Corporate and Commercial Law

Commercial law is effectively the legislation that covers most transactions in the life of Joe Public, from the fine balance of a marriage contract to the more fundamental protection of intellectual property.

Corporate law, on the other hand, is the exclusive domain of big businesses and concentrates on the intricacies of corporate governance, finance and the ongoing cycle of mergers, acquisitions and insolvencies.

Although the two terms are effectively interchangeable, commercial law has a broader application in that it is not only applied to business alone; whereas corporate law is a specific branch of the law that concentrates on all aspects of business.

Thus, when one ties the knot, finances a car or house or even finds alluvial gold in the stream running through our property, we have to take advice from a commercial lawyer and follow the legislation set out in commercial law.

In South Africa, commercial and corporate law is effectively governed by a handful of Acts promulgated over the years, including:

  • The National Credit Act of 2005
  • The Competition Act of 1998
  • The Close Corporations Act of 1984
  • The Alienation of Land Act 1981
  • The Credit Agreements Act of 1980
  • The Companies Act of 1973

Commercial law applies to virtually any and all transactions and it is advisable to contact reputable attorneys before embarking on any deal or contract. Top flight lawyers will ensure that the deal is fair and, more importantly, in your favour.

South African law firms can and will give imperative advice on the following:

  • The administration of estates
  • The sale and carriage of goods
  • The acquisition of real estate
  • The protection of intellectual property
  • Inward and outward investment options
  • Tax, both personal and corporate
  • Marine, fire, life and accident insurance

The dedicated corporate attorney will take care of more pressing issues facing you and your business, including:

  • Acquisitions, mergers and takeovers
  • Banking and finance
  • Commercial contracts, including lease agreements, service and management agreements and licences agreements
  • Corporate finance
  • Empowerment transactions
  • Corporate restructuring
  • Stock exchange listings
  • Tenders

In a nutshell then, commercial law involves the areas of law that have particular relevance to commerce and commercial transactions whereas corporate law deals with big businesses.

Using Lawyers Effectively: 5 Good Legal Habits of Successful Businesses

Do you see your lawyer as a key member of your strategic business team?

Do you feel that you can sound them out about commercial and strategic issues, without fear of the cost?

Or, is your lawyer the last person that you call when a problem has got so bad that there is no alternative?

Successful businesses are well supported by specialists in all the management disciplines, such as production, operations, strategy, HR and finance as each specialist has expertise in generating growth or reducing risk.

Sadly, legal advice is not always taken in advance of strategic decisions in the same way that most businesses would consult with their accountant or HR manager. Consequently, problems can arise down the line, for example when a contract does not protect you in the way that you envisaged.

Successful businesses make the most of their legal adviser and typically display the following 5 good habits:

1. Choose a legal adviser that understands your business

When selecting a new legal adviser, consider how interested they are in the businesses and whether they understand the issues that your business faces. For example, a bio-tech business will need to ensure that their adviser is familiar with regulatory and intellectual property law relating to their sector.

Do they ask about your personal and business objectives? This is particularly important if you are thinking of an exit strategy in the future.

2. Include your lawyer as part of your strategic business team

Whilst lawyers can advise you on your regulatory obligations and compliance, a good commercial lawyer will advise you on the commercial implications of strategic decisions. Keep your lawyer in the loop. Keep them apprised of your business strategies so they can identify legal risks at an early stage of your strategy and give you proactive solutions.

A lawyer who understands your business can provide you with innovative business structures that help your business grow and protect your market position, as well as identifying risks.

3. Provide a clear brief and feedback

Provide clear instructions, agree budgets and provide any information promptly. Consistent communications are vital especially where there are critical deadlines. Provide feedback to your lawyer, especially if you feel that you are not getting the level of service that you require.

4. Invest in proper legal documentation processes

A successful business will have efficient systems for purchasing, quality control, accounts, and HR. Yet few businesses have efficient legal systems and this often causes problems as a deadline for contract renewal can be missed or it can cause unnecessary delays when preparing a business for sale. Without proper documentation, evidence can be difficult to find when disputes arise and oral evidence is only allowed in limited circumstances so the written word remains paramount.

5. Budget for legal advice

Budgeting for legal advice is no different than budgeting for accounting or HR costs. You may also be able to insure against certain legal costs.

Getting Ahead With Employment Lawyers

There are somethings that you should do yourself, and there are other things that you should always try to avoid doing yourself. One such thing of course, would be employment issues, or even commercial issues assuming that they involve legal matters. That being said, how will you go about taking care of this business if you cannot do it directly? Easy answer: employment lawyers.

Let’s be honest. Most people will never need an employment lawyer. As a matter of fact, the average person has never even heard of an employment lawyer! So what do they do exactly? First of all, they will help to settle certain workplace disputes. We are not talking about that minor dispute you may have had with another employee. Instead we are talking about wage disputes and even sexual harassment claims.

These instances are common in the workplace, though they are usually resolved internally via a settlement of some type. Employment lawyers only become necessary when the dispute simply cannot be solved normally. An employment lawyer will go about the business of ensuring you get the settlement you need, and that you remain employed, if you so desire.

Commercial lawyers are not to be confused with employment lawyers. These lawyers serve a purpose as well, but it is separate. Contract negotiation, among other things, will be the domain of the commercial lawyer, and every corporation will probably have one on retainer. Keep in mind however that a commercial lawyer is also very important for small businesses.

When seeking out either employment lawyers or commercial lawyers, it will be of the utmost importance for you to ensure that they know what they are doing. This is a very specific area of law, and you cannot go to just any lawyer for advice. You will need to make sure you employ a lawyer that has very specific experience in the area. It might be expensive, but it will get the job done.

The most important thing to remember is that you will at least want a lawyer on retainer. You certainly do not want to look for an employment lawyer or a commercial lawyer the moment you need one. Certain problems can evolve, and you may find that the opposing side obtains an attorney before you do. The question now of course, is how you go about finding an attorney that can help present your case to the proper authorities, and ultimately help you get the outcome you not only want, but deserve.

The first thing you need to do is search online. You will find that there are a plethora of great online resources, Once you find someone, it would be a good idea to make sure you check their references and ensure that you’re dealing with a confident lawyer. So long as you do your research and make sure you do not rush into anything, there is absolutely no reason that you should not be able to hire a lawyer that will take your case on. The biggest question however is whether or not you are really prepared to take on the responsibility of taking on your workplace. It can be intimidating, but in the end, you may help others who are facing the same situation, and ultimately create a better workplace environment. Are you ready?

Terminating an Agency Agreement – Breach of a Commercial Agency Agreement – Compensation for Agents

PJ Pipe and Valve Co Ltd v Audco India Ltd [2005], the Court ruled that damages for a breach of a commercial agency agreement should be assessed on a flexible basis according to the particular facts of each case.

The claimant, PJ Pipe, is an agency in the petrochemicals industry, promoting and selling products in this industry. The defendant, Audco, is based in India and manufactures valves some of which are used in the petrochemical industry.

Audco hired PJ Pipe as their agent and entered into two agreements with them. In 2001, they entered into an Agency Agreement granting PJ Pipe the right to sell products as its agent in Nanhai (the “Nanhai Agreement”). In 2002, the two parties entered into a general exclusive agency agreement which gave PJ Pipe exclusive rights to represent six named UK contractors for a period of two years expiring on 31 December 2003 (the “Exclusive Agreement”).

In September/October 2002, Audco breached the Exclusive Agreement by employing an alternative UK agent and by purporting to terminate the Exclusive Agreement with PJ Pipe before the expiration of the term of the Exclusive Agreement.

PJ Pipe accepted the breach and commenced proceedings against Audco for commission and damages under the two agreements.

Regulation 17 of the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053, , provides: ‘(6) . 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 amortize the costs and expenses that he had incurred in the performance of the agency contract on the advice of his principal.’

The case concerned a number of issues, for instance, whether the claimant was a commercial agent within the meaning of the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053 (see above) and the approach to be taken in the calculation of the amount of compensation, if any, arising under Regulation 17 of the Regulations. The arguments centred on whether the approach of the French courts should be adopted whereby the level of compensation was fixed as the global sum of the last two years’ commission or the sum of two years’ commission calculated over the average of the last three years of the agency contract, although the court retained a discretion to award a lesser sum.

PJ Pipe argued that a 5% commission rate should have been awarded as this was the standard commission rate in this industry. Audco contended that there was no such standard commission rate but rather the commission rate depended on a number of factors which would reduce the rate to 3.5%.

The Court concluded that:-
the “rule of thumb” commission level in the oil, gas and petrochemical supply business is 5%;
to reflect commercial reality, the 5% figure is not immutable and will be fact sensitive to the relevant case, particularly when either low or large value orders are involved;
for small amounts of work undertaken late in the day, the commission rate would be 4.5%;
where PJ Pipe had simply “opened the door” for Audco in Nanhai the commission rate would be 3%;
PJ Pipe was a commercial agent for the purpose of The Commercial Agents (Council Directive) Regulations (“the Regulations”) as PJ Pipe played a crucial role in effecting introductions, persuading contractors to deal with Audco and assisting with quotations and queries;
in accordance with the Regulations, the Court should gauge the loss to PJ Pipe by the termination of the agency and avoid any double counting;
the Court need not confine itself to the French two-year tariff approach when assessing loss (the global sum of the last two years’ commission or the sum of two years’ commission calculated over the average of the last three years of the agency contract); and
PJ Pipe was entitled to compensation of $118,518.60 under the Regulations as well as damages for loss of commission.
It is likely that Audco will appeal this award.

If you require any advice on drafting or termination of agency agreements, please contact us at [email protected]

© RT COOPERS, 2005.

This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

The Role of Commercial Litigation Lawyers

If you own a business or are involved in any business affairs, conflicts can involve commercial litigation. In most cases, these issues are mostly pertaining to financial, property and contract problems. However, any commercial litigation involves business legal matters that could be taken to court. Nonetheless, when a business or an individual is dealing with any type of commercial litigation issues, he or she is advised to consult with a commercial litigation lawyer. Sometimes, taking legal resources in our own hands could be risky and could cost you or your business a fortune. Hence, it is advisable and practical to consult a lawyer that could help you reach a settlement outside the court of law.

Role of Commercial Litigation Lawyers

Commercial litigation lawyers are responsible for assisting and helping people involved in serious legal matters. In most of the cases, their main aim is to resolve any legal dispute out of the court even before the accused individual or business is presented before the court.

In normal cases, the resolution of dispute that is conducted inside the court takes a lot of time as compared to the out of the court settlement. When two parties are involved, it is often in their interest to engage lawyers to handle their cases and try to fight it out. Hence, these lawyers generally handle cases that do not necessarily involve conflict of interests; instead, they try to resolve the matter in the best possible way. Thus, if both parties are able to meet terms and come to an agreement, an individual saves himself from all the tragic emotions and his business from the grave loss.

Experienced and authentic commercial litigation lawyers are good at dealing with such issues and resolving it with utmost emphasis to both legal aspects of the matter as well as the business.

Areas of Applications where Litigation Lawyers are Involved

There are many businesses that benefit from the incorporation. Every newly incorporated company can enjoy the benefits of several tax breaks and additional advantages. However, to ensure all the procedures are done correctly, it is advisable to hire a litigation attorney to do the job.

Real estate is a very common area of discussion when it comes to commercial litigation. Also, company mergers and land acquisitions are sensitive topics under this subject. Thus, with the help of a knowledgeable and skilled business lawyer issues can be resolved quite easily.

Well, besides the above mentioned applications, these lawyers also have experience in representing their clients in legal sections such as, employment disputes, litigation oversight, construction disputes, breach of contract, general civil litigation, product liability, appeals and appellate review, insurance coverage litigation, business torts including restrictive covenant disputes, unfair competition, business interference, trade secret disputes and many such fields.