COMMERCIAL LAW

Source: Amy Krois-Lindner and Matt Firth, Introduction to International Legal

Reading 1
COMMERCIAL LAW
Commercial law deals with issues of both private law and public law. It
developed as a distinct body of jurisprudence with the beginning of large- scale
trade, and many of its rules are derived from the practices of traders. Specific
law has developed in a number of commercial fields, including agency,
banking, bankruptcy, carriage of goods, commercial dispute resolution,
company law, competition law, contract, debtor and creditor, sale of goods and
services, intellectual property, landlord and tenant, mercantile agency,
mortgages, negotiable instruments, secured transactions, real- property and tax
law.
The work of a commercial lawyer may involve any aspect of the law as it
relates to a firm’s business clients, and the role of the lawyer is to facilitate
business clients' commercial transactions. It is essential for a commercial
lawyer to have not only a good knowledge of a lot of substantive law, but also
a thorough understanding of both contemporary business practices and the
particular business needs of each client.
A commercial lawyer may be asked to advise a client on matters relating to
both non-contentious and contentious work. Non-contentious work largely
involves advising clients on the drafting of contracts, whereas contentious work
commonly involves the consequences of breach of contract.
Many jurisdictions have adopted civil codes that contain comprehensive
statements of their commercial law, e.g. the Uniform Commercial Code (UCC),
which has been generally adopted throughout the USA. Within the European
Union, the European Parliament and the legislatures of member nations are
working to unify their various commercial codes.
A substantial amount of commercial law is governed by international treaties
and conventions. The United Nations Commission on International Trade Law
(UNCITRAL) regulates international trade in cooperation with the World
Trade Organisation (WTO). The WTO is responsible for negotiating and
implementing new trade agreements, and is in charge of policing member
countries’ adherence to these agreements, which are signed by the majority of
the world's trading nations and ratified by their legislatures (for example,
Parliament in the UK or Congress in the USA).

Reading 2
COMMERCIAL LAW INTERSHIP
Powderhouse Sommerville LLP International Commercial Law Internship
The international commercial law firm Powderhouse Sommerville LLP
launched its International Commercial Law Internship at the University Law
School in 2006 and has renewed it for the current academic year.
Powderhouse Sommerville LLP is one of the world’s largest law firms, with
over 1,600 lawyers and 15 offices in North America, Europe and Asia.
Professor May Rikos, Director of the University Law School, said: The
University Law School welcomes the opportunity to work with one of the first-
rank global commercial law firms.’
Under the terms of the internship, students taking International Commercial
Law courses in Mergers, Comparative Antitrust Law and World Trade Law
will be invited to compete for the internship. Selection will be on the basis of
an essay plus interview of the students who achieve the top essay mark in each
of the relevant courses. Applications must be submitted by March 10, and the
interviews will take place in late March/early April. The Internship will take
place from May to July inclusive in the Powderhouse Sommerville Frankfurt
Office.
• Link to application at the bottom of this page.
Reading 3
ROLE OF COMMERCIAL AGENTS
The role of commercial agents is well known. They act as independent
intermediaries representing their principals in the market. A commercial agent
is defined by EU Directive 86/653 as a person ‘who is a self-employed
intermediary having continuing authority to negotiate the sale or purchase of
goods (but not services) on behalf of his principal or to negotiate and conclude
such transactions on behalf of and in the name of his principal…’. They do not
buy products from their principals, but arrange sales directly from their
principals to the customer. For the provision of this service, commercial agents
are typically paid a commission by their principals, calculated as a percentage
of the sale price of the product to the customer.
Commercial agency is of particular importance in international trade. It
provides a convenient structure enabling a foreign supplier to penetrate an
overseas market. By using the services of an agent established in the targeted
overseas market, the principal can benefit from the knowledge and local
connection of the agent, avoid the investment and commitment of managerial
resources required by the establishment of a branch or subsidiary and, by
taking advantage of the agent’s services on a commission basis, can effectively
test the overseas market on a ‘no cure, no pay’ basis.
But the position of the commercial agent is vulnerable. Because of the agent’s
role as intermediary, the principal necessarily has perfect knowledge of the
customers procured by the agent. As sales volumes build, the temptation for the
principal to circumvent the agent and enter into direct relationships with
customers can often become overwhelming against the background of an
increasing commission bill, often fuelled by repeat orders from the same
customers. It is commonplace, therefore, for the commercial agent to find his
relationship with his principal brought to an end precisely at the moment where
the agent’s efforts have resulted in the establishment of a significant new
customer base for the principal in a new market. In this way, the agent becomes
the victim of his own success and the principal takes advantage of the goodwill
in the principal’s product, created largely as a result of the agent's efforts.

Reading 4
COMMERCIAL AGENCY CONTRACT (COMMERCIAL AGENCY
AGREEMENT)

3. The Agent shall endeavor to obtain business for the Principal and
is bound to serve the interests of the said Principal to the best of his
ability. He will do his best to provide all information necessary for the
purpose of promoting business, and especially inform the Principal
immediately about even- order received. (The Agent shall try his best to
achieve business for the Principal and is limited to serve the gain of the said
Principal. He will make the best attempt to provide all information which is
needed for boost business, and especially directly notice the Principal about
even-order received.)
4. He may not deviate from the prices, delivery and payment conditions
of the Principal without his consent.
9. The contract shall come into force on 10 February 2006 and shall be
valid for an indefinite period.
Where the contract has been agreed for a fixed period, it shall be
expected for the same period provided that notice of termination shall
not have been served, by registered letter, at least six months prior to
the end or a calendar quarter.
Where the contract has been agreed for an indefinite period, it may
he terminated by either party thereto giving, by registered letter, six
months’ notice prior to the end of a calendar quarter.
10. The provisions of the EEC Council Directive of 18 December 1986
on the co-ordination of the laws of the Member States relating to
self-employed agents (86/653/EEC) apply to this agreement. In other
respects, the law of the domicile of the Agent is to be consulted.
11. Any disputes arising out of or in connection with this agreement shall
be decided by the competent Court in the area where the claimant
has his residence or registered offices.

Reading 5
THE COMMERCIAL AGENTS (COUNCIL DIRECTIVE)
REGULATIONS 1993
Entitlement of commercial agent to indemnity or compensation on
termination of agency contract
17 (1) This regulation has effect for the purpose of ensuring that the
commercial agent is, after termination of the agency contract, indemnified in
accordance with paragraphs (3) to (5) below or compensated for damage in
accordance with paragraphs (6) and (7) below.
(2) Except where the agency contract otherwise provides, the
commercial agent shall be entitled to be compensated rather than indemnified.
(3) Subject to paragraph (9) and to regulation 18 below, the commercial
agent shall be entitled to an indemnity if and to the extent that—
(a) he has brought the principal new customers or has
significantly increased the volume of business with existing
customers and the principal continues to derive substantial
benefits from the business with such customers; and
(b) the payment of this indemnity is equitable having regard to all
the circumstances and, in particular, the commission lost by the
commercial agent on the business transacted with such
customers.
(4) The amount of the indemnity shall not exceed a figure equivalent to
an indemnity for one year calculated from the commercial agent's average
annual remuneration over the preceding five years and if the contract goes back
less than five years the indemnity shall be calculated on the average for the
period in question.
 (5) The grant of an indemnity as mentioned above shall not prevent the
commercial agent from seeking damages.
(6) Subject to paragraph (9) and to regulation 18 below, the commercial
agent shall be entitled to compensation for the damage he suffers as a result of
the termination of his relations with his principal.
(7) For the purpose of these Regulations such damage shall be deemed
to occur particularly when the termination takes place in either or both of the
following circumstances, namely circumstances which—
(a) deprive the commercial agent of the commission which proper
performance of the agency contract would have procured for him
whilst providing his principal with substantial benefits linked to
the activities of the commercial agent; or
(b) have not enabled the commercial agent to amortise the costs
and expenses that he had incurred in the performance of the
agency contract on the advice of his principal.
(8) Entitlement to the indemnity or compensation for damage as
provided for under paragraphs (2) to (7) above shall also arise where the
agency contract is terminated as a result of the death of the commercial agent.