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The Commercial Agency

الوكالة التجارية - Commercial agency

The Trade Law remains for a century without any amendment until the issuance of Law No. 17 for 1999, the provisions of the said law include all amendments that come in line with all update in the field of trade, rather the legislative authority has given special regulation to some commercial contracts of economic importance through the development of special laws that regulate them, as happened with financial leasing contracts, real estate financing, some insurance contracts and other commercial activities and contracts.

The multiplicity and diversity of businesses and actions of a commercial nature increased, and the existence of industrial and productive activities looking for selling and marketing their products to merchants and consumers, which led to the presence of commercial agency businesses, commercial intermediatory, and real estate brokerage to act as a link by and between the parties to commercial transactions.

The legislator focuses on the commercial agency and real estate brokerage works that are regulated through Law No. 120 for 1982 as amended by law No. 21 for 2022.

What is a commercial agency?

Commercial agency means assigning some tasks related to commercial transactions to a person, whether he is an agent or distributor in any form of agency or distribution, in exchange for a profit or commission according to the contract agreement concluded between them. The agency is applied if the agent is professional in commercial transactions for the account of others, and there are two forms of agency:

  1. If you are given absolute power of attorney, it will only be used for commercial transactions
  2. The commercial agency is dedicated to a specific commercial transaction. The agent may carry out all the work necessary to carry out this transaction without the need for permission from the principal.

What is commercial commission brokerage?

Commission brokerage is an integrated financing package that combines export working capital financing, credit protection, foreign bookkeeping services, and collection services.

A commercial mediation or commercial intermediary is a bank or a specialized financial company that finances through the purchase of invoices or accounts receivable.

It presents a model of commercial intermediation or export intermediation under an agreement between the intermediary and the exporter whereby the intermediary can purchase short-term foreign accounts from the exporter in return for cash at a discount to the face value, usually without resorting to reviewing the obligations. The broker handles the risk of the foreign buyer’s ability to pay and handles collections of funds.

What is real estate brokerage?

One of the prominent commercial works, which was not regulated or governed by law until April 2022 is the real estate brokerage, as a result of the actual importance and the undertaken role by real estate brokers in light of the significant growth in the field of real estate tremendously, many citizens resorting to save their funds in the form of real estate properties, therefore, of the benefits of that the legislator regulates the works of real estate brokers and obliged them with legal obligations to ensure the veracity of property, land, and/or unit’s data, as well as to make sure that the information provided by the parties in question to conclude a contract is correct.

In light of Law No. 21 for 2022, each real estate broker may be defined as each natural or juristic person who carries out the brokerage works or seeks between two parties or more to conclude the process of selling, purchasing or leasing unit, property or land in exchange for an amount in this regard.

It is worth mentioning that law No. 21 for 2022 is not regulating real estate developers’ works, as such works are regulated through the prime minister decree No. 2184 for 2022.

Benefits of regulating the business of real estate brokers

The following are deemed as the most features in connection with regulating real estate brokers:

  • Controlling the real estate market as the broker has a great influence on real estate transactions as such broker is deemed as the between the two parties of the real estate transaction.
  • Providing more guarantees for the buyer or tenant by obliging the real estate broker to verify the property data, and even penalizing the real estate broker if he withholds the information or data that he should have provided to the buyer or tenant.
  • Registration in the register of real estate brokers before the competent authority, which provides a kind of professionalism for the real estate broker, which gives reassurance to customers about his efficiency in performing his assigned work.
  • The real estate brokerage contract shall be in writing by and between the parties in question.
  • The existence of deterrent penalties of up to two years imprisonment and a fine of one million pounds for some cases of breaching the real estate broker’s obligations, which forces the real estate broker to carry out his work in accordance with the law and without prejudice to his duties.

It is worth noting that the legislator’s regulation of real estate brokerage work came to complete the real estate activity circles, whether by organizing the real estate developer’s work and the real estate financing business, selling and renting, which contributes to revitalizing and protecting the real estate market.

Types of commercial agencies

  • Commission agency

It is a contract under which the agent undertakes to perform a legal disposition in his name for the account of the principal. In addition to the general provisions on commercial agency, the provisions stipulated in the law apply to the commission agency.

What are the obligations of the commission agent?

If the commission agent sells for less than the price set by the principal or buys for a higher price, the principal must, if he wants to reject the deal, notify the agent of that as soon as he becomes aware of it, otherwise he is deemed to have accepted the price. The principal may not reject the deal if the commission agent accepts bearing the price difference.

If the commission agent buys for the principal’s account commodities that differ from the type or class requested by the principal, he is not obliged to accept them. If the commission agent purchases commodities that are identical to the required goods, but in a larger quantity, the principal is only obligated to accept the quantity that he requested. If the quantity is less, the principal has the choice between accepting or rejecting it.

If the commission agent contracts on better terms than those set by the principal, the benefit reverts to the principal, and the agent must present his account on the basis of the real terms under which the deal was concluded.

If the commission agent entrusted with the sale gives the purchaser a deadline to fulfill the price or makes it by installments without the principal’s permission, the principal may demand that the agent pay the entire price immediately. In this case, the commission agent may keep the price difference if the transaction is concluded at a higher price.

If the principal’s instructions dictate the sale at a deferred price and the commission agent sells at a prompt price, the principal may not ask him to pay the price except upon the maturity of the deadline he specified. In this case, the commission agent is obligated to pay the price on the basis of the deferred sale.

  • Agency by contract

It is a contract under which a person undertakes to undertake, on an ongoing basis and in a specific area of activity, the promotion, negotiation and conclusion of deals in the name of the principal and for his account in exchange for a fee, and his task may include executing them in the name and for the account of the principal.

What are the agency terms of the contract?

  1. The contract agency contract must be established in writing, and it shall indicate in particular the limits of the agency, the agent’s fee, the area of his activity, and the term of the contract if it is for a definite period.
  2. If it is stipulated in the contract that the contract agent establishes display buildings, commodity stores, or facilities for maintenance or repair, the term of the contract may not be less than five years.
  3. If the contract is for a limited period, and the principal decides not to renew it at the end of its term, the representative shall have the right to compensation estimated by the judge, even if there is an agreement to the contrary.