business law
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Summer 2020
Semester 2 UG 090 : OMANI BUSINESS LAW Lecture 4 : COMMERCIAL AGENCIES LAW
B.Sc. Accounting, Auditing and Finance and
Bachelor Business Administration
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Introduction
Learning Objectives
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LO 2 Apply general principles of contract, tort and agency law
Define the nature and meaning of a contract.
Apply essential elements of valid contract.
Assess the significance of contracts and contract law in business.
Determine, the nature, meaning and different types of torts.
Explain the Basics of agency.
Commercial Agencies Law- ROYAL DECREE NO. 26/77
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Commercial agencies are governed by
the Commercial law which has been issued by the Royal Decree No. 55/90,
the Commercial Agencies Law Issued by the Royal Decree No. 26/77 as amended by Royal Decree No. 82/84 and
Royal Decree No. 73/96 and the Commercial Register Law issue by the Royal Decree No. 3/74 as amended by the Royal Decree No. 88/86.
Definition of Commercial Agency
According to the Commercial Agencies Law, the commercial agency is defined as: “Any agreement through which a merchant or a commercial company in the Sultanate is assigned to promote or distribute the products or services of a foreign person or entity in consideration for profit or commission”
According to article 276 of Commercial Law of Oman, agency is a contract in which the principal appoints someone (agent) to do a specific legal transaction on behalf of the principal.
Law of commercial Agency
distributorship agreements in Oman are governed by Law of Commercial Agencies
Definition of Agent & Principal
An agent is a person employed to do any act for another or to represent another in dealings with third persons.
The person for whom such acts are done or who is represented is called the principal.
The contract which creates relationship of principal & agent is called an agency.
Importance
Agency is the foundation of most business relationships where more than one person engages in commerce together.
The Commercial Agency Law (Royal Decree 26/1977) was enacted to provide a means for foreign principals to sell goods and services in Oman without a local presence, while providing protection to the investment made by Omani agents.
Prior to the amendments, the CAL was protective of Omani agents with regards to renewal and termination of agency agreements.
Qualification of an agent
Only Omani nationals (or a naturalized person who has been a citizen at least three years)
Should be not less than 18 years of age.
Should be registered in the Commercial Register and is a member of the Oman Chamber of Commerce and Industry and his head office in Oman.
Should not have been convicted of bankruptcy or fraud or speculation in the prices of goods, or any crime affecting honour or good reputation, unless he has been rehabilitated.
or companies duly established in accordance with the laws of Oman and with at least 51% Omani ownership may be appointed as commercial agents.
Qualification of an agent
Company
Should be registered in the Commercial Registry and its principal office should be in the Sultanate.
Omani share in its capital should not be less than 51%.
The purpose of the company includes import trade and commercial agencies business.
companies must be established in accordance with the laws of Oman
Agency contract
Commercial Agency contracts are subject to the following regulations in addition to any terms the contracting parties
The agency contract or any shall be in writing and attested by Oman Chamber of Commerce and Industry
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The commercial agency agreement must be in writing and must be duly certified and authenticated. The agency agreement must include at least the following essential elements (Article 6):
(1) Name of both the principal and the agent and their nationalities.
(2) The assets, goods and services of the agency, its commercial name (if available) and the rights and obligations of both the principal and the agent.
(3) The term of the agency and the area the agency covers.
The registration of the agency must be renewed every three years from the date of initial registration in the register or from the date of last renewal.
Termination of agency
If the principal terminates an unlimited term commercial agency without cause, the principal must compensate the agent.
With respect to limited term agencies, the principal is free to cancel registration at the end of the term.
However, an agent may seek compensation where the principal has abused this right to terminate.
The most common example is where the principal unjustly terminates or fails to re-new.
Reference
Anon, (2018). [online] Available at: https://www.dentons.com/.../significant-amendments-to-omans-commercial-agencies-l... [Accessed 10 Sep. 2018].
Times of Oman. (2018). Oman allows multiple agency agreements for imports, clarifies ministry. [online] Available at: https://timesofoman.com/article/114775 [Accessed 10 Sep. 2018].
Reference
Tag-legal.com. (2018). [online] Available at: http://www.tag-legal.com/UploadFiles/Commercial%20Agency%20in%20the%20Sultanate%20of%20Oman%20for%20web.pdf [Accessed 10 Sep. 2018].
Stalawfirm.com. (2018). Application of commercial Agency Law of Oman - STA Law Firm. [online] Available at: https://www.stalawfirm.com/en/blogs/view/commercial-agency-law-of-oman.html [Accessed 10 Sep. 2018].
Reference
Oman Law Blog. (2018). Agency Agreements Under the Laws of Oman. [online] Available at: https://omanlawblog.curtis.com/2016/02/agency-agreements-under-laws-of-oman.html [Accessed 10 Sep. 2018].
The End/ Questions
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