Negligence Legal Case Study

BUSINESS LAWPRLW4181
By
Dr. Maen Mohammad Ali Al-Qassaymeh
CHAPTER ONE
INTRODUCTION
Business Law is dedicated to regulate commercial
transactions and relationships. This law is specialized
in traders and commercial activities, i.e. it is different
from the other branches of the law which have
different characters. In order to know the meaning of
business law and the nature of this law, we have to
specify the position of this law among the other
branches of the law. This requires defining the law, in
general, as a first step, and getting a glance about
the divisions of the law.
Definition of the law
Generally, the law is defined as the body of rules and
regulations that is used to govern a society and to control the
behavior of its members.
Divisions of the Law
The law is divided into two sections; public law and private law.
The public law means the law which regulates the legal
relationships in which the state is a party. Meanwhile, the
private law is defined as the law which regulates the legal
relationships among citizens and individuals. Thereby, the
criterion which distinguishes between the public law and the
private law is the existence of the state in the relationship, i.e.
if the state is a party in the legal relationship, the rules of
public law are applied. Meanwhile, if the state is not a party in
the legal relationship, the rules of private law are applied.
Divisions of Public Law:
Public law contains several sections. They are:
Public International Law:
It is the law which regulates the relations among states. It also
regulates the relations with the international organizations. It is
interested in several points such as; the elements of the states,
the state sovereignty, how to form the international treaties, the
effects of the international treaties, termination of the
international treaties, international organizations, etc.
Constitutional Law:
It is the law which regulates the form of the state, regime of the
state, the public authorities in the state, the relation among
these public authorities, the rights of the citizens, etc. Thus, it
clarifies if the state is kingdom, republic, or sultanate. It also
clarifies if the state is democratic or non- democratic. Besides,
this law regulates the three authorities inside the country;
judiciary, legislature and the government.
Administrative Law:
It is the law which regulates the performance of the
government, the bodies inside the state, the rights
and the duties of the employees, etc.
Criminal Law:
This law contains rules and regulations for the crimes
and the sanctions for these crimes. This law contains
a famous and known principle provides “no crime
and no sanction without a provision”. Thus, this law
is interested in crimes and criminals. It regulates the
elements of these crimes and the sanctions for them.
Divisions of Private Law:
Private law contains several sections. They are:
Civil Law:
It is the law which regulates the relationships among
individuals. It is considered a background to the all issues
which are not regulated by a special law. Therefore, if there is
no rule regulates a specific issue, the Civil Law is a reference.
for example, in the commercial law, if there is legal vacuum, we
have to refer to the civil law to search for a rule regulates that
vacuum.
Civil Law regulates two types of issues; the first type is the
issues which relate to private aspects of the individuals such as
marriage, divorce, inheritance, etc. The second type is the
issues which relate to financial transactions such as the
contract and the negligence. The second type is the main axis
in Omani Civil Law.
In Oman, the Civil Law, which takes the number 29, was issued
in 2013. It contains 1086 Articles. They are distributed among
four books and preface. While the first book regulates the
sources of obligations, the second book regulates the
nominated contracts. The third and the fourth books are
dedicated to regulate the rights in rem.
Commercial Law:
It is the business law. It is defined as the body of rules which
regulates the commercial activities and the relationships
among traders, or among traders and their dealers. This shows
that the main axes in commercial law are the traders and their
activities.
Omani Commercial Law Number 55 was issued in 1990. It
contains 786 Articles distributed in five books. The first and the
second books regulate the activities of the trader and his tradehouse (shop). While the third book regulates the commercial
contracts, the fourth book is assigned to the bills of trade. The
fifth book is devoted to the rules of bankruptcy.
Beside this law, there are some other laws which are
considered supplementary laws. The followings are the
supreme:
• Company Law No. 18 of 2019.
• Commercial Registry Law No. 3 of 1974.
• Commercial Agency Law No. 26 of 1977.
• Insurance Companies Law No. of 12 of 1979.
• Maritime Law No. 35 of 1981.
• Capital Market Law No. 53 of 1988.
• Industrial Property Law No. 67 of 2008.
Thus, Omani Commercial Law No. 55 of 1990 and these
laws are assigned to regulate the trader relationships
and transactions. Accordingly, the sum of these laws is
the business law.
Private International Law:
It is the body of the rules which governs the
relationships which contain a foreigner element, i.e.
this law appears as a result of existence of relations
between national person and foreigner person. For
example, if an Omani trader sold goods to an Egyptian
trader, which law governs this relation? Is it Omani Law
or Egyptian Law? In addition, if a dispute arises
between the parties, which court is competent to
judge? Private international law focuses on these two
questions; which law should be applied and which
court is competent to judge. Besides these two
questions, this law regulates the issue of nationality
and the issue of domicile.
Sources of the Law:
After we got a glance about the division of the law, a
question arises; where do the rules of the law come
from? In other words, if a dispute arises between
two parties, how can the court find the rule which
should be applied between them?
In order to answer this question, it is important to
mention that there are several sources to the rules
of the law and each of these sources has position
different from the other. Accordingly, some sources
take the main role and others take secondary role.
They are as follow:
1) Legislation:
Legislation is considered the main source in Oman and also in
Arabic countries. It means: setting the legal rules in a written
form by the competent authority. This procedure should be
done according to the rules which are mentioned in the
constitution of the state. Legislation is divided into three types.
The first one is the constitution. It is the most important law in
the country. All other laws must agree with it. If there is any
rule in any law contradicts with the constitution, that rule must
be canceled or amended. The second type is the normal
legislation which is issued by the legislature. The third type is
the regulations which are issued by the government.
2) Islamic principles and jurisprudence
Omani legislature sets the Islamic principles and jurisprudence
as a secondary source. This is mentioned in Art (1) of Omani
Civil Law. It is also mentioned in Art (5) of Omani Commercial
Law. But this Art mentions Islamic principles as a forth source
after the contract, legislation and custom.
3) Custom:
It is the binding habits which people accustomed to do. Thus, the
custom comes from habits. But the difference between them is that
the custom takes an obligatory character, i.e. if any person does not
follow its rules, he will be punished. This source is also mentioned in
Art (1) of Omani Civil Law.
These three sources are considered general sources for the law.
However, Omani Commercial Law arranged them in a different
manner. This appears clearly in Art (4 and 5) of this law which
arranged them as follow: the first source is the contract, the second
source is Omani Commercial Law and its supplementary laws, the
third source is custom, the fourth is Islamic jurisprudence and the
last is the rules of justice.
Thus, the contract is the first source in Omani Commercial Law. The
legislature in Oman steps out of the general policy in other
countries which usually sets the legislation before the contract.
Besides, the mentioned Articles render the rules of justice as a last
source to which the court may refer if there is no rule in the other
sources.
CHAPTER TWO
COMMERCIAL ACTIVITIES AND TRADERS
SECTION ONE
COMMERCIAL ACTIVITIES
It is important to distinguish between the commercial
activities and the civilian activities. This is because there
are legal effects built on this distinction. But what are
the criteria to distinguish the commercial activities from
others, and what are the legal effects which result from
this distinction? In order to answer these questions, this
part is divided into two sections; the first is about the
concept of commercial activities and the second is about
the effects of distinction between the commercial
activities and the civilian activities.
Concept of commercial activities
There are several criteria to distinguish between the
commercial activities and the civilian activities. But Art
(8) of Omani Commercial Law adopted one of them. It is
the speculation criterion. Speculation means achieving
profit. So, if a person does an activity with intention to
achieve profit, this activity is considered commercial
activity and the commercial law governs it. But if that
person does not aim at achieving profit, his activity is
considered civilian and the Civil Law governs it.
Accordingly, the criterion to distinguish the commercial
activity from civilian activity is the intent to achieve
profit, regardless of who does that activity.
Beside this criterion, Art (9 and 10) of Omani
Commercial Law mentioned some activities and
rendered them commercial activities.
According to Art 9, The following activities in particular shall be
deemed to be commercial activities:
1. The purchase of commodities and other movable materials
and non-movable materials with intent to sell them and
achieve profit whether sold in their original condition or
after manufacture or conversion.
2. The purchase of commodities and other movable materials
and non-movable materials with intent to hire them. Or,
lease them with intent to sub-leasing them.
3. The sale, rent or sub-leasing of the commodities purchased
or leased in the aforementioned manner.
4. The purchase of real estate with intent to achieve profit
from the sale in its original condition or after division. And
the sale of real estate purchased with such intent.
5. Supply contracts.
6. Employment contracts.
7. Public and private banking transactions, money-changing
activities and financial dealings.
9. Commercial papers such as bills of exchange,
promissory notes and checks. (all activities such as
drawing, acceptance, endorsement, guarantee, etc)
10. The establishment of commercial companies and the
sale or purchase of their shares or bonds.
11. Public warehouses and pledges on property
deposited therein.
12. The extraction of minerals, oils, rocks and other
natural resource.
13. The various types of insurance.
14. Public sites and premises such as public playgrounds,
cinemas, hotels, restaurants and auction rooms.
15. Public utility concessions such as the distribution of
water, electricity, gas, postal communications,
telecommunications and the like.
16. Transportation via land, sea and air.
17. Business agencies, tourism offices, import and
export offices.
18. Activities related to printing, publishing, the
press, broadcasting and television, news or picture
transmission, advertisements and the sale of books.
19. The establishment of factories, even if related to
agricultural investment, and undertaking to
establish and manufacture.
20. Activities related to building and construction
and to altering, renovating and demolishing
buildings.
In addition, According to Art 10, all activities related to
maritime and air navigation shall be deemed to be
commercial activities, particularly:
1. The construction of ships or aircrafts and the sale,
purchase, hire, leasing or repair of them.
2. Contracts pertaining the wages and salaries of a
ship’s master and crew navigators of aircraft and all
those employed thereon.
3. Lending and borrowing
4. Maritime and air transportation and all related
processes such as the purchase or sale of the
requisites thereof in terms of supplies, tools, stores,
fuel, ropes, sails provisions and aircraft supply
materials
5. The various types of sea and air insurance
Thus, these two Articles specified precisely the
commercial activities regardless of the person who does
them, namely, whether he is trader or civilian. But
besides these activities, there are some transactions
shall be considered commercial activities. They are the
activities linked with, or facilitating the activities
mentioned in the previous Articles. They are called
subsidiary commercial activities.
The subsidiary commercial activities, generally, have a
civilian nature. But they acquire the commercial
character because they issue from a person who has
commercial character and they relate to his commercial
business. In other words, these activities are deemed to
be commercial if two conditions are fulfilled. First, the
activity should issue from a trader. Second, the activity
should be linked with the commercial activities of that
trader.
According to that, if a trader works in clothes bought sofas to his
shop, this transaction is considered commercial activity. This is
because this transaction is done by a trader and his purpose is to
improve his shop, i.e. the transaction is linked with his business. But
if this trader bought the sofas to his house, this transaction is
considered civilian activity.
Effects of distinction between the Commercial activities and the
civilian activities.
There are some results come from the distinction between the
commercial activities and the civilian activities. They are as follow:
1) The debtors are jointly-liable in the commercial debt.
This means that the creditor in the commercial activity can ask any
of the debtors about his right. He also can ask all of them together.
So, if any of them bankrupted, the other debtors will pay instead of
him and the creditor will not bear this bankruptcy. But in order to
apply the joint-liability rule, the debt should be common among the
debtors, i.e. the source of the debt should be unified for the
debtors. However, the Art shows that the joint-liability is not an
obligatory rule. So, the parties can agree otherwise.
2) Rules of evidence:
The rules of evidence in the commercial transactions are
different from those in the civilian transactions. This is because
commerce is based on credit and speed. Accordingly, the
parties, in commercial activities, have freedom in the issue of
evidence, i.e. they can prove the transaction by any method of
evidence. Meanwhile, the civilian transaction is proven only by
writing if the value of the transaction exceeds a specific limit.
3)No donation in commercial activity:
It is abovementioned that the purpose of the commercial
activities is to achieve profit. Because of that, there is no
donation in the commercial activities. Thus, if the parties of the
contract overlooked to mention consideration, that does not
mean they intend to make donation. Meanwhile, if they
overlooked to mention the consideration in a civilian contract,
that may mean that the parties intend to make donation.
4) Acquisition of the trader character:
If the person practices the commercial activities, he may
acquire the commercial character. If he acquires this
character, then he has to do some legal obligations. For
example, he has to keep commercial books, record in the
commercial registrar, etc.
5) Statute of limitation:
Statute of limitation means that the court will not
receive any claim after passing a specific time, i.e. no
legal action will be brought before the court if a specific
time lapses. This time differs in commercial activities
from that in civilian activities. In commercial activities, it
is ten years. Meanwhile, in civilian activities, it is fifteen
years.
SECTION TWO
TRADER
The trader is defined in Art (16) of Omani
Commercial Law as “Any person who engages in
commercial activities in his name, has the requisite
capacity and adopts such transactions as a business
will be considered a Merchant”. Thus, this Art shows
that there are some requirements should be
available in the person to be deemed a trader. If they
are fulfilled, the person acquires the trader character
and then he has to perform some obligations. They
are as follow:
Requirement of acquisition of a trader character:
In order to study the requirements of acquisition of a trader
character, we have to distinguish between the normal person and
the juristic person.
The normal person:
The abovementioned Art shows that several conditions should be
available in the normal trader. They are:
First: The trader has to practice commerce in his name and for his
account. That means, the person has to be independent in his work,
and his work should be commercial activity, i.e. the activities which
are mentioned in Art (9 and 10) of Omani Commercial Law.
According to that, if the person works in a name belongs to another
person, or if he works for the account of another person, he will not
be considered a trader. Besides, the director of the company does
not acquire the commercial character if he is not a partner in the
company. This is because he works in the name of the company and
for its account. But if the company is general partnership or limited
partnership, he may acquire the trader character.
Second: The trader has to become a professional in the
commercial activities. So, professionalism is an important
criterion to distinguish the trader from the non-trader.
Professionalism means that the person adopts the commercial
activities as a job and vocation to collect his Livelihood. Thus,
any person practices the commercial activities professionally
will acquire the trader character. He will acquire the trader
character even if he practices other works do not relate to the
trade. For example, the farmer may practice commercial
activities besides farming. If he did and achieved the
professionalism criterion, he will acquire the trader character.
But if he practices commerce accidentally, he will not acquire
the trader character.
However, there are exceptions to the professionalism criterion.
In these exceptions the person may acquire the trader
character even if he does not practice commercial activities
professionally, or vice versa. They are as follow:
1) if a person advertises that he is a trader, then he will
acquire the trader character even if he does not practice
commerce professionally. The law gives him the trader
character in order to protect the persons who deal with
him. This is because some persons may depend on the
advertisement and, accordingly, deal with him as a
trader. In this case, the law considers him a trader and
the commercial law will be applied on him.
2) there are some persons prohibited, by virtue of special
acts, from practicing commerce such as public
employees, lawyers, etc. These persons may practice
commercial activities by hidden ways. For example, they
may use names belong to other persons. In this case, the
hidden and the apparent persons acquire the trader
character.
3) the persons who have simple shops and simple
vocations do not acquire the trader character.
Accordingly, they are not submitted to the
commercial law although their commercial activities
are submitted to this law. The purpose for which the
legislature does not give them the trader character
is to keep them away from the rules of bankruptcy.
But in order to apply this exclusion, two
requirements should be fulfilled; their equity capital
should not exceed (10.000) OMR, and they have to
depend, in their work, on their handcraft more than
the equity capital.
Third: The person who practices commerce has to have
the commercial capacity. Therefore, his age should be
more than 18 years and no mental disorder happens
with him. This rule is applied on Omani citizens.
Meanwhile, it is not applied on the foreigner persons.
This is because the foreigner persons are prohibited
from practicing commerce inside Oman unless they got
permission from the competent authorities.
The juristic person:
The juristic person means a group of people or amount
of money takes legal entity and recognized by the law.
According to Omani Law, the trader character is given to
three types of juristic persons. They are:
a) The companies which are established by the government or by
anybody belongs to the government. These companies acquire the
trader character even if the government participates partly in the
establishment. But in order to acquire the trader character, these
companies should practice commercial activities. Otherwise, they
will not acquire this character.
Accordingly, when these companies acquire the trader character,
they will be submitted to the rules of commercial law except the
rules of bankruptcy. This is because the state is a party in these
companies and, accordingly, it has ability to avoid bankruptcy.
b) The commercial companies acquire the commercial character
too. This is because they are established to practice commercial
activities and to achieve profit. Omani Law regulates five types of
commercial companies. They are: Joint-Liable Company (General
Partnership), Limited Partnership, Particular Partnership Company,
The Shareholding Company and the Limited Liability Company.
These types will be discussed later.
c) The third type which acquires the trader character is the
companies which take commercial form even if they practice
civilian activities, i.e. This type of companies is, primarily,
established to practice civilian activities such as farming,
pharmacy, etc, and, at the same time, take commercial form
such as Joint-Liable Company and the like. Because they take
the commercial form, they will be submitted to the rules of
Commercial Law.
Effect of acquiring the trader character:
When the person, whether normal or juristic, practices
commercial activities professionally and the abovementioned
requirements exist, he acquires the commercial character.
Then, the law binds that person to do some duties, they are: to
keep commercial books, to bear a commercial name, to
register in the commercial registry, to avoid unfair competition
and to be submitted to the bankruptcy rules.
1) To keep commercial books:
The commercial books mean the note books in which the trader
writes his commercial transactions. They are important because
they enable the trader to regulate his financial position. Namely,
they will enable him to know his rights and obligations. Also, they
are important for evidence, i.e. the trader or his dealer may use
them to prove the transaction. The commercial books are divided
into two types; the compulsory commercial books and the optional
commercial books.
The former type is named compulsory because the trader must
keep them. Otherwise, he may be punished. This type includes the
day-book, the general ledger and the book of bills and
correspondences. The day-book is used for recording the daily
transactions, i.e. the trader uses it to record the all transactions
which happen every day and relate to his commerce. Also, the
trader uses the day-book to record the monthly expenses, namely,
his personal expenses. Thus, this book is useful to the trader
because it helps him to govern his commercial transactions.
The general ledger is used for recording information
about the goods which the trader has. It is also used for
recording the rights of the trader, his obligations and his
balance in the bank. The third book is used to keep the
bills, the correspondences, the telegrams and the all
documents which relate to his commerce. Omani
Commercial Law binds the trader (or his heirs) to keep
the former and the second books for ten years, and the
third book for five years. These periods start at the time
of closing the book.
The optional commercial books are called optional
because the law does not bind the trader to keep them.
Therefore, using these books depends on the desire of
the trader, but not on the rules of the law. The optional
commercial books contain non-exclusive types. This is
because they are not nominated by the law.
2) To bear a commercial name:
The commercial name is the name which the trader
selects for himself in order to distinguish himself from
other traders. Thus, when he deals with others, he uses
this name.
Omani Commercial Law contains some rules regulating
the commercial name. While some of them relate to the
normal person, others relate to the juristic person. With
regard to the normal person, the law permits to the
trader to select his personal name or his nickname. He
also can select any invented name or any name derived
from the nature of the commercial activities which he
practices. But in all cases, the name which he selects
should be real and not illusive. For example, if he
selected a name derived from the commercial activities
which he practices, this name must relate to these
activities, namely not to other commercial activities.
Besides, when the trader selects a name for himself, he has to
record this name in the commercial registry. Then, the
commercial registrar has to make sure that no previous trader
selected this name. If the name is registered previously and
reserved to another trader, the registrar should stop registering
it.
Thereby, the registration protects the name and ensures that
no one uses it except its owner. If another trader uses it, its
owner has right to ask for compensation. But he has to prove
that he is injured.
Besides the compensation, Art (92) of Industrial Property Law
No. 67 of 2008 mentions a penal punishment. It provides that
any person uses an Industrial property belongs to another
person should be punished by an imprisonment between three
months until three years or fine between (OMR 2.000) to (OMR
10.000) or both of the sanctions. The sanction is doubled if the
fault is repeated.
3) To register in the commercial registry:
The law binds the trader to register in the commercial registry
because the registration is considered an instrument of
publication for the data which relate to the trader such as his
name, his trademark (if he has), his commercial logo and the
disposals which relate to his shop. Accordingly, when the data
is registered, it becomes protected by the law as
abovementioned.
In addition, registration of the data in the commercial registry
is useful for the persons who deal with the trader. This is
because they can see the data which relates to him and
reassure about his financial position.
The duty of registration is regulated by Commercial Registry
Law No. 3 of 1974 which specifies the data which should be
registered. Art (7 and 9) of this law mentions the data. They
are: The personal name and the nickname of the trader, the
name which he selects to practice commerce, date and place of
birth, etc.
➢Art (16) of Commercial Registry Law binds the
registrar to make sure of the authenticity of the
mentioned data when it is submitted to him. If he
finds that there is something wrong in the data, he
can reject the registration.
➢Art (18) of the same law imposed fine between
(OMR 500) until (OMR 1000) or imprisonment
between one month to six months or the both
sanctions on the trader who introduces,
intentionally, incorrect data to the registrar.
➢The same Art imposed fine between (OMR 100)
until (OMR 1000) on the trader who does not
register during one month in the commercial
registrar office.
4) To avoid unfair competition
The unfair competition means any activity contradicts
with the principles of commerce. Accordingly, the
fraud, the cheating, introducing incorrect information
about the commodity and the like are considered
unfair competition. Also, using a commercial name, a
trademark belongs to another trader is considered
unfair completion.
➢ The unfair competition is based on three elements.
They are: the mistake, injury (damage) and the cause
which links between them.
➢ If the trader does not avoid this competition, he has
to compensate the injured person.
➢ Also, he may sometime be punished by virtue of Art
(92) of Industrial Property Law No. 67 of 2008 which
is aforementioned.
5) Subjection to bankruptcy rules:
Bankruptcy is a legal system applied on the traders only. It is
applied on them if they become unable to pay their debt. This
system is characterized by hardness and cruelty. Therefore, the
law keeps the civilian persons away from this system. However,
another system called “insolvency” is applied on them. This
system is characterized by flexibility and it is less hardness than
the bankruptcy.
In order to apply the bankruptcy rules, there are some
requirements should be fulfilled. They are:
• The person should acquire the trader character
• The trader should be unable to pay his debts
• The court has to declare that the trader is bankrupted.
If one of these requirements is not fulfilled, the bankruptcy is
not applied.
Besides, there are requirements should be available
in the debts. They are:
1. Commerciality of trader’s debts.
2. Monetary nature of debt. Only the obligation of
payment justifies the declaration of bankruptcy
in case of cessation .
3. debt should be final. So, it should not be
conditional. It also should not be an object of
dispute, and the dispute should be serious.
4. the amount of debt should be fixed.
5. debt should be current.
CHAPTER THREE
COMMERCIAL CONTRACTS
SECTION ONE
GENERAL RULES IN CONTRACT
Definition of the contract
The contract is an agreement between two parties or
more aims at creating legal relation.
Elements of the contract
Omani Law shows that there are four elements for
the contract. They are: Offer, acceptance, subject
matter and the cause.
Offer
Definition of Offer
According to Article 69 (2) of Omani Civil Law , offer
means the proposal which comes from one party and
addressed to another party to create legal
relationship.
Depending on that, the offer is the first step in the
formation of contract.
How the offer is expressed?
According to Article 70 of Omani Civil Law, there are
several forms to the offer.
Verbal form is the first and the main form. In this
form, the expression of the will is made by any word
that indicates the will of the party.
Further, the expression of the will may be made by
writing.
Furthermore, offer may be made by conduct.
Besides these methods, the gesture is legally
considered.
Omani Civil Law does not stop on this limit and on
these forms, but it permits any other methods that
indicate the internal consent of the party.
Conditions of Offer
The offer, in general rules, has to be clear and certain. It
is considered clear when it contains the terms which
define the contract. For example, if the seller wants to
sell a car, the offer has to define the car and the price.
Also, it is considered certain when it is decisive and
indicates the intention of the offeror.
To achieve clarity and certainty, the offer has to be
definite. It is considered definite when it is addressed to
a specific person or to the people because the purpose
of the offer is to create contractual relationship with
another party. Namely, offer must be intended to receive
acceptance to form contract, but not a mere
advertisement. Accordingly, if the offer is not addressed
to a specific person or people, this is not an offer and it
will not lead to legal effects
Offer and Invitation to Treat
It is important to differentiate between offer and invitation to
treat because the invitation to treat indicates that the parties
are still at the negotiation stage and the offeror is not bound
yet to form a contract. But offer indicates that the parties have
terminated the negotiation stage and have begun to form the
contract.
So, if the advertisement (the expression ) is an offer, the
contract is formed when the acceptance is issued. Then the
advertiser can not revoke his offer because the contract is
already formed. But if the advertisement is an invitation to
treat, the advertiser can revoke his advertisement even though
a person demonstrates his willingness to buy.
The criterion to distinguish between them is the conditions of
the offer. If the expression contains the conditions of the offer,
then it is an offer. Otherwise, it is an invitation to treat.
Communication of Offer
Specifying the time of communication is important because it
affects the issue of utterance of valid acceptance. Namely, the
acceptance should be uttered after the legal existence of an
offer in order to make a valid contract.
The legal existence occurs when it comes to the knowledge of
the offeree. At that time the offer is considered effective.
Termination of Offer
The offer is terminated by the following methods:
1) If the Offeror Revokes his Offer:
This means, the offeror can revoke his offer at any time before
the acceptance. However, the law prevents the offeror from
revocation of his offer if he determines a specific period for his
offer, i.e. the offeror is bound in the period mentioned in his
offer.
2) If the offeree rejects the offer:
If the offeree rejects the offer, the offer is terminated.
Additionally, if the offeree changes the offer by adding,
deleting or replacing any term in the offer, this is
considered rejection of the offer. The offer which is
changed may be considered a new offer.
3) If the offer is limited with a specific time:
The offer is terminated when the time lapses and the
acceptance is not issued during that time. But if the
acceptance is issued after the specific period lapses, this
acceptance is considered a new offer.
4) Death or Mental Disorder of the Offeror
Acceptance
Definition of Acceptance
It is the statement made in the second place. The contract
becomes completed thereby.
Thus, every intention comes after the offer corresponding it to
form contract is an acceptance, i.e. the acceptance, in this law,
is the second intention. When it is coupled with the offer, the
contract is formed.
Note: the forms of the expression of acceptance are the same
forms of the offer. They are verbal form, writing form, gesture
and any situation which indicates the consent of the offeree.
But the acceptance is made either expressly or impliedly. It is
deemed to be express when the acceptor uses verbal or
written words in his expression. Additionally, the acceptance is
considered express when the acceptor uses the gesture to
indicate his consent. On the contrary, acceptance is implied if
the offeree does an action or behavior that indicates his
acceptance.
Conditions of acceptance
1) Acceptance must be issued before the offer comes to
an end: Thus, it is important to specify the moment
in which acceptance is made because the contract is
concluded at that moment.
2) Acceptance must fit the offer
If the acceptance contains more or less than what the
offer contains, the acceptance is deemed a new offer.
Besides, acceptance fits the offer if the parties agree
upon all essential points in the contract. The essential
issues in the contract are the issues which the parties
cannot avoid. For example, if the contract is a sale
contract, they have to agree on the price and the goods
sold.
Distinction between essential issues and other issues
depends on the circumstances of every contract.
The Silence of the offeree
generally, silence does not express the intention of
the person. Despite this fact, it may sometime
express the acceptance (but not the offer) in two
cases:
First, if the parties have a previous transaction and
the offer relates to this transaction, silence may be
considered an acceptance.
Second, if the offer has a benefit to the offeree,
silence of the offeree may be considered an
acceptance.
The subject matter
Definition
The subject matter is defined as “the element which the
party who owes the money commits himself to perform
an action, refrain from some action, or transfer the right
of some property”.
Accordingly, the subject matter differs from contract to
contract. Therefore, this is the reason why there are
several nominated (named) contracts and there are also
none nominated (unnamed) contracts. In other words,
the contracts are varied according to their subject
matters.
Besides that, it is important to mention that the price is
the subject matter in respect to the buyer in the sale
contract and he is obliged to perform it. Consequently,
the price is an element in some contracts and it has to
have the conditions of the subject of the contract.
Conditions of the Subject of the Contract
1) It should have value.
2) It should be possible to perform
The impossibility does not have to refer to one of the parties
but it has to refer to the subject itself. Namely, if the subject of
the contract is impossible to be performed not only by the
parties but also by the public, then the impossibility refers to
the subject itself and the contract is invalid. Additionally, the
impossibility should occur at the time of the formation of
contract, but not after that time. If it happens after that time,
the contract is valid, but the parties may rescind it.
3) It has to be existent
If the subject matter of the contract is not existent, the
contract is not formed because the performance becomes
impossible.
4) It has to be specified and defined in a way to prevent ambiguity.
Specifying the subject of the contract depends on its existence in
the contract session. If it does not exist, the seller has to describe it
and specify its kind and amount. On the other hand, if it exists, the
purchaser can see and examine it.
Additionally, it is important to take into consideration that if the
subject matter is amount of money, this amount has to be specified
numerically. The price here is performed according to the number
or the amount of the money which the parties agreed upon,
regardless of the change of the rate of the currency which may
occur between the time of formation of the contract and the time
of performance.
The price must not only be known numerically, but it also has to be
specified to which country it belongs, namely which currency it is.
5) It should be lawful.
The law, sometimes, prevents people from dealing with specific
things which contradict the general policy and morals in Oman. For
instance, the law prevents selling human bodies. Thus, the contract
is deemed invalid and not acceptable if its subject does not comply
with this policy.
The cause
According to the modern theory, the cause goes
beyond the direct purpose of the contract. This
happens by searching for the indirect and deep
motives which prompt each party to make the
contract. For example, if a person bought a house to
make it a place for gambling, the cause here is that
he wants to make it a place for gambling. Thus, in the
light of this theory, it can be known whether the
cause is permitted or prohibited. In this example, the
cause is prohibited because gambling is prohibited
and, accordingly, the contract is invalid.
SECTION TWO
COMMERCIAL CONTRACT
PART ONE
THE COMMERCIAL SALE
Definition
Commercial sale is regulated in Art (93-107) of Omani Commercial
Law (OCL).
What is commercial sale?
It is not defined in the Commercial Law. But the sale is defined
generally as: it is a contract between two parties (the seller and the
buyer). According to this contract, the seller will be bound to deliver
something to the buyer and transfer its ownership, at the same time
the buyer will be bound to give the price to the seller.
➢ But it is important to remember that the purpose of the
commercial sale is to achieve profits. This factor differentiates the
commercial sale from the civil sale.
➢ As long as the sale aims at achieving profit, the sale is considered
commercial whether it is done by a trader or by a normal citizen.
Formation of commercial sale
➢ The commercial sale should contain the elements of the
contract.
➢ If the seller sold thing which does not belong to him, the
seller would be bound to buy it and sell it again to the buyer.
Otherwise, the buyer can ask for compensation…(Art 98)
➢ Omani Law allows to sell a thing which is not currently
available as long as it is possible to be available in the
future…(Art 100 of OCL)
➢ The price should be specified in the contract. Or, at least, the
contract should contain terms describe how the price is
specified. Such as, mentioning a third party to specify the
price, adopting the price in markets or adopting the price of
the unit…(Art 103 of OCL).
➢ If the parties did not specify the price or if they did not
mention the way how to specify the price, that does not
mean one of them wants to make donation to the other
party. In this case, the price is specified by the custom,
otherwise the court will specify it.
Some types of commercial sales
The sale through a sample
➢ This kind of sale depends on a sample which is
considered a pattern to the goods.
➢ In this sale, the seller should deliver a thing sold
contains the same quality and descriptions of the
sample.
➢ If the sample is destroyed while it is under hand one of
the parties and the other party claims that the quality
or the descriptions of the thing sold is different from
the sample, the first party should prove that both of
them are similar and there is no difference.
➢ If the seller delivered a thing different from the sample,
the buyer can rescind the contract or he may ask to
decrease the price.
Sale upon trial
➢ In a sale upon trial, the purchaser has the option either
to accept or to refuse the thing sold.
➢ The vendor is bound to allow the purchaser to make
the trial.
➢ If the purchaser refuses the thing sold, he must give
notice of his refusal within the time agreed or, in the
absence of agreement, within a reasonable time to be
fixed by the vendor. When this time has elapsed, the
silence of the purchaser who had the opportunity to
try the thing sold is equivalent to acceptance.
➢ A sale upon trial is deemed to have been made subject
to a suspensive condition of acceptance of the thing
sold, unless it appears from the agreement or from the
circumstances that the sale was made subject to a
resolutory condition.
The sale subject to tasting
➢In a sale made subject to tasting, the
purchaser may accept the thing sold if he sees
fit.
➢But he must declare his acceptance within the
time fixed by the agreement.
➢If there is no agreement, the time is specified
by custom.
➢The sale will be considered complete only
from the date of such declaration.
The obligations and the rights of the parties of the sale contract
OCL regulates the obligations of the seller in Art (108-118). At the
same time, the obligations of the buyer are regulated in Art(119127).
Obligations of the seller
In commercial sale, the seller is bound to carry out the following
obligations:
1) To transfer the ownership
The seller is bound to transfer the ownership to the buyer.
In general, the ownership is transferred from the seller to the buyer
when the contract is concluded.
But if the contract needs to make formal procedures (such as if the
thing sold was real estate), the ownership is transferred when that
procedure is done.
Besides, if the thing sold needs measurement or to be weighted, the
ownership is transferred when this procedure is done.
2- To deliver the thing sold
the delivery occurs by enabling the buyer to take
the thing sold without hindrance. Usually, the
delivery happens at the time of transferring the
ownership.
The delivery is concluded according to the
conditions of the contract. Otherwise, the
custom will take part to regulate it.
The delivery is either (actual) or (constructive).
The actual method is concluded by delivering
the thing sold by hands. So, if the thing sold is
movable property, the delivery is concluded by
handing it to the buyer. This happens if the
nature of the thing sold accepts delivery by
hands such as the things which are estimated by
weight. On the other hand, if the thing sold is
immovable property (real estate), the seller
delivers it by vacating it and enabling the buyer
to obtain it. Therefore, if it is a house, it is
delivered by vacating it and handing its keys to
the buyer.
Also, the actual method of delivery may be
concluded figuratively as if the seller hands the
keys of the store to the buyer, or if the seller
delivers the bill of lading to the buyer .
The constructive (indicative) delivery differs
from the actual method in that this delivery
happens without physical action, but with legal
disposal. This happens when the thing sold is
under the control of the buyer before the
conclusion of the sale contract.
The Time of Delivery
The time of delivery is specified as follow:
• By the agreement of the parties of the
contract.
• If there is no agreement, the thing sold should
be delivered at the time of formation of the
contract.
• If there is a specific season for the goods, the
delivery should occur before the season is
terminated.
According to Omani Law, if the seller did not deliver
the thing sold at the time which the parties agreed
upon, then:
• The buyer can rescind the contract without
notification. Or,
• The buyer has the right to get a thing similar to
the thing which the parties agreed upon and the
seller should pay the price (even if the new price
is more than the price which they agreed upon).
But in this case, the seller should be notified. Or,
• The buyer can claim to carry out the contract and
get the thing which they agreed upon. In this
case, the buyer can not claim for carrying out
unless he notifies the seller before three days of
the time of delivery.
If the seller delivered a thing differs from the
thing which the parties agreed upon (whether in
quality or in plenty), then the buyer either
claims to reduce the price or demands to
complete the deficiency. But if the difference
was harmful, the buyer can claim to rescind the
contract.
Note: the right of reducing the price or
rescinding the contract comes off after one year
of the actual delivery.
Omani law provides: if the thing sold needs
measure or weight, the expenses of these
actions will be borne by the seller unless there is
an agreement or custom provides otherwise.
Destruction of the Thing Sold
The destruction of the thing sold is discussed before the
delivery, not after it. This is because; it is known that the
destruction after the delivery is borne by the buyer. Thus,
if the delivery is concluded correctly, the vendor will not
be liable for the thing sold after the conclusion of the
delivery.
But he will remain liable (exceptions):
• If the destruction occurs because of his mistake.
• He will also remain liable if the destruction occurs due
to a cause that refers to the time when the thing sold
was in his possession such as the hidden defect.
➢ If the seller notified the buyer to collect the thing sold
in the time which they agreed upon and the buyer
ignored this notification, the buyer in this case will be
liable but not the seller.
3- To guarantee the hidden defect
This obligation means that if there is any hidden
defect in the thing sold, the buyer refers to the
seller either to reduce the price or to rescind the
contract. The buyer should refer to the seller
immediately when he discovers the defect,
otherwise he will be deemed accepted the defect.
➢ The defect should be: old, hidden and effective.
➢ Omani Law gives the buyer one year to claim for
the hidden defect starts at the time of delivery,
i.e. after the year lapses the buyer can not claim
even if he finds a hidden defect.
Obligations of the buyer
1- To pay the price
The price should be paid at the place of delivery
unless there is a custom or there is another
agreement between the parties. If it is not paid
at that place, it should be paid in the place of
the buyer.
Note: The seller has right to retain the thing sold
if the buyer does not pay the price. At the same
time, the buyer has right to retain the price if
the seller refused to deliver the thing sold. This
is because the sale contract is bilateral contract.
2- To collect the thing sold
➢The buyer should collect the thing sold at the
time and the place which the parties agreed
upon.
➢If there is no agreement, they should follow
the custom.
➢If the custom is also devoid of rule, Omani Law
provides that the buyer should collect it at the
place where the thing sold exists at the time
of formation of the contract.
➢The expenses of collecting the thing sold is
borne by the buyer unless there is agreement
or custom provides otherwise.
Cost, Insurance and Freight Sale (CIF)
A ClF sale is the sale of goods exported by sea to a specific place at a
fixed price which includes the cost of the goods, the insurance and
the carriage by sea thereof.
By virtue of this contract, there are some obligations should be
done by the seller. They are:
• The vendor must conclude a contract – at his expense – under the
normal conditions to transport the goods to the agreed place of
arrival by normal journey… Art 137 of OCL.
• He must pay the cost and any other expenses for discharging the
goods at the time and place of shipment… Art 137 of OCL.
• The vendor shall be obligated to load the goods, at his expense,
on the ship in the port of shipment on the date agreed in the
contract of sale or within a reasonable time where the two
parties did not specify a time for shipment… Art 138.
• The vendor shall be liable for any damage occurred to the goods
until the moment where the goods cross the edge of the ship
during loading. Thereafter, such liability shall be borne by the
purchaser.
• The vendor shall – at his expense – conclude a contract of
insurance with an insurer who has good reputation to cover
the risks of the carriage…Art 140.
Free On Board Sale (FOB)
FOB sale is a sale whereby the goods are delivered, at the port of
shipment, at the board of the ship which is designated by the
purchaser for the carriage thereof.
In this sale:
• The purchaser must conclude the contract for carriage of the
goods and pay the fee of the carrier.
• Also, the purchaser must conclude the contract of insurance.
• The vendor must pack the goods and ship them on the board
of the ship on the date which the parties agreed upon. The
vendor shall bear the cost of packing and shipping.
• The vendor shall bear any damage or destruction which may
occur to the goods until the moment where the goods cross
the edge of the ship during loading.
PART TWO
CONTRACT OF CARRIAGE OF GOODS
Definition:
Art 156 of Omani Commercial Law defines the contract of carriage
as an agreement whereby the carrier undertakes to carry goods or
persons from one place to another by a means of transport in
return for a fee.
Characters of contract of carriage
• It is bilateral contract: This means each party in this contract is a
creditor and debtor. The carrier is debtor because he will carry
the person or the goods from place to place. At the same time,
he is creditor because the other party has to give him the fee.
Also, the owner of the goods or the passenger is debtor because
he has to pay the fee and, at the same time, he is creditor
because the carrier should carry him or his goods.
Besides that, this character means that if one of the parties did not
perform his duty, the other party can rescind the contract and
demand for compensation.
• It is concluded by mutual consent: that means
there is no formal element in this contract.
• This contract is based upon consideration: this
means each party will get a consideration in
return for what he gives. While the carrier will
get the fee, the other party (or the goods of
the other party) will be carried to the
destination.
Note:
➢The fee may not be equivalent to the service,
i.e. the fee may be less than the value of the
carriage. But the fee should exist in this
contract. If the agreement is devoid of the fee,
it will not be deemed a contract of carriage,
and the carrier will not be liable about the
safety of the goods or the passenger.
➢The fee may be money or any other thing. This
depends on the agreement of the parties.
• The contract of carriage is commercial
contract:
It is a commercial contract for the carrier
because he always aims at achieving profit. But
for the other party, it may, or may not, be
deemed a commercial contract. This depends on
the nature of the transaction, i.e. if the other
party is civilian person, the contract is deemed a
civilian contract. But if the other party is a trader
and the contract of carriage is related to his
commerce, then the contract is deemed
commercial contract for him.
Formation of contract of carriage of goods
➢This contract is concluded by the mutual consent
and there is no formal element. Therefor, the
general rules of the formation of the contract are
applied.
➢The parties of the contract of carriage of goods are
two: the carrier and the consignor. Sometime the
contract may provide to deliver the goods to a
consignee. But this person is not a party in the
contract. The third person usually appears in the
international sales such as C.I.F sale and F.O.B sale.
➢ It is a fundamental principle that the effect of contract of
carriage of goods is to be between the parties of the
contract (the carrier and the consignor). But sometime the
law may bind the third person (the consignee) to perform
something such as collecting the goods from the carrier.
Proving the contract of carriage of goods
Although this contract is concluded by the mutual consent
and there is no formal element, the carrier usually issues a
document contains information about the contract (Bill of
carriage). This document is an instrument to prove the
contract of carriage of goods. But it is important to remember
that this bill is not an element in the contact and the law does
not bind the parties to issue it. Thus, if the carrier did not
issue this bill, the parties can prove this contract by any
method of evidence. This is because, as abovementioned, this
contract is a commercial contract.
This bill represents the carried goods. Thus, if this bill is
delivered to a foreigner party, that means this party
becomes the owner of the goods.
The bill of carriage may be drawn up in the name of a
specific person or to his order or to the bearer. The bill
shall be negotiable according to the rules of transfer if
nominal and by endorsement if made out to order and by
delivery if made out to the bearer.
If the parties did not write this bill, the consignor can
demand a receipt from the carrier. This receipt should
contain the date of issuance and enough information
about the goods…Art (160) of OCL.
This receipt will take the place of the bill of carriage in
evidence.
Effects of contract of carriage of goods
Because the contract of carriage of goods is
bilateral contract, there will be obligations for the
both parties. Besides that, this contract may make
some obligations for the consignee if he is not the
same consignor.
The obligations of the consignor
• To deliver the goods to the carrier
This delivery should happen at the place where the
parties agreed upon. If they did not agree on the
place, it should happen at the place of the
carrier…Art (161) of OCL.
➢ If the parties agree that the delivery will be in a place
different from the place of the carrier, the consignor should
bring the goods to that place, and he will bear the
expenses.
➢ If the goods need specific instruments in carriage, the
consignor should inform the carrier about that before the
time of delivery. (For example, the goods may need
refrigerators).
➢ The law allows to the carrier to demand a list of the goods
from the consignor. This is because he may want to make
sure if the goods which they agree upon are the same or
not. Also, this will help him to know the status and the
quantity of the goods.
➢ The consignor should pack the goods in good manner
which suits with the circumstances of the trip, particularly
when the goods are sensitive and may be broken easily.
➢ If the goods are not packed well or if there is defect in the
pack, the carrier has the right to ask for good pack, or else
he can stop carrying the goods.
➢ If the pack was bad and the consignor insisted to
deliver it in this status, the carrier can write this
insistence in the bill of carriage. In this case he will
escape from liability of destruction which may happen
as a result of this bad pack.
• To pay the fee
The fee is usually specified in the agreement of the
parties. The agreement also specifies the time of
payment of the fee.
If the parties agree that the fee will be paid by the
consignee, then the consignor and the consignee are
jointly liable about this fee…Art (162) of OCL.
Besides the fee, if the goods need expenses during the
trip, the consignor has to pay them to the carrier. The
amount of these expenses depends on the nature of the
goods and on the period of the trip.
➢OCL gives the consignor and the consignee the
right to stop paying the fee if the goods are
destroyed due to force majeure during the
trip…Art (162).
➢If the consignor, during the trip, asked the
carrier to return the goods to him or to deliver
them to another consignee, the consignor will
bear the expenses of that, and he will
compensate the carrier if needs arises.
➢If the consignor did not pay the fee, the carrier
can retain the goods until he gets it.
• The right of disposal in the goods
The owner of the goods (the consignor) has the
right to dispose in the goods during the trip. For
example, he can sell them via the bill of carriage
if he finds a buyer who pays good price.
Obligations of consignee
Generally, the consignee does not have
obligations because he is not a party in the
contract. But The consignee shall be liable for
the obligations arising from the contract where
he accepts expressly or impliedly. In this case, he
will be liable to collect the goods at the time
which the parties agreed upon.
Obligations of the carrier
• To collect the goods
➢ The carrier has to collect the goods in the place of
the carrier, or in the place which is specified in
the contract. This will happen at the time which is
also specified in the contract.
➢ The carrier should not refuse to collect the goods
as long as it is the same goods which they agreed
upon. If he refused, he will be liable.
➢ At the time of collecting the goods, the carrier
should check the goods to make sure of its status
and quantity. This may require removing the
cover and the pack. If he does that, this should
happen in the existence of the consignor or his
proxy.
• To ship and stow the goods
➢ Shipping the goods means putting them on the
carriage means.
➢ Stowing the goods means arranging them and
putting them in the suitable places on the
carriage means.
➢ Shipping and stowing the goods are responsibility
of the carrier because he has experience in this
field. But the parties can agree that the consignor
does them. If he (the consignor) did that and he
performed this duty in bad manner, the carrier
can stop performing the carriage…Art (166) of
OCL.
➢ The nature of the goods takes important role in
the shipping and stowing procedures. Thus, some
goods may need to use pumps, others may need
pipes…etc.
➢The carrier is liable about the destruction
which may happen during the shipping if it
comes as a result of his mistake. He is liable
even if the mistake happens due to mistake of
workers or companies specialized in shipping
belong to him. This is because he should
practice supervision upon them.
➢Shipping and stowing the goods should
happen at the time which the parties agreed
upon. If they did not specify the time, they
should follow the custom.
• To transport the goods
➢ It is the main obligation in the contract of
carriage of goods. In this obligation, the carrier is
bound to perform his duty by a suitable means
which should suit with the nature of the goods.
For example, if the goods are fruits and
vegetables, the means of carriage should include
containers with low temperature.
➢ Safety of the goods during the trip until arriving
the destination is the responsibility of the carrier.
For example, if the sky rained during the trip, the
carrier has to take the all procedures to save the
goods from water, such as covering them. Or else,
he will be liable about destruction.
➢ The carrier should follow the agreed route. If this
route is not specified in the contract, the law
binds him to follow the shortest route… Art (167)
of OCL.
➢ If he followed a route different from the route
which they agreed upon, or if he followed a long
route, he will be liable about the destructed
goods (if there is destruction). He also will be
liable if the goods arrived in a late date.
➢ Despite that, the law allows to the carrier to
change the agreed route if there is necessity to
do so, such as if the sky rained heavily or if there
is tornado in the route. In this case the carrier will
not be liable even if there is destruction in the
goods.
• To discharge the goods
The carrier is bound to discharge the goods. He
also will bear its expenses. But the parties may
agree that the consignor or the consignee
performs this duty. In this case, if a destruction
happens to the goods during the discharging
procedures, the carrier will not be liable about
that.
• To deliver the goods
In this obligation the carrier ends his duty. When
the carrier does this obligation, he should demand
a receipt from the consignor or the consignee. This
receipt will be a proof indicates that the duty of the
carrier is done. Or, the carrier can ask the consignor
(or the consignee) to write on the bill of carriage a
statement indicates that he received the goods.
The consignor should come at the time of arrival to
receive the goods. If he did not come, the carrier
has to inform him that the goods arrived. If he did
not come, the carrier can transport the goods to
the place of the consignor in return for extra
fee…Art (180) of OCL.
CHAPTER THREE
COMMERCIAL COMPANIES
SECTION ONE
GENERAL RULES IN THE COMPANIES
Concept of the company
Article 3 of Omani Company Law defines the company as follow;
“the company is a Juristic person built on a contract between two
parties or more, whereby they share each other in a project to
achieve profit. Each of the parties introduces a share in the capital
of the company. This share is either money or shares in property (inkind) or moral shares (services). According to these shares, each of
the parties will get his portion of profits or losses”.
Exception: the One Person Company is excluded
This definition shows that the company is built on a contract joins
several parties who cooperate with each other to invest their
capitals in order to achieve profits. On basis of that, a new legal
juristic person comes out of this contract. This juristic person is an
independent from the parties and will have rights and obligations
independent from the rights and the obligations of the parties.
The conditions which are required to establish the
company
Because the company is based on a contract, the
general elements of the contract, which we studied
earlier, should be available (offer, acceptance,
subject matter and the cause).
Besides these elements, the law requires other
special and formal elements.
2. The special elements
Beside the general elements which are aforementioned, four
special requirements should be available in the contract of
company.
If one of these elements is not existed in the contract, the
contract is considered void.
They are as follow:
A) There should be more than one party (Except the One Person
Company)
Because the company is based on a contract, it is not imagined
that it will contain one party only. This fact is concluded from
the definition of the company. This fact is also emphasized in
the rules of each type of the companies. Thus, the law binds
the Joint-Liability company (General Partnership), Limited
Partnership, Particular Partnership Company and Limited
Liability Company to contain two parties at least.
Meanwhile, in the Shareholding Company (JointStock Company), the parties must be three at least
unless one of the parties is the state. If the state is a
party in this company, it is allowed to be
established by one party or two parties only.
At the same time, Omani Company Law does not
set a maximum limit for the parties of these
companies except the Limited Liability Company
which must not contain more than (50) partners.
➢Note: If the partners do not follow these rules,
the contract will be void.
➢Note: The legal number of the parties must exist
at the time of formation of the contract and also
during the existence of the company. Therefore,
if the number becomes illegal after the
formation of the contract, the company
becomes void unless the parties amended the
number by increasing or decreasing the
partners. If amendment happens, it should be
registered in commercial registrar office.
B) To provide the shares
Each partner in the company has to introduce a share. The
sum of these shares are considered guarantee for the
creditors of the company.
Art (21) of Omani Company Law shows that the shares are
either money or shares in property (in-kind) or moral shares
(services). They are discussed as follow:
▪ The monetary shares
If the party committed in the contract of the company to
introduce a monetary share, he has to perform his
commitment. He may commit to introduce the monetary
sum wholly or by installments. In each case, he has to
perform his commitment. The party here will be a debtor to
the company. If he is late to pay his debt, he will be liable and
the other parties may ask him either to pay his debt or to
leave the partnership. They can also ask him to pay
compensation if the company is injured.
▪ shares in property (in-kind)
It is non-monetary shares. It may be movable things
such as cars, machines, computers or any other
things. It also may be immovable things such as
buildings, apartments or peace of land.
Besides that, it may be moral thing such as patent
or trademarks.
These shares may be introduced to the company by
transferring their ownership to the company or by
transferring there benefit only.
I. Transferring the ownership:
If the party transferred the ownership to the company, the
rules of contract of sale are applied. But we have to take into
consideration that there is no price here.
According to that, if transferring the ownership requires
formal procedures, the party has to perform these
procedures. For example, if the share is immovable thing, the
transfer of the ownership requires registering it in the
specialized department. Likewise, the same rule is applied if
the share is moral thing such as trademark.
Note: When the ownership is transferred to the company,
then that thing becomes owned by the company and it
becomes a part of its capital. That means, the company has
right to dispose in this thing. Additionally, the transferred
thing becomes a guarantee to the creditors of the company.
II. Transferring the benefit:
If the partner transferred the benefit of the thing
only, the rules of contract of lease are applied. But
there are some differences because there is no fee
paid to the partner.
That means, the partner in this case is still having the
shared thing. This is because he only transferred its
benefit but not its ownership. Thus, if the company
is terminated, the partner can return his share
because he is still the owner.
In addition, if the shared thing is destructed while it
is under possession of the company, the party (the
owner) has to introduce another thing instead of the
destructed share. But if the destruction comes as a
result of the mistake of the company, the company
will bear this destruction.
➢ Evaluation of the share:
The introduced share should be evaluated
monetarily in the basic contract. If the evaluation is
overrated, any of the partners can claim before the
court. If the court finds that the evaluation was
really overrated, the court will ask the partner to
pay the extra money (the difference between the
paid share and the real value).
Note: To evaluate the share, the court can ask help
from experts.
▪ moral shares (services):
Omani Company Law provides that the shares may be services or
works introduced by the party, such as if the party has good
knowledge in engineering and he introduced his knowledge as a
share in the company. But this service should introduce benefit to
the company and it should have importance for it. Or else, it is not
considered a share.
Further, if the party introduced his work or his knowledge as a
share, he has not to use it (the knowledge) with other company or
even to himself. This is because this is considered an illegal
competence. He can do that only if he got a previous permission
from the parties of the company.
Note: The service (or the work) is not considered a part of the
capital of the company. So, it is not a guarantee for the creditors
of the company.
Note: Because the company should contain a capital, the law does
not allow that the all parties introduce services. If they did, there
will be no guarantee to the creditors.
C) Distributing profits and losses:
The parties have to agree in the basic contract of the
company that if there is profit achieved, this profit is
divided among them. At the same time, if there is loss,
this loss is also divided among them.
So, it is prohibited that one of the parties stipulates in
the contract that if there is profit, he will get his portion.
But if there is loss, he will not bear his portion. This
agreement is void and the distribution should happen
according to the portion of that partner.
Also, if the partners agree to deprive one of them from
the profit, this agreement is void and the distribution
should happen according to the portion of that partner.
➢Note: The manner of distributing the profits and
the losses should be mentioned in the basic
contract. If it is not mentioned, the law provides
that the profits and the losses are distributed
according to the portion of each party.
➢Note: If the partners specified the manner of
distributing profits only and they did not specify
the manner of distributing the losses, the same
manner which they agreed upon for the profit is
applied on the losses.
D) Intention of partnership:
Intention of partnership means that each party has to intend
primarily to cooperate with each other to achieve the object of the
company.
This cooperation differs in partnerships (persons companies) from
that in corporations (capital companies). It is usually more effective in
the former category. Therefore, the parties in the partnerships
usually spend effort and practice supervision on the activities of the
company.
Meanwhile, in the corporations the partners do not care about the
activities, and a lot of them do not attend the general assembly
meetings. They focus only on profit, regardless of the activities of the
company.
The intention of partnership is a criterion to distinguish between the
contract of company and other contracts such as the employment
contract. This is because each of the parties, in contract of company,
aims at achieving profit and practices supervision on the activities of
the company, while in contract of employment the employee does
not have this supervision and he usually belongs to his employer.
3 The formal requirements for establishing the company
Besides the previous elements, Omani Company Law
mentions three requirements which should be available
in the contract of company. They are: writing the
contract, registering it in the commercial registrar office
and publishing this registration. They are as follow:
A) Writing the contract of company
The contract of company should be written because:
the registrar can not make sure of the data relates to the
company unless the contract is written.
Further, the contract of the company usually contains a
lot of details. These details may be forgotten if they are
not written.
Note: If the contract is not written, it is considered void.
Note: The Particular Partnership is excluded from writing
B) Registration of the contract
Art (6) of Omani Company Law binds the partners of the
company to register the contract in the commercial registrar
office. Besides, the parties may not prove the existence of the
company unless it is registered.
Note: The Particular Partnership Company is excluded from
this rule.
C) Publishing the registration
After registration and publication, the company can start to
practice its activities.
Note: if the contract is not registered or not published, the
partners can not prove the existence of the company against
others (the foreigner persons). But the foreigner persons who
are in good faith can claim against the company even if it is
not registered.
Juristic personality of the company
Contract of company differs from other
contracts. This is because it creates a new legal
person which has capacity and independency in
finance.
Omani Company Law provides that all types of
companies have juristic personality except the
Particular Partnership Company because of its
particular nature.
In this section, we will study the concept of
juristic personality and its effects.
The concept of juristic personality
The time in which the company acquires the juristic
personality:
Generally, the company acquires the juristic personality when
the general and the special elements exist. However, Art (14) of
Omani Company Law provides that the company acquires this
personality at the time of registration when the registrar issues
a registration certificate. Also, the company may acquire the
juristic personality before this time if need arises.
The time in which the company loses the juristic personality:
The juristic personality is still existing as long as its contract is
still correct. If it becomes void, this personality is terminated.
Also, this personality is terminated when the company is
terminated. However, Omani Law gives the company juristic
personality during the period of liquidation.
The effects of acquisition of juristic personality
Some legal effects appear when the company
acquires the juristic personality. They are as follow:
1- The name of the company:
Similar to the normal person, when the company
acquires the juristic personality, it must have a
name to distinguish it from others. This name will
be an instrument to deal with others. It should be
written on the contracts, the bill and the all
documents which belong to the company. Also, this
name should be set on the entrance of the
company.
2- Financial independence
When the company becomes juristic person, it will have financial
budget independent from its members. Thereby, the shares which
are introduced by the members became owned by the company
itself, but not by the members. This leads to the following results:
a) The company has right to dispose in its property, i.e. the
members can not dispose in them and they also can not return their
shares back as long as the company continues in its activities.
b) The company will have rights and obligations differ from the
rights and the obligations of the partners.
c) The property of the company is a guarantee to its creditors, but
not to the creditors of the partners. That means, the creditors of
the partners can not get their rights from the shares which are
introduced to the company. Despite that, they can get their rights
from the profits which the partners may get.
d) Bankruptcy of the company does not lead to bankrupt the
partners. On the other hand, bankruptcy of the members does
not lead to bankrupt the company. But there is an exception in
the partnerships. This exception will be discussed later.
3- The legal capacity
When the company becomes a juristic person, it will have legal
capacity. So, the company can practice all types of transactions. It
also will be responsible about these transactions. It may pay
compensation if it breaches a contract or if there is negligence.
Besides that, the company will be punished by the rules of penal
code if it does a crime.
4- Nationality of the company
The nationality of the company is independent from the nationality
of the partners. There are some criteria through which the
nationality of the company is specified. The most important one is
the criterion of the headquarter of the company, i.e. the company
will take the nationality of the state where the headquarter is
located.
The headquarter and the place of establishment are the criteria of
nationality in Oman… Art (12) of OCL.
Specifying the nationality of the company is sometime useful to
specify the law which should be applied if a dispute arises between
the company and another party.
5- Domicile of the company
The meaning of the domicile of the company is
the place where the headquarter is located.
Specifying the domicile of the company is
important to specify the court competent if a
dispute arises between the company and
another party.
Termination of the company
The company is terminated in the following cases:
• If the company does not start in its activity and
two years passed.
• if its basic contract contained a specific period for
the company and this period lapsed.
• if the object for which it is established is achieved.
• if the shares become owned by one party only.
• Bankruptcy, or losing the all capital of the
company.
• if the partners agree to terminate it.
• Termination by a decision of the court
• The company is terminated by merger (union)
Termination of partnerships
Beside the abovementioned methods of
termination, there are other methods to terminate
the partnerships. They have special methods
because the personality of each partner has an
important consideration in this category of
companies.
Thus, these partnerships may be terminated by:
1- Passing away one of the partners
2- Mental disorder or bankruptcy of a partner
3- If one of the partners withdraws from the
partnership
SECTION TWO
PARTNERSHIPS
Partnerships, according to Art 2 of Omani Company
Law, are: Joint-Liable Company (General
Partnership), Limited Partnership and Particular
Partnership Company.
These types of companies are based on personal
relations. So, these companies usually contain
partners have relative relation or friendship relation.
Thy are discussed as follow:
PART ONE
JOINT-LIABILITY COMPANY (GENERAL PARTNERSHIP)
Concept of Joint-Liable Company
Art (60) of Omani Company Law defines the Joint-Liable Company
as: It is a commercial partnership which consists of a number of
persons, not less than two and aims at practicing commerce under a
specified commercial name. The partners will be joint-liable toward
the creditors of the company.
This definition shows some characters to the Joint-Liability
Company. They are as follow:
1. It consists of a number of partners
2. It has a commercial name
3. Each partner acquires the trader character
4. The partners are liable jointly and personally toward the
creditors of the company
5. The partners can not waive their shares unless some
requirements are fulfilled.
1- It consists of a number of partners
Art (60) which is abovementioned shows that the
number of the partners must be two or more. This
number must be available at the time of formation of
the company and it must continue during its lifetime.
Thus, if the shares of the company become owned by
one partner only, the company must be
terminated…Art (40) of Omani Company Law.
➢ Note: OCL does not specify a maximum limit for the
partners in this company. Meanwhile, some Arabic
Laws set this limit because this company is based on
the personal consideration.
➢ Note: Omani Company Law allows to the juristic
person to be a partner in this company. This rule may
not suit with the nature of this company.
2- It has a commercial name
Because the joint-liable company acquires the commercial
character, it should have a commercial name. According to Art
(61) of OCL, the partners can select any name to the company
provided that it should not be illusive.
Also, the name may contain a name of one of the partners or
more. But it must not contain a name of a person who is not a
partner in the company.
If the name contains a name of a foreigner person who agreed
to insert his name, then that person will be jointly liable
toward the creditors of the company… Art (61).
Further, it is necessary and obligatory to add the term “jointliability” beside the selected name or any other words give the
same meaning. Additionally, the name of the company has to
express its activities.
Furthermore, if a name of the partner is mentioned in the
company, it should be followed by the term “and his partner or
and his partners”.
➢If a partner left the company or passed away and
his name is mentioned in the name of the
company, then the partners can leave his name in
the name of the company. But he has to agree.
And in case of death, the heirs have to agree.
➢In the first case, he will remain liable (jointly and
personally) toward the creditors of the company
who have good faith.
➢In the second case (the case of death), the heirs
will remain liable (jointly and personally) toward
the creditors of the company who have good
faith.
➢In all cases, if the name of the company is
amended, the amendment should be registered in
the commercial registrar office. It also should be
published.
3- The partners acquire the commercial character. (art 63)
Not only the company will acquire the commercial character, but
also each partner in the company will acquire this character. This
is because they practice commerce through the company, and also
because the partners will be liable jointly and personally.
➢ The commercial character is acquired to the partners at the
time of formation of the company and, exactly, at the time
when the company acquires the juristic personality. They
acquire that character at that time even if the company does
not start its activities.
➢ Each party will acquire this character whether his name is
mentioned in the name of the company or not.
➢ Because each partner will acquire the commercial character,
each of them should have legal capacity (18 years at least).
➢ Although each partner will acquire the commercial character,
the partners will not be bound to do the trader obligations (the
commercial books, commercial name, etc.). This is because the
company will do these obligations instead of them.
➢ Because the partners will acquire the commercial
character, the rules of bankruptcy will be applied on
them. So, if the company bankrupted, the partners will
also be bankrupted. This is because they are not only
joint-liable, but they are also personally liable. So, if
the company stopped paying its debts and obligations,
that means the company and the partners are unable
to pay. Thus all of them are bankrupted…Art (63) of
Omani Company Law.
➢ On the contrary, the bankruptcy of the partner does
not mean that the company is bankrupted. This is
because the budget of the company is independent
from the budget of the partners and it (the company)
is not liable about the debts of the partners.
Nevertheless, bankruptcy of one of the partners may
lead to terminate the company.
4- The partners are liable jointly and personally toward the creditors
of the company.
This character means that the creditors of the company have
guarantee not only on the property of the company, but also on the
property of each partner. So, the liability of the partners is not limited
to the shares which they introduced. It exceeds that to their personal
property. These liabilities are as follow:
A) The personal liability
The personal liability means that the partner is liable as if he was the
debtor. So his private property is guarantee to the creditors of the
company. So, the liability of the partner in this company is not limited
with the share which he introduced.
Accordingly, the creditor of the company can ask any of the partners
to discharge the debt of the company and that partner can not refuse
to discharge. However, Omani Company Law provides that the
partner in this case is not bound to discharge the debt unless it is
proved that the company is unable to discharge the debt… Art (67).
So, the creditor should ask the company first. If the company failed to
discharge, then he can ask the partners.
➢ Note: If one of the partners discharged the debt of
the company, he can refer to the other partners to
pay their portion of the debt. Each party will bear his
portion according to the basic contract.
➢ Note: The rule of personal liability of the partner in
this company is obligatory rule. Thus, the partners
are not allowed to agree otherwise. If they set a
clause in the basic contract disagrees with this rule,
this clause is considered invalid and it should be
deleted. It is obligatory rule although Omani
Company Law does not mention it. This is because
this rule is general rule applied in this type of
companies everywhere.
B) The joint-liability
The joint-liability means that the creditors can claim on the
partners severally or jointly. So, if one of the partners is asked to
pay the debt, he should not refuse to pay. He also should not
ask the creditor to leave him and claim on the other partners.
He has to pay, and after payment he can refer to the other
partners. If one of the partners was bankrupted, the others will
bear this bankruptcy according to their portions in the capital.
But we have to remember that the partner is not bound to pay
the debt unless the company fails to pay.
Note: Like the rule of personal liability, the rule of joint-liability
of the partner in this company is obligatory rule. Thus, the
partners are not allowed to agree otherwise. If they agreed
otherwise, this agreement is considered invalid. This rule is
obligatory although Omani Company Law does not mention it.
This is because this rule is general rule applied in this type of
companies everywhere.
The personal liability and the joint-liability are applied on the all
partners as long as they are still in the company. Accordingly, if
one of the partners left the company, he will not be liable after
leaving, whether personally or jointly. But to be non-liable, he has
to register that he left the company in the commercial registrar
office. This event should also be published. Besides, if his name is
mentioned in the name of the company, he has to delete his
name. But if he agreed to leave his name in the name of the
company, he will remain liable (jointly and personally) toward the
creditors of the company who have good faith as aforementioned.
Nevertheless, the withdrawn partner will remain liable about the
transactions which happened at the time when he was a partner.
If the partners agreed otherwise, this agreement will be invalid
toward the creditors of the company.
On contrary, if a new partner joined to the company, he will be
liable about the obligations of the company which happens before
and after his joining. However, the new partner can stipulate that
he will be liable about the obligations which happen after the
joining only.
5- The partners can not waive their shares unless some
requirements are fulfilled.
Art (66) of Omani Company Law prohibits that one of the
partners waives his share to a foreigner person unless the all
partners agree. But this rule is not obligatory rule. So, the
partners can agree otherwise in the basic contract. But even if
the partners agree otherwise, this agreement should not be
absolute. This is because this company is based on the personal
consideration among the partners. Thus, they have to set
restrictions to this agreement. For example, they may agree that
the majority of the partners should agree.
However, if the partner waives his share to another partner, the
agreement of the other partners is not required. This is because
the partner who received the share is already accepted by the
other partners and they trusted on him.
In all cases, when the partner waives his share, the basic
contract should be amended. This amendment should be
registered and published.
PART TWO
LIMITED PARTNERSHIP
Concept of Limited Partnership:
Art (77) provides: “the Limited Company, which is a commercial
company, includes two types of partners:
a) Authorized partner or partners. They are jointly and severally
liable (in their private property) for the all partnership’s debts
and liabilities.
b) Limited partners. Their liability is limited to the shares which they
introduced…”
Thus, this Article shows that there are two types of partners in this
company. The first type (the authorized partners or the general
partners) has a position similar to the position of the partners in the
Joint-Liability Company, i.e. the liability of these partners is not only
limited for the shares which they introduced, but also to their private
property.
The second type is called limited partners. Their liability is limited
only to the shares which they introduced, i.e. they are not liable in
their private property.
Characters of the Limited Company:
1- This company contains two types of partners: the
authorized partners and the limited partners. The liability of
the authorized partners is not limited to the shares which they
introduced, but it exceeds that to their private property.
Further, the authorized partners acquire the trader character.
Therefore, they are submitted to bankruptcy rules, i.e. if the
company is bankrupted, they also will be bankrupted.
Meanwhile, the liability of the limited partners is limited to
their shares only. Besides, the limited partners do not acquire
the trader character and, accordingly, bankruptcy is not
applied on them.
➢ Note: Even if there are two types of partners, this company
is based on personal consideration. So, the partners
cooperate with each other to achieve the object of the
company, and a trust should be available among them.
2- The name of the company may contain the name of one of the
partners or more (the authorized partners). At the same time, they
are not bound to insert their names and they have freedom in this
issue.
However, if they insert a name of any partner, this name should be
factual and not illusive. Also, If they inserted one name only, this
name should be followed by the term (and his partners or and his
partner)
In addition, the partners can select any term to be added in the
name of the company. For example, they may select a name suits
with the activities of the company.
Besides, the name must contain the words (Limited Partnership).
Thereby, people can distinguish the type of the company from other
types, such as if they name it Ali Salim and his partners company
(Limited Partnership).
On the other hand, the name of the limited partners should not be
mentioned in the name of the company. If a name of one of them is
mentioned, he will be liable for the debts and obligations of the
company, i.e. he will have the same position which the authorized
partner has.
3- The limited partner has limited liability
The liability of the limited partner differs from the
liability of the authorized partner. The liability of the
former is limited to the share which he introduced
only, while the liability of the second extends to his
private property. Thus, if the company loses, the
loss of the limited partner will not exceed what he
paid to the company.
The share of the limited partner should be either
monetary or share in property (in-kind), i.e. it
should not be a service. Meanwhile, the share of
the authorized partner may be a service. This is
because he takes the same position which the
partner in joint-liability takes.
4- The limited partner does not acquire the trader character.
This means that the limited partner is not bound to fulfill the trader
requirements. Accordingly, he is not submitted to the bankruptcy
rules…Art (81) of Omani Company Law.
5- Transferring the shares to foreigner parties is restricted with
specific requirements.
This is because this company is a type of companies of persons.
Thus, the personality of each partner has consideration among the
partners. Therefore, transferring the share of the partner to a
foreigner person should happen by the consent of the partners. This
consent should happen in consensus.
Nevertheless, if the basic contract of the company contains other
requirements, these requirements are applied instead of the rule of
the consent of all partners. For example, the basic contract may
stipulate that the transfer of the share happens by the consent of
majority of the partners, but not all of them…Art (31) of Omani
Company Law. These rules are applied on the authorized partners
and the limited partners.
➢ Note: If the share is transferred to a partner (not a
foreigner person), there is no need to get the consent
of the all partners unless the basic contract contains a
clause provides otherwise.
➢ Note: If a share is transferred whether from partner to
partner or from partner to a foreigner person, the
basic contract should be amended and this
amendment should be registered and published.
➢ Although there is restriction in transferring the share
of the partner, he (the partner) can waive his portion
of profit to a foreigner person. He can waive the profit
regardless of the agreement of the partners. This
happens by an agreement between the partner and
the foreigner person and there is no relation arises
between the foreigner and the company.
PART THREE
PARTICULAR PARTNERSHIP COMPANY (AN IMPLIED
TRUST)
Concept of Particular Partnership Company.
This company is defined in Art (85) of Omani Company
Law which provides: “The Particular Partnership
Company is a commercial company organized between
two persons or more. It is limited to the special
relationship among the partners without any effect to
the foreigner persons”.
This definition shows that this company is formed
among two partners or more, whether these persons are
normal or juristic. Its existence is limited to the relations
among these partners only.
This company has characters distinguish it from other
companies. They are as follow:
Characters of the particular partnership company
1- It is a type of the partnerships. So, it is based on the trust among
the partners who know each other. Consequently, the shares of the
partners should not be transferred to any foreigner person unless
the partners agree unanimously. However, the partners can specify
other method to transfer the shares in the basic contract of the
company.
2- It is a hidden company. The partners form this company on basis
of a contract concluded among them and the others do not know
that there is a company. It remains a hidden company as long as the
partners do not show to the others that there is a company among
them. If they show to the others that there is a company , then the
rules of Joint liable Company are applied (Art 85). But this new
company should fulfill the required legal conditions. Thus, the
partners will be joint-liable toward the others.
Note: It may be shown to the others if the partners deal with the
others by its name. or it may be shown if a foreigner party proved
that there is a company among the partners.
3- It is not submitted to the registration procedures.
Art (85) of Omani Company Law provides “the Particular Partnership
Company is not submitted to registration procedures in the
commercial registrar office, it is also not submitted to publication”.
This rule is also applied if the partners amended the contract, i.e.
there is no registration or publication in the amendment of the
contract.
4- It does not have a juristic personality. This is mentioned in Art (85)
of Omani Company Law. That means, it does not have a commercial
name. So, when the others deal with this company, the legal relation
arises between the others and the partners, but not between the
others and the company.
Further, because this company does not have a juristic personality, it
will not have financial independency, i.e. the shares of the partners
remain owned by them and they are not transferred to the company.
Furthermore, as a result of this character, this company will not have
nationality and domicile. It also will not have legal identity which
means it is not submitted to bankruptcy.
SECTION THREE
CORPORATIONS
PART ONE
SHAREHOLDING COMPANY (JOINT-STOCK COMPANY)
This type of companies has ability to carry out the huge
projects. This is because it is based on a large capital which
comes as a result of collecting the shares.
The shares, in this company ,usually have small value. Due to
that, any person can buy these shares and become a partner in
the company even if he is poor.
Besides, the liability of the partner is limited to the shares
which the partner has. It does not exceed these shares. So, he
will not be liable in his personal property. This factor motivates
people to buy shares as this factor achieves safety and security
to the partners.
In addition, the ownership of the shares in this company can be
transferred easily by simple procedures.
Because this type of companies affects on the economy of the state,
the laws (including Omani Company Law) regulate this company by
obligatory rules. And they usually regulate it in details.
This company is regulated in Oman in Art (88-233) of Omani
Company Law. These Articles show that there are two types of the
shareholding company: the Public Shareholding Company and the
Private Shareholding Company (it is called also Closed Shareholding
Company).
Actually, these two types are governed by the same rules in Omani
Company Law. However, there are some differences. The most
important difference is that the founders in the Public Shareholding
Company have to subscribe in (30% – 60%) of the capital of the
company before offering prospectuses to the public…Art (61) of
Omani Company Law.
Meanwhile, the capital of the Private Shareholding Company (Closed
Shareholding Company) is owned entirely by the founders, and there
are no prospectuses offered to the public. In addition, there is
another important difference. It is that the legislator in Oman
renders the minimum capital for the Public Shareholding Company
(OMR 2,000,000). Meanwhile, the legislator renders the minimum
capital for the Private Shareholding Company (OMR 500,000).
Concept of Shareholding Company
Art (88 and 89) of Omani Company Law defines this
company as: It is a commercial company in which its
capital is divided into equal values called shares.
These shares are circulated among people according
to the rules of the law. The liability of the partner is
limited by the nominal value of the shares which he
has. This company must contain three partners at
least (whether normal or juristic persons). However, if
the state is a partner in this company, it may contain
less than three.
This definition shows some characters for the
Shareholding Company. They are as follow:
1- It is a corporation and not a partnership
That means, the partners are interested, in this company, in the
finance and in the capital of the company, but they are not interested
in the trust among them, i.e. they aim to create a capital regardless
of the partners. According to that, the partners in this company can
easily waive their shares to others. Further,…