Commercial Acts
Explanation
The Code of Land Commerce defines commercial acts by nature [actes de commerce par nature] (Article 6). These acts include the purchase of movables or real estate to sell them at a profit and exchange and banking operations. They also include transport enterprises, factories, brokerage, public works agencies, and other exclusively specified enterprises or similar ones.
The law establishes the principle of commercial acts by accessory [actes de commerce par accessoire] (Article 8). Every act performed by a merchant for their commercial needs is considered a commercial act. In case of doubt, the law presumes that the merchant's acts were carried out for commercial purposes unless proven otherwise.
The law defines a merchant [commerçant] as a person who makes performing commercial acts their profession (Article 9). It also considers companies with a commercial object as merchants.
The law sets an important exception for companies with a civil object. If a civil company takes the form of a joint-stock company [société anonyme] or a partnership limited by shares [société en commandite par actions], it is subject to merchants' obligations. These obligations include being subject to the provisions of bankruptcy [faillite] and preventive composition (Article 9).
The law regulates the capital of a limited liability company [société à responsabilité limitée] (Amended Article 7). Its capital must not be less than five million Lebanese pounds divided into equal shares. If the capital falls below this limit, the company is granted a one-year grace period to complete it or change its type. Otherwise, its judicial dissolution may be requested after a warning to the manager.
Official legal articles
replace · 1992-03-12: Open the official text
Think deeper
How does the presumption making a merchant's acts commercial relate to the legal definition of a merchant?
Flashcards
When does the law consider the purchase of real estate a commercial act?
It is considered a commercial act when done within an enterprise of purchasing real estate to sell it at a profit (Article 6).
What is the legal presumption for acts performed by a merchant in case of doubt about their purpose?
The acts of a merchant are deemed to be issued for commercial needs unless proven otherwise (Article 8).
Who is a merchant in the eyes of the law?
A merchant is a person whose profession is to perform commercial acts and a company whose object is commercial (Article 9).
Is a company with a civil object subject to bankruptcy provisions?
Yes, it is subject to bankruptcy if it takes the form of a joint-stock company or a partnership limited by shares (Article 9).
What is the legal minimum capital for a limited liability company?
The minimum capital is five million Lebanese pounds (Amended Article 7).
Is an agricultural investment considered a commercial act if combined with a factory enterprise?
Yes, it is considered a commercial act unless the transformation of materials is done by simple manual labor (Article 6).
Practice questions
Which of the following acts is not considered a commercial act by nature according to the law?
The law excludes a factory enterprise combined with an agricultural investment from commercial acts if the transformation of materials is done by simple manual labor (Article 6).
A merchant purchased a car. In case of doubt about the purpose of the purchase, how is this act classified?
In case of doubt, the acts of a merchant are deemed to be issued for commercial needs unless proven otherwise (Article 8).
A company has a purely civil object, but it was established as a joint-stock company. Is it subject to bankruptcy provisions?
Civil companies taking the form of a joint-stock company are subject to the obligations of merchants and to the provisions of preventive composition and bankruptcy (Article 9).
The capital of a limited liability company fell to three million Lebanese pounds. What is the legal grace period to complete the capital before judicial dissolution can be requested?
The law grants a one-year grace period to complete the capital or convert the company to another type (Article 7).
Which of the following enterprises is considered a commercial act by nature according to the law?
The law explicitly considers the enterprise for the supply of materials, the fixed-premium insurance enterprise, and the mining and petroleum enterprise as commercial acts (Article 6).
Case problems
A person owns agricultural land and transforms their crop into jam using simple manual labor at home. Is their act considered commercial? Are they considered a merchant?
Model answer
No, their act is not considered commercial.
A factory enterprise combined with an agricultural investment is not commercial if materials are transformed by simple manual labor (Article 6).
Since their act is not commercial, they do not make performing commercial acts their profession.
Therefore, they are not considered a merchant because a merchant must take commercial acts as a profession (Article 9).
Self-grading rubric
A company has a civil object limited to managing real estate owned by partners without intention to sell. It was established as a partnership limited by shares. The company stopped paying its debts. Can its bankruptcy be declared?
Model answer
Yes, its bankruptcy can be declared.
Companies with a civil object that take the form of a partnership limited by shares are subject to all merchant obligations (Article 9).
These companies are also explicitly subject to the provisions of preventive composition and bankruptcy.
Therefore, although its object is civil, its legal form makes it subject to bankruptcy.
Self-grading rubric
A limited liability company's capital fell to two million Lebanese pounds due to consecutive losses. Two years passed and the manager did not take any action to remedy the situation. What can any interested party do?
Model answer
The capital of a limited liability company must not be less than five million Lebanese pounds (Article 7).
If it falls below this limit, it must be completed or the company converted to another type within one year.
Since the grace period has expired after two years, any interested party may request judicial dissolution.
Before requesting dissolution, a warning must be sent to the company manager to rectify its situation.