Saturday, February 27, 2021

Definition of Traders Under Ethiopian Commercial Code

(Source: LAW OF TRADERS AND BUSINESS ORGANIZATIONS: A Course Material

ALEMAYEHU FENTAW AND KEFENE GURMU)

Businesses are operated by persons, whether physical or juridical. However, sole businesses or sole proprietorships can only be run by physical persons. Physical persons who operate a sole business are referred to as traders. Chapter 2 of Title I in Book I deals with the definition of persons having the status of traders. Particularly, Article 5 defines the trader. This provision has two key elements: the general condition and the special condition. The general condition consists, in the existence of an enterprise or business, of a profession, and the goal of realizing profits while the special condition is such that the person carries out any of the activities enumerated in article 5 as her business object. Traders, pursuant to Article 5, are persons who professional and for carry on any of the following activities:

 

(1)   Purchasing of movables and immovable with a view to re-selling them either as they are or after alteration or adaptation;

(2)   Purchasing of movables with a view to letting them for hire;

(3)   Warehousing activities as defined in Art.2806 of the Civil Code;

(4)   Exploitation of mines, including prospecting for and working of mineral oils;

(5)   Exploitation of quarries not by handicraftsmen;

(6)   Exploitation of salt pans;

(7)   Conversion and adaptation of chattels, such as foodstuffs, raw materials or semi-finished products not by handicraftsmen;

(8)   Building, repairing, maintaining, cleaning, painting or dyeing movables not by handicraftsmen;

(9)   Embanking, leveling, trenching or draining carried out for a third party not by handicraftsmen;

(10)     Carriage of goods or persons not by handicraftsmen;

(11)     Printing and engraving and works connected with photography or cinematography not by handicraftsmen;

(12)     Capturing, distributing and supplying water:

(13)     Producing, distributing and supplying electricity, gas, compressed air including heating and cooling;

(14)     Operating places of entertainment or radio or television stations;

(15)     Operating hotels, restaurants, bars, cafes, inns, hair- dressing establishments not operated by handicraftsmen and public baths;

(16)     Publishing in whatever form, and in particular by means of printing, engraving, photography or recording;

(17)     Operating news and information services;

(18)     Operating travel and publicity agencies;

(19)     Operating business as an agent, broker, stock-broker or commercial agent;

(20)     Operating a banking and money changing business; and

(21)     Operating an insurance business.

 

2.1.1Positive Definition

According to the general condition, a physical person becomes a trader if and only if she operates a business/enterprise, engages in such business professionally, and for gain. The general condition’s requirement of the existence of a business has not been made as explicit as in the unofficial French master-text as the remaining two. Despite its inexplicitness, the business requirement can be read into Article 5 without difficulty. This is so for two reasons. First, it is a priori. One cannot be a trader without operating a business or an enterprise. Second, though it has been contended that the business requirement is implicit in the fact of being trader, it is submitted that a conjunctive reading of Articles 125(1) and 5 render it explicit. Article 125(1) stipulates that “Every trader operates a business.” From this, it appears that there is no trader who does not operate a business.

 

The second requirement of the general condition says that one who operates a business has to do so professionally. The profession requirement refers to something different from the standard lexical meaning of the word “profession” or “professional”. For example, Merriam-Webster’s Collegiate Dictionary defines “profession” as “a calling requiring specialized knowledge and often long and intensive academic preparation.” The term also denotes “a principal calling, vocation, or employment.” It is not in the sense of a learnt calling, as in the first meaning, that the Code uses the term. Rather, it is in the sense of a principal calling, vocation, or employment that the Code makes use of it. To say that the business that is being operated by a certain person has to be her principal calling is, in   effect, to say that she who operates a business as a pastime or in her leisure does no be counted as a trader.

 

The third requirement tells us that one who starts a business and engages herself in such business professionally does not become a trader unless she does so for profit. Turning to the second kind of condition, which I call the special condition, a person does not become a trader the moment she runs a business professionally and for gain. According to the special condition, the business objects of such person has to be carry out one or more of the activities listed in Article 5 of the Commercial Code. Here, I wish to raise one issue in connection with the special condition. Is the enumeration under Art.5 illustrative or exhaustive?

 

The list in Article 5 was meant to be exhaustive (Read the excerpts below). However, it has been broadened by subsequent legislations. Cases in point are the Commercial Registration and Business Licensing Proclamation No. 67/97, as amended, the Re-enactment of the Investment Proclamation No. 280/2002, as amended, and the Trade Practice Proclamation. The said laws redefined the scope of the enumeration of commercial activities under Article 5 of the Commercial Code. For instance, such activities as higher education, health, and construction are included. In addition to studying the list of activities that are being opened for traders, it is also important to examine the definition of trader in these laws. In this regard, note that Article 2(2) of Proc. No.67/97 replaces the word ‘trader’, which is a legal term of art used by the Commercial Code, by ‘businessperson’. The definition of the newly introduced term ‘businessperson’ as found in Art.2(2) of Proclamation No.67/97 is broader than the definition of the hitherto existing terminology “trader”. Art.2(2) defines a businessperson as “any person who professionally and for gain carries on any of those activities specified in Article 5 of the Commercial Code, or who dispenses services, or who carries on those commercial activities designated as such by Regulations issued by the Government.” Amazingly, Article 2(10) of the Trade Practice Proclamation No.329/2003 uses the term ‘trader’ with the same definition given for the term ‘businessperson’ by Proc. No.67/97. Still, the terminological question does not seem to have been settled once and for all. For instance, the Commercial Registration and Business Licensing Proclamation (Amendment) No. 376/2003 introduces a new term ‘sole businessperson’. Anyway, you should keep in mind that all of the above terms refer to one and the same legal concept, viz., and the concept of trader. 

 

2.1.2. Negative Definition

A negative definition of the trader is also to be found in Articles 6-9, which exclude from farmers, fishermen and artisans from the scope of the Code’s applicability. In particular, Articles 6 and 7 deal with agriculture, while Article 8 assimilates fishermen and persons who breed fish to farmers. Article 9 deals with artisans, who are already excluded by sub-articles (5),(7),(8),(9),(10) and (11) and (15) of Article 5.

 

At this juncture, it is instructive to compare and contrast the proposed revision of the law concerning traders under the Draft Revised Commercial Code prepared by the Ministry of Justice. Article 5 of the Draft provides:

 

Any person who as his regular profession and for gain, carry on any production and service activities is a trader. In particular:

(1)     Purchase of movable or immovable with a view to reselling or letting them for hire either as they are or after alteration or adaptation;

(2)     Warehousing activities;

(3)     Exploitation of mines and other resource deposit;

(4)     Exploitation of marine resources;

(5)     Construction, repairing, maintaining and similar activities;

(6)     Transport and communication activities;

(7)     Printing, publishing, engraving, binding; cinematography, photography and computer activities;

(8)     Producing, distributing, and supplying water, electricity, gas, compressed air, heating and cooling;

(9)     Operating radio and television stations, or places of entertainment;

(10) Operating hotels, restaurants, bars, inns, public baths, hairdressing and beauty salon establishments;

(11) News, information and advertisement activities;

(12) Operating travel agencies, safaris, and tour operations;

(13) Operating business as a commission agent, broker, stock broker, or commercial agent;

(14) Operating banking, money changing and bank related activities;

(15) Operating insurance activities;

(16) Operating health, education and kindergarten activities; and

(17) Any consultancy service;

 

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