.

While, transactions individually performed and not through enterprise
 civil.

Q178: What does the concept of Commercial Profession mean?

- The concept personalizes the commercial transactions because it confines them to
traders who perform business professionally.
- It provides that:

a) the act is performed professionally (regularly, consistently & continuously).

b) by a trader + in connection with his trade.

- Many legislators including Bahraini considered some transactions as commercial if they

are practiced professionally.
Q179: What does the concept of Cause
mean?
- the incentive behind performing the transaction which motivates parties to enter into
the transaction. If their incentive is commercial  the transaction would be
commercial, if not
 the transaction is civil.

- BLC adopted this concept in certain transactions, eg: purchase of movables with the
intention of selling or leasing out in order to make profit  commercial
 Part Four: Commercial
Transactions Chapter2: features
of Distinction

Q180: What are the legal effects for the distinction between Commercial and Civil
Transactions?
1- Individual v. Dual Legal Jurisdiction
2- Commercial Character
3- Application of Bankruptcy
4- Interest Rate
5- Urgency
6- Solidarity between
Debtors 7- Capacity to
contract
8- Instruments of Proof
9- Grace Period
10- Prescription

Q181: Explain ‘Individual v. Dual Legal Jurisdiction’ as an effect for the distinction between
Commercial and Civil Transactions
 individual legal jurisdiction  civil courts adjudicate both civil + commercial cases,
while dual legal jurisdiction civil courts adjudicate civil cases only, and there are
commercial courts adjudicating commercial cases.
dual legal jurisdiction advantages:
1- many aspects will be taken into consideration such as: procedures, court
formation & location which may be located in commercial centers.
2- providing judges and administrative staff specialized in commercial transactions.

in Bahrain: individual legal jurisdiction.

Q182: Explain ‘Commercial Character’ as an effect for the distinction between Commercial
and Civil Transactions
To be characterized as a trader: for
Natural person:
1. legally capacitated (18 years old).
2. practice trade professionally.
3. in his own name and for his own account.

Legal Person: to take one of the forms that stipulated by the law, regardless of its
object.
Q183: Who is a bankrupt trader?
Bahraini Law defines the bankrupt traders as: every trader whose business is
disordered and stopped to make payment of his commercial debts is considered to be
in a state of bankruptcy and should be declared bankrupt by a court order.
 trader’s property will be liquidated and the resulted money will be distributed
between the creditors.

Q184: What is the difference between civil insolvency & commercial bankruptcy?
1) commercial bankruptcy  prevents trader from managing his property,
while in civil insolvency  he will not.
2) commercial bankruptcy  suspending trader’s civil rights unless he is reinstated,
while in civil insolvency  he will not.
3) commercial bankruptcy  all his debts maturity dates will be  due for payment,
in civil insolvency  although his debts maturity dates will be due for payment, but
the judge has the power to  delays the payment or allow payment by installments,
provided that  no serious damage caused to the creditors.
- Explain ‘Application of Bankruptcy’ as an effect for traders and non-traders.
The answers of the two above questions.

Q185: Explain the ‘Application of Interest Rate’ as an effect for the distinction between
Commercial and Civil Transactions.
A. Higher interest rate in Commercial debts
 Generally, in commercial debts the interest rate is higher than those of civil debts.
Why? because:
a) using the borrowed amount in commercial transactions attract higher profit for
the borrower, while in civil transactions the profit is expected to be lower.
b) Commercial transactions are based on speculation, therefore, the lender in
commercial transactions is exposed to higher risk than in civil debts.
 Bahraini Law:
- in Civil Loan:
a) the law prohibits charging interests in civil loans and every condition
providing for the contrary shall be  void
b) every benefit required by the lender shall be considered as interest.

- in Commercial Loan: it is assumed that contracting parties have agreed that the
loan is with interest unless otherwise proved.
Q186: Explain the ‘Urgency’ as an effect for the distinction between Commercial and Civil
Transactions
c- litigating in civil cases may take a long period to settle the dispute & enforce the
judgment which is inconsistent with the commercial transactions that are based on
rapidity & flexibility.

d- according to Bahraini Law

a) in Civil matters: a judgment cannot be executed if it is appealable unless that the
Anticipated Execution is  provided by the law or in the judgment. But,
b) in Commercial matters: judgment is always subject to Anticipated Execution ‘summary
litigation’ provided that guarantee is paid.
Q187: Explain the ‘Solidarity between debtors’ as an effect for the distinction between
Commercial and Civil Transactions
 In commercial debts:

- debtors are jointly & severally liable, unless otherwise provided by the law or
parties’ agreement.
-
 in civil debts: no solidarity unless otherwise provided by the law or parties’ agreement.

Q188: Explain the ‘Capacity to Contract’ as an effect for the distinction between Commercial
and Civil Transactions
The capacity to conclude:
a) Civil contract: 21 years old
b) Commercial contract: 18 years old.

Q189: Explain the ‘Instruments of proof’ as an effect for the distinction between Commercial
and Civil Transactions
 Proof in Civil Transactions
if the value of the transaction:
a) exceeds 500 dinars, or
b) is not specified  it should be proved in written and cannot be proved by
testimony (witness) unless otherwise provided by  law or agreement.

 Proof in Commercial Transactions

Parties can prove by all proof methods:
a) commercial obligation regardless of its value.
b) the contrary to the written evidence. unless 
otherwise provided by the law
- eg: trader can prove his case by any methods such as witness, oath, his commercial
books, unless otherwise provided by the law such as real estate disputes which must
be proved in written.
Q190: Explain ‘Granting Grace Period’ as an effect for the distinction between Commercial and
Civil Transactions
 Generally: payment must be made once the obligation is due for payment unless the
agreement or the law provides otherwise.

 in Civil Debts:
 if the law does not provide otherwise, the judge in exceptional cases may delays
the payment or allow payment by installments, provided that  no serious
damage caused to the creditors.

 in Commercial Debts:
 more restrictive because granting debtor new terms to repay his commercial debts
may endanger the creditor’s financial status & cause him gross damage as the
commercial transactions are closely linked to each other, therefore, debtor’s failure
to pay may lead to series of negative consequences including bankruptcy.

 Eg., BLC stipulates that: courts shall not grant grace period to repay commercial
papers or to perform any related procedure unless otherwise stipulated by the law.

Q191: Explain ‘Prescription’ as an effect for the distinction between Commercial and Civil
Transactions
 In both commercial and civil law, if a person does not claim his rights during specific
period of time  a claim can no longer be filed, this period is called ‘Prescription’.
 Generally, prescription limitations in civil transactions is longer than those of
commercial transactions.
 prescription general period in:
1- civil transactions: 15 years, unless the law provides otherwise.
2- Commercial transactions: 10 years unless the law provides otherwise, such as:
a) carriage of goods contracts: 1 year.
b) Insurance contracts: 3 years.
 Part Four – Chapter 3
Classes of Commercial
Transactions

Q192: List the classes of Commercial Transactions

1- Commercial Transactions by Nature
2- Profession Commercial
Transactions 3- Accessory Commercial
Transactions 4- Mixed Commercial
Transactions

Commercial Transactions by
Nature
Q193: What do Commercial Transactions by Nature mean?
 Bahraini Law of Commerce does not define such transactions
 the transaction is commercial if it is performed with the intent of making profit,
whether practiced:
- once or incidentally
- by trader on non-trader

Q194: What is the scope of ‘Commercial Transactions by Nature’?

1- Land Commercial Transaction by Nature.
2- Maritime and Air Navigation Commercial Transactions by Nature.

Q195: What are the ‘Land Commercial Transaction by Nature’ stipulated by Bahraini Law of
Commerce?
1- purchase of movables of any kind with the intention of selling or leasing them in their
original form or after modification, to make profit through speculation.
2- sale or lease the movables mentioned above to make profit.
3- all transactions relating to  bills of exchange, promissory notes, cheques, regardless
of the nature of transactions for which they are issued.
4- setting up of commercial companies.

Q196: List Maritime and Air Navigation Commercial Transaction by Nature

Bahraini Law of Commerce has specified examples for these transactions as follows:
 1- construction, repair, maintenance of ships or aircraft: these activities are only
performed by commercial institutions, because they are done through dry-dock &
ship repair yards, aircraft factories and workshops.
2- purchase, sale, charter or taking on charter of ships and aircraft with the
intention of utilize them.
3- purchase of material or equipment for providing ships or aircraft with necessary
supplies. 4- shipping and commercial aviation.
5- loading and unloading ships & aircrafts operations.
6- contracts related to the employment of ship captains, pilots, engineers, navigators
and such other employees. ‫ا‬
7- lending and borrowing: such as bottomry and respondentia.

Professional Commercial Transactions

Q197: define Professional Commercial Transactions
a transaction that is considered as commercial if it is performed professionally 
regularly, consistently & continuously.

Q198: What is the Scope of Professional Commercial Transactions?

- Bahraini Law of Commerce has not define the term profession, instead, it has stated
example for transactions that would be considered as commercial if practice
professionally.
- it is suggested that the nature of these transactions requires the ‘enterprise criterion’
to be met.
- those examples are as follows:
1. Supply, Export and Distribution of goods.
2. Industry.
3. Land Transport.
4. Commercial Agencies, Commission Agency and Brokerage.
5. Insurance business whatever their kind may be.
6. Banking Operations, Foreign Exchange, and Stock Exchange.
7. Deposit in public Warehouses.
8. Media Work.
9. Extraction of natural resources.
10. Construction, cleaning and maintenance.
11. Trading in Real Estate.
12. Public Services.
 13. Tourism and Recreation.
14. Leasing and Renting of Buildings.

Accessory Commercial Transactions

Q212: Define the Accessory Commercial Transactions?

Civil Transactions which acquire commercial quality because they are performed by a
trader for reasons related to his trade.

Q213: what are the conditions of Accessory Commercial

Transactions 1- Performing the act by a trader:
- a trader may perform certain transactions which though initially civil in their nature,
but they acquire their commercial quality because they are conducted by traders.
- a trader can be:
1) natural person who practices commercial transactions professionally.

2) Legal person: a company that takes one of forms stipulated by the Commercial
Companies Law.
2- The act related to Trader’s profession:
- the transaction performed by the trader should be related to his business.
- Eg.: a trader buys gifts to his family  civil act
a trader buys gifts as a promotion for his business  commercial
Q214: What is the ‘Presumption of Commerciality’ created by Bahraini Law of Commerce in this
regard?
- Bahraini legislator created a legal presumption that  all transactions performed
by a trader shall be deemed relevant to his business unless proved otherwise.
- it can be proved otherwise by all methods of proof.

- the trader has the burden to prove that the transaction he performed is civil
through establishing that  the transaction he performed is not related to his
business.

Mixed Commercial Transactions

Q218: When a transaction is described as a Mixed Commercial Transaction?
When the transaction is civil for one party and commercial for the other party, unless the
law provides otherwise.

Q219: which law is applied to mixed commercial transaction?

Bahraini Law of Commerce applies Commercial law to both parties.

Q220: to prove their case, what are the method of proof parties may utilize?
- in Bahrain, both parties can utilize the methods of proof available in commercial law
which are wider and easier to apply.
- in other states which apply dual system  applying civil law to the party whose
transaction is civil, and commercial law to the party whose transaction is commercial,
so the first party can only depend on proof methods stipulated in civil law.

Q221: Which Court has the jurisdiction to hear The Mixed Commercial Transaction?
1- Unified Legal Jurisdiction: such as Bahrain, one court will hear the case which is the 
civil court.
2- Dual Legal Jurisdiction: such as France  if the transaction to the plaintiff is:
- Civil  Civil Courts.
- Commercial  Commercial Courts.