Article 32 of the commercial code imposes an obligation on traders not to make use of any

name, mark or distinctive device capable of creating confusion with those lawfully used by
others even if the latter are not registered in terms of the Trademarks act. Explain the aim of
this obligation and describe its salient features.

Article 32 of the commercial code states “Traders shall not make use of any name, mark or
distinctive device capable of creating confusion with any name, mark or distinctive device
lawfully used by others, even though such other name, mark or distinctive device be not
registered in terms of the Trademarks Act, nor may they make use of any firm name or
fictitious name capable of misleading others as to the real importance of the firm.” Thereby
this article relates to the use of unfair competition to gain a competitive advantage.
Competition can be abused. The law controls this by virtue of 2 different area of law both
which are competition law but have a distinction. The first distinction is public law which
relates to the state and the business. Competition law also referred to as anti trust law refers
to an area of law were the state creates rules to ensure that the market remains
competitive. In a free market, you get firms which have a lot of power, for example
Microsoft in the operating system for PC’s. That area of legislations where the state tries to
control abuses in the sense that the market does not remain competitive. Found under
competition act of 1985. The second is law which concerns more traders between
themselves. The rules of the game between traders themselves. The articles art article 32 to
37 with 37 being the remedy section.

The limits of fair competition has been around for a while with the law being introduced in
1927 and articles 32 to 37 of the commercial code relate to such issues. Therefore before
1927 there were issues with competition law and in fact cases such as Smith vs Galea of
1867 proved such issues as in this case the court recognised the notion of unfair competition
and this related to a name of a shop. The court recognised property rights in the name of a
shop. The issues relating to limits of competition are constantly changing with constant
amendments being added. The latest amendments being in 2008 where they added in
articles 32A, 32B and 36A.

Article 32 of the commercial code deals with unlawful competition through confusion. The
confusion of products may be caused either through the limitation of trademarks and the
confusion of names or distinctive devices. In order to establish an action under article 32 one
must need to prove the plaintiff has the lawful use of a name and that the defendant is using
a name for a distinctive device. This exclusive use of mark, name or device is because the
trader was the first one to use it in the public. Trademarks besides being protected by article
32 are also protected by special legislation. In particular the trademark legislation act of
2000. Article 32 refers to this act and provides that the provision in article 32 applies
whether or not the trademark is registered. There is the possibility of a conflict between a
registered trademark and a mark which a person has prior use to. In this situation the court
has established that registration does not create ownership right. Article 32 of the
commercial is indeed a law that protects unregistered trademark.

The features of article 32 were mentioned above and there are a number of cases that relate
to the issues of article 32. One of these cases is Frendo Randon vs Gatt of 1968 where the
defendant registered a company in Malta with the name Club Med Limited. This company
had nothing to do with the tradename club med which operated under French Management.
Lawyers of the French company filed an action in court. The principal pleas of the defendant
was that the law were theritorial. The commercial court and court of appeal gave judgement
in favour of the plaintiff relying on the fact that the plaintiff company had a long established
reputation in Europe and Malta. It was also noted even though club med had no office in
Malta both the plaintiff company and the Maltese company were in competition. Other
cases similar to this are the appeal decision of Valletta vs Tanti.

Thereby what we can take out of these cases is that there are elements of distinctiveness
that need to be added onto one of the features of article 32 as when related to trade name
as it is an essential function of it. What may also be an issue in trade name if a business uses
a generic word such as in the case of Colombus vs Lee in 1932 where Colombus
manufactured cigarettes and the brand name was Turkish. The plaintiff sued the defendant
for unfair competition because the defendant was also using the word Turkish. The
defendant gave a plea which is basically the word is essentially describing but the court held
that the word Turkish acquired a secondary meaning to the extent that the public related
the word to that product. This case shows us that generic words can be given secondary
meaning if they acquire secondary usage.

Legal principle determine whether a mark creates confusion or not and this relies on a
question of fact that are decided on a case by case basis. There are a number of actions that
could be taken to make sure that there will not be a level of confusion when it comes to
distinction of trade names. This includes determining whether a mark is similar you would
look at the names from the point of view of the likely purchasers of the good. In this point
you take the average with ordinary attention and diligence. You could also look at what the
impression of the mark leaves on the mind and that the mark must be seen as a whole and
not merely one single detail. An example of a case related to this is the case of Canon vs
MGM.

Article 32 as mentioned before has a number of different sub section that relate to different
issues with fair competition. Article 32 A deals with comparative advertising where under
article 32A this states that the trader shall not engage in any comparative advertising and
even the mentioning of other companies can only be done if the information given is not
misleading, if it compares goods or services to meet the same needs or purposes, if it
objectively compares one or more material, if it does not discredit trademarks, it did not
take unfair advantage of a trademark and it does not create confusion against the
competitor. There also is article 32B which relates to misleading advertising and the false
indication of origin. A case related to this is Giuseppe Barbara vs Alfredo Barbara where the
plaintiff alleged that the defendant was using a falsification of the origin since on his naval
caps he used the words British make. In this case the defendant said that since Malta was
part of the British empire it was entitled to the British make. The court did not accept this
claim.
Article 5 (a) is the objective act of trade par excellence and the act which historically gave
meaning to the word “trade”. Explain in detail:

1. a. Its features and requirements; and

2. b. The differences between the objective act of trade in Article 5 (a) and the objective
act of trade in Article 5 (h).

A trader according to article 4 of the commercial code means any person who, by
profession, exercises acts of trade on his own name, and includes any commercial
partnership. Essentially what this means is that one cannot become a trader without
exercising acts of trade; which can be split into objective and subjective acts of trade.
Objective acts of trade in the commercial code give meaning to what a trade actually is
as it lists a number of examples that by law are considered to be trades.

(a) The article related to objective acts of trade is article 5 of the commercial code which
gives 8 true examples of transaction which by law are considered to be trades. One of
these is 5(a) which is the most important acts of trade as Article 5(a) states “any
purchase of moveable effects for the object of re-selling or letting them, whether in their
natural state or after being worked or manufactured; any sale or lease of moveable
effects, in their natural or after being worked or manufactured, when the purchase
thereof has been made with the object of re-selling or letting such effects;. Essentially
this is a very important as it deals with important scenarios that are used in every day
trading which are the purchase and sale of goods bought with the intention of reselling.
There are 3 elements involved in this act and these are purchase or sale, moveable
effects and object of re-selling.

The first element the purchase or sale first we must look at what a purchase is and what
a sale is. A purchase is the art of speculation where you purchase something at a price to
speculate, thinking you are going to purchase the good to earn a profit as the aim of
purchasing the good is to resell it in the future. The sale then is the realization of the
speculation when you purchase the good.

The second element the moveable effects element essentially tells us what moveable
objects are. Essentially this could be better defined in article 316 of the civil code which
states that moveable objects are “The words movable property or things, moveable
effects or moveable substance used in any provision of law or in any disposition of man,
without any other addition or indication restricting their meaning, shall include both the
things which are moveable by nature and the things which are generally considered
moveable by regulation of law.” An example of a case which was related to this issue
could be seen in Vella Vs Zammit which was related to a concession to quarry stone for 4
years in Imgieret. The courts commented saying that so long as the stone remained
unquarried they remain part of the land but if they are quarried they become moveable
objects. Similar cases are Aquilina Vs Zammit and Briffa vs Schembri.

The final element we will be looking at is the object of re-selling as this act of trade is
about purchase and sale of goods specifically purchase and sold for the intention of
being used to make a profit. Therefore we need to see the differences between what we
consider a commercial sale which is when a good is bought with the intention of
reselling and a civil sale which is when a good is bought with the intention of consuming.
Firstly as a purchase the difference between how they will be defined in a law matter is
what the consumer intends on doing with the good when the purchase is being made.
For example if a consumer purchase a video game with the intention of selling it to make
a profit but then decides that he wants to keep it and use it to play with then even
though his intention may have changed this would be still be considered as a commercial
sale. The same thing can be said about under sale as it is considered a commercial sale
dependant on the intention once a purchase is made. An example of a case that we can
see could be related to such an issue is Saliba v Mula where the plaintiff claimed the sum
of 130LM which represented the price of goats he had sold to the husband of the
defendant; who had by then passed away. The defendant sold milk door to door. In this
case, the question of jurisdiction arose. The court then determined that the principal
purpose was to sell the milk, which was not an act of trade under article 5.

(b) As we saw in part a we clearly saw how Article 5a deals with any purchase or sale of
any moveable property. An article similar to the article we have in 5a is article 5h. Article
5h deals with any purchase and resale of immoveable property when made with the
object of commercial speculation. This article is very similar and the only real difference
between is that one relates to immoveable property and the other relates to moveable
property.

As mentioned in part a moveable property can be defined according to article 316 of the
civil code which states that “The words movable property or things, moveable effects or
moveable substance used in any provision of law or in any disposition of man, without
any other addition or indication restricting their meaning, shall include both the things
which are moveable by nature and the things which are generally considered moveable
by regulation of law.”

In the case of immoveable property this relates to anything that does not meet the
criteria of a moveable property and the difference in the way they are handled legally is
that the resale of a moveable would be treated with the purpose of a resale while
immovable property would be treated with the purpose of commercial speculation.
Commercial Speculation mainly refers to the purchase of property which is then
intended to be sold off as a property as that is the main type of immoveable property
however to easily define it we can say that it means the making of profit out of
something and not exercising an activity in it.

An example of cases that took into account the issue of immoveable and moveable and
the difference between 5a and 5h are cases such as Micallef vs Mizzi where the plaintiff
sued for a balance owed for woodworks in which he had undertaken in a property of the
defendant. The question of jurisdiction arose. The Court held that the defendant was a
trade who regularly bought and sold land. These all fit into article 5(h) and hence he was
considered to be a trader.
A trader according to article 4 of the commercial code is any person who by profession,
exercises act of trade in his own name, and includes any commercial partnership. By law
when a trade exercising acts of trade he has 3 duties in which he must abide to that are
listed in the commercial code.
These duties of the trader that they must keep trade books, they must publish marriage
contract and they must keep within the limits of fair competition. In terms of trade
books these regulations are listed within articles 13-26 of the commercial code. These
trade should hold a record of all the business transactions of a trader during the specific
financial year. It is important for Traders to keep record of these transactions and to
keep these trade books is that they must keep a record of profit and losses made for
fiscal purposes. This is due to the fact that in certain scenarios where the books must be
shown such as if the trader goes bankrupt these books must be shown to prove that the
trader is actually bankrupt as well as in scenarios such as creating goodwill for the
business of the trader. The second reason why a trader must keep these records is that
through these books a trader can show that he is credit worthy which would help a
trader receive a loan if necessary and for banks or other financial institutions to trust this
trader. The final reason as to why a trader must keep these as when necessary these
books must be provided as evidence within a court as they are a form of proof.

Article 13 of the Commercial Code states that “every trader is bound to keep the
following trade books:
- Waste Book
- Journal
- Cashbook
- Inventory Book
- Ledger”
Therefore all physical traders must keep these following books. The waste book is the
first book and the article related to the waste book is listed in article 14 which states that
“every trader shall immediately enter in the waste-book every commercial transaction
which he makes, showing all the conditions or terms to which it is subject.” This
essentially means that the waste book is essentially a book used to record as soon as
they are occurred. The way in which this works is that as soon as the transaction takes
place the legislator will record this transaction and is also in charge of stating the terms
and conditions of the transaction. The waste book is important because the entries
made therein are the most genuine hence in case of discrepancy between the waste
book and any other book the court would give prevalence to what is contained in the
waste book.

The next book we will be looking at is the journal which is stated in article 15 of the
commercial code which states that “The journal must show day by day all the
transaction concluded by the trader, his debts and credits, his negotiations, acceptances
and endorsements of bills, and generally all that he receives or pay for any cause
whatsoever; and must show month by month the sums disbursed for household
expenses.” This is a well detailed book which states all day to day transactions as well as
all the negotiations, acceptance and bills of exchange that occur by the day.

The next is the cash book which is listed in article 16 states that “the cash-book must
show in detail, day by day, all the sums received and those paid out by the trader,
compared with the journal; it must be balanced at least once a month.” The cash
essentially enables the trader to know each day its cash in his possession. The fact that
the trader has no cash on a particular day does not mean its not doing well however it
should be recorded at end of every month.
The next book is the inventory book which is stated in article 17 of the commercial code
and within this article we can see that it states that “(1) The trader shall make every year
an inventory containing a description and valuation of his whole estate, assets and
liabilities, whatever may be their nature and origin. (2) The annual inventory shall be
closed with a balance and with a statement showing the profits and losses, and shall be
copied out year by year in the aforesaid inventory-book.”. This book is essentially a profit
and loss account and a balance sheet where the balance sheet should show the traders
assets and liabilities at the end of the financial year while the profit and loss account has
to show the profit a trader would make at the end of the financial year. It is in the
interest of creditors to know what assets and liabilities has, so the legislator has required
that this exercise is made.

The final book that must be recorded by a trader according to the commercial code is
the ledger which is stated in article 18 and states that “The ledger shall show an accurate
and up-to-date record of all transactions classified as personal and impersonal accounts
and so kept as to render possible the drawing up of a true and correct picture of the
state of affairs of the business or trade at any given time.” Thereby the reason as to why
this is kept is it essentially links all the books together as it takes notice of all transaction
thereby this gives a true and correct view of the state of affairs of the trader at a
particular point in time. This has to be kept in a way that by looking at them once can
extract pretty exact information of what the financial position of the trader is.

Besides these 5 obligatory trade books that a trader must keep article 19 of the
commercial states that traders may opt to also keep other books in which they may
deem to be useful to showing the true and fair of the financial situation of the trader.
The trader must also take into account that there are also regulations as to what must
be shown in these books and how they should be recorded. Article 20 and Article 21 of
the commercial code clearly show us this as article 20 relates to the duty of traders to
keep letters, invoices and telegram as well as all forms of true receipts and proof that
these transactions did occur while article 21 states that these books must be kept in
order, the transactions must have a transaction number and there must be no space
kept in between the drawing up of these books so as to avoid any possible tampering.
Article 21 also states that if there may be mistakes these will need to be kept showing as
trade books are being elevated to the same standing that written proceedings in court
have and that public deeds have, as they all require this procedure of leaving the
cancelled words legible and showing clearly the changes made.

These books are there for all traders and must be recorded by all traders except for
companies. Companies do not have to record these books but will have to record a
different set of books that are listed on article 163 of the companies act which states
that companies will have their own list of books that they must record that are different
to those of physical traders where they must keep proper accounting records.
June 2022 qs1:
Explain in detail how commercial contract are formed with reference to the following concepts as
regulated by the commercial code
a. Offer and acceptance
b. Union of the Wills

The civil code of Malta defines a contract as a written agreement made between two or more parties
and this creates an obligation which is subject to enforcement and recognition in the eyes of the law.
A contract, regulation or dimmish an obligation. In order for a contract to be considered as valid
there must be 4 requisites that must meet according to Article 966 of the civil code. These are that a
contract must have capacity, consent, object and it must be lawful. Therefore since to form a
contract we must look at the process in which a full agreement is made. First there will be an offer,
after the offer there will be an acceptance and afterwards there will be a union of the wills.

The offer element of a contract is the part of the contract where all information regarding the
contract will be passed on and where all details regarding this agreement will be discussed and this
is the first part before an agreement is made. As mentioned before according to article 966 of the
civil code a contract must have capacity, consent, an object and it must be lawful. In this section of
the contract these parts of the contract will all be defined. The capacity refers to the ability of both
parties to enter as there may be cases where a person may not be able to enter into a contract such
as in cases where the persons are under the age of 16 which makes them a minor or where the
person may have some illness which will make them incapable of entering into a contract. An
example of this is in the case of Mario Bugeja vs Bernadette Brincat where a donation of an
immovable property was made in favour of the defendant by her parents in 2009. The plaintiff
argued that a half undivided share of the said property, which share represented the portion
transferred by his mother to the defendant, was null and void. The plaintiff alleged that his mother
lacked the mental capacity at the time the said transfer occurred, thus this led her to be incapable of
contracting the said donation. The court then made reference to principles which emerged from
previous judgements and these principles state that capacity is always presumed and incapacity is an
exception.

There must also be consent where the contract must be accepted where the contract is free from
fear, fraud or violence. A case that had a similar scenario to this is the case of George Portelli vs Ivan
John Felice, 2004, where the court listed the elements of fraud in contracts; (1) consent is not valid if
there exist fraudulent acts; (2) must be serious; and (3) these acts must be done by one party on the
other.

The object of the contract can be seen in article 982 of the civil code which states that “(1)every
contract has for its subject matter a thing which one of the contracting parties binds himself to give,
or to do, or not to do. (2) Only the things that are not extra commercium can be the subject of an
agreement. (3) The mere use or the mere possession of a thing can like the thing itself, be the
subject of a contract.” This article provides us a definition of what is to be understood as the object
of a contract. The object can be anything tangible or intangible meaning that the object can
essentially be anything. Through the object we can see that a person may not contract on something
which does not belong to him or her. We can also see through this article and we can see that things
which are extra commercium cannot be the object of an agreement. The extra commercium includes
air, navigable waters and property owned by the government. Finally within the objects that must be
agreed upon within the contract this includes future things which may form part of this object, but
things which are impossible, or prohibited by law, or contrary to morality or to public policy may not
be the object of a contract.

In the offer of the contract there must also be a reason or purpose of the contract which will be
defined within the offer. Article 987 of the civil code also defines this as it states that “an obligation
without a consideration or founded on a false or an unlawful consideration, shall have no effect”.
The notion of causa has often linked to morality because it can be used in such a way as to allow the
courts to invoke the invalidity of a contract based on causa when the moral grounds of the contract
do not seem right even though there may be nothing wrong with the contract.

After all this is defined within the offer of the contract we must then look at concluding the contract.
When concluding the contract there must be a number of things that must be taken into account.
This includes concluding the contract through the union of wills of the parties. When concluding a
contract there must also be an acceptance where until the conclusive moment is reached, each party
may withdraw. The conclusion of a commercial can be seen in article 110 of the commercial code
which states that “a contract stipulated by means of correspondence whether by letter or telegram,
between parties at a distance, is not complete if the acceptance has not become known to the party
making the offer within the time fixed by him or within such time as is ordinarily required for the
exchange of the offer and the acceptance, according to the nature of the contract and the usages of
trade, generally.” This means that contract will never be lawful unless the two parties have both
signed the contract and given written confirmation that they agree to all parts written within a
contract and thus after there will be written confirmation the contract will become accepted.

Once it a contract will be accepted a process will then have to be undertaken. This includes making
sure that the contract includes correspondence to the offer, it must be made by the offeree and
forwarded to the offeror, it must also be externally manifested and become known to the offeror
within the prescribed time.
The commercial code regulates six types of persons auxiliary to traders that are divided into two
categories: independent and dependant auxiliary persons to traders. Explain the general purpose of
these persons auxiliary to traders, give a brief description of the role of each such person and explain
the difference between dependent and independent auxiliary persons. In conclusion, indicate which
of these six types of persons are considered to be dependant auxiliary persons and which are
considered to be independent auxiliary persons.

A person auxiliary to traders by law means any person who is directly or indirectly related to the firm
and who works for the firm. There are two classes of persons who are auxiliary to traders and these
those who give their services to the trader with a view to securing the proper internal running of the
business concern. An example of this are the ordinary employees. In this section are also those who
give their services The laws related to a person auxiliary to trade can be seen in articles 49 till article
109. There are six types of persons auxiliary to trade and these are agencies, managers, commercial
travellers and salesman, commercial agents., brokers and commission merchants.

Let us start with agencies and the laws regulated by agencies can be seen from article 49 to article
56. Article 49 of the commercial code essentially tells us that we will find that when we are
discussing the topic of agency the first we must look at is specific to law on mercantile agency. In the
commercial code there are a number of sections that regulate the notion of agency in general.
Where the law is silent, our second source of law comes into play. This covers the law of mandate
which is very important as there are a number of points on mandates that can be taken up for
agency as they are very similar except for a main distinction which is that in an agency situation the
agent has the power to negotiate and to conclude business on behalf of the principal. In mandate he
will be given the power to promote the business but he will refer back the business opportunities to
the principal. The other articles in this section also set about regulation for the agent with article 50
stating that “all acts done by the agent on behalf of the principal, within the scope of this authority,
produce directly their effect whether in favour of or against the principal”. This essentially tell us the
agent is acting on behalf of the principle and this must be shown and not presumed. This article also
tells us that any profit or loss which is made out of that transaction is bourne directly by the principle
where if the agent make a profit it is the principle who gets the profit. Article 51 is also an important
article as it gives us the capacity of the principle which meant that if the principle himself is legally
incapable of performing a particular transaction, he cannot have an agent performing that
transaction on his behalf.

Next up is the manager where the law regulated by the manager are listed between articles 57 and
articles 66. The source of the manager is the institutor. If we look at article 57 of the commercial
code it tells us that “a manager who is placed, personally and permanently, in charge of the business
or of a branch of the business of the principal in or more fixed places.” This article lays the
characteristics of the manager which are that the manager is appointed permanently which in this
case denotes employment for a certain duration. The manager also has a fixed place of
appointment, therefore he is not roaming like a commercial traveller. The manager also has wide
powers since he is in charge of the business and is not entrusted with one particular transaction but
he has an entire operation. The manager is also placed personally in charge of the business and
therefore has personal responsibilities. The manager is an agent because he is concluding
transaction with third parties for an on behalf of the principal. The function of the manager is to
substitute the principal in the management of the business which has been entrusted to him and as
such he is entitled to perform and conclude in the name and on behalf of his principal all acts
pertaining and necessary to the exercise of the business in respect of which he has been appointed,
subject to any limitations imposed on him by the principal. A case related to the laws of manager can
be seen in the case Orsette J.Caruana Scicluna vs Edward J.Funicane where media and
Mediterranean company give out pension, gratuity and other allowances to their employees. The
company is not liable for any of the manager. He may not do anything outside of his roles within the
firm. The manager is not allowed to give out pensions to employees. Therefore, the employee has no
claim to earn a pension if given by the manager. When the plaintiff took them to court he lost the
case in terms of being entitled to a pension however he will be given a retirement allowance.

Commercial traveller concludes transactions in the same place where the trade exercises his
business. There are two types of commercial travellers and these are the one who is authorized to
promote business and transmit orders for acceptance by the principal. This kind of commercial
traveller is not authorised to conclude business transactions himself. The other type of commercial
traveller is the commercial traveller who is purely an agent of the principal and he has the power to
sell and conclude business transactions for and on behalf of the principal. The articles related to the
commercial traveller can be seen in articles 67 to 69. In these articles it sets out the duties of the
commercial traveller and the salesman where article 67 sets out the duties of the commercial
traveller which essentially tells us that they will deal in the name of the principle and can not trade
without the authority present and they could be sued or sue in the name of the principle. As
mentioned this section of the persons auxiliary to traders also includes the salesman. The salesman
is a person who is entrusted by a trader with wholesale or retail sales within the warehouse or place
of business of the trader and in the trader’s name and behalf. The article that deals with the
salesman is article 68 which essentially deals with the duties of the salesman. The distinction
between the commercial traveller and salesman is that the commercial traveller is roaming around
and such person is promoting business in the case of the salesman he is restricted to a physical place
and his authority is limited; he can only receive price for the goods purchased.

The broker is listed in articles 79-95 of the commercial code. A person who carries on the business of
acting as intermediary in commercial transactions between two or more parties. This means that he
brings together demand and supply and does not act in the name and on behalf of any of the
parties. The broker is the only person to trade who is not attached to a particular principle because
he is supposed to be the middle man between 2 traders who facilitates the conclusion of a business
transaction. The law even imposes a duty on brokers to keep a memorandum or a day book similar
to the general who is kept by the trader, and it also imposes a duty of keeping a book of brokerages
that reports the actual concluded transactions. Important articles in this section are articles 83,
article 88 which deals with the fact that if you are a public broker you cannot transact commercial
business for your own account either directly or through a third party. This prohibition was an
absolute prohibition.

Commission merchant is someone who buys or sells products on behalf of the principal. In so doing,
the transaction is carried out in the commission merchant’s own name or firm name but for and on
behalf of the principal. The commission merchant can be seen in article 96-109 of the commercial
code. The special feature of commission merchants is the fact that he is a person who transacts
business in his own name or under a firm name for and on behalf of the principal. He is the only
person auxiliary to trade that transmits business in his own name. An important article is article 97
which states there is no legal relationship between the principal and the third party with whom the
commission merchants concludes such transaction.
A commercial agent is a self-employed individual who has continuing authority to negotiate the sale
or the purchase of goods on behalf of and in the name of that principal. The commercial agent was
introduced in our law by act 4 of 2003 and this introduced European directive 86/653 on self
employed commercial agents in our legislation.

The persons auxiliary to traders in the commercial code can be sub-divided as into dependant and
independent auxiliary persons. The dependent auxiliary persons are those persons who are directly
dependent on the trader and have accepted to solely act in his name on his behalf as instructed by
him. The independent auxiliary persons are those persons who, while retaining their professional or
commercial independence, accept to transact business. An independent auxiliary person could be in
their name but on behalf of the principal or as intermediaries between two or more parties in
commercial transactions.

Independent auxiliary persons are commercial agents and the broker while dependent auxiliary
persons to trade are commission merchants, commercial travellers, agency and managers.
Article for offer and acceptance and union of the wills.

Law Report: The implications of an offer and acceptance

Case:
A dispute regarding the payment of 1,858.18 lira alleged due by the defendant company to
the plaintiff company for the balance of the price of certain merchandise sold and consigned
that remained unpaid.

The acceptance of an officer is a manifestation of the desire to accede to such offer thereby
concluding an agreement between parties. The Court of Appeal pointed out that both the
offer and the acceptance must be precise, determinate and complete. Therefore the
offer must constitute a proposal to contract and be a clear intention to bind oneself
while the acceptance must be an express, clear declaration by the other party to
agree to such relationship being formed with the proposer.

The agreement constituted by the offer and acceptance must be perfect both in
form as well as in substance in that the acceptance must conform with the relevant
offer.
Article 5(a) is the objective act of trade par excellence and the act which historically gave
meaning to the word “trade”. Explain in detail:
a. Its features and requirements; and
b. The differences between the objective act of trade in article 5(a) and the objective act of
trade in article 5(h)

Article 4 of the commercial code states that “the term “trader” means any person who, by
profession, exercises acts of trade in his own, and includes any commercial partnership.” In
law we divide acts of trade into two different parts and these are the objective acts of trade
and the subjective acts of trade. The objective acts of trade is the acts which the law
declares to be acts of trade regardless of whether they are performed by a trader or not.
Subjective acts of trade on the other hand are the acts which become acts of trade simply
because they are performed by a person who is a trader.

In this section we will be talking about the objective acts of trade which can be seen in
article 5 of the commercial code. The characteristics of these acts of trade is that an act of
trade is immaterial whether the act is performed by a trader or non-trader, it remains an act
of trade nonetheless. It does depend on the status of the person who performs the act.
Another characteristic of the objective acts of trade are the repeated exercise of an
objective act of trade confers on the person performing that act the status of a trader which
bring about a number of rights and duties. The final characteristics of an act of trade is that
these acts listed in article 5 and article 6 are exhaustive which means that you can not add to
these categories however the acts within the categories are expandable and therefore allow
you to shape these acts into categories as widely as possible.

Article 5(a) of the commercial code states that “any purchase of moveable effects for the
object of re-selling or letting them, whether in their natural state or after being worked or
manufactured; (2) any sale or lease of moveable effects, in their natural state or after being
worked or manufacture, when the purchase thereof has been made with the object of re-
selling or letting such effects;” Thereby what we can get from this article is that as
mentioned it gives us basically the meaning of trade where it outlines the elements involved
in a purchase and the elements involved in a sale of a good. As for the purchase the
elements which must be taken into account are that purchases involve any purchase, they
must be moveable and the objective is to re-selling or letting. The same can be said for sale
as the elements in a sale are that any sale or lease, the moveable effects and when the
purchase thereof has been made with the object of reselling or letting them.

The element of purchase or sale is when you purchase something at a price to speculate,
thinking you are to re-sell it. The commerciality of the act rests in the international element.
The sale is the realization of the speculation when you purchase. If the exchange has the
same function, the court have interpreted purchase to mean any acquisition of value.

The next element is the element of moveable effects is the law that distinguishes between
movables by nature and movables by regulation of law. An example of this is the trademark
Nike which has a value and is moveable because a patent for an invention is movable.

The final element is the object of re-selling which is the element which distinguishes a
commercial sale(re-sell) from a civil sale(use or consumption). The element of re-selling is
based on when you purchase the good your intention with the good at that time. Under
purchase the relative in time is at the moment of purchase. The key moment is the punctum
in tempor. This is because a person may purchase a good, and change his mind about re-sale
and not sell it. It is the moment of purchase which is important. Cases that relate to this are
cases such as Bezzina vs Rodrigo where the defendant had purchased a car with the
intention of doing it up and then reselling. He ended up making a loss, yet since the
intention was to make a profit, it must be considered to be an act of trade. It is possible to
conclude a sale before one has actually purchased the object. For instance, if one has a
contact to manufacture chairs, a sale may be concluded for 100 chairs for 10 euros each. In
this case the sale would have been concluded prior to the actual delivery and payment.
Other cases include Farrugia vs Bonello, Seychell vs Seychell(1956) and Cremona Vs Borg
(1950).

(b) Article 5(h) relates to any purchase and any resale of immovable property made with the
object of commercial speculation and any building enterprise. It is modelled on a paragraph
of the Italian Commercial Code. The first part of this article relating to any purchase and
resale of immovable property when made with the object of commercial speculation. The
first part is interpreted in the same way as the commercial and resale of movables in article
5(a). Immovable effects should replace property; while with the object of commercial
speculation is to replace the purpose of resale. Commercial speculation is also dealt with
when purchasing property with the intention of reselling. One point of disagreement
between authors is when a speculation includes the purchase or lease of a premises to be
used as a business. The majority view is that commercial speculation is speculation on the
object and not in the object. Speculation intrinsically means the making of profit out of
something and not exercising an activity in it.

The second part of article 5(h) which distinguishes between article 5(a) and article 5(h) of
the commercial is the part of any building enterprise were this is regarding the building
enterprise criterion. Here this is similar to article 5(g) which deals with “any undertakings
relating to supplies, manufacture, construction, carriage, insurance, deposits, public
entertainment and advertising.”

Cases related to 5(h) include cases such as Micallef vs Mizzi (1939) where the plaintiff sued
for a balance owed for woodworks which he had undertaken in a property of the defendant.
The question of jurisdiction arose. The court held that the defendant was a trader who
regularly bough and sold. The fit into article 5(h) and thus he was considered a trader. Other
cases related to this include Foster vs Borg(1950).

Cases related to movable and immovable property include cases such as Aquilina vs Zammit
(1903) and Briffa vs Schembri (1938) where the case related to a quarry in between Kalkara
and Birzebbuga.
From a reading of article 3 of the commercial code it is clear that commercial matters are not only
regulated by the provisions of the said code. Name and describe the four main sources of
commercial law and the order in which they are to be applied.

Article 3 of the commercial code states that “In commercial matters, the commercial shall
apply: provided that where no provisions is made in such law, the usages of trade or, in the
absence of such usages, the civil law shall apply. “This essentially means that for commercial
matters, which means any litigation related to arising out of any commercial dispute or
disagreement, there is a hierarchial system where the first law that applies to commercial
matters is the commercial law, with the second being the usage of trade and the third being
civil law.

Commercial law according to Vivante is that is part of Private law which has as its principal
object the legal rule which are applicable to the exercise of trade. This can be seen in the
commercial code which in article 2 it states “The commercial law relates to traders and to
acts of trade done by any person, even though not a trader.” The commercial law embraces
all that legislation which relates to acts to trade.

The second is the usage of trade which are the unwritten law. Potentially there could be a
usage which conflicts with the civil law. If so, since it is a commercial matter, the usage takes
precedence, but it cannot conflict with the commercial law. The hierarchy is important and
so category 1 prevails. According to Navarrini usages are unwritten rules established by
constant and uniform practice based on a collective conviction that those unwritten rules
are applicable as law. There are requisites for a usage where the judgements say that there
are two elements that must be established to prove two things. There are two forms of
element and these are the objective which is a constant and uniform observance and the
subjective element which is the constant and uniform observance must arise out of a
collective conviction of the persons involved in the trade qua a rule of law even though it is
not written.

Cases related to subjective elements are cases such as edgar vella vs Paul Mifsud (1953)
where the defendants were shipping agents and charged the plaintiff a sum of money for
landing charges. Vella asked the defendant for a receipt