COMMERCIAL CODE

COMMERCIAL CODE

CHAPTER 13

COMMERCIAL CODE

To amend and consolidate the Laws relating to Trade.

ORDINANCES XIII of 1857, XV, XVI, XVII, XVIII and XIX of 1858 and II of 1898, and

ACTS: XIV and XXIX of 1933* - as amended by Ordinances: III of 1863, VII of 1868, V of

1904; Acts: XV of 1924, XXX of 1927, XII of 1929; Ordinances: XXX of 1931, XXXVII of 1939

and VII of 1941 - Consolidated.

The Code was subsequently amended by Ordinances: XVIII of 1944, XIII of 1946, X and

XXV of 1962; Legal Notices 4 of 1963 and 46 of 1965; Acts: XXXI of 1966, XI and XLVI of

1973 and LVIII of 1974; Legal Notice l48 of 1975; Acts: XXII of 1976, XLIX of 1981, IX and

XVI of 1982, XIII of 1983, XXXVII of 1988, VIII and XXXIII of 1990, XXIV of 1995, XVI of 2000,

XXXI of 2002, IX of 2003 and XXII of 2005; Legal Notices 233 of 2005, 181 of 2006 and 407 of

2007; Acts II and XIII of 2008, and XXIII of 2009; and Legal Notices 272 of 2012 and 13 of 2014

and Acts XXIII of 2022 and XXXIV of 2025.

*(2nd October, 1857) *

(21st December, 1859) †

(26th April, 1898) ‡

(12th May, 1939) §

(3rd August, 1933) **

*See Proclamation No. XXI of the 2nd of October, 1857.

†See Proclamation No. XII of the 2lst of December, 1859.

‡See Proclamation No. II of the 26th of April, 1898.

§See Proclamation No. XXV of the 12th of May, 1939.

**See Act No. V of 1927 omitted under the Statute Law Revision Ordinance, 1936, and Government Notice.

No. 266 of the l8th of July, 1933

COMMERCIAL CODE

This Code may be cited as the Commercial Code.

PART I

O F T RADE IN G ENERAL

P RELIMINARY P ROVISIONS

1927.

Schedules con-

tained in s.1 of

[Articles 550-551]

Ord.II. of 1898,

consolidated.

PART I

Amended by

(Article 70(3))

XIII.1983.4;

IX.2003.4;

L.N. 407 of 2007.

SECONDARY ACTIVITIES OF COMMERCIAL AGENTS

1. The activities of a person as a commercial agent are secondary where it may

reasonably be taken that the primary purpose of the arrangement with his principal is

other than as set out in paragraph 2 below.

2. An arrangement falls within this paragraph if -

(a) the business of the principal is the sale, or as the case may be purchase,

of goods or services of a particular kind; and

(b) the goods or services concerned are such that -

(i)

transactions are normally individually negotiated and concluded

on a commercial basis, and

(ii) procuring a transaction on one occasion is likely to lead to further

transactions in those goods or services with that customer on

future occasions, or to transactions in those goods or services with

other customers in the same geographical area or among the same

group of customers, and that accordingly it is in the commercial

interests of the principal in developing the market in those goods

or services to appoint a representative to such customers with a

view to the representative devoting effort, skill and expenditure

from his own resources to that end.

3. The following are indications that an arrangement falls within paragraph 2

above, and the absence of any of them is indication to the contrary -

(a) the principal is the manufacturer, importer or distributor of the goods;

(b) the goods are specifically identified with the principal in the market in

question rather than, or to a greater extent than, with any other person;

(c) the agent devotes substantially the whole of his time to representative

activities (whether for one principal or for a number of principals whose

interests are not conflicting);

(d) the goods are not normally available in the market in question other

than by means of the agent;

(e) the arrangement is described as one of commercial agency.

4. The following are indications that an arrangement does not fall within

paragraph 2 above -

(a) promotional material is supplied direct to potential customers;

(b) persons are granted agencies without reference to existing agents in a

particular area or in relation to a particular group;

(c) customers normally select the goods for themselves and merely place

their orders through the agent.

5. The activities of the following categories of persons are presumed, unless

COMMERCIAL CODE

the contrary is established, not to fall within paragraph 2 above -

-

Mail order catalogue agents for consumer goods;

-

Consumer credit agents.

PART II

COMMISSIONS AND FEES

Commissions

On the purchase and sale of goods

On the purchase of goods with the principal’s funds in hand ..........

On the purchase of goods and on the drawing for the value thereof

On the sale of goods .....................................................................

On attempted sale of goods -

if the value be above €1,164,69 ...........................................

if the value be €1,164,69 or less ..........................................

On the purchase and sale of sailing - or steam-ships (including

brokerage), (from each party) .......................................................

Banking Transactions

On drawing ..................................................................................

On remitting .................................................................................

On accepting ................................................................................

On negotiating ..............................................................................

On endorsement of bills of exchange ............................................

N.B.- If the drawing and remitting, or the accepting and

negotiating refer to the same transaction, the fee is only ................

On the purchase or sale of public funds -

for funds quoted at above 75% of their nominal value, -

on the nominal value ............................................................

for funds quoted at below 75% of their nominal value, -

on the nominal value ............................................................

On disbursements to travellers against letters of credit ..................

On collection, payment, or negotiating of coupons ........................

On collection of bills of exchange and remittances of the amount ..

On collection of moneys in account current and remittance of

proceeds, or payments made on demand ........................................

N.B. - The minimum rates above specified in the cases where the

rate is not definitely indicated, apply to transactions the amount of

which exceeds €232.94

Sailing-ship or Steamship Agency

To the freighter of a steamship or sailing-ship ...............................

To the consignee, on the affreightment of a sailing-ship or

steamship, if he procured the affreightment ...................................

On freights of importation, as per manifest, both if the freight be

payable at the port of destination and if paid in advance ...............

On procuring freights to steamships or sailing-ships for

exportation, as per manifest ..........................................................

On disbursements to steamships or sailing-ships ...........................

On disbursements to steamships or sailing-ships if under average ..

On discharging and reloading, or on reshipping of goods on

sailing-ship or steamship with or without average, -

if the value of the goods be under €4658.75 .........................

if the value of the goods be above €4658.75 .........................

On transhipment of packages - according to the goods and the

number of packages -

for each package .................................................................

for bales or cases of textiles, -

for each bale or case ...........................................................

for iron, - per ton .................................................................

On the sale by public auction of goods or articles landed from

sailing-ships or steamships under average .....................................

Fees

For representing one or more persons before courts of justice -

if the amount in litigation exceeds €2,329.37 -

in the court of first instance ............................................

in the court of second instance ........................................

if the amount in litigation is €2,329.37 or less -

in the court of first instance ............................................

in the court of second instance ........................................

N.B. - If representation is in second instance only, the fee is -

if the amount in litigation exceeds €2,329.37 .......................

if it is €2,329.37 or less .......................................................

On deposits in court as security for suits (besides interest at 6%

per annum) -

for a period not longer than one year ....................................

for any further period not exceeding one year .......................

On receipt of telegrams for transmission abroad -

per telegram ........................................................................

On giving orders -

to steamships, - for each order ............................................

to sailing-ships, - for each order ..........................................

On procuring orders, receiving and delivering goods, adjusting

accounts, procuring acceptances, or collecting and remitting .........

for del credere on the sale of goods on credit .......................

On guarantees in favour of any person - per month ........................

On guarantees in favour of any person, accompanied by a deposit

(besides ¼% per month), interest, per annum, of ...........................

COMMERCIAL CODE

PART III

FEES OF PUBLIC BROKERS

On the sale and purchase of goods (from each party) .....................

On the sale and purchase of goods of small value, such as

pozzolana, soda-ash, firewood, mineral salts, and the like articles

(from each party) ..........................................................................

N.B. - In the case of goods sold under discount, the brokerage is

due on the net amount of the invoice

On exchange of goods - on the value of every article (from each

party) ...........................................................................................

On the purchase and sale of any stock in public funds to bearer -

on the real value (from each party) ...............................................

On the purchase and sale of foreign bills of exchange, discount of

bills in the market, and of coupons - on the real value (from each

party) ...........................................................................................

On the purchase and sale of gold and silver bullion, or of State or

foreign coins - on the real value (from each party) ........................

On whole or partial affreightment of sailing-ships or steamships -

payable by the master ...................................................................

On affreightment of sailing-ships or steamships á la cueillette

(ship receiving goods) ..................................................................

PART IV

FEES OF SURVEYORS

For a survey on the condition of a sailing-ship or on the condition

of the bottom or machinery of a steamship, with or without

average -

for the first survey ...............................................................

for any further survey ..........................................................

For a survey on goods -

if the value does not exceed €232.94 .................................

if the value is above €232.94 but does not exceed €465.87 ...

if the value is above €465.87 -

for the first survey ..........................................................

for any further survey .....................................................

For a survey, on board, on condition of the cargo and stowage

thereof -

for the first survey ...............................................................

for any further survey ..........................................................

N.B. - All the said fees are due to each surveyor and for

attendances within the Grand Harbour or within the Marsamxett

Harbour; for attendances outside the said harbours, such fees shall

be doubled. The said fees also include the fee for the drawing up

of the report, but transport and other expenses incurred by the

surveyors in the discharge of their duties, shall be refunded to

them, in addition to the fees above specified

If the time employed by the surveyors outside the said two

harbours exceeds one day, and their continual attendance should

be required beyond that term, - in addition to the expenses

incurred, for each day already commenced ....................................

On appraisement of a sailing-ship or steamship, her tackle and

apparel, - besides the expenses incurred -

on the first €1,164.69 ..........................................................

on the second €1,164.69 .....................................................

on any further sum ...............................................................

The commercial law relates to traders and to acts of trade

done by any person, even though not a trader and, for the purposes of

Part III alone

(a)

extends to the persons referred to in article 477;

(b)

shall not extend

(i)

to public

corporations

or

agencies

established by law;

(ii)

where any applicable law creates a

separate patrimony in the hands of a person or where a

person is vested with ownership, has registered in his

name, holds, exercises control or powers of disposition

over property subject to fiduciary obligations;

(iii) to

any

accrued

occupational

pension

entitlements;

(c)

shall not extend insofar as these may be

inconsistent with, or insofar as these may be construed as

limiting or restricting, the application of the following laws or

instruments, or any transposing legislation, as may be

amended from time to time

(i)

the Convention on International Interests

in Mobile Equipment and its Protocol on Matters

Specific to Aircraft Equipment that was opened for

signature at Cape Town on 16 November 2001, as

transposed or as enforceable in terms of Maltese law;

(ii)

Directive 98/26/EC of the European

Parliament and of the Council of 19 May 1998 on

settlement finality in payment and securities settlement

systems, as transposed in terms of Maltese law;

(iii) Directive 2002/47/EC of the European

Parliament and of the Council of 6 June 2002 on

financial collateral arrangements, as transposed in terms

of Maltese law;

(iv) Regulation (EU) No. 648/2012 of the

European Parliament and of the Council of 4 July 2012

on OTC derivatives, central counterparties and trade

repositories;

(v)

the safeguarding requirements of funds

for

(aa) payment institutions laid down

under Directive (EU) 2015/2366 of the European

Parliament and of the Council of 25 November

2015 on payment services in the internal market,

amending Directives 2002/65/EC, 2009/110/EC

and 2013/36/EU and Regulation (EU) No. 1093/

2010, and repealing Directive 2007/64/EC, as

transposed in terms of Maltese law; and

(bb) electronic money institutions laid

down under Directive 2009/110/EC of the

European Parliament and of the Council of 16

September 2009 on the taking up, pursuit and

prudential supervision of the business of

electronic

money

institutions

amending

Directives 2005/60/EC and 2006/48/EC and

repealing Directive 2000/46/EC, as transposed in

terms of Maltese law;

(vi) the Financial Collateral Arrangements

Regulations and any financial collateral arrangement in

terms thereof;

(vii)

the Set-Off and Netting on Insolvency

Act.

In commercial matters, the commercial law shall apply

Provided that where no provision is made in such law, the usages

of trade or, in the absence of such usages, the civil law shall apply.

Title I

O F T RADERS AND A CTS OF T RADE

The term "trader" means any person who, by profession,

exercises acts of trade in his own name, and includes any

commercial partnership

Provided that, for the purposes of Part III, the term "trader"

shall have the meaning assigned to it in article 477.

The following are acts of trade

(a) any purchase of movable 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 movable effects, in their natural state or after being

worked or manufactured, when the purchase thereof

has been made with the object of re-selling or letting

such effects;

(b) any banking transaction;

(c) any transaction relating to bills of exchange;

(d) any time-bargain in securities;

(e) any transaction relating to commercial partnerships or

to shares in such partnerships;

(f)

any transaction relating to vessels and navigation;

(g) any undertaking relating to supplies, manufacture,

construction, carriage, insurance, deposits, public

entertainment and advertising;

(h) any purchase and any re-sale of immovable property,

when made with the object of commercial speculation,

and any building enterprise;

(i)

any transaction ancillary to or connected with any of

the above acts.

Obligations arising from collision of vessels, assistance or

salvage in case of wreck, stranding or abandonment, from jettison

or average are likewise commercial matters.

Every act of a trader shall be deemed to be an act of trade,

unless from the act itself it appears that it is extraneous to trade.

Any person capable of contracting, may trade, unless the

law precludes him from carrying on trade.

A minor who has attained the age of sixteen years, may

trade and shall be deemed to be a major with regard to obligations

contracted by him for purposes of trade, if -

(a) he has previously been authorized to that effect by the

parent to whose authority he is subject, by means of a

public deed registered in the Civil Court, First Hall; or,

where both parents are dead, interdicted or absent, he

has been authorized by the judge of the Civil Court,

First Hall; and

(b) a summary of the deed of authorization or of the

decree aforementioned has been published by means of

a notice in the Exchange, in the Government Gazette

and in another newspaper.

Minors who are traders authorized as aforesaid can by

reason of their trade charge, hypothecate and even alienate their

property, without any of the formalities prescribed by the civil law.

The provisions of articles 9 and 10 shall apply to minors

not being traders, with respect to acts declared to be acts of trade.

(1) The authority granted to a minor by the parent vested

with parental authority to carry on trade may, at any time, be

revoked by the parent exercising such authority by means of a

public deed duly served on the minor.

(2) The deed of revocation shall be registered in the Civil

Court, First Hall, and published by means of a notice in the

Exchange, in the Government Gazette and in another newspaper.

(3) Such revocation shall in no case injuriously affect the rights

acquired by a third party, even in regard to transactions which are

still in the course of negotiation.

Title II

O F THE D UTIES OF T RADERS

Sub-title I

O F T RADE B OOKS

Every trader is bound to keep the following books

(a)

a waste-book;

(b)

a journal;

(c)

a cash-book;

(d)

an inventory-book;

(e)

a ledger.

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.

The journal must show day by day all the transactions

concluded by the trader, his debts and credits, his negotiations,

acceptances and endorsements of bills, and, generally, all that he

receives or pays for any cause whatsoever; and must show month

by month the sums disbursed for household expenses.

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.

(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.

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.

Besides the books mentioned in the foregoing articles of

this sub-title, traders may keep other books and other papers

wherefrom the extent and the progress of their business shall

appear in a more detailed manner.

Every trader shall keep, by order of date, the original of all

letters, invoices and telegrams received by him, and a copy,

whether hand-written or type-written, or a press-copy, of all letters,

invoices and telegrams forwarded by him.

(1) All books which traders are required to keep, with the

exception of the waste-book, shall be numbered and kept, by order

of date, without blanks or marginal notes.

(2) Whenever it shall be necessary to make any cancellation,

this shall be made in such a manner as to leave the cancelled words

legible.

(3) The provisions of this article shall not apply to such books

as were already in use before the first day of January nineteen

hundred and twenty-eight.

(1) Trade books, whether obligatory or optional, shall

constitute evidence in terms of the Code of Organization and Civil

Procedure.

(2) Nevertheless, it shall not be lawful to divide the contents of

such books.

(1) In the course of an action, the court may, at the

instance of one of the parties or of its own motion, order the

production of all correspondence touching the question at issue,

and of the trade books in order to abstract therefrom such portion

only as relates to the controversy.

(2) In such case, a qualified accountant chosen by agreement

between the parties or, in default, nominated ex officio by the court,

may be appointed in order to ascertain, without removing the books

and in the presence of the person producing them, whether such

books are in order, and to abstract therefrom such entries as relate

to the controversy.

(3)

The opposite party may in counter-evidence produce his

own books kept according to law.

In cases of winding up or liquidation of a partnership, or of

property in community or of successions, the court shall have

power to allow the examination of all the books subject to such

conditions and formalities as the court may in each case prescribe.

Retail traders are not bound to enter in their books the sales

made for ready cash: it will be sufficient for them to enter each day

the total amount of the sales made on such day.

Traders are bound to keep their trade books, letters,

invoices and telegrams received by them, for a period of five years

to be reckoned, in the case of trade books, from the date of the last

entry made in each book.

Sub-title IA

O F LATE PAYMENTS IN COMMERCIAL TRANSACTIONS

For the purposes of this Sub-Title

"amount due" means the principal sum which should have been

paid within the contractual period of payment, including, where

applicable, taxes, duties, levies or charges specified in the invoice;

"commercial transactions" means transactions between

undertakings or between undertakings and public authorities, which

lead to the delivery of goods or the provision of services for

remuneration;

"Commission Directive 2006/111/EC" means the Commission

Directive of 16 November 2006 on the transparency of financial

relations between Member States and public undertakings as well

as on financial transparency within certain undertakings;

"executive title" has the same meaning as is assigned to it in Title

VII of Part I of the Code of Organization and Civil Procedure, and

the provisions of that title shall apply thereto;

"interest for late payment" means legal interest for late payment

or interest at a rate agreed between the undertakings, subject to the

provisions of article 26G;

"invoice" means a bill sent by a provider of a product or service

to the purchaser. The invoice establishes an obligation on the part

of the purchaser to pay. For the purpose of this definition, "invoice"

includes an equivalent request for payment;

"late payment" means payment not made on the date agreed upon

in the contract or according to law, and on the fulfilment of the

conditions laid down under article 26C(1) and article 26D(1);

"legal interest for late payment" means simple interest for late

payment at a rate which is equal to the sum of the reference rate

and at least eight percent (8%);

"public authority" means the Government of Malta, the Local

Councils or bodies governed by public law, associations formed by

one or several of such authorities or bodies governed by public law.

For the purpose of this definition, "a body governed by public

law" means a body which

(a) is established for the specific purpose of meeting

needs in the general interest, not being of an industrial

or commercial nature;

(b) has legal personality; and

(c) is financed for the most part by the State, or Local

Councils or other public bodies, or is subject to

management supervision by those bodies, or has an

administrative, managerial or supervisory board more

than half of whose members are appointed by the

State, Local Councils, or other public bodies;

"reference rate" means the interest rate applied by the European

Central Bank to its most recent main refinancing operations, or the

m a rg i n a l i n t e r e s t r a t e r e s u l t i n g f r o m v a r i a b l e - r a t e t e n d e r

procedures for the most recent main refinancing operations of the

European Central Bank;

"undertaking" means any organization, other than a public

authority, acting in the course of its independent economic or

professional activity, even where that activity is carried out by a

single person.

The provisions of this Sub-Title shall, notwithstanding the

p r o v i s i o n s o f a n y o t h e r l a w, a p p l y t o p a y m e n t s m a d e a s

remuneration for commercial transactions carried out between

private and public undertakings, between undertakings and public

authorities, and between main contractors and their suppliers and

subcontractors, as from 1st March, 2012

Provided that this Sub-Title shall not regulate transactions

between consumers, interest in connection with other payments

such as payments under the laws on cheques and bills of exchange,

or payments made as compensation for damages including payment

from insurance companies.

(1) In the case of transactions between undertakings, the

creditor shall be entitled to interest for late payment, without the

need of a reminder, to the extent that it

(a) has fulfilled its contractual and legal obligations; and

(b) has not received the amount due on time, unless the

debtor is not responsible for the delay.

(2)

The creditor may proceed with the claim of interest for late

payment against the debtor without reminding the debtor that the

amount is due.

(3) On fulfilment of the conditions under sub-article (1), the

creditor shall be entitled to interest for late payment from the day

following the date or the end of term for payment fixed in the

contract

Provided that when the date or term for payment is not

fixed in the contract, the creditor shall be entitled to interest for late

payment upon the expiry of any of the following time limits

(a) thirty calendar days following the date of receipt by

the debtor of the invoice;

(b) thirty calendar days after the date of receipt of the

goods or services, when the date of the receipt of the

invoice is uncertain;

(c) thirty calendar days after the date of the receipt of the

goods or services, when the debtor receives the invoice

earlier than the goods or services;

(d) thirty calendar days after the date when according to

law as agreed or in the contract the product has to be

ascertained or verified, and the debtor receives the

invoice earlier or on the date on which such

acceptance or verification takes place

Provided further that the parties to a contract may expressly

agree in the contract to extend the thirty calendar day period under

paragraph (d) to a longer period, so long as the extension of time is

not grossly unfair to the creditor.

(4) Irrespective of any other law, the period for payment fixed

in a contract may not exceed sixty calendar days

Provided that the parties may expressly agree for a longer

period, so long as the extension of time is not grossly unfair to the

creditor.

(5)

The applicable reference rate for

(a) the first semester of the year concerned shall be the

rate in force on 1 January of that year;

(b) the second semester of the year concerned shall be the

rate in force on 1 July of that year.

(1) In the case of transactions between undertakings as

creditor and public authorities as debtor, the creditor shall be

entitled, without the need of a reminder, to legal interest for late

payment to the extent that it

(a) has fulfilled its contractual and legal obligations; and

(b) has not received the amount due on time, unless the

debtor is not responsible for the delay.

(2) The creditor may proceed with the claim for late payment

against the debtor without reminding the debtor that the amount is

due.

(3) On fulfilment of the conditions under sub-article (1), the

creditor shall be entitled to interest for late payment upon the

expiry of either of the following time limits

(a) thirty calendar days following the date of receipt by

the debtor of the invoice;

(b) thirty calendar days after the date of receipt of the

goods or services, when the date of the receipt of the

invoice is uncertain;

(c) thirty calendar days after the date of the receipt of the

goods or services, when the debtor receives the invoice

earlier than the goods or services;

(d) thirty calendar days after the date when according to

law or in the contract the product has to be ascertained

or verified as being in conformity with the contract,

and the debtor receives the invoice earlier or on the

date on which such acceptance or verification takes

place

Provided that

(i)

the duration of the procedure relating to acceptance or

verification referred to in paragraph (d) shall not

exceed thirty calendar days from the date of receipt of

the goods or services unless the parties have expressly

agreed otherwise in the contract and in all documents

relating to the tender document, and provided that it is

not grossly unfair to the creditor within the meaning of

article 26G;

(ii) unless expressly agreed to between the creditor and

debtor in a contract, the period for payment fixed in

the contract may not exceed the limits under paragraph

(a) to (d), and when such agreement is reached,

provided this is objectively justified in the light of the

particular nature of the features of the contract, the

period for payment fixed in the contract may not

exceed sixty calendar days;

(iii) the time period mentioned under paragraphs (a) to (d)

shall be extended to a maximum of sixty calendar days

for

1. any public authority which carries out economic

activities of an industrial or commercial nature

by offering goods or services on the market and

which is subject as a public undertaking to the

transparency requirements laid down in

Commission Directive 2006/111/EC;

2. public entities providing health care which are

duly recognized for that purpose.

(4) An agreement between the creditor and debtor extending

the date of receipt of the invoice is null and void.

(5)

The applicable reference rate for

(a) the first semester of the year concerned shall be the

rate in force on 1 January of that year;

(b) the second semester of the year concerned shall be the

rate in force on 1 July of that year.

In addition to the claim for late payment under this Sub-

Title, a creditor is entitled to recover from the debtor, without the

need of a reminder

(a) a minimum of forty euro (€40) as compensation for the

creditor’s own recovery costs; and

(b) such other reasonable sum in excess of the forty euro

(€40) incurred by him due to the debtor’s late

payment.

Nothing in this Sub-Title shall prohibit parties from

reaching an agreement on payment being effected periodically by

means of instalments

Provided that where an instalment is not paid within the

agreed date, the payment of interest and compensation shall be

calculated solely on the basis of overdue amounts.

(1) A provision in an agreement or a practice, which

relates to the date or period of payment, the rate of interest for late

payment or the compensation for recovery costs, may be

unenforceable or may give rise to a claim for damages, if such

provision or practice is grossly unfair to the creditor.

(2) In determining whether a provision or a practice is grossly

u n f a i r t o t h e c r e d i t o r, t h e f o l l o w i n g s h a l l b e t a k e n i n t o

consideration

(a) any gross deviation from good commercial practice is

contrary to good faith or fair dealing;

(b) the nature of the product or the service; and

(c) whether the debtor has any objective reason to deviate

from the legal rate of interest for late payment, from

the payment periods referred to in articles 26C(4) and

26D(3), sub-paragraph (ii) of the proviso to article

26D(3), sub-paragraph (iii) of the proviso to article

26D(3), or from the fixed sum as referred to in article

26E(a).

(3) For the purpose of this article, a provision in a contract or a

practice which excludes

(a) interest for late payment, shall be deemed as grossly

unfair;

(b) compensation for recovery costs, shall be presumed to

be grossly unfair.

(4) An organization which represents enterprises or an

organization with a legitimate interest in the representation of

enterprises may seek redress before a court of civil jurisdiction

against the use of contractual conditions or practices which are

manifestly unjust according to sub-articles (1), (2) and (3).

An agreement to a commercial transaction which provides

for the retention of title between the vendor and the purchaser, shall

entitle the vendor to retain title over the goods until the price has

been paid in full by the purchaser.

With reference to claims for late payment made according

to the provisions of this Sub-title, where the amount of the debt or

other features of the proceedings are not in dispute, an executive

title may be obtained by the creditor according to the provisions of

articles 166A to 170, inclusive, of the Code of Organization and

Civil Procedure, without prejudice to the conditions established in

the said articles.

The Ministry for Finance shall publish the rate of legal

interest for late payment in commercial transactions, including

publication by the use of electronic means.

Sub-title II

O F P UBLICATION OF M ARRIAGE C ONTRACTS

(1) Every notary receiving a marriage contract or any deed

varying such contract between persons any one of whom is

described in the deed as a trader, shall, within fifteen days from the

date of such contract or deed, file with the Registrar of Courts of

Malta or with the Registrar of Courts of Gozo, according to the

residence of the party described as a trader, a note containing the

following particulars

(a) the date of the contract or deed and the name of the

notary receiving such contract or deed;

(b) the name of the party described as a trader;

(c) the amount of the dowry and of the dower.

(2) The registrar shall cause a copy of the note aforesaid to be

posted up at the Exchange and published in the Government

Gazette.

(1) The Registrar of Courts of Malta and the Registrar of

Courts of Gozo and Comino shall keep an Index, in alphabetical

order, of the notes filed with them respectively under the provisions

of the last preceding article.

(2)

The Index shall be open to inspection by the public.

Every notary who fails to comply with the provisions of

article 27 shall be liable, on conviction, to a penalty not exceeding

twenty-three euro and twenty-nine cents (23.29), at the suit of any

interested party, or of the Attorney General, by summons before the

Civil Court, First Hall, or before the Court of Magistrates (Gozo) in

its superior commercial jurisdiction, as the case may be.

(1) Where any one of the spouses engages in trade after

the marriage, or although already engaged in trade has not been so

described in the marriage contract, the obligations mentioned in

article 27 shall devolve upon such spouse.

(2) If such spouse fails to carry out the said obligations, such

spouse shall be liable to the penalty prescribed in the last preceding

article and may, moreover, in the event of bankruptcy, be adjudged

a fraudulent bankrupt.

(1) The registrar shall cause every demand for the

separation of property between spouses any one of whom is

described in the Index mentioned in article 28 as a trader, to be

published in the Government Gazette.

(2) The registrar shall likewise cause the judgment on the said

demand to be published in the Government Gazette, and shall enter

a reference to such judgment in the said Index.

Sub-title III

O F L IMITS OF C OMPETITION

Traders shall not make use of any name, mark or

distinctive device capable of creating confusion with any other

name, mark or distinctive device lawfully used by others, even

t ho ugh su ch ot her n am e, m ark o r di sti nct ive de vic e b e n ot

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.

(1) Traders

shall

not

engage

in

any

comparative

advertising.

(2) Notwithstanding the preceding sub-article, comparative

advertising shall, as far as the comparison is concerned, be

permitted when the following conditions are met

(a) it is not misleading within the meaning of article 32B

or within the meaning of articles 51C and 51D of the

Consumer Affairs Act;

(b) it compares goods or services meeting the same needs

or intended for the same purpose;

(c) it objectively compares one or more material, relevant,

verifiable and representative features of those goods

and services, which may include price;

(d) it does not discredit or denigrate the trade marks, trade

names, other distinguishing marks, goods, services,

activities, or circumstances of a competitor;

(e) for products with designation of origin, it relates in

each case to products with the same designation;

(f)

it does not take unfair advantage of the reputation of a

trade mark, trade name or other distinguishing marks

of a competitor or of the designation of origin of

competing products;

(g) it does not present goods or services as imitations or

replicas of goods or services bearing a protected trade

mark or trade name;

(h) it does not create confusion among traders, between

the advertiser and a competitor or between the

advertiser’s trade marks, trade names, other

distinguishing marks, goods or services and those of a

competitor.

(3) Any comparison referring to a special offer shall indicate in

a clear and unequivocal way the date on which the offer ends or,

w h e r e a p p r o p r i a t e , t h a t t h e s p e c i a l o ff e r i s s u b j e c t t o t h e

availability of the goods and services, and where the special offer

has not yet begun the date of the period during which the special

offer shall apply. "Special offer" in this sub-article refers to the

which the goods or services will be supplied.

(4) For the purposes of this article "comparative advertising"

means any advertising which explicitly or by implication identifies

a competitor or goods or services offered by a competitor.

(1) Traders shall not engage in any form of misleading

advertising.

(2) An advertisement is misleading if in any way, including its

presentation, it deceives or is likely to deceive the persons to whom

it is addressed or whom it reaches, and if by reason of its deceptive

nature, it is likely to affect their economic behaviour or is one

which for those reasons, injures or is likely to injure a competitor

of the person whose interests the advertisement seeks to promote.

(3) In determining whether an advertisement is misleading

account shall be taken of all its features, and in particular of any

information it may have about -

(a) the characteristics of goods or services, including their

availability, nature, execution, composition, method

and date of manufacture or provision, fitness for

purpose, uses, quantity, specification, geographical or

commercial origin or the results to be expected from

their use, or the results and material features of tests or

checks carried out on the goods or services;

(b) the price or the manner in which the price is

calculated, and the conditions on which the goods are

supplied or the services provided;

(c) the nature, attributes and rights of the advertiser,

including his identity and assets, his qualifications and

ownership of industrial, commercial or intellectual

property rights or any awards and distinctions made to

him.

Traders shall not make use of any false indication of origin

of the goods

Provided that a designation which according to commercial

usage is considered as a common designation, shall not be deemed

to be a false indication.

(1) Traders shall not, for the purpose of competition,

spread news capable of prejudicing the business or trade carried on

by other persons.

(2) Moreover, they shall not make use of honours, patents,

medals, prizes or other distinctions to which they have no claim or

which have been obtained for some other branch of business or

trade.

Traders shall not suborn persons employed in the trade or

business carried on by a competitor for the object of knowing or

exploiting his customers.

A trader shall not, in the exercise of his trade or business,

issue certificates of honesty or competency contrary to the facts as

known to him and capable of imposing upon the good faith of

others.

For the purposes of this subtitle, "advertising" means any

form of representation, including a catalogue, a circular and a price

list, about a trade, business, craft or profession in order to promote

the supply or transfer of goods or services, immovable property,

rights or obligations and "advertisement" shall be construed

accordingly.

(1) Any trader who contravenes any of the prohibitions

contained in articles 32 to 36 inclusively, shall, at the choice of the

injured trader, be liable either to an action for damages and interest

or to a penalty. The injured trader may, further, demand that every

thing done contrary to the said prohibitions be destroyed, or that

any other remedy be applied capable, according to circumstances,

of removing the act constituting the unlawful competition.

(2) Any action for damages and interest brought under this

article shall be governed by the rules of the civil law.

(3) The penalty, however, shall be fixed by the Civil Court,

First Hall, or by the Court of Magistrates (Gozo) in its superior

commercial jurisdiction at the suit of the injured trader, and shall

not be less than four hundred and sixty-five euro and eighty-seven

cents (€465.87) nor more than four thousand, six hundred and fifty-

eight euro and seventy-five cents (€4,658.75), having regard to the

seriousness of the fact, to its continuance, to the malice of the

offending party and to all other particular circumstances of each

case. Such penalty shall be paid to the injured trader in settlement

of all his claims for damages and interest.

Title III

O F THE R EGISTER OF T RADERS

(1) Every trader and every commercial partnership may, if

they so desire, be registered in a special book to be called "Register

of Traders" which shall be kept under the authority of the Civil

Court, First Hall.

(2) There shall be kept under the authority of the Court of

Magistrates (Gozo) in its superior commercial jurisdiction another

register for traders residing in Gozo and for commercial

partnerships having their place of business there; such register,

however, shall be deemed to form an integral part of that kept under

the authority of the Civil Court, First Hall.

(1) Every person is entitled to be registered in the register

mentioned in the last preceding article, provided -

(a) he is actually engaged in trade or in any branch of

trade;

(b) he is discharged, if he had previously been adjudged

bankrupt;

(c) he has not been convicted of any of the crimes

affecting public trust or against property provided for

in the Criminal Code;

(d) he produces a certificate from the Council of the

Chamber of Commerce, Enterprise and Industry as to

the existence in his respect of the conditions

mentioned in paragraphs (a), (b) and (c).

(2) Where a commercial partnership is to be registered, the

conditions mentioned in paragraphs (b), (c) and (d) of sub-article

(1) of this article must exist in respect of every one of the partners

with unlimited liability.

Any person desiring to be registered in the aforesaid

register shall make an application before one of the courts

mentioned in article 38, as the case may be, producing all the

requisite documents, and, in the case of a commercial partnership, a

copy of the statement published in the Government Gazette in

terms of sub-article (1) of article 192 of the Commercial Partner-

ships Ordinance * , showing the date of registration of the

partnership and the date on which the relative certificate of

*Repealed by Act XXV of 1995 (Chapter 386).

registration was issued.

(1) The judge or magistrate, as the case may be, shall

grant or refuse the application by a decree in camera, ordering in

the first case, the registrar to enter applicant’s name in the register

and, in the second case, that the applicant be served with a copy of

the decree.

(2) The decree refusing the application shall contain the

reasons for such refusal and shall be subject to appeal, by sworn

application, to the Court of Appeal within eight days from the day

of the service above-mentioned.

It shall be lawful for the court of first or second instance to

examine the applicant on oath and to require him to produce all

such evidence as it shall deem necessary for dealing with the

application.

(1) The name of a trader or of a commercial partnership,

after having been duly entered in the register above-mentioned,

shall be liable to cancellation if the trader dies or retires from

business or if the partnership is dissolved, or if the one or the other

is adjudged bankrupt, or if the trader or any of the partners with

unlimited liability is convicted of any of the crimes mentioned in

paragraph (c) of sub-article (1) of article 39.

(2) The demand for the cancellation shall be made before the

competent court, by means of an application, by any interested

party or by the President of the Council of the Chamber of

C o m m e r c e , E n t e r p r i s e a n d I n d u s t r y, a g a i n s t t h e p e r s o n o r

partnership concerned or his or its lawful representative.

(3) The decree given on such application is also subject to

appeal within the same time and in the same manner as prescribed

in sub-article (2) of article 41.

(1) Every entry in the register above-mentioned shall bear

a progressive number, and shall set out the name and surname of

the trader or of every partner with unlimited liability, as the case

may be, the trade name, the firm or partnership name under which

the trade is carried on, the place of residence and the trade or the

particular branch of trade carried on.

(2) Every registration in Gozo shall, without delay, be

communicated, by means of a legal copy, to the registrar in Malta who

shall enter such registration in the register of traders, allotting to it a

p r o g r e s s i v e n u m b e r. S u c h n u m b e r sh al l , w i t h o u t d e l a y, b e

communicated to the registrar in Gozo who shall forthwith enter the

same in the register kept under the authority of that court.

It shall be lawful for any trader or commercial partnership,

at his or its own expense, to demand from the registrar a certificate

of his or its registration.

The register of traders shall be open to inspection by every

person, free of charge.

(1) Default of registration shall not operate so as to

restrain any person from engaging in trade.

(2) Nevertheless, whosoever, without being duly registered or

after his name has been struck off the register of traders, shall, in

his correspondence or in any other paper relating to his business,

make use of any designation calculated to lead others to believe

that he is duly registered, shall be liable to a penalty of not less

than eleven euro and sixty-five cents (11.65) and not exceeding two

hundred and thirty-two euro and ninety-four cents (232.94), at the

suit of the Attorney General, by sworn application before the

competent court of commercial jurisdiction.

In the register of traders there shall be a special part for

public brokers and another for commercial agents.

Title IV

O F P ERSONS A UXILIARY TO T RADERS

Sub-title I

O F A GENCY IN GENERAL

In the absence of any agreement, law or custom to the

c o n t r a r y, m e r c a n t i l e a g e n c y i s g o v e r n e d b y t h e p r o vi s i o n s

contained in Title XVIII of Part II of Book Second of the Civil

Code so far as applicable, with the exception of article 1861

Provided that where a mercantile agency involves also the

obligation on the part of the agent of performing particular

services, then it shall also be governed by the provisions of the

Employment and Industrial Relations Act, so far as applicable.

All acts done by the agent on behalf of the principal, within

the scope of his authority, produce directly their effect whether in

favour of or against the principal.

For the purpose of establishing the validity and the effects

of the act done by the agent, regard shall be had to the capacity of

the principal and to the intention of the agent

P ro v id e d t h a t w he r e a t t he t i me o f t h e co nc l u s i on o f t h e

transaction the principal is in bad faith, he cannot set up the good

faith of the agent.

Where the law requires that an act be expressed in writing,

the authority given to an agent to do such act must be conferred in

writing.

Saving any custom or agreement to the contrary, the power

to buy shall not be deemed to include the power to buy on credit,

and the power to sell shall not be deemed to include the power to

sell on credit.

(1) The agent is bound to furnish to the third party every

information as to the extent of the authority conferred on him by

the principal and, if the third party so requires, the agent is bound

to deliver to such third party a declaration duly signed by him to the

effect that a given transaction is comprised within the said

authority.

(2) Any false statement wilfully made by the agent in the said

declaration shall be considered as a forgery of a commercial

document within the meaning of article 183 of the Criminal Code,

and shall be liable to the punishment therein prescribed, without

prejudice to any action for damages and interest.

Where the agency has been conferred in general terms, the

principal who withdraws the agency, may relieve himself from all

liability towards third parties for any further acts done by the agent,

by giving notice of such withdrawal by means of a note filed in the

Civil Court, First Hall, or in the Court of Magistrates (Gozo) in its

superior commercial jurisdiction, as the case may be, and causing

such note to be published in the Government Gazette and in another

newspaper, and affixed in the Exchange.

It shall not be lawful for the agent to transact with himself

a business of his principal, whether on his own behalf or on behalf

of any other person, directly or through the medium of a third party,

without the authority or ratification of the principal.

Sub-title II

O F M ANAGERS

A manager is a person who is placed, personally and

permanently, in charge of the business or of a branch of the

business of the principal in one or more fixed places.

Any person, whatever his or her age, may be a manager.

(1) The authority to act as manager may be express or

implied.

(2) In the first case, where the principal desires to limit the

authority conferred on the manager in such a way as to raise a

presumption that the limitations imposed are known to third

parties, he must file in the one or the other of the courts mentioned

in article 55 a note showing in detail all such limitations, and cause

such note to be affixed in the Exchange and published in the

G o v e r n m en t G a z e t t e a n d i n an o t h e r n e w s p a p e r, p o s s i b l y a

commercial newspaper.

(3) In the second case, the authority to act as manager shall in

regard to third parties be deemed to be general and to comprise all

matters pertaining and necessary to the exercise of the business or

branch of business in respect of which it has been conferred, unless

the principal proves that such third parties knew of the aforesaid

limitations at the time the transaction was concluded.

The principal shall be liable for the acts of the manager and

for the obligations contracted by him within the limits of the

business or branch of business which has been entrusted to him.

A loan (mutuum) made to the manager is not binding on the

principal except when the object for which it has been made has

been stated, and such object actually relates to the business or

branch of business in charge of which the manager has been placed.

(1) The manager shall always deal in the name of the

principal, and when signing shall, besides his own name and

surname, indicate the name and surname or the firm name of the

principal, with the clause per procura or some equivalent clause.

(2) In default of such indication, the manager shall be

personally liable; but in such case, third parties may bring, also

against the principal, any action arising from the acts of the

manager pertaining and necessary to the exercise of the business

with which he is charged.

(1) The manager shall not, either on his own behalf or on

behalf of others, without the express consent of the principal, carry

on or have any interest in any business of the same nature as that in

charge of which he has been placed.

(2) If the manager acts in contravention of this prohibition, the

principal may, at his option, either take action for damages and

interest or demand payment of any profits made by the manager in

any transaction entered into in violation of his duty.

The manager may sue or be sued in the name of the

principal for any obligations arising out of the acts done by him in

the exercise of the business or branch of business with which he is

charged, even if the principal is present in Malta.

The manager is jointly and severally liable with the

principal for the observance of the provisions contained in Title II

of this Part of this Code in regard to all matters relating to the

business or branch of business with which he is charged.

The determination of the manager’s authority shall be

made public with the same formalities prescribed in sub-article (2)

of article 59, even where the grant of the authority had not been so

made known.

Sub-title III

O F C OMMERCIAL T RAVELLERS AND SALESPERSONS

(1) Commercial travellers shall produce to the customers

with whom they deal in the name of the principal, the instrument

creating their authority and defining its limitations.

(2) In the absence of an express authority, they cannot receive

the price of goods, unless they personally deliver the same, nor can

they grant time for payment or allow discount in respect of

transactions concluded by them.

(3) They may receive complaints addressed to the principal,

and may sue or be sued in the name of the principal in respect of

obligations arising out of transactions concluded by them in the

name of the principal himself.

(1) Salespersons entrusted with wholesale or retail sales,

are empowered to receive within the warehouse or place of

business, the price of goods sold by them, unless the receipt of

payments is entrusted to some other person as cashier.

(2) They cannot receive such price outside the warehouse or

place of business, unless they produce the power giving them

authority so to do or deliver a receipt signed by the principal.

(1) Commercial travellers and salespersons shall not,

without express authority, exercise the same trade as the principal,

either on their own behalf or on behalf of others, and shall not

communicate information about customers to the detriment of the

principal.

(2) Whosoever acts in contravention of this prohibition shall be

liable for damages and interest; and shall moreover be liable to a

penalty of not less than eleven euro and sixty-five cents (11.65) and

not exceeding two hundred and thirty-two euro and ninety-four cents

(232.94), on proceedings taken at the suit of the principal, before

the Court of Magistrates.

Sub-title IV

O F C OMMERCIAL A GENTS

(1) The relations between commercial agents and their

principals and the activities of commercial agents in Malta are

governed by the provisions of this sub-title.

(2)

This sub-title shall not apply to

(a) commercial agents whose activities are unpaid;

(b) commercial agents when they operate on commodity

exchanges or in the commodity market; and

(c) persons whose activities as commercial agents are

secondary.

(3) The provisions of Part I of the Schedule shall apply in

order to determine the persons whose activities as commercial

agents are to be deemed secondary for the purposes of sub-article

(2)(c).

In this sub-title

"commercial agent" means a person not being a person in the

employment of the principal, who has continuing authority to

negotiate the sale or purchase of goods or services on behalf of

another person (the principal), or to negotiate and conclude such

transactions on behalf and in the name of that principal, but does

not include

(i)

a person who in his capacity as an officer of a

company or association is empowered to enter

into commitments binding the company or

association;

(ii) a partner who is lawfully authorised to enter into

commitments binding on his partners;

(iii) a person acting as an insolvency practitioner in

Malta or in an equivalent position in any other

jurisdiction;

"commission" means any part of the remuneration of a

commercial agent which varies with the number or value of

business transactions;

"Minister" means the Minister responsible for commerce;

"regulatory authority" means the Council of the Chamber of

Commerce, Enterprise and Industry;

"restraint of trade clause" means an agreement or a clause in an

agreement restricting the business activities of a commercial agent

following the termination of the agency contract.

(1) Any person desiring to act as a commercial agent,

whether alone or in partnership with any other person, shall notify

the regulatory authority requesting registration, within thirty days

of undertaking this activity.

(2) In order to be registered as a commercial agent with the

regulatory authority an applicant shall apply in writing to the

authority in such form as the regulatory authority shall prescribe,

containing the full name and surname, age, private and business

addresses of the applicant and such other particulars concerning his

business or occupation as the regulatory authority shall require. In

the case of a person applying to be registered as a commercial

agent in partnership, a reference shall be made in the application to

the statement published in the Gazette in terms of the Companies

Act showing the date of registration of the partnership and the date

on which the relative certificate of registration was issued.

(3) The regulatory authority shall not accept an application for

registration to act as a commercial agent from any person who is in

the employment of the Government of Malta or of any financial

institution, or from any person holding a warrant to practise a

profession in Malta and actually practising such profession, or

from stockbrokers or from any person who, whether in Malta or

abroad, has been found guilty of fraudulent bankruptcy.

(4) Notice of any registration under this article shall be

published in the Gazette. In the month of January of each year, a

complete list of registrations then in force shall likewise be

published in the Gazette.

(5) Any registration carried out under this article may be

withdrawn or suspended by the regulatory authority, if the person

registered -

(a) is convicted of any crime against property;

(b) is adjudged bankrupt;

(c) accepts employment under the Government of Malta,

or with any financial institution, or becomes the holder

of a warrant to practise a profession and actually

practises such profession or becomes a stockbroker;

(d) is proved, to the satisfaction of the court, not to be a fit

and proper person to act as a commercial agent.

(6) Such withdrawal or suspension shall be published in the

Gazette.

The Minister after consulting the regulatory authority may,

by regulation, prescribe the fee to be charged by the regulatory

authority in respect of a registration to act as a commercial agent

under the provisions of the last preceding article. Any such

regulation may prescribe the payment of an annual fee in addition

to the fee payable on the initial registration and may provide that in

default of payment of any such annual fee, the registered person or

partnership shall removed from the register.

Without prejudice to the provisions of article 71(1), any

person who, without being registered, represents himself to be, or

acts or undertakes to act as a commercial agent, shall be liable

(a) on a first conviction to a fine (multa) not exceeding

two thousand and five hundred euro (€2,500); and

(b) on a second or subsequent conviction, to imprisonment

for a term not exceeding three months or to a fine

(multa) not exceeding five thousand euro (€5,000).

Where any court has imposed a fine under this sub-title,

and such fine has not been paid, the regulatory authority shall not

grant or renew the registration on the expiry thereof until such time

as the payment of the fine is effected.

(1) In performing his activities a commercial agent shall

look after the interests of his principal and act dutifully and in good

faith.

(2)

In particular, a commercial agent shall -

(a) make proper efforts to negotiate and, where

appropriate, conclude the transactions he is instructed

to take care of;

(b) communicate to his principal all the necessary

information available to him;

(c) comply with reasonable instructions given by his

principal.

(1) In his relations with his commercial agent a principal

shall act dutifully and in good faith.

(2)

In particular, a principal shall -

(a) provide his commercial agent with the necessary

documentation relating to the goods concerned;

(b) obtain for his commercial agent the information

necessary for the performance of the agency contract,

and in particular notify his commercial agent within a

reasonable period where he anticipates that the volume

of commercial transactions will be significantly lower

than that which the commercial agent could normally

have expected.

(3) A principal shall, in addition, inform his commercial agent

within a reasonable period of his acceptance or refusal of, and of

any non-execution by him of, a commercial transaction which the

commercial agent has procured for him.

(1) The parties may not derogate from articles 74 and 75.

(2) The law applicable to the contract shall govern the

consequence of breach of the rights and obligations under articles

74 and 75 above.

(1) Without prejudice to the application of any enactment

or rule of law concerning the level of remuneration of commercial

agents, in the absence of any agreement as to remuneration between

the parties, a commercial agent shall be entitled to the remuneration

that commercial agents appointed for the goods forming the subject

of his agency contract are customarily allowed in the place where

he carries on his activities and, in the absence of such customary

practice, a commercial agent shall be entitled to such reasonable

remuneration taking into account all the aspects of the transaction

to be agreed to between the parties or in default by the court.

(2) Where the remuneration of a commission agent is not fixed

in whole or in part as a commission the provisions of articles 77A

to 77F shall not apply.

(1) A commercial agent shall be entitled to commission

on commercial transactions concluded during the period covered by

the agency contract -

(a) where the transaction has been concluded as a result of

his direct or indirect intervention; or

(b) where the transaction is concluded with a third party

whom he has previously acquired as a customer for

transactions of the same kind.

(2) A commercial agent shall also be entitled to commission on

transactions concluded during the period covered by the agency

contract where he has an exclusive right to a specific geographical

area or to a specific group of customers and where the transaction

has been entered into with a customer in that area or group.

Subject to article 77C, a commercial agent shall be entitled

to commission on commercial transactions concluded after the

agency contract has terminated if -

(a) the transaction is mainly attributable to his efforts

during the period covered by the agency contract and

if the transaction was entered into within a reasonable

period after that contract terminated; or

(b) in accordance with the conditions mentioned in article

77A above, the order of the third party reached the

principal or the commercial agent before the agency

contract terminated.

(1) A commercial agent shall not be entitled to the

commission referred to in article 77A if that commission is

payable, by virtue of article 77B, to the previous commercial agent,

u n l e s s i t is eq ui t a b l e b e c a u s e of t h e ci r c u m s ta n c e s f o r t he

commission to be shared between the commercial agents.

(2) The principal shall be liable for any sum due under sub-

article (1) to the person entitled to it in accordance therewith, and

any sum which the other commercial agent receives to which he is

not entitled shall be refunded to the principal.

(1) Commission shall become due as soon as, and to the

extent that, one of the following circumstances occurs

(a) the principal has executed the transaction; or

(b) the principal should, according to his agreement with

the third party, have executed the transaction; or

(c) the third party has executed the transaction.

(2) Commission shall become due at the latest when the third

party has executed his part of the transaction or should have done

so if the principal had executed his part of the transaction, as he

should have.

(3) The commission shall be paid not later than on the last day

of the month following the quarter in which it became due, and, for

the purposes of this sub-title, unless otherwise agreed between the

parties, the first quarter period shall run from the date the agency

contract takes effect, and subsequent periods shall run from that

date in the third month thereafter.

(4) Any agreement to derogate from sub-articles (2) and (3) to

the detriment of the commercial agent shall be void.

(1) The right to commission can be extinguished only if

and to the extent that it is established that the contract between the

third party and the principal will not be executed for a reason not

attributable to the fault of the principal.

(2) Any commission which the commercial agent has already

received shall be refunded if the right to it is extinguished.

(3) Any agreement to derogate from the provisions of sub-

article (1) to the detriment of the commercial agent shall be void.

(1) The principal shall supply his commercial agent with

a statement of the commission due, not later than the last day of the

month following the quarter in which the commission has become

due, and such statement shall set out the basis used in calculating

the amount of the commission.

(2) A commercial agent shall be entitled to demand that he be

provided with all the information (and in particular an extract from

the books) which is available to his principal and which he requires

in order to check the amount of the commission due to him.

(3) Any agreement to derogate from sub-articles (1) and (2)

shall be void.

(4) Nothing in this article shall remove or restrict the effect of,

derogate from the provisions of any enactment or rule of law which

grants to an agent the right to inspect the books of a principal.

(1) The commercial agent and principal shall each be

entitled to receive from the other, on request, a signed written

document setting out the terms of the agency contract including any

terms subsequently agreed.

(2) Any purported waiver of the right referred to in paragraph

(1) above shall be void.

An agency contract for a fixed period which continues to

be performed by both parties after that period has expired shall be

deemed to be converted into an agency contract for an indefinite

period.

(1) Where an agency contract is concluded for an

indefinite period either party may terminate it by notice.

(2)

The period of notice shall be -

(a) one month for in first year of the contract;

(b) two months after the commencement of the second

year but before the commencement of the third year;

(c) three months after the commencement of the third

year;

and the parties may not agree on any shorter periods of notice.

(3) The parties may agree on longer periods than those laid

down in sub-article (2), provided that the period of notice to be

given by the principal may not be shorter than that to be given by

the commercial agent.

(4) Unless otherwise agreed by the parties, the end of the

period of notice must coincide with the end of a calendar month.

(5) The provisions of this article shall also apply to an agency

contract for a fixed period which in virtue of article 78A is

converted into an agency contract for an indefinite period and for

the purposes of calculating the period of notice the term of the

fixed period contract shall be deemed to be part of the agency

contract for an indefinite period.

This sub-title shall not affect the application of any

enactment or rule of law which provides for the immediate

termination of the agency contract -

(a) because of the failure of one party to carry out all or

part of his obligations under that contract; or

(b) where exceptional circumstances arise.

(1) Subject to sub-article (7) and to article 78E, the

commercial agent shall be entitled to an indemnity if and to the

extent that -

(a) he has brought the principal new customers or has

significantly increased the volume of business with

existing customers and the principal continues to

derive substantial benefits from the business with such

customers; and

(b) the payment of this indemnity is equitable having regard

to all the circumstances and, in particular, the

commission lost by the commercial agent on the

business transacted with such customers.

(2) The amount of the indemnity shall not exceed a figure

equivalent to indemnity for one year calculated from the

c o m m e r c i a l a g e n t ’s a v e r a g e a n n u a l r e m u n e r a t i o n o v e r t h e

preceding five years and if the contract goes back less than five

years the indemnity shall be calculated on the average for the

period in question.

(3) The grant of an indemnity as mentioned above shall not

prevent the commercial agent from seeking damages.

(4) Subject to sub-article (7) and to article 78E, the commercial

agent shall be entitled to compensation for damage he suffers as a

result of the termination of his relations with his principal.

(5) For the purpose of this sub-title 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 enable the commercial agent to amortize the

costs and expenses that he had incurred on the advice

of his principal in the performance of the agency

contract.

(6) Entitlement to the indemnity or compensation for damage

as provided for under sub-articles (1) to (5) shall also arise where

the agency contract is terminated as a result of the death of the

commercial agent.

(7) The commercial agent shall lose his entitlement to the

indemnity or compensation for damage in accordance with the

prov isio ns of t he fo re goi ng su b-art icl es i f wi th in o ne year

following termination of his agency contract he does not make a

claim to his principal therefor.

The indemnity or compensation referred to in article 78D

shall not be payable to the commercial agent where -

(a) the principal has terminated the agency contract

because of default attributable to the commercial agent

which would justify immediate termination of the

agency contract in accordance with article 78C; or

(b) the commercial agent has himself terminated the

agency contract, unless such termination is justified -

(i)

by circumstances attributable to fault of the

principal, or

(ii) on grounds of the age, infirmity or illness of the

commercial agent in consequence of which he

cannot reasonably be required to continue his

activities; or

(c) the commercial agent, with the agreement of his

principal, assigns his rights and duties under the

agency contract to another person.

The parties may before the expiration of the agency

contract, not derogate from articles 78D and 78E to the detriment

of the commercial agent.

78E.

(1) A restraint of trade clause shall be valid only if and to

the extent that -

(a) it is concluded in writing; and

(b) it relates to the geographical area or the group of

customers and the geographical area entrusted to the

commercial agent and to the kind of goods covered by

his agency under the contract.

(2) A restraint of trade clause shall be valid for not more than

two years after termination of the agency contract.

(3) Nothing in this article shall affect any enactment or rule of

law which imposes other restrictions on the validity or

enforceability of restraint of trade clauses or which enables a court

to reduce the obligations on the parties resulting from such clauses.

Nothing in this sub-title shall require information to be

given where such disclosure would be contrary to public policy.

(1) Any notice, statement or other document to be given

or supplied to a commercial agent or to be given or supplied to the

principal under this sub-title may be so given or supplied

(a) by delivering it to him;

(b) by leaving it at his proper address addressed to him by

name;

(c) by sending it by post to him addressed either to his

registered address or to the address of his registered or

principal office; or by any other means provided for in

the agency contract.

(2)

Any such notice, statement or document may -

(a) in the case of a body corporate, be given or served on

the secretary or clerk of that body;

(b) in the case of a partnership, be given to or served on

any partner or on any person having the control or

management of the partnership business.

The provisions of this subtitle shall also apply to agency

contracts concluded before the date of coming into force of this

sub-title

Provided that noting therein shall effect any right or liability

accrued before such date.

Sub-title V

O F B ROKERS

(1) Any person desiring to act as a public broker shall

notify the Council of the Chamber of Commerce, Enterprise and

Industry, as the authority regulating this activity, requesting

registration, within thirty days of starting such an activity.

(2) In order to be registered as a public broker with the

regulatory authority, an applicant shall inform the authority in

writing in such form as the regulatory authority shall prescribe,

containing the full name and surname, age, private and business

addresses of the applicant and such other particulars concerning his

business or occupation as the regulatory authority shall require.

(3) Brokers complying with all the aforesaid formalities shall

be registered in a register administered by the regulatory authority.

Notice of any registration under this article shall be published in

the Gazette. In the month of January of each year, a complete list of

registrations then in force shall likewise be published in the

Gazette.

If a public broker is convicted of any of the crimes

provided for in Sub-titles I, II and III of Title IX of Part II of Book

First of the Criminal Code, he shall, ipso facto, forfeit his office,

and his name shall be struck off the register.

Whosoever, without complying with the formalities

prescribed in article 79 or after forfeiting his office of public

broker, performs an act of brokerage, shall, on conviction by the

Court of Magistrates, be liable to the punishments established for

contraventions.

(1) Public brokers shall keep a memorandum or daybook

and a book of brokerages.

(2)

The provisions of article 21 shall apply to such books.

Every public broker, on the conclusion of every

transaction, shall forthwith note it down in his memorandum or

day-book, and shall, day by day, enter every transaction in his book

of brokerages. He shall state in both such books, the date, the name

of the contracting parties, the nature of the transaction and,

generally, every stipulation and condition agreed upon by the

parties, and, in the case of merchandise, he shall particularly state

the quality, the quantity, the price and the marks, if any, and the

mode of payment.

The public broker shall, if so required by any of the

contracting parties, deliver a true copy signed by him, of the entry

made in the book of brokerages.

Public brokers shall, if so ordered by the court, produce

their books for the purpose of collating any copies delivered by

them to the parties, and shall give to the court, if necessary on oath,

all such explanations as may be required.

(1) Every public broker shall have the custody of his

books and shall keep them in good order.

(2) In the event of the death or interdiction of a public broker,

his books shall be deposited in the Civil Court, First Hall, by his

heirs or by any other person in whose possession they may be or by

himself, as the case may be, within fifteen days from the death or

interdiction.

(3) In default of such deposit, the registrar may take action for

the deposit of the books and may, where necessary, demand for

such purpose the issue of any requisite warrant against any person

whom he shall have reasonable grounds to believe to be in

possession of such books.

The provisions contained in articles 79, 80 and 81 shall not

apply to brokers employed in the selling or letting of immovables,

and the provisions contained in articles 79 to 86 shall not apply to

brokers employed in the selling of agricultural produce.

No public broker shall transact any commercial business for

his own account, or have any interest therein, either directly or

indirectly, in his own name or through the medium of a third party,

whether alone or in partnership with others; nor shall any public

broker lend his name for any transaction whatsoever to any person

not authorized to exercise the office of a public broker

Provided that two or more public brokers may form a

partnership between them for the purpose of brokerage only.

A public broker is not the agent of the parties in concluding

any transaction; and if in concluding any transaction he acts as

agent of one of the parties, he shall not be entitled to the

commission as broker.

(1) A public broker who does not disclose to one

contracting party the name of the other contracting party shall be

personally liable for the performance of the contract, and shall be

subrogated to the rights of the contracting party who has been paid

by him, as against the undisclosed contracting party.

(2) If the public broker discloses the name even after

concluding the business, the one party may directly sue the other

p a r t y, s a v i n g t h e p u b l i c b r o k e r ’s l i a b i l i t y i n c a s e o f n o n -

performance.

(1) A public broker who acts in contravention of any of

the obligations mentioned in the foregoing articles shall, at the

instance of any interested party or of the Attorney General, be

liable to a penalty of not less than fifty euro (€50) and not

exceeding five hundred euro (€500) on proceedings taken before

the Civil Court, First Hall, or the Court of Magistrates (Gozo) in its

superior commercial jurisdiction, as the case may be, saving any

other action arising from this Code or any other law.

(2) The court may, moreover, order the interdiction of the

public broker for a period not exceeding two years, in which case

the provisions of article 81 shall, during the time of interdiction, be

applicable.

Saving any agreement to the contrary, the fee for brokerage

is payable by the contracting parties in equal shares.

A public broker shall in respect of the bargain which he has

negotiated be entitled to the brokerage fee, even though the

transaction be concluded between the parties without him, but

without the services of another public broker.

Where a public broker has commenced a transaction which

i s af t e r w a r d s c o nc lu d e d by an ot h e r ac c o rd i n g t o t h e te r m s

negotiated by the former, the brokerage fee shall be equally divided

between the two brokers; but if the transaction is concluded

otherwise than according to the terms negotiated by the former

broker, the whole brokerage fee is payable to the second broker.

The provisions of articles 79 to 94 shall not apply to

brokers duly authorized to act as such before the first day of

January nineteen hundred and twenty-eight.

Sub-title VI

O F C OMMISSION M ERCHANTS

A commission merchant is a person who transacts business

in his own name or under a firm name, for or on behalf of a

principal.

A commission merchant is not bound to disclose the name

of the principal for whom he acts. He is directly liable to the person

with whom he deals, as if the transaction were his own.

The principal has no action against the person with whom

the commission merchant has contracted nor can such person

maintain an action against the principal.

The commission merchant may deviate from the

instructions received from the principal if he is of opinion that the

latter would have given his approval had he known of the altered

conditions, and there has not been sufficient time to ask for and

obtain his previous assent.

Where instructions are given for the buying or selling of

stocks, bills of exchange and other current securities or of goods

having an exchange or market value, the commission merchant,

unless the principal otherwise directs, may himself furnish at the

current price, as seller, the things he has to buy, or hold for himself

at the current price, as buyer, the things he has to sell on account of

the principal, saving his right to commission.

In the absence of agreement or usage to the contrary, a

commission merchant shall not be answerable for the performance

of the obligations assumed by the person with whom he has

contracted; and if he assumes such liability he is entitled to a

special commission, called a del credere commission which, in

default of agreement, is fixed by the custom of the place where the

authority is executed.

Every authority is deemed to include an order to conform

to the usages prevailing in trade.

It shall be in the power of the commission merchant to

accept or decline the agency entrusted to him by the principal

Provided that if he does not accept it, he shall, without any

delay, give notice of his refusal to the principal.

A commission merchant may relinquish the agency

already accepted by him where a just cause arises inducing him to

believe that the principal has not sufficient funds to meet his

obligations, in which case he shall, without any delay, give him

notice of his renunciation.

A commission merchant who has made advances on goods

forwarded to him for sale on account of the principal has a lien or

privilege for the reimbursement of such advances and for interest

and expenses on the value of the goods if these are already at his

disposal in any warehouse or place of deposit, or if, before their

arrival, he is in a position to prove that the goods have been

forwarded to him.

A commission merchant who has bought goods on behalf

of others has on such goods a like lien or privilege as mentioned in

the last preceding article for the reimbursement of the price paid or

to be paid by him, both if the goods are at his disposal in any

warehouse or place of deposit, as well as if, before the goods come

into the possession of the principal, he proves that he has forwarded

the same to the principal.

The lien or privilege mentioned in the last preceding

article shall likewise attach, where the goods, although already in

the possession of the principal, have not undergone a substantial

alteration and can still be identified.

A commission merchant to whom goods have been

forwarded or who has bought goods on behalf of a principal has,

even if such goods have been sold and delivered, a preferential

claim for reimbursement on the proceeds as against the creditors of

the principal, in respect of all advances made by him, and of

interest and expenses.

The lien or privilege mentioned in articles 105 and 108

may be enforced on the price of the goods if such price has not been

already paid or passed to account current as between the principal

and the buyer.

Title V

O F C OMMERCIAL O BLIGATIONS

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.

(1) Until the contract is complete, both the offer and the

acceptance may be revoked. If, however, the person making the

offer declares that he will keep it open till a certain time, or if a

time is implied by the nature of the contract, the revocation thereof

before the lapse of such time will not prevent the completion of the

contract.

(2) If the offer empowers, even impliedly, the other party to

carry out the contract without previously communicating his

acceptance, the contract is complete as soon as its execution has

commenced within the customary or prescribed time.

A delayed acceptance or an acceptance subject to

conditions, additions, restrictions or alterations shall be deemed to

be and shall count as a refusal of the original offer and as a new

offer.

(1) An offer made to the public by means of catalogues

or other advertisements is not binding unless it has been expressly

declared to be so; it only amounts to an invitation to offer.

(2) The exhibition of goods constitutes an offer binding the

person exhibiting them if it is accompanied by an indication of the

Where the parties have agreed that the verbal agreement

should be reduced to writing it is presumed that they desire to

subject the validity thereof to the observance of such formality.

(1) In commercial obligations, co-debtors are, saving any

stipulation to the contrary, presumed to be jointly and severally

liable.

(2) The same presumption shall extend to a surety, even if not a

trader, who guarantees a commercial obligation.

Where the money expressed in a contract is not legal

tender in Malta and the exchange thereof is not stated, payment

may be made in the money of the country according to the rate of

exchange at sight at the due date and at the place fixed for the

performance of the obligation, and, if there is not at such place a

course of exchange, according to the rate of exchange in the nearest

market, unless the clause "in cash" or an equivalent clause is

contained in the contract.

In commercial contracts, the implied resolutive condition

referred to in article 1068 of the Civil Code produces the

dissolution of the contract ipso jure, and it shall not be lawful for

the court to grant to the defendant a time for clearing the delay

Provided that this article shall not apply to contracts of letting of

immovable property or to contracts of emphyteusis or to contracts

the dissolution whereof, in the event of failure by one of the parties

to fulfil his engagements, is specially regulated by law.

The right competent to a debtor under article 1483 of the

Civil Code, in the case of assignment of a litigious right, cannot be

exercised where the litigious right so assigned arises from a

commercial transaction.

Title VI

O F THE C HAMBER OF C OMMERCE, ENTERPRISE AND INDUSTRY

(1) The Chamber of Commerce, Enterprise and Industry

is a body composed of traders, brokers, master-mariners and all

other persons engaged in trade, commerce or industry.

(2)

It is recognized by the Government.

(1) The said Chamber shall each year appoint, in terms of

the statute approved by the said Chamber, a committee composed

of members of the Chamber of Commerce, Enterprise and Industry

f o r r e g u l a t i n g i t s a ff a i r s . T h e p e r s o n s c o m p o s i n g t h e s a i d

committee shall constitute the Council of the Chamber of

Commerce, Enterprise and Industry and their names shall be

published in the Government Gazette.

(2) The said Council shall represent

the

commercial,

mercantile and industrial community of Malta.

The Chamber of Commerce, Enterprise and Industry has

its seat in Valletta in the building of the Chamber of Commerce,

Enterprise and Industry.

Repealed by: XXXIII.1990.38.

Title VII

O F B ILLS OF E XCHANGE, P ROMISSORY N OTES, AND D RAFTS OR

C HEQUES ON B ANKERS OR C ASHIERS

Sub-title I

O F B ILLS OF E XCHANGE

O F THE F ORM OF A B ILL OF E XCHANGE

A bill of exchange must be dated, and must specify the

place where it is drawn, the sum to be paid, the name of the person

who is to pay, and the name of the person to whom or to whose

order payment is to be made, the time and place of payment, and

the value given, whether in cash, in goods, in account, or in any

other manner; and must be signed by the drawer.

A bill of exchange can be drawn by a person upon himself,

and can be made payable at the same place where it is drawn.

A bill of exchange signed by means of a cross or any other

mark is null.

(1) Where in a bill of exchange the sum payable is

expressed in words and also in figures, and there is a discrepancy

between the two, the sum denoted by the words is the amount

payable.

(2) Where the amount is repeatedly expressed in figures or in

words, and there is a discrepancy, the smaller amount is the amount

payable.

A bill of exchange may be drawn to the order of a third

party, or to the order of the drawer himself.

(1) A bill of exchange may be drawn on a person, and

made payable at the place of residence of a third party.

(2)

It may be drawn by order and for account of a third party.

(1) A bill of exchange may be drawn in a set, each part of

the set containing a reference thereto by the words first, second,

third, etc., in which case each part is equivalent to the whole of the

parts, and the whole of the parts constitutes one bill.

(2) In the absence of such reference, each part shall be deemed

to be a separate bill.

O F THE D UTIES OF THE D RAWER

The drawer must deliver to the payee, if the latter so

requires, before the bill becomes due, more than one part of the

bill.

(1) The drawer, or, where a bill is drawn for account of

another party, the party for whose account the bill has been drawn,

engages that at the time when the bill becomes due there shall be on

his account in the hands of the drawee a supply of funds sufficient

for the payment of the bill, even if such bill is payable at the place

of residence of a third party.

(2) Nevertheless, the drawer for account of another person

remains personally liable towards the payee, the endorsers, and the

holder of the bill.

The drawee shall be deemed to have been put in funds if,

at the time the bill becomes due, he owes a debt to the drawer, or to

the party for whose account the bill was drawn, in an amount not

less than that specified in the bill.

(1) An acceptance implies the supply of funds, and

constitutes a proof thereof as regards the holders and the endorsers.

(2) The drawer alone, whether the bill be accepted or not, is

bound to prove, in case of dispute, that the persons on whom the

bill was drawn were provided with the necessary funds for the

payment of the bill at maturity; otherwise he is bound to warrant

the bill, even though the protest is made after the lapse of the

prescribed times.

(1) The holder of a bill which has been protested shall, in

no case, be entitled to the funds supplied by the drawer or by the

person for whose account the bill was drawn.

(2) If the bill has not been accepted, the funds supplied shall, in

case of bankruptcy of the party supplying them, revert to his estate.

(3) If the bill has been accepted, the funds supplied shall

remain with the acceptor, subject to his obligation of paying the

holder of the bill.

When the drawer has prohibited the transfer of a bill by an

express declaration on the bill itself, and this notwithstanding a

transfer is made, the endorsee acquires no rights other than those of

the payee.

O F E NDORSEMENT

The holder of a bill can transfer the property in it by

endorsement.

A bill of exchange may be endorsed to the drawee, to the

acceptor, to a prior endorser, or even back to the drawer, and may

be further endorsed by each and all of them.

The endorsement is made on the back of the bill, or on a

slip of paper called an allonge which, when necessary, is attached

to the bill itself.

An endorsement may be made by specifying the name of

the person to whom, or to whose order the bill is to be payable, the

date of the endorsement, and other particulars; it may also be made

in blank by the mere signature of the endorser.

(1) The endorser is liable to every succeeding holder for

the acceptance and payment of the bill.

(2) Nevertheless, where the endorsement is qualified by the

words "without recourse" or by some other form of words implying

a l ik e qu a l i f ic a t i o n , t h e en d o r s e r w ho h a s s o q ua l i f ie d t he

endorsement is exempted from all liability on his endorsement.

Where an endorser has in his endorsement expressly

prohibited any further transfer of the bill, the parties to whom such

bill is subsequently endorsed have no right of recourse against such

endorser.

Where the endorsement is made with the order "for

collection" or any other expression implying an order by the

endorser, such endorsement does not pass the property in the bill,

but merely transmits to the endorsee the order therein contained,

and in such case the endorsee can only transmit to other parties the

same order by a similar endorsement.

(1) Where the endorsement is made after the expiration of

the time within which the protest for non-payment is to be made,

the endorsee acquires, as against the drawee, all the rights arising

from the acceptance already made, and the rights of recourse

against such parties as shall have endorsed the bill after the lapse of

the said time.

(2) The provisions of this article shall also apply where the

endorsement is made after the expiration of the time within which

the protest for non-acceptance is to be made.

Where the endorsement is made after the bill has been

protested for non-payment, such endorsement shall not vest in the

endorsee any rights other than those competent to his endorser

against the drawee, if the drawee has accepted the bill, and against

such endorsers as may be still liable on the bill.

In the cases referred to in the last two preceding articles,

the endorsee maintains unimpaired his rights against the drawer,

and against the person for whose account the bill was drawn.

Where the endorser has in his endorsement specified the

time for the presentment of the bill to the drawee, the liability

created by the endorsement ceases, if the bill is not presented for

acceptance within the time so specified.

The mere possession of a bill of exchange not endorsed to

the holder entitles the holder to present such bill for acceptance,

and to protest it for non-acceptance.

O F A CCEPTANCE

The acceptance of a bill of exchange must be made on the

bill itself by the signature of the acceptor, with or without the

words "I accept" or "accepted".

The acceptance must be dated, if the bill is payable at a

certain period after sight or at usance. The omission of the date of

acceptance renders the bill payable at the time specified in the bill,

such time to run from the date of such bill.

(1) An acceptance cannot be conditional, but it may be

partial as to the amount to be paid.

(2) A conditional acceptance shall be deemed to be a refusal to

accept.

(1) A bill of exchange shall be accepted on presentment,

or at the latest within twenty-four hours after presentment.

(2) Where, after the expiration of the said time, the bill is not

re-delivered, accepted or unaccepted, the party who retained the

bill shall be liable in damages and interest to the holder.

(1) The acceptor of a bill by accepting it engages that he

will pay the amount thereof, and cannot be relieved from such

engagement, even though the drawer, or the party for whose

account the bill was accepted, may, without his knowledge, have

become bankrupt previously to the acceptance of the bill.

(2) Nevertheless, when the acceptor has not been put in funds,

he may resort to the drawer or to the party for whose account the

bill was accepted; in any such case the acceptance raises only a

rebuttable presumption against the acceptor, who shall have the

right to prove the contrary.

(1) A refusal to accept shall be proved by means of a

protest termed protest for non-acceptance.

(2) Where the bill is not accepted for the whole amount for

which it is drawn, a protest for non-acceptance of the balance shall

be made.

Upon notification of the protest mentioned in the last

preceding article, the endorsers and the drawer are respectively

bound to give sufficient security for the payment at maturity of the

amount of the bill or of the amount for which it was not accepted,

or to pay the bill together with the expenses of protest and of re-

exchange.

Where, after the acceptance of the bill, it is proved that the

acceptor’s condition, with regard to his commercial affairs, has so

changed as to give rise to a reasonable fear that the bill will not be

paid at maturity, it shall be lawful to demand against the drawer,

the endorsers, and even against the acceptor himself, the same

security as that mentioned in the last preceding article.

A person who stands surety for one only of the parties

bound to give security, shall be jointly and severally liable only

with the party for whom he stands surety.

A promise to accept a bill of exchange does not amount to

an acceptance, but the promisee may maintain an action for

damages and interest against the promisor if the latter refuses to

perform the promise.

O F A CCEPTANCE FOR H ONOUR OR BY I NTERVENTION

(1) Where a bill of exchange is protested for non-

acceptance, any person, not being a party already liable thereon,

may intervene and accept the bill for the honour of the drawer, or of

one of the endorsers, with or without an order to that effect from

such drawer or endorser.

(2) The drawee himself may, after the protest for non-

acceptance, intervene as stranger as aforesaid.

Where several persons offer to accept for honour, the

following shall have the preferences

(a) those who intervene for the drawer or for the party for

whose account the bill is drawn;

(b) those who intervene for the endorsers according to the

order of the endorsements.

Where several persons offer to accept by intervention for

one and the same party, the holder of the bill may choose any one

of them.

Nevertheless, the party instructed to intervene by the

person for whom he offers to accept shall, in all cases, have the

preference over those who offer to accept for the same person,

without such instructions.

The holder of a bill of exchange may, as any other person,

accept by intervention, and he may, in like circumstances, give the

preference to himself.

An acceptance for honour must be written on the bill and

be signed by the acceptor for honour, and mention thereof shall be

made in the act of protest or in a subsequent act forming an

extension thereof or appended thereto.

The acceptor for honour shall cause the protest for non-

acceptance to be delivered to him, and shall, without delay, give

notice of his intervention to the party for whose honour he has

intervened, and communicate to such party the said protest: in

default, he shall be liable in damages and interest.

Where the acceptor for honour does not state for whose

honour he intervenes, the acceptance shall be deemed to be made

for the honour of the drawer, or of the party for whose account the

bill is drawn, if the name of such party appears on the bill.

(1) Notwithstanding any acceptance for honour, the

holder of a bill maintains unimpaired all such rights as are

competent to him against the drawer and the endorsers for want of

acceptance by the drawee.

(2) Nevertheless, where a reference in case of need has been

inserted in the bill by the drawer himself, and the bill is accepted

by the referee in case of need, the security mentioned in article 154

shall not be competent.

(1) A bill accepted for honour must be presented to the

original drawee for payment at the time it falls due, and be

protested against him in case of non-payment.

(2) In default of such protest, the acceptor for honour shall not

be bound to pay the bill, and if he pays the bill notwithstanding

such default, he shall lose his right of recourse against such parties

as may have had an interest that the bill be protested against the

drawee.

O F J OINT AND S EVERAL L IABILITY

All parties who have signed, accepted, or endorsed a bill,

are jointly and severally liable for warranty to the holder.

O F S URETY PAR AVAL

Independently of the acceptance and endorsement, the

payment of a bill of exchange can be guaranteed by an aval, which

is an obligation of a third party.

Aval can be given on the bill itself, or by a separate act, or

even by letter.

The party giving the aval is liable jointly and severally,

and in the same manner as the drawer and the endorsers, unless the

parties have agreed otherwise.

O F M ATURITY AND P AYMENT

A bill may be expressed to be payable -

(a) at sight;

(b) at a certain time or on a certain day;

(c) at a certain time after sight;

(d) at a certain time after date;

(e) at usance.

A bill expressed to be payable at sight is payable on

presentment.

A bill expressed to be payable at a certain time or on a

certain day is payable at the time or on the day expressed therein.

Where a bill is expressed to be payable in the middle of a

certain month, the bill shall be deemed to become due on the

fifteenth day of that month.

A bill expressed to be payable at a certain time after

sight, or at a certain time after date, is payable -

(a) if the time is stated in days, on the last day thereof

provided that in the case of a bill expressed to be

payable at a certain time after sight, the day on which

the bill was presented for acceptance shall not be

reckoned, and in the case of a bill expressed to be

payable at a certain time after date, the day of the date

of the bill shall not be reckoned;

(b) if the time is stated in weeks or months, on the day of

the week or month which corresponds, in name or

number, with the day on which the bill was presented

for acceptance or with the day of the date of the bill

Provided that where there is no such date in the

month of payment, the bill shall be deemed to fall due

on the last day of such month.

The time expressed by the words "half a month" shall be

equivalent to fifteen days.

The months are reckoned according to the Gregorian

calendar.

A bill expressed to be payable at usance is payable at

twenty-one days from the day on which the bill was presented for

acceptance.

In the absence of any of the indications mentioned in

article 172, the bill shall be payable at sight.

If the day on which a bill becomes due falls on a Sunday

or on a Holy day of obligation or on Good Friday or on any other

public holiday, the bill shall be payable on the day next following,

not being a public holiday.

A bill shall be deemed to be due from the moment the

drawee is adjudged bankrupt, and in such case the holder may

protest the bill as provided in article 191; but the drawer and the

endorsers may, if called upon to pay the bill, postpone payment

until the day on which the bill shall be due according to the terms in

which it is drawn, on giving the security mentioned in article 154.

A bill of exchange must be paid in the money specified

therein. Nevertheless, if the money specified in the bill is fictitious

or is not legal tender in the place where payment is to be made, and

the value thereof has not been stated in the bill, the payment shall

be made in the money which is legal tender at the place of payment,

in an amount corresponding to the value of the money specified in

the bill at the time of maturity, unless the drawer, by the use of the

clause "in cash" or other equivalent clause, shall have expressly

required payment to be made in the money specified by him, not

being fictitious money.

The payer of a bill is not bound to verify the genuineness

of the endorsements.

A party paying a bill before it becomes due shall be

answerable for the validity of the payment.

A party paying a bill at maturity, and without any

opposition, shall be deemed to be lawfully discharged.

The holder of a bill cannot be compelled to receive

payment thereof before it becomes due.

The payment of a bill on a second, third, or other part,

shall be valid, provided it is specified on such second, third, or

other part, that such payment annuls the effect of the other parts of

the bill.

A party paying a bill on a second, third, or other part,

without taking back the part which he has accepted, shall not be

discharged with respect to a third party in possession of the

accepted part, saving his right of recourse against the party to

whom payment was unduly made.

Where a bill is drawn in a set consisting of a first, second,

third, or other part, and the drawee has accepted more than one

part, he is bound to pay all the accepted parts which shall be

presented to him at maturity by the different holders thereof, saving

his right of recourse against the person who made use of more than

one of the parts of the bill.

A refusal of payment of a bill shall be proved by means of

a protest termed protest for non-payment.

A person who claims the payment of a bill which has not

been endorsed to him, but who, at the same time, proves that the

bill was remitted to him to receive payment thereof, may, upon

giving sufficient security, demand payment of the bill, and protest

it in case of non-payment.

The holder of a bill who receives payment thereof, and all

prior endorsers shall be liable to the party paying the bill, as

guarantors of the validity of all antecedent endorsements.

Saving the case referred to in articles 201 and 202, the

party liable for the payment of the bill is not bound to effect

payment thereof except against the delivery of the bill duly

discharged.

(1) The holder of a bill cannot refuse to receive from the

drawee part-payment thereof, even though the bill may have been

accepted by the drawee himself, or by any other party, for the

whole amount, but the holder must protest it for the balance.

(2) The party making such part-payment cannot, however,

claim that the bill be delivered up to him, but can only demand that

the amount paid be endorsed upon the bill, and that a copy of the

bill with the discharge of the amount paid, be given to him.

If a bill is not presented for payment at the time it becomes

due, the acceptor may, after the expiration of the time within which

protest for non-payment is to be made, lodge the amount of the bill

in the Civil Court, First Hall, at the expense and risk of the holder.

Pleas which are personal to the endorsers may not be set up

against the holder of a bill.

(1) Pleas which are personal to the holder of a bill cannot

delay the payment thereof, unless the pleas are such as can be

conveniently and speedily disposed of in the pending action.

(2) Where such pleas require a prolonged enquiry, the

examination thereof shall be referred to an independent action and,

meanwhile, the judgment ordering the payment of the bill, with or

without security, as the court shall deem fit, shall not be delayed.

No opposition to the payment of a bill shall be allowed

except in case of loss of the bill or bankruptcy of the holder.

In case of loss of a non-accepted bill, the party to whom

such bill belongs may demand the payment thereof upon a second,

third, fourth, or other part.

Where the lost bill is an accepted bill, payment cannot be

claimed upon the second, third, fourth, or other part, unless the

party claiming payment duly proves his title thereto and gives

sufficient security.

Where the party who has lost the bill, whether accepted or

not, is unable to present a second, third, fourth, or other part

thereof, he can nevertheless demand and obtain payment, if he duly

proves his title thereto and gives sufficient security.

The obligation arising from the security mentioned in the

last two preceding articles shall be extinguished after the lapse of

three years.

In the absence of the security referred to in articles 201

and 202, it shall be lawful, on furnishing the proof of title required

in those articles, to demand that the amount due on the lost bill be

lodged in the Civil Court, First Hall.

In case of non-payment on a demand to that effect in

accordance with the provisions of articles 201 and 202, the owner

of the lost bill shall, in order to preserve all his rights, cause a deed

of protest to be drawn up, and to be notified to the drawer and the

endorsers, within the time and in the manner hereinafter prescribed

with regard to the protest for non-payment.

The owner of a lost bill, in order to obtain the second,

third, or other part thereof, shall apply to his immediate endorser,

and such endorser shall be bound to give his assistance to, and

allow the said owner to proceed in his name against his own

endorser, and so on from one endorser to another up to the drawer

of the bill.

The owner of the lost bill shall bear all the expenses

resulting from the loss.

Where a party refuses to give a second, third, or other part,

upon being required so to do under article 206, he shall be liable in

damages and interest.

O F P AYMENT FOR H ONOUR OR BY I NTERVENTION

Where a bill of exchange has been protested for non-

payment, any person may intervene and pay it supra protest for the

honour of the drawer or any of the endorsers.

A payment for honour shall be recorded in the act of

protest or in a separate act, forming an extension thereof or

appended thereto.

(1) A party paying a bill of exchange supra protest

succeeds to the rights of the holder, and also to his duties with

regard to the formalities to be observed.

(2) Moreover, he must give immediate notice of the payment to

the party for whose honour he has intervened, under penalty of

damages and interest.

(1) Where payment supra protest is made for the honour

of the drawer, all the endorsers shall be discharged.

(2) Where the payment is made for the honour of a particular

endorser, all subsequent endorsers shall be discharged.

Where two or more persons offer to pay a bill supra

protest, the rules in regard to acceptance by intervention shall

apply.

Nevertheless, where the original drawee, against whom

the protest for non-acceptance was made, is willing to pay the bill

at the time it becomes due, he shall have preference over all the

parties who offer to pay the bill by intervention.

An acceptor by intervention, who does not pay the bill

because it is paid by the drawee or any other party, is entitled to

recover from the payer the expenses which he has incurred, and a

commission of one-third per centum.

The payer for honour, where another party, having

preference over him, has offered to pay the bill, shall have no right

of recourse against such endorsers as would have been discharged

by the payment if made by such other party.

The payer for honour is entitled to the delivery up of the

bill itself and the protest for non-payment, and he is bound to

refund the expenses of the protest.

O F THE R IGHTS AND D UTIES OF THE H OLDER

The holder of a bill of exchange payable in Malta at sight,

or at a certain time after sight, or at usance, is bound to present it

for payment or for acceptance, within the times prescribed in the

next following article, to be reckoned from the date of the bill,

under penalty of forfeiting his right of recourse against the

endorsers, and even against the drawer, if the latter has provided

funds to meet the bill.

The times referred to in the last preceding article are-

(a) six months, if the bill is drawn at a place in Europe,

Asia Minor, Syria, Egypt, Tripoli, Tunis, Algiers or

Morocco;

(b) one year, if the bill is drawn at any other place;

(c) one month, if the bill is drawn and made payable in

Malta

Provided that in time of maritime war, the times mentioned in

paragraphs (a) and (b) shall be doubled.

The same forfeiture mentioned in article 218 shall be

incurred by the holder of a bill drawn in Malta, and payable,

whether at sight, or at a certain time after sight, or at usance, in any

of the countries mentioned in the last preceding article, if the

holder shall not present it for payment or acceptance within the

times stated in that article.

The holder of a bill drawn at a certain time or at a certain

day, or at a certain time after date, is not bound to present the bill

for acceptance, but if he elects to present it, he is bound to protest it

in case of non-acceptance.

The provisions contained in articles 218, 220 and 221 shall

not apply to such drawer or endorser as may have lawfully given

different directions.

The holder of a bill shall present it for payment on the day

it falls due.

The presentment of a bill for acceptance or payment, the

protest, the request for a duplicate of the bill, as well as all other

acts against a particular party with regard to a bill, shall be made at

such party’s place of business or otherwise at his residence.

(1) The holder of a bill cannot demand the acceptance

thereof, or the delivery of a duplicate, or the performance of any

other act relating thereto, except on a day not being a public

holiday.

(2) If the last day on which the performance of any of such acts

was demandable falls on a Sunday, or on a Holy day of obligation,

or on Good Friday, or on any other public holiday, the performance

shall be demanded on the next following day, not being a public

holiday.

(3)

The provisions of this article shall also apply to the protest.

(1) The protest for non-acceptance shall be made on the

day next succeeding that on which the bill was presented for

acceptance.

(2) The protest for non-payment shall be made on the day next

succeeding that on which the bill becomes due.

(1) The protest for non-acceptance, or the death or

bankruptcy of the party on whom the bill is drawn, shall not excuse

the holder from protesting the bill in case of non-payment.

(2) Where the acceptor becomes bankrupt before the bill falls

due, the holder may protest the bill and exercise his right of

recourse.

Where a party is named in the bill for the purpose of

accepting or of paying it by intervention, and the drawee refuses to

accept the bill, the holder shall, after protesting the bill against the

drawee, present it for acceptance by the party named in the bill.

Where the party on whom the bill was drawn refuses to

pay it, the holder shall, after protesting the bill against him, present

it for payment to the acceptor for honour, and, in case of refusal by

the latter, to any other party named in the bill for the acceptance or

payment thereof in case of need.

The refusal, whether to accept or to pay, by any of the

parties referred to in the last two preceding articles, shall be

mentioned in the act of protest against the drawee or subsequently

thereto.

(1) The holder of a bill which has been protested for non-

acceptance or non-payment cannot refuse the acceptance or

payment offered by a party intervening for the honour of the drawer

or any of the endorsers.

(2) Nevertheless, any such acceptance for honour shall not

operate so as to bar the holder from demanding the security

mentioned in article 154.

A request or direction contained in a bill that it shall be

returned without protest (retour sans protêt), excuses the holder

from the obligation of protesting the bill, but shall not excuse him

from the obligation of presenting the bill in due time.

(1) The holder of a bill protested for non-acceptance or

non-payment shall, without delay, give notice thereof in writing to

the endorser immediately preceding him.

(2) Every endorser on receiving such notice shall, without

delay, communicate it to the endorser immediately preceding him.

(3) The notice referred to in this article shall be accompanied

by the protest.

Where a party has endorsed a bill to another party without

stating his address, notice of non-acceptance or non-payment shall

be given to the endorser next preceding him.

It shall not be competent to the holder of a bill, in case of

non-payment, to exercise his right of recourse against the drawer or

the endorsers -

(a) if the bill was not presented for acceptance, where

necessary, or for payment, to the drawee or the parties

mentioned in articles 228 and 229;

(b) if the holder has refused acceptance or payment by a

party intervening for the honour of the drawer or of

any of the endorsers.

Nor shall it be competent to the holder to exercise his right

of recourse against the endorsers or the drawer who has supplied

funds to the drawee or to the parties mentioned in articles 228 and

229, if he has failed to comply with the provisions of articles 226,

230 and 233.

The holder of a bill protested for non-payment may

exercise his right of recourse against all the obligors jointly, or

against only one or some of them, without forfeiting his right of

recourse against the others not sued on the bill, and he shall not be

bound to follow the order of the endorsements.

The right of recourse against endorsers and drawers

residing in Malta, in the case of bills, protested for non-payment,

drawn in Malta and payable elsewhere, shall be exercised within -

(a) twelve months, if the bill was payable at a place in

Europe, Asia Minor, Syria, Egypt, Tripoli, Tunis,

Algiers or Morocco;

(b) eighteen months, if the bill was payable in any other

country

Provided that such times shall be doubled in time of maritime

war.

The times specified in the last preceding article shall

commence to run -

(a) with regard to the holder of the bill, from the date of

the protest for non-payment;

(b) with regard to each endorser, from the day on which

the payment was demanded from him, if he pays

voluntarily, or, otherwise, from the day on which a

judicial demand for payment was made against him.

After the expiration of the times specified in the last two

preceding articles, the holder and the endorsers of the bill shall lose

their right of recourse.

(1) In case of bankruptcy of one or more of the parties

liable on a protested bill, the holder thereof may put forward his

claim for the satisfaction of the whole debt against the estate of

each of the bankrupts.

(2) Where a dividend is received from the estate of one of the

bankrupts, the parties liable on the bill, who are not bankrupts, as

well as the estates of the other bankrupts, shall be only discharged

to the extent of the dividend so received.

(1) Nevertheless, where the holder of a bill accepts a

voluntary arrangement with the drawer or the acceptor, he shall

lose his right of recourse against all the endorsers.

(2) Where the arrangement is made with one of the endorsers,

the holder loses his right of recourse against all the subsequent

endorsers, but preserves his rights against the acceptor. He

preserves his rights also against the prior endorsers and the drawer,

unless su ch endorsers or d rawer prov e that t hey have b een

prejudiced by such arrangement and provided the holder has

expressly reserved his rights against them.

(3) Where the arrangement is made with the drawer, the

acce ptor, if h e has not bee n p ut i n funds, shall be entirely

discharged.

(4) Finally, where the arrangement is voluntarily made with the

acceptor, and such acceptor has been put in funds, the holder loses

his right of recourse against the drawer.

The right of recourse shall revive in favour of the holder

against the drawer or endorser who, after the expiration of the times

prescribed for the protest, the notice, and the exercise of the

aforesaid right, has received on account, or by way of

compensation, or in any other manner, the funds assigned for the

payment of the bill.

Any party liable on a bill of exchange shall, on paying the

amount thereof, together with the interest and incidental expenses,

be entitled to have the bill, duly discharged, delivered up to him.

The acceptance and the endorsements, if genuine, shall

continue to be effectual, even if the signature of the drawer is

forged or fraudulently altered.

If a bill contains a forged acceptance or endorsement, or

a n ac c e p t a n c e o r en d or s e m e n t f r a u du l e n tl y a lt e r e d , al l t he

endorsers and the drawer, whose signatures are genuine, shall

continue to be liable on such bill.

O F P ROTEST

Protests for non-acceptance or non-payment shall be

drawn up by a notary public, who shall go to the place of business

or residence of the party bound to accept or to pay, and request him

to accept the bill or to pay the amount thereof.

(1) The act of protest must contain a verbatim copy of the

bill, of the acceptance, if the bill had been already accepted, of the

endorsements, and of the instructions given therein, and must

specify -

(a) the name of the person in whose favour the protest is

made;

(b) the demand to accept or to pay made to the party

against whom the protest is made;

(c) the fact whether the party bound to accept or to pay

was present or absent;

(d) the reason of the refusal to accept or to pay;

(e) the date on which the demand was made or

unsuccessfully attempted.

(2) In case of acceptance or payment for honour, the protest

shall specify by whom, for whose honour, and in what manner the

bill has been accepted or paid.

Where the notary has not been able to find the party bound

to accept or to pay, or to ascertain whether such party has any place

of business, or to discover his place of residence, he shall expressly

state in the protest that his inquiries have been unsuccessful.

Where the demand for acceptance or payment is to be

made to two or more persons, it shall be sufficient to draw up a

single act of protest with respect to such demand.

No other act by the holder of the bill can supply the want

of the act of protest, saving the cases provided for in articles 199,

200, 201 and 202 with regard to lost bills.

O F R E-EXCHANGE

Re-exchange is effected by means of a re-draft.

A re-draft is a fresh bill drawn by the holder in order to

recover from the drawer or from one of the endorsers the amount

due to him as holder of the protested bill, in accordance with the

provisions of article 256.

Re-exchange is regulated according to the course of

exchange of the place in which the re-draft is drawn on the place

where the reimbursement is to be made.

A re-draft must be accompanied by an account termed

"account of re-draft".

(1) Such account shall comprise -

(a) the amount of the protested bill;

(b) the expenses of the protest, and other lawful expenses,

such as those of commission, brokerage and postage;

(c) the name of the party on whom the re-draft is drawn,

and the rate of exchange at which it is negotiated, such

rate of exchange to be certified by a broker or two

merchants.

(2) The said account shall be accompanied by the protested bill

and the protest.

Where there is no course of exchange between the place at

which, and the place on which a re-draft is drawn, the re-exchange

shall be reckoned according to the course of exchange on the place

nearest to that on which the re-draft is drawn.

Interest on the sum specified in the bill protested for non-

payment, on the expenses of protest, and on all other lawful

expenses, shall be recoverable as from the day of the protest.

No payment may be claimed on a re-draft unless the

account of re-draft be accompanied by the certificate prescribed in

article 256.

Sub-title II

O F P ROMISSORY N OTES, AND D RAFTS OR C HEQUES ON

B ANKERS OR C ASHIERS

The provisions applicable to bills of exchange, and

relating to endorsement, joint and several liability, aval, time of

maturity, payment, payment for honour, protest, duties and rights of

the holder, and re-exchange, shall apply to promissory notes.

(1) A promissory note shall state the date, the amount to

be paid, the person in whose favour or to whose order such note is

signed, the time when payment is due, and the value supplied in

cash, goods, in account or in any other manner.

(2)

It may also be drawn payable to bearer.

(1) Drafts or cheques on bankers or cashiers shall be

dated, and shall specify the sum to be paid, and shall be made

payable to a person therein named, or to his order, or to bearer.

(2)

They shall be payable on presentment.

Where the holder of a cheque fails to cash it within three

days from the date thereof, and, after such time, the banker or

cashier refuses to pay, the holder who has received the cheque from

a third party has no right of recourse against such party, nor against

the maker of the cheque, if the latter proves that he had in the hands

of the banker or cashier sufficient funds to meet the cheque, and

that such funds did not cease to be available through his fault.

TITLE VIII

O F THE C ONTRACT OF A CCOUNT C URRENT

Account current is a contract whereby two persons

covenant that their mutual remittances be entered in an account as

items of debit and credit, subject to the obligation of the party

against whom a balance is found at the time the account is wound

up to pay such balance.

Every remittance made in pursuance of such contract shall

be deemed to pass in absolute ownership from the remittor to the

remittee.

The items of debit and credit shall be deemed to be two

indivisible amounts

Provided that, in default of an agreement to the contrary, every

right of action or defence relating to any act or contract giving rise

to each separate remittance shall remain unimpaired; and, where

any such act or contract is annulled, the items relating thereto shall

be struck out of the account.

(1) The party who has included in the account a debt

secured by a pledge or a hypothec shall be entitled to enforce such

security for the payment of any balance which may be found for

him.

(2) The provisions of this article shall also apply with regard to

any claim passed to account current which is secured by the

obligation of a surety or a co-debtor.

(1) All remittances of debts due, whatever their origin,

shall be deemed to be passed to account current under the clause

"subject to collection".

(2) If any such debt remains unpaid, the remittee may elect

either to strike the item out of the account or to sue the remittor

thereof for the payment of the debt.

Any creditor of any of the parties to an account current

may sue out a garnishee order against his debtor in the hands of the

other party to the account, provided that any such order shall be

operative only when and if a final balance is found for such debtor

on the winding up of the account.

(1) It shall not be lawful for the debtor, after the

execution of the garnishee order referred to in the last preceding

article, to impair his credit account by fresh remittances

Provided that any remittance the title to which accrued in favour

of the other party to the account current before the issue of the

garnishee order, shall not be deemed to be a fresh remittance.

(2) The party to the account current in whose hands the

attachment is made may, on being served with the garnishee order,

demand the dissolution of the contract.

Save as otherwise agreed upon between the parties, an

account current shall be wound up yearly.

The death, or the supervening disability, or the bankruptcy

of a party to an account current shall not operate so as to determine

the contract, unless the heir, or representative, or the other party to

the account, as the case may be, elects to determine the contract by

means of a judicial intimation to that effect within three months

from the happening of any of the aforesaid events.

PART II

O F M ARITIME T RADE AND OF N AVIGATION

Title I

O F THE C ONTRACT OF A FFREIGHTMENT

Sub-title I

G ENERAL P ROVISIONS

A contract of affreightment is an agreement for the hire of

a vessel.

The affreightment can be -

(a) for the entire vessel or for a part thereof; for one or

more voyages;

(b) for the conveyance of goods in a general ship or á la

cueillette that is, when the master receives goods

separately from several persons and engages to ship

and convey such goods.

Where the vessel, chartered whether in whole or in part, is

of more than thirty tons tonnage, the contract is null unless made in

writing.

If the period for loading and discharging is not fixed by

agreement, the following rules shall be observed

(a) The period for loading or discharging in Malta is of

eight days, if the vessel is of one hundred tons or less;

of twelve days, if the vessel is of more than one

hundred tons but not more than two hundred; of twenty

days, if the vessel is of more than two hundred tons.

Such period shall be reckoned from the time when the

master declares that he is ready to load or discharge.

The days mentioned in this article are successive

working days.

(b) Outside Malta, the period for loading or discharging

shall be determined according to the laws and usages

of the place of loading or discharging and if the

loading or discharging is to be effected in different

places, the period shall be determined according to the

laws and usages of the place where the last portion of

the cargo is loaded or discharged.

Where a portion of the cargo is to be loaded or discharged

in one place and the remainder in another, the time employed in

proceeding from one place to another shall not be computed in the

time limited for loading or discharging.

(1) If the person letting the vessel declares the vessel to

be of a tonnage greater than her real tonnage, he shall be liable to a

proportionate abatement of the freight, and shall be answerable for

damages and interest to the freighter.

(2) The provisions of this article shall not apply, where the

difference between the declared tonnage and the real tonnage does

not exceed a fortieth part of the real tonnage.

The payment of the freight can be demanded immediately

after the delivery of the cargo.

(1) Where the vessel is chartered by the month, the

freight runs from the time of the commencement of the voyage.

(2) A voyage is deemed to be commenced as soon as the vessel

has left the place where the loading commenced, or if the vessel

sails in ballast, from the place where the ballast was shipped.

The buyer or any other successor is bound to abide by the

terms of the contract of affreightment stipulated by the seller or any

other prior possessor of the vessel.

Sub-title II

O F THE R IGHTS AND D UTIES OF THE P ERSON LETTING

THE V ESSEL AND THE F REIGHTER

If the freighter has not shipped any portion of the cargo

within the period fixed in the contract or determined by law, the

person letting the vessel may, at his option, either -

(a) claim the indemnity fixed in the contract, or, failing

any covenant thereanent, an indemnity to be assessed

by experts; or

(b) rescind the contract, and claim from the freighter half

the freight; or

(c) on the lapse of two days from the date of service of a

protest, undertake the voyage without a cargo, and, on

the completion of the voyage, claim from the freighter

the freight in full, besides the amount of demurrage, if

any, and the expenses incurred for the protest and for

any other act which it was necessary for him to make.

If within the period aforesaid, the freighter has shipped

only a portion of the cargo, the person letting the vessel may, at his

option, either -

(a) demand the indemnity mentioned in the last preceding

article; or

(b) on the lapse of two days from the date of service of a

protest, undertake the voyage with the portion so

shipped, and claim the freight, the demurrage, and the

expenses, as provided in the last preceding article.

If during the voyage the vessel which has sailed without a

cargo, or with a portion only of the cargo, sustains a loss which

would have given rise to a general average in case the vessel had

taken on board a full cargo, the person letting the vessel may claim

from the freighter a contribution reckoned on two-thirds of the

goods which the latter failed to ship.

If the freighter has not shipped any portion of the cargo,

and abandons the contract before the commencement of the period

of demurrage, he must pay to the person letting the vessel half the

freight.

(1) Where the person letting the vessel is entitled to sail

without a cargo, or with a portion only of the cargo, he may, for the

purpose of securing the freight and the contribution to general

average, take in other goods, even without the consent of the

freighter.

(2) In any such case the freight for such other goods shall be

accounted to the original freighter, who shall, moreover, be

discharged from such contribution to general average as shall have

been paid by such other goods.

Where the freighter ships more than was agreed upon, he

shall pay freight on the excess at the rate stipulated for the quantity

agreed upon.

If the vessel is not ready, and is not in a state to receive the

goods at the stipulated time, the person letting the vessel shall be

liable to pay damages and interest to the freighter.

Where the affreightment is for the conveyance of goods in

a general ship, the master shall sail with the first favourable wind

or on the first favourable opportunity after the expiration of the

period during which it was agreed that the vessel would take in her

lading, unless a further delay be agreed to by the shippers.

(1) If in a contract for the conveyance of goods in a

general ship, the day for the sailing of the vessel is not fixed, it

shall be lawful for each of the shippers to withdraw his own goods

without payment of freight, on returning the bills of lading signed

by the master, or giving security for such bills as may have already

been forwarded, and on paying all the expenses for the loading and

unloading of such goods.

(2) Nevertheless, where, in any such case, the vessel has

already on board more than one-half of the cargo, the master shall

sail with the first favourable wind or on the first favourable

opportunity, if he is required to do so by means of a protest by the

shippers representing the greater part of the cargo, and he shall so

sail not later than eight days from the service of such protest; in

such case no one of the shippers shall be allowed to withdraw his

goods.

If a vessel is arrested at the time of departure, or during

the voyage, or at the place of discharge, on account of the act or

negligence of the freighter or any of the shippers, such freighter or

shipper shall make good to the person letting the vessel and the

other shippers all damages and interest.

The person letting the vessel shall be liable in damages

and interest to the freighter, if, on account of the act or negligence

of the former, the vessel is detained or delayed at the time of

departure, or during the voyage, or at the place of discharge.

If, without the knowledge or concurrence of the person

letting the vessel or of the master, the freighter or the shipper loads

goods the importation or exportation of which is prohibited, or, by

any other unlawful act during the time of loading or unloading,

causes injury to the vessel or to other interested parties, he is bound

to make good any damages, and, even though the goods are

confiscated, to pay the full freight, and to contribute towards

general average, if any.

(1) If the master is obliged to refit the vessel in the course

of the voyage, the freighter or the shipper is bound to await the

carrying out of such refitting, unless he elects to withdraw his

goods, in which case he must pay the full freight and contribute

towards general average, saving the provisions of article 324.

(2) If the vessel is chartered by the month, the freight shall

continue to run during the time of refitting, but if the vessel is

chartered by the voyage, no increase of freight may be claimed.

(3) If the vessel cannot be refitted, the master must charter

another vessel or other vessels to carry the goods to the place of

destination.

(4) If the master is unable to charter such other vessel or

vessels at the same place or at a place nearby, freight is due in

proportion to the part of the voyage performed.

(5) In the case mentioned in sub-article (4) of this article, the

duty to provide for the conveyance of the goods shall devolve on

the shippers severally, but the person letting the vessel shall be

bound not only to inform them as to his situation, but also to take

meanwhile all such steps as may be necessary for the preservation

of the cargo.

The person letting the vessel loses his freight and is

answerable for damages and interest to the freighter, if the latter

proves that the vessel was unseaworthy when she sailed.

The freighter may in the course of the voyage withdraw

the whole of the goods, or a portion thereof, provided no injury or

delay be caused thereby to the other freighters, and provided he

pays to the master the whole freight for the goods withdrawn, as

well as any contribution to general average or other indemnity

wh i c h m a y be d u e , a c c or d i ng to c i rc um s t a n c e s , sa v in g t h e

provisions of article 324.

Where, in the course of the voyage, the cargo has by

reason of any peril of the sea become incapable of being carried, it

shall be lawful for the freighter to withdraw it on paying the freight

in proportion to the voyage performed; but if the cargo has become

so incapable by its own inherent vice, the freighter must, if he

withdraws the cargo, pay full freight.

The freight on goods which the master has been compelled

to sell in the course of the voyage for refitting the vessel, or for

buying sails, ropes, or other apparel, or provisions, shall be payable

in full, if the vessel arrives in safety, or in proportion to the voyage

performed, if the vessel is wrecked.

The freight in respect of goods jettisoned for the common

safety shall be payable by contribution as a general average.

No freight is due for goods lost by shipwreck, stranding,

or any other vis major, and the person letting the vessel is bound to

refund the freight paid to him in advance.

(1) If the goods have been saved from shipwreck or other

accident, freight is due to the person letting the vessel as far as the

place of the accident.

(2) The entire freight is due to him if he carries the goods to

their place of destination.

No freight is due for goods, forming part of the cargo,

which may have been saved at sea or on the coast, without the co-

operation of the master.

After the expiration of the period agreed upon in the

contract, or fixed by law for unloading, the person letting the vessel

or the master can compel the freighter or the consignee of the goods

to proceed to the unloading of the vessel, and to pay the freight and

average.

If, the lay days having elapsed, any dispute arises with

regard to the unloading of the vessel, the person letting the vessel

or the master may discharge the goods, and put them on deposit in

the hands of a third party, without prejudice to his right over such

goods.

(1) The person letting the vessel or the master cannot

detain the goods on board the vessel on the plea of default of

payment of the freight, the general average, and other charges.

(2) Nevertheless, the person letting the vessel or the master can

deposit the goods with a third party until the sum due to him is

paid, and can, if such goods are perishable, demand that they be

sold.

(3) Where the general average cannot be immediately adjusted,

it shall be lawful to demand that a judicial deposit be made of a

sum to be fixed by the court.

Where the master unloads the goods without obtaining

payment of the freight, average, and other charges, or without

taking such precautions as are allowed to him by the laws in force

at the place of discharge, he shall forfeit his right against the

freighter or the shipper, if such freighter or shipper proves that he

has duly settled the amount of such freight, average, and charges

with the person receiving the goods, or that he cannot, owing to the

bankruptcy of such person, recover back such amount.

If the consignee refuses to receive the goods, the person

letting the vessel or the master may demand the sale of such

quantity of the goods as may be required for the payment of the

freight, average and other charges, saving the right of resort to the

freighters or the shippers in case of insufficiency of the proceeds.

(1) The special lien or privilege which, under the

provisions of paragraph (c) of article 2009 of the Civil Code, is

competent to the person letting the vessel or the master for the

payment of the freight, extends also to average contributions and

other charges.

(2) Such lien or privilege, however, both in regard to the

amount of freight, and to the average and other charges, ceases on

the expiration of fifteen days from the day of the delivery of the

goods, notwithstanding that such goods may have not yet passed

into the hands of third parties.

In all cases where the freight is agreed upon by the

number, measure, or weight of the goods to be carried, the person

letting the vessel is entitled to demand that the goods be numbered,

measured, or weighed at the time of their discharge.

In no case can the freighter or the shipper demand a

reduction in the freight.

The shipper cannot abandon for the freight goods which

have decreased in value or deteriorated whether by their own

inherent vice or by any fortuitous event. Nevertheless, if casks of

wine, oil, honey, or other liquids have so leaked as to be empty or

almost empty, such casks may be abandoned for the freight.

Sub-title III

O F THE D ISSOLUTION OF C ONTRACTS OF A FFREIGHTMENT

(1

A contract of affreightment is dissolved ipso jure,

without any right of the parties to the contract to claim freight or

indemnity, upon the happening, before the departure of the vessel,

of any of the following circumstances

(a) if the departure of the vessel is prevented by a vis

major;

(b) if the exportation from the place of departure of all or

any of the goods included in one and the same contract

of affreightment is prohibited, or if the importation

thereof is prohibited at the place of destination;

(c) if trade with the place to which the vessel is bound is

interdicted.

(2) In every such case the freighter must bear the expenses of

loading and discharging.

(1) A contract of affreightment can be dissolved upon the

demand of either of the parties if, before the commencement of the

voyage, a war breaks out by reason whereof the vessel or the cargo

or both ceases or cease to be considered as neutral property.

(2) If neither the vessel nor the cargo is free, the person letting

the vessel and the freighter have no claim upon each other for

compensation, but the expenses of loading and discharging shall be

borne by the freighter.

(3) If the cargo only is not free, the freighter must pay to the

person letting the vessel all the expenses necessary for fitting out

the vessel, for the wages and the maintenance of the crew up to the

day on which the demand for the dissolution of the contract is

made, or, if the goods be already on board, up to the day of

unloading.

(4) If the vessel only is not free, the expenses of loading and

unloading shall be borne by the person letting the vessel.

In the cases mentioned in the last two preceding articles,

the person letting the vessel maintains unimpaired his rights with

regard to demurrage and to general average, if any.

If a vessel, freighted for more than one place of

destination, after the completion of one voyage, happens to be in

the port wherefrom she is to undertake another voyage, and a war

breaks out before the commencement of such other voyage, the

following rules shall be observed

(a) if neither the vessel nor the cargo is free -

the vessel shall stay in port until the conclusion of

peace, or until she can sail with convoy, or in any other

safe manner, or until further instructions are

transmitted to the master by the owners of the vessel

and of the cargo,

where the vessel is laden, the master may deposit the

goods in a warehouse or in any other place of safe

custody, until the voyage can be continued or until

other measures are adopted,

the wages of the seamen and the expenses for the

maintenance of the crew, warehouse rent and any other

expense occasioned by the delay shall be borne, by

way of general average, by the freighter and the person

letting the vessel,

where the vessel is not laden, two-thirds of the

expenses shall be borne by the freighter;

(b) if the vessel only is not free -

the contract for the intended voyage shall be dissolved

upon the demand of the person letting the vessel,

where the vessel is laden, the person letting her or the

master shall pay the expenses for loading and

unloading, and they can only claim freight in

proportion to the voyages already performed,

demurrage, and general average;

(c) if the cargo only is not free, and the freighter does not

otherwise effect the shipment, the master may sail

without the cargo, and complete the voyage

undertaken. In any such case, the person letting the

vessel or the master is entitled, on completion of the

voyage, to claim the whole freight, and the provisions

of articles 284 and 286 shall also apply

Provided that if the freighter is absent they shall use

all due diligence to obtain a cargo from other persons.

(1) Where a vessel is freighted to proceed in ballast to

another port, there to be laden for a voyage, the contract shall be

dissolved if, when the vessel is on her way to, or has arrived at the

place of loading, a war breaks out, which prevents the continuation

of the voyage; and no claim to compensation shall be competent to

either party, if the restraint affects the vessel alone, or both the

vessel and the cargo.

(2) If, on the contrary, the vessel is free, but not the cargo, the

freighter shall pay half the stipulated freight.

If, whilst a vessel is on a voyage, trade with the country to

which the vessel is proceeding is interdicted, and the vessel is

obliged to return with the cargo, freight is due for the outward

voyage only, even though the vessel may have been chartered "out

and home".

(1) Where an embargo or any other reason of force

majeure causes a temporary suspension of the voyage of a vessel

whether before the vessel’s departure or during the voyage, without

any fault of the master, the owner, or the freighter, the contract

shall continue to subsist, and neither party is liable for damages for

delay.

(2) Freight shall also be due during the detention of the vessel,

if the vessel is chartered by the month; but no increase is due, if the

vessel is chartered for the voyage.

(3) The shipper can have his goods discharged during the

detention at his own expense, on condition of re-loading them or of

indemnifying the person letting the vessel or the master.

If the port to which the vessel is bound is blockaded, the

master must, in the absence of instructions to the contrary, proceed

to such one of the neighbouring ports of the same State as he may

be allowed to put into.

All the rules contained in this sub-title shall apply to the

contract for the conveyance of merchandise in a general ship or á la

cueillette.

Sub-title IV

O F B ILLS OF L ADING

The bill of lading shall be signed by the master, and given

to the shipper, and a duplicate shall be signed by the shipper, and

given to the master.

(1) The bill of lading may be drawn to order or to bearer

or in favour of a party named therein.

(2)

It may be transferred by endorsement even in blank.

The master shall give as many parts of a bill of lading as

are asked for by the freighter or the shipper.

(1) Freighters or shippers cannot withdraw the goods,

already shipped, without returning to the master the bills of lading

received in respect of such goods.

(2) If one bill of lading or more than one shall have been

forwarded, it shall not be competent to the freighters or the

shippers to withdraw the aforesaid goods except upon giving

sufficient security in respect of any consequences which may arise

from the forwarding of such bill or bills, and under the obligation,

i n a l l c a s e s, o f p a y i n g t h e e nt i r e f r e i g h t , t h e e x p e n s e s f o r

discharging the goods, and those occasioned by the displacement of

the remainder of the cargo, saving the provisions of article 290 and

any other provision of law.

A bill of lading is conclusive evidence between all persons

concerned in the cargo, as well as between them and the insurers,

saving any proof to the contrary.

If there is a variance between bills of lading of the same

cargo, the one which is in the hands of the master shall be

conclusive evidence if it is filled up by the shipper or his agent; and

that presented by the shipper or by the consignee is conclusive

evidence, if filled up by the master.

Every agent or consignee on receiving the goods specified

in the bill of lading or in the contract of affreightment shall be

bound to give the master a receipt for such goods, under penalty of

paying all the expenses, damages, and interest, including those

occasioned by the delay.

Sub-title V

O F P ASSENGERS

If the passenger fails to go on board, or, without the

permission of the master, absents himself from the vessel at the

time appointed for the departure thereof, the master shall be at

liberty to sail, and may claim the entire amount of passage money.

A passenger cannot, without the consent of the master,

transfer to a third party the right accruing to him from the contract.

(1) If the passenger dies before the commencement of the

voyage, only half the passage money shall be due.

(2) Where in any such case the cost of provisions is included in

the passage money agreed upon, such cost shall be deducted

therefrom.

(1) If the vessel’s voyage be interrupted or suspended,

whether before the departure or in the course of the voyage, by a vis

major, or by any cause beyond the master’s control, the passenger

and the master shall be released from their mutual obligations, and

neither of them can claim compensation from the other.

(2) In the case, however, of the interruption of a voyage after

the commencement thereof, the passengers shall pay passage

money in proportion to the part of the voyage performed.

If in the case contemplated in article 294 a passenger is

willing to await the refitting of the vessel, the supply of provisions

during the delay shall be at the charge of the master, if he has

undertaken to furnish provisions during the voyage.

Passengers shall obey the orders of the master in all

matters concerning the preservation of order on board the vessel.

The master is neither bound, nor authorized, to put into a

port, or to stop during the voyage, at the request or for the benefit

of a passenger.

Passengers shall, in the absence of an agreement to the

contrary, provide for their own maintenance; but the master is,

when required, bound to supply to a passenger at a fair price such

provisions as may be necessary.

If a passenger dies in the course of the voyage, the master

shall provide for the custody of such effects of the deceased as are

found on board.

The master shall, for the payment of the passage money

and the cost of provisions, have a right of retention over the effects

brought on board by a passenger, in addition to the same special

privilege as is competent to the creditors mentioned in paragraph

(b) of article 2009 of the Civil Code.

Title II

O F C ONTRACTS OF L OAN ON B OTTOMRY AND AT

RESPONDENTIA

Articles 338 to 360, both inclusive, repealed by: XXXVII.1988.41.

Title III

O F M ARINE I NSURANCE

Sub-title I

O F THE C ONTRACT OF M ARINE I NSURANCE

(1) Contracts of insurance must be made in writing, under

pain of nullity.

(2) They may be made by a private writing, which is called a

policy. No blank space shall be left in the policy.

(3) There shall be stated in the contract the date of the day on

which it is signed, and whether the contract was made before or

after noon.

(1) The same contract may contain several insurances,

whether by reason of the things insured, or of the rate of the

premium, or of the several insurers.

(2) Where by the same contract things, even of a different kind,

shipped in the same vessel, are insured in favour of one person

only, one insurance only is deemed to be made.

(3) Where the insurers are two or more, and they do not sign

the contract at the same time, each of them shall, before signing,

state the day and hour of the affixing of his signature.

The policy is transferable by endorsement.

(1) The insurance may be upon the hull of the vessel,

whether laden or in ballast, fitted out or not fitted out, sailing alone

o r w i t h o th e r s ; h e r t a c k le a nd a p p a r e l ; h e r e q u i p m e n t ; h e r

provisions; all that which may have been expended for the vessel

up to the day of her departure; the sums lent on bottomry and the

interest thereon; the cargo; the anticipated profits; the stipulated

freight; and upon all other things capable of being estimated in

money, and subject to the perils of navigation.

(2) An insurance of the vessel, without any other explanation,

includes the hull, the tackle and apparel, and the equipment.

(1) An insurance may be made on the whole or on a part

of the above-mentioned things, jointly or separately.

(2) It may be made in time of peace or in time of war, before or

during the voyage of the vessel.

(3) It may be for a voyage "out and home", or only for one of

t h e t w o; f o r a w ho l e v o ya ge o r f o r a de fi n it e pe r io d; fo r a

determinate voyage and for a definite period jointly; for all the

voyages and passages by sea, through rivers or navigable channels.

If both the voyage and the time are specified in the

contract of insurance, the insurer shall run the risks of the entire

voyage. Where the duration of the voyage exceeds the time

specified, the premium shall be increased in proportion to the

excess. Where the voyage is completed in less than the time

specified, the premium agreed upon cannot in any way be reduced.

If the assured does not know on board of which vessel the

goods are shipped, such goods can be insured as shipped on board a

vessel unknown to the assured.

If the nature or the kind of the goods is not stated in the

contract, the goods can be insured under the general description of

merchandise; but such insurance shall not include gold or silver

coins or ingots, or pieces of gold and silver, or diamonds, pearls,

gold ware, or munitions of war.

If the value of the thing insured is fixed in the contract in

foreign money, it shall be reckoned at the value of such foreign

money in Malta, according to the rate of exchange at the time of the

stipulation of the contract.

If the value of the goods is not stated in the contract, such

value can be proved by the invoices and the books: in the absence

thereof, the goods shall be valued according to the market price at

the time and place of loading, including all duties paid and charges

incurred up to the time the goods have been shipped.

The anticipated profit is proved by means of the lists of

prices current, or, in the absence thereof, by such other means as

may establish the amount of profit which might have reasonably

been obtained if the goods insured had reached their place of

destination after a voyage without any accident.

Where by such lists of prices current or other means it is

proved that, in case of safe arrival, the profit would have been less

than the sum stated in the contract by the assured, the insurer is

discharged on paying such lesser sum. If the goods insured would

have yielded no profit, nothing shall be due by the insurer.

(1) The amount of the freight is proved by the contract of

affreightment, or by the bill of lading.

(2) Failing such evidence, and in regard to goods belonging to

the ship-owners themselves, the amount of the freight shall be fixed

by experts.

If the period of the risk is not stated in the contract of

insurance, such risk shall commence to run and shall come to an

end as provided in article 355.

When goods have been insured, the period of the risk shall

run without any interruption even in cases where, after the vessel

had dropped anchor at an intermediate port, the master has been

compelled to unload the cargo for the purpose of refitting the

vessel; but the period of the risk shall end if the voyage is legally

interrupted, or whenever the assured has ordered the goods not to

be reshipped, or, lastly, immediately on the completion of the

voyage.

The risk in regard to an insured freight shall commence, as

far as the insurer is concerned, as and when the goods contributing

to the freight are shipped, and shall end on their being landed.

In regard to insurers of sums lent on bottomry, the period

of the risk shall commence and end simultaneously with the

beginning and the end of the risk of the lender, in terms of law, and

according to such agreements as are notified to the insurer.

The period of the risk in regard to anticipated profits shall

be the same as that in regard to goods.

(1) Where an insurance has been made on anticipated

profits, such profits shall be estimated separately in the contract,

with an indication of the goods in regard to which such profits are

anticipated.

(2) In case of a valuation in gross of the subject insured, with

an express covenant that the surplus value shall be considered as

the anticipated profits, the insurance shall only be good to the

extent of the cost of the subject insured, and of such amount of

anticipated profits, over and above the cost, as may be proved

under articles 370 and 371.

(1) It shall be lawful for the insurer to reinsure with

another person things which he has insured.

(2)

The assured may insure the cost of the insurance.

(3) The premium of the reinsurance may be greater or less than

that of the insurance.

If, after the commencement of the risks contemplated in

the contract of insurance, a war breaks out, and, in consequence

thereof, the subject insured is exposed to greater danger, it shall be

competent to the insurer to demand an increase of the premium,

and, if such increase is not agreed upon by the parties, it shall be

fixed by the court, regard being had to the circumstances causing

the increase of the danger.

(1) A member of the crew or a passenger having on board

the vessel in or on which he is serving or is carried, goods insured

in Malta shall deposit a bill of lading in the Civil Court, First Hall,

if the shipment is made in Malta; if the shipment is made outside

Malta, such bill of lading shall be deposited with the diplomatic or

consular representative of the Government of Malta in that port or

with a person serving in a diplomatic, consular or other foreign

service of any country which, by arrangement with the Government

of Malta, has undertaken to represent that Government’s interests

in that port or with a person authorised in that behalf by the

President of Malta, or, in the absence of such persons, with some

trustworthy merchant being a citizen of Malta or other

Commonwealth citizen, or with a local magistrate.

(2) If the goods insured belong to the master, the bill of lading

shall be signed by two of the principal members of the crew, and, in

case of any disaster, the master shall also be bound to prove to the

insurers the purchase of such goods.

(1) If the insurer becomes bankrupt before the

termination of the risk, the assured may demand either that security

be given or that the contract be rescinded.

(2) The same right shall be competent to the insurer in case of

bankruptcy of the assured, if the premium has not been paid to him.

A contract of insurance is null, if made upon -

(a) the pay or wages of members of the crew;

(b) the premium or primage payable to the master;

(c) vessels or goods charged, before the commencement of

the voyage, with a loan on bottomry for their entire

value

Provided that if such vessels or goods are only in

part charged with such loans, the contract of insurance

shall be valid for the excess of their value over the sum

borrowed.

(1) Any concealment, or any misrepresentation by the

assured, or any discrepancy between the contract of insurance and

the bill of lading, shall render the contract of insurance void, if

such concealment, misrepresentation, or discrepancy is such as to

lessen the estimate of the risk, or to change the subject-matter

thereof.

(2) The insurance shall be void even if the concealment,

misrepresentation, or discrepancy shall have had no effect upon the

damage or loss of the things insured.

Sub-title II

O F THE R IGHTS AND O BLIGATIONS OF THE I NSURER AND OF

THE A SSURED

(1) If the voyage is abandoned, even though by the act of

the assured, before the insurer has begun to run the risk, the

insurance becomes void, and the assured is not bound to pay the

premium, or, in case he has paid it, he shall be entitled to demand

from the insurer the repayment thereof.

(2) The insurer, however, shall receive, by way of

compensation, one half per centum on the sum insured, or one half

of the premium, if the whole premium does not amount to one per

cent.

Any loss or damage which happens to the things insured

by reason of stress of weather, shipwreck, stranding, fortuitous

collision, compulsory deviations, or changes of voyage or vessel;

or by reason of jettison, fire, capture, pillage, piracy, arrest and

restraint of princes and peoples, declaration of war, reprisals; or in

general by reason of any other peril of the sea, shall be at the risk of

the insurer, unless the insurer shall have covenanted his exemption

from one or more of such risks.

Any voluntary deviation, or change of voyage or vessel,

and any loss or damage proceeding from the act of the assured, is

not at the risk of the insurer, and he shall be deemed to have earned

his premium, if the time of his risk has commenced.

(1) In the absence of an express agreement to the

contrary, the insurer is in no case answerable for damages or

averages proceeding directly from an inherent vice or from the

nature of the subject insured.

(2) Where an insurer is bound to pay for damages occasioned

by leaking or liquefaction, the leakage or diminution to which the

thing insured is ordinarily subject shall be first deducted.

(1) In the absence of an agreement to the contrary, the

insurer shall not be answerable for such malversations or faults of

the master or crew as are known by the name of barratry of the

master.

(2) Any such contrary agreement is ineffectual in regard to

such portion of the subject insured as belongs to the master.

(3) The insurer shall, however, be answerable for the unskilful-

ness of the master or crew.

(1) In cases of damage caused by a collision of vessels,

the insurer shall be liable to make good the damage if the collision

was accidental or was caused by the fault of the master or the crew

of another vessel.

(2) Where, however, it is proved that both the vessel insured as

well as the other vessel were in fault, or where it is doubtful to

whose fault the collision is imputable, the damage, in cases not

provided for by the Merchant Shipping Act, shall be borne in equal

portions by the colliding vessels; and, in such cases, as well as in

the case of a collision caused by the fault of the master or the crew

of the vessel insured, the insurer is not responsible, unless he has

assumed liability also for cases of barratry of the master.

(3) The liability of the insurer, in the cases contemplated in this

article, is limited to the damage sustained by the vessel insured, and

does not extend to any indemnity which, by reason of the collision,

may be due by the vessel insured to the other vessel.

The insurer shall not be liable for ordinary pilotage and

towage dues, or any other kind of dues imposed on the vessel or the

goods, unless such dues have been incurred in consequence of any

damage for which the insurer is liable.

Where the insurance is contracted with the clause "free

from average", the insurer is not answerable for any average,

whether general or particular, except in cases which give rise to an

abandonment.

(1) Where the insurance is contracted with the clause

"free from hostilities", the insurer shall be discharged from all

liability if the goods perish or are damaged by reason of any

violence, capture, pillage, arrest and restraint of princes and

peoples, declaration of war, or reprisal.

(2) The contract of insurance shall cease as soon as the subject

insured suffers any delay, or the course of the voyage is altered, by

reason of hostilities.

(3) Nevertheless, the insurer shall not on such account be

discharged from the obligation of making good any damage

sustained before the commencement of hostilities.

Where any vessel or goods insured "free from hostilities"

are, by hostile force, taken or detained in any port, such vessel or

goods shall be deemed to be captures at sea, and the risk of the

insurer shall cease.

Where the insurance is made separately on goods which

are to be shipped on two or more vessels specified in the contract,

with a statement of the amount insured on each vessel, and where

the whole of such goods is shipped on one vessel or on a smaller

number of vessels than that stated in the contract, the insurer is

only liable for the amount which he has assured on the vessel or

vessels receiving the goods, notwithstanding the loss of all the

vessels so specified; and shall, nevertheless, be entitled to one half

per centum on the amounts the insurances whereof have thus

become void.

(1) The insurer’s risk ceases, and he shall be entitled to

the premium, if the assured sends the vessel to a more distant port

than that stated in the contract, even though it be in the same

course.

(2) The insurance shall have its full effect if the voyage is

shortened.

(1) The assured is bound to communicate without delay

to the insurer any information which he receives concerning the

loss of the subject insured, and to furnish the insurers, if required,

with copies or extracts of any document conveying such

information.

(2)

Otherwise, he shall bear the damages and costs.

Unless and until the assured shall exercise the right of

abandonment competent to him, he is bound to use his best

endeavours for the preservation or recovery of the subject insured.

In case of an insurance on a loan on bottomry, the insurer,

in the absence of an agreement to the contrary, shall not be

responsible for any fraud on the part of the borrower.

Where the things insured are not dispatched, or only a part

thereof is dispatched, the insurer shall receive one half per centum,

or one half of the premium, according to the provisions of article

386, on the sum insured or on the sum exceeding the value of the

goods dispatched, as the case may be.

A person effecting an insurance on behalf of another

person without disclosing the name of the latter, shall not be

entitled to recover the premium if such other person fails to

dispatch the goods insured, or dispatches only a part thereof.

(1) An insurance effected for an amount exceeding the

value of the subject insured is void as regards the assured only, if

fraud or deceit on his part be proved.

(2) If no fraud or deceit is proved, the insurance is valid up to

the value of the subject insured, and, in regard to the excess, the

insurers shall receive one half per centum, or one half of the

premium, according to the provisions of article 386.

(3) An agreement that the insurer shall be answerable for the

whole amount stated in the contract, independently of the value of

the subject insured, is valid.

(4) Where the insurance is effected for a value less than the real

value, the insurer shall only be liable in proportion to the value

stated.

(1) Where there are several contracts of insurance

effected without fraud on the same subject, and the first contract

covers the entire value thereof, such first contract only shall hold

good.

(2) The insurers who have signed the subsequent contracts

shall be discharged, and shall only receive one half per centum on

the sum insured, or one half of the premium, according to the

provisions of article 386.

(3) If the entire value of the goods loaded is not covered by the

first contract, the insurers who have signed the subsequent

contracts shall be answerable for the remaining value, according to

the order of the date of the contracts.

If there be goods on board to the full amount of the sums

insured, and a portion of such goods is lost, the loss shall be borne

by all the insurers of such goods ratably in proportion to their

respective interest.

If the master is allowed to touch at different ports for the

purpose of completing or changing his cargo, the insurer runs the

risks of the goods insured, as provided in article 355.

In case of total or partial nullity of the contract of

insurance, the insurer shall, provided the assured has acted in good

faith, return the premium or, as the case may be, such proportionate

part thereof as corresponds to the amount received by him in

respect of risks which did not attach, deducting one-half per

centum, or one-half of the premium as provided in article 386.

If the contract is avoided by reason of any deceit, fraud, or

bad faith on the part of the assured, the insurer is not bound to

return the premium.

Where an insurance is effected on vessels or goods which,

at the time of the stipulation of the contract of insurance, had

already reached their place of destination, or had sustained a

disaster, such insurance is void, if it is proved, or can be presumed

that, at the time of the signing of the contract, the insurer was

aware of the arrival of the subject insured, or, as the case may be,

the assured was aware of the happening of the disaster.

Such presumption shall be deemed to exist whensoever,

reckoning at the rate of four miles to the hour, or whensoever,

regard being had to the means of communication or other

circumstances, it is shown that the information relating to the

arrival or loss of the vessel, from the place of such arrival or loss,

or from the place whence such information first came, could have

reached the place where the contract was made, before the signing

of the same.

Such presumption shall also be deemed to exist

whensoever, before the signing of the contract of insurance, any

vessel shall have come to the place where the contract was made,

from the place of the arrival or loss, or from the place whence

information of such arrival or loss first came, provided such vessel

shall have sailed from the said place after the arrival or loss.

(1) The presumption mentioned in the last preceding

article shall not arise if the insurance is effected under the clause

"good or bad news", or any other like clause.

(2) In such case the insurance cannot be avoided, unless it is

proved that the insurer was aware of the arrival, or the insured of

the loss, before the signing of the contract.

Sub-title III

O F A BANDONMENT

(1) The things insured may be abandoned in the following

cases

(a) shipwreck;

(b) stranding or running aground with partial wreck;

(c) unseaworthiness occasioned by a peril of the sea;

(d) forced abandonment;

(e) capture;

(f)

arrest and restraint of princes and peoples;

(g) loss or deterioration of the things insured amounting to

at least three-fourths of their value.

(2) Any other damage shall be deemed to be an average loss,

and shall be settled between the insurer and the assured in

accordance with their agreements, and according to their respective

interest.

The sale of the goods in consequence of a peril of the sea,

during the voyage and before the arrival of such goods at the place

of destination, is deemed to be a case of loss which authorises the

abandonment, whatever the proceeds of such sale may be.

Where it is necessary to ascertain whether there is

deterioration or loss corresponding to three-fourths of the value of

the goods insured, the damages which arise from general average

contributions are not taken into consideration. The expenses

relating to the sale of the said goods, and the expenses of the acts

preparatory to the sale are, however, taken into consideration.

(1) In cases where the things insured may be abandoned,

the assured may elect either to make the abandonment or to bring

an action for average.

(2) It shall not be lawful for the assured, after having elected to

bring an action for average, to waive such action, and bring an

action for abandonment. He may, however, waive the abandonment,

if not yet accepted by the insurers, and bring an action for average.

It shall not be lawful to make an abandonment before the

risk insured against has attached.

The abandonment of the subject insured cannot be partial

or conditional. It extends only to the property which is the subject

of the insurance and of the risk.

(1) An abandonment to the insurer must be made within

the time following

(a) six months from the day on which information of the

disaster is received, if it has happened on the coasts of

Europe, or on those of Asia or of Africa in the

Mediterranean, or, in the case of capture, from the day

on which information is received that the prize was

carried into any of the ports or places situated on the

above-mentioned coasts;

(b) eighteen months to run from the aforesaid days

respectively, if the disaster happened in, or the prize

was conveyed to any other part of the world.

(2) When the said times have expired, it shall not be competent

to the assured to make the abandonment.

(1) In every case in which the right to abandon is

competent, and in case of any other peril the risk whereof is to be

borne by the insurer, the assured must give notice to the insurer of

any information which he may have received thereon.

(2) Such notice shall be given without delay under pain of

damages and interest.

(1) If, upon the expiration of one year from the day of the

vessel’s departure, or from the day to which the last news of the

vessel relates, in the case of ordinary voyages, or upon the

expiration of two years, in the case of long voyages, the assured

declares that he has received no news of the vessel, he shall be

entitled to abandon, and to claim payment of the sum insured

without any necessity of proving the loss of the vessel.

(2) Upon the expiration of the aforesaid times of one year or of

two years, the assured shall be allowed, for the purpose of

commencing proceedings, the times fixed in article 419.

(1) In the case of an insurance effected for a fixed period

of time, when the times mentioned in the last preceding article have

elapsed, the loss of the vessel shall be presumed to have happened

within the period of the insurance.

(2) If there are several successive insurances for a fixed period

of time, the loss is presumed to have happened within the period of

the first insurance; or, in case of news received as contemplated in

the last preceding article, within the period of that particular

insurance to which the date of the last news corresponds.

Long voyages are those having for their destination any

coast or country situated beyond the Straits of Gibraltar, excepting

the European sea coast as far as the Sound, the African sea coast as

far as Cape Verde, the Baltic Sea, the British Isles, the Madeiras

and the Canary Islands.

The assured may, by means of the notice mentioned in

article 420, either abandon, and claim from the insurer payment of

the sum assured within the time fixed in the contract, or reserve his

right to abandon within the times fixed by law.

The assured shall, when making the abandonment, state all

the insurances made, or caused to be made, or ordered by him, and

the sums of money borrowed on bottomry or at respondentia. In

default of so doing, the time for payment, which is to run from the

day of the abandonment, shall be suspended until the day on which

the assured shall make and notify such statement, but the period

prescribed for making the abandonment shall not be enlarged

thereby.

If the statement be fraudulent, the assured shall be

deprived of the benefits of the insurance, and shall be bound to pay

the sums b orrow ed on bottom ry or at respon dentia ,

notwithstanding the loss or the capture of the vessel.

(1) In case of shipwreck or stranding with partial wreck,

the assured is bound to labour for the recovery of the things

insured, without prejudice to the abandonment to be made in due

time and at the proper place.

(2) The assured is entitled to the reimbursement of the

expenses for recovery up to the value of the things recovered.

(1) If the time for payment is not stated in the contract,

the insurer shall pay the sum insured four months after the notice of

the abandonment.

(2) After the expiration of such time, the insurer shall also pay

interest at the legal rate. The things abandoned shall be charged

with the payment.

The insurer cannot be sued for the payment of the sums

insured before the documents proving the shipment and the loss of

the goods insured are notified to him.

(1) Where, in the opinion of the court, the defence of the

insurers is such as to require a separate trial, the court shall order

the insurers to make provisional payment to the assured of the sum

insured, subject to the obligation of the assured to give security.

(2) Such security shall cease to be binding on the expiration of

two years, if within such time no action shall have been brought by

the insurers.

Where an abandonment has been notified and accepted, or

adjudged valid, the property in the thing insured vests in the insurer

from the day of the abandonment, and the insurer cannot, under the

excuse of the vessel’s return, avoid payment of the sum insured.

The freight of goods saved, even if paid in advance, is

included in the abandonment of the vessel, and becomes likewise

the property of the insurer, without prejudice to the rights of the

lenders on bottomry, or of the seamen for their wages, or of other

parties for the recovery of the expenses incurred during the voyage.

(1) In the case of arrest and restraint of princes and

peoples, the assured shall, without delay, give notice to the insurer

of the information received.

(2) The abandonment of the property arrested cannot be made

until after six months from the day of such notice, if the arrest is

effected in the Mediterranean or other European sea; or until after

one year, if the arrest is effected in a more distant place.

(3) Such times shall commence to run from the day of the

notice of the arrest. Where the goods arrested are of a perishable

nature, the aforesaid times shall be reduced to two months in the

former case, and to three months in the latter case.

(1) During the running of the times fixed in the last

preceding article, the assured is bound to use all due diligence to

obtain the release of the goods arrested.

(2) The insurers on their part may, either in concert with the

assured or separately, endeavour to secure such release.

An abandonment on the ground of unseaworthiness cannot

be made if the vessel can be repaired and made fit to continue the

voyage to her place of destination, unless the expense of refitting

the vessel is such as to exceed three-fourths of the value thereof,

saving the right of action of the assured against the insurers for the

recovery of the amount of the expenses incurred and the average

sustained.

Where the vessel has been declared unfit for navigation,

the party whose goods have been insured is bound to give without

delay notice to the insurer of the information received.

The master is bound in such case to use all due diligence

to procure another vessel to carry the goods to their place of

destination.

The insurer shall run the risks of the goods reshipped on

another vessel, in the case referred to in the last preceding article,

up to the time of the arrival and discharge of such goods.

The insurer shall moreover be liable for all averages and

all expenses incurred for the unloading, storage and safe keeping in

warehouses, and reshipment of the goods, for any excess of freight,

and for any other expense incurred in saving the goods, to the

extent of the sum insured.

If within the time of two months the master is unable to

procure another vessel for the reshipment of the goods and the

carriage thereof to the place of destination, it shall be lawful for the

assured to abandon the goods.

Title IV

O F A VERAGE AND OF J ETTISON AND A VERAGE C ONTRIBUTION

Sub-title I

O F A VERAGE

Every extraordinary expenditure made on behalf of the

vessel or of the cargo, or of both, and every damage sustained by

the vessel or the cargo from the time of the loading or the sailing up

to the time of the return or discharge, fall under the description of

average.

Failing special agreements between all the parties,

averages are regulated in accordance with the following provisions.

There are two kinds of average: gross or general average,

and simple or particular average.

The following are general averages

(a) goods thrown overboard for the common safety, or for

the benefit of the vessel and the cargo jointly;

(b) cables, masts, sails, and other rigging, cut away or

broken for the said purpose;

(c) anchors, cordage or other things abandoned for the

said purpose;

(d) any damage done by jettison to goods remaining on

board;

(e) any damage voluntarily done to the vessel in order to

facilitate the jettison, to lighten the vessel, or to save

the goods, or in order to facilitate the running out of

the water; and any damage sustained by the cargo from

these causes;

(f)

the maintenance of the seamen during the carrying out

of the repairs of the damage voluntarily sustained for

the common safety;

(g) the expenses of unloading in order to lighten the

vessel, and of putting into any port or other place,

when the vessel is compelled to do so by stress of

weather, pursuit of enemies or pirates, or any other

cause for the safety of the vessel and the cargo;

(h) any damage caused to the vessel or to the cargo, or to

both, if the vessel is voluntarily run ashore to avoid

her capture or loss, or to save the vessel or the cargo

from any other imminent peril; the expenses and

wages for getting the vessel afloat; and the salvage

payable for extraordinary services to avoid loss or

capture in the aforesaid cases;

(i)

generally, any damage voluntarily sustained in cases of

danger, and all expenses incurred, for the common

benefit and preservation of the vessel and of the goods,

from the time of loading and sailing, up to the time of

the return and discharge.

The goods, the vessel according to her condition at the time

of her arrival, and the clear amount of the freight after deducting

the wages of the seamen, their maintenance, and other expenses of

the voyage, shall each and all contribute in proportion to their

respective values or amounts, towards general average.

The price of the goods shall be fixed according to their

value at the place of discharge.

The following are particular averages

(a) any damage sustained by the goods through inherent

defects, or by reason of stress of weather, capture,

shipwreck, or stranding;

(b) expenses incurred to save the goods;

(c) the loss of cables, anchors, sails, masts, or cordage,

occasioned by stress of weather or other marine

accident; the expenses of putting into any place owing

to the fortuitous loss of the said things, or to the

necessity of victualling the vessel, or for the purpose

of repairing her in case of leakage;

(d) the wages and maintenance of the seamen during the

refitting of the vessel for any of the causes mentioned

in this article;

(e) the wages and maintenance

of seamen during

quarantine; and

(f)

generally, all expenses incurred for and any damage

sustained by the vessel alone, or the goods alone, from

the time of the loading and sailing to that of the return

and discharge, whenever such expenses and damage

were not incurred or caused voluntarily, and for the

common safety of the vessel and cargo.

Particular averages are borne and paid by the owner of the

thing which has sustained the damage or occasioned the expense.

(1) Any damage sustained by the goods by reason of the

master having neglected to secure the hatches, to moor the vessel,

or to provide good cables, or by reason of any other accident

occasioned by the neglect of the master or the crew, are likewise

particular averages to be borne by the owner of such goods; but for

any such damage the owner has a remedy against the master, the

vessel and the freight.

(2) Any damage which the owners of the vessel sustain through

an unnecessary and unreasonably long stay in port shall be made

good by the master.

Pilotage and towage dues in order to put into or sail from

any port or place, the expenses relating to sea-protests, tonnage and

other navigation dues, are not averages but simple charges on the

vessel, saving the provisions of paragraph (g) of article 444.

No action for general average can be brought if such

average does not exceed one per centum of the joint value of the

vessel and cargo, and no action for particular average can be

brought if such average does not exceed one per centum of the

value of the thing damaged.

Sub-title II

O F J ETTISON AND A VERAGE C ONTRIBUTION

(1) If by reason of stress of weather or the pursuit of an

enemy, the master deems it his duty, for the safety of the vessel, to

throw anything overboard, or to cut away the masts, or to abandon

the anchors, he is bound to consult the parties interested who may

be on board the vessel and the principal members of the crew.

(2) If there is a difference of opinion, the opinion of the master

shall prevail.

The things least useful, the heaviest, and the least

valuable, shall be the first to be thrown overboard.

(1) The master shall, as soon as possible, draw up a

statement of the deliberation as to the jettison.

(2) The statement shall indicate the grounds on which it was

decided to make the jettison, and shall mention the goods thrown

overboard or damaged; it shall include the names of those who

agreed and of those who disagreed with the master; and it shall be

copied in the log-book.

The statement of the losses and damage shall be made at

the place of discharge of the vessel.

Goods thrown overboard shall be valued according to the

market price at the place of discharge; their nature and quality shall

be proved chiefly by the bills of lading and invoices, if any.

The apportionment of the losses and damages shall be

made on the goods thrown overboard and on those saved, on the

vessel and on the freight, in proportion to their value at the place of

discharge.

(1) In cases where the quality of the goods has not been

truly described in the bill of lading, if the goods are found to be of

greater value than that stated, they shall, if saved, contribute

according to their valuation; but, if lost, they shall be paid for

according to the quality as stated in the bill of lading.

(2) If the goods are found to be of an inferior quality to that

stated in the bill of lading, they shall, if saved, contribute on the

basis of the quality shown in the bill of lading, but, if jettisoned or

damaged, they shall be paid for according to their value.

(1) Ammunition, victuals, the effects of the crew, and the

wearing apparel of the passengers do not contribute to general

average.

(2) The value of such things, however, if they are jettisoned,

shall be paid for by a contribution on all the other things.

Goods for which there is no bill of lading, nor a

declaration of the master, are not paid for, if jettisoned, but shall

contribute, if saved.

(1) Goods carried on deck shall contribute, if saved; if

they are jettisoned, or damaged by the jettison, no claim for

contribution can be made by the owner thereof, who shall, however,

have a right of recourse against the master, where the latter is liable

according to law.

(2) The provisions of this article shall not apply in the case of

voyages between Malta and Sicily, or between Malta and Tripoli or

Tunis, or in the case of goods which it is customary to carry on

deck.

If the jettison does not save the vessel, there shall be no

contribution, and the goods which have not been jettisoned, and

which have been saved, shall not be liable to pay for the things

jettisoned, or to make good the damage sustained by other goods.

If the jettison saves the vessel and if, in prosecuting her

voyage, she should be afterwards lost, the effects saved shall

contribute towards the jettison, according to their value in the

condition in which they may be found, after deducting salvage

expenses.

(1) Goods jettisoned do not, in any case, contribute to the

payment for any damage which the goods saved sustain after the

jettison.

(2) The cargo does not contribute to the payment of the vessel

which is lost or has become unseaworthy, except in the cases

mentioned in article 444.

Where the vessel has been cut open to extract the goods,

such goods shall contribute to the repair of the damage caused to

the vessel.

Where the vessel is lost with the remainder of the cargo,

there shall be no claim for contribution against goods put into boats

to lighten the vessel, even though such goods arrive in safety.

Where, after the apportionment of the contribution, the

goods jettisoned are recovered by their owners, such owners must

return to the master and to the interested parties what they received

out of the contribution, deducting the damages caused by the

jettison, and the expenses of recovering the goods.

The owner of the goods can in no case be called upon to

contribute to general average beyond the value of the goods at the

time of their arrival.

Title V

O F P RIVILEGED D EBTS ON S HIPS AND OTHER S EA-GOING

V ESSELS

Articles 469 to 476, both inclusive, repealed by: XXXVII.1988.41.

PART III

O F B ANKRUPTCY

Title I

OF THE DECLARATION OF BANKRUPTCY

(1) Every trader who, having regard also to his contingent

and prospective liabilities, is unable to pay his commercial debts,

shall suspend the payment of all his debts, and shall, upon the

suspension thereof, be in a state of bankruptcy.

(2) Without prejudice to the provisions of sub-article (1), if a

commercial debt due by the trader has remained unsatisfied in

whole or in part after twenty-four (24) weeks from the enforcement

of an executive title against the trader by any of the executive acts

specified in article 273 of the Code of Organization and Civil

Procedure, the trader shall suspend the payment of all his debts and

be deemed to be in a state of bankruptcy.

(3) For the purposes of this Part, the term "trader" shall, in

addition to the persons referred to in article 4, also include any

other natural or legal person, in respect of commercial debts for

which such person is, or becomes, liable, whether as principal

debtor or otherwise.

(4) In this Part, unless the context otherwise requires, the

following expressions have the meaning hereby assigned to them

(a)

"commercial debt" means any liability incurred

by any person, whether as principal debtor or otherwise,

insofar as that liability was incurred, or otherwise arises as a

result of any liability which was originally incurred in the

course of, in connection with, or for the purposes of, the

exercise of any trade, business, craft or profession by the

original debtor, and any other liabilities as the Minister

responsible for the Malta Business Registry may, by

regulations prescribe;

(b)

"personal debt" means any liability incurred by

any person, whether as principal debtor or otherwise, which is

not a commercial debt;

(c)

"debt", when used alone, means any liability

incurred by any person, whether as principal debtor or

otherwise, and whether a commercial debt or a personal debt;

and

(d)

"competent authority" means the same as the

definition assigned to it in the Insolvency Practitioners Act.

(5) A debt falling under sub-article (4)(a), which is not

exclusively incurred in the pursuit of the activities described in

sub-article (4)(a), shall, for the purposes of this Part, be treated as a

commercial debt to the extent of that part of the debt which has

been incurred, or which has arisen as a result of the activities

provided for in sub-article (4)(a), and the term "commercial debt"

shall, for the purposes of this Part, be read and construed

accordingly.

(6) Any transfer of assets, payment of debts, or act of trade

made by a trader who is in a state of bankruptcy, and which are

made between the date of the suspension of payments and the date

of the judgment declaring bankruptcy, shall, unless a determination

is made by the court in accordance with article 482(3) that the

debtor is not in a state of bankruptcy, be null and void.

Upon the suspension of payments, every trader shall,

without undue delay, file a declaration of bankruptcy in the Civil

Court (Commercial Section).

(1) The declaration of bankruptcy filed by the trader must

be confirmed on oath and include the following

(a)

the trader’s name and his identification or

registration number;

(b)

the nature of the trade, business, craft or

profession, in respect of which the debts have been incurred;

(c)

the name, identification or registration number,

and other particulars of each of the trader’s creditors together

with their registered address or, in the absence of a registered

address, the address of their place of business or place of

residence;

(d)

the value and nature of the trader’s debts, both

commercial and personal, and the security, if any, enjoyed by

the respective creditors; and

(e)

such other information as the Minister may, by

notice, prescribe.

(2) In case of the bankruptcy of a legal person, the declaration

must also include the name and the place of residence of each of the

natural persons jointly and severally liable for the debts of the legal

person.

On making the declaration mentioned in the foregoing

articles, the trader shall, at the same time, file in the Civil Court

(Commercial Section), all his commercial books, records and other

papers

Provided that, where the trader is not a person bound to

keep trade books in terms of article 13, it shall be sufficient for

such person to file in the Civil Court (Commercial Section), all

information and documentation as may be necessary to ascertain

the circumstances in which the respective debts were incurred,

together with a statement of the financial position of the person at

the time listing all assets and liabilities of such person.

(1) Any creditor may, whether the debt owing to him is a

commercial debt or otherwise, and even though such debt has not

yet fallen due, proceed summarily before the Civil Court

(Commercial Section), against a trader who is his debtor, or his

lawful representative, demanding a declaration that such trader is in

a state of bankruptcy.

(2) A declaration of bankruptcy may not be sought by a child

against their parent, or by a parent against their child, or by one

spouse against the other.

(3) The bankruptcy of a trader, being a natural person, may be

declared after his death, if prior to his death he had suspended

payments; in such case the declaration of bankruptcy cannot be

demanded by the creditors except within three (3) months from the

death of the debtor.

(4) In the case of a demand for a declaration of bankruptcy as

provided in this article, the creditor making the demand shall,

simultaneously with the demand, give security in an amount that

shall be equivalent to the greater of ten percent (10%) of the debt

owing to such creditor, or one thousand euro (€1,000) in favour of

the party against whom the demand is made, for the due

prosecution of the case without delay and the substantiation of his

claim; in default whereof, the court may order the amount of the

security to be paid, in whole or in part, to the party in whose favour

such security has been given

Provided that such payment shall not operate as a bar to an

action against the creditor for damages and interest arising from

such proceedings.

(1)Where a declaration of bankruptcy has been filed in

terms of article 479, the registrar shall, by notice, call upon the

creditors mentioned in the declaration to appear before the Civil

Court (Commercial Section), on such date, and at such a time, as

shall be specified in the relevant notice, being a date not later than

thirty (30) days from the date on which the declaration is made, to

show cause why their debtor should not be declared to be in a state

of bankru ptcy, and to m ake representations concerni ng the

appointment by the court of a bankruptcy trustee. The registrar

shall cause the notice to be served on the creditors mentioned in the

declaration, and for the notice together with the declaration to be

published by means of a notice containing an abstract in the

Gazette and in one (1) or more daily newspapers.

(2) Where a declaration of bankruptcy is demanded in terms of

article 481, the registrar shall, by notice, call upon the debtor

mentioned in the declaration to appear before the Civil Court

(Commercial Section), on such date, and at such a time, as shall be

specified in the relevant notice, being a date not be later than thirty

(30) days from the date on which the declaration is demanded, to

show cause why he should not be declared to be in a state of

bankruptcy. The registrar shall cause the notice to be served on the

creditor making the demand, and for the notice together with the

declaration to be published by means of a notice containing an

abstract in the Gazette and in one (1) or more daily newspapers,

calling upon interested persons to show cause why the debtor

should not be declared to be in a state of bankruptcy, and to make

representations concerning the appointment by the court of a

bankruptcy trustee.

(3) Where the court, during the proceedings referred to above,

is satisfied that cause has been shown why the debtor should not be

declared to be in a state of bankruptcy, the court shall, by judgment,

declare that the debtor is not in a state of bankruptcy and shall

award costs against the party cast. The court shall also order that an

abstract of the judgment be published, by means of a notice in the

Gazette.

(4) Where the court, during the proceedings referred to above,

is satisfied that cause has been shown why the debtor should be

declared to be in a state of bankruptcy, the court shall deliver a

judgment declaring the bankruptcy.

(5) In the event that the court is of the view that the declaration

of bankruptcy made by the debtor in terms of article 479, or the

declaration of bankruptcy demanded by the creditor in terms of

article 481, is frivolous or vexatious, the court may award double

costs against the party cast.

(1) If the creditor on whose demand the bankruptcy has

been declared neglects to sue out, at his own expense, such acts and

proceedings as are necessary to arrive at the making of a

bankruptcy order, any other creditor, or even the bankrupt himself,

may proceed to sue out such acts or proceedings.

(2) Subject to the provisions of article 499, all necessary

expenses incurred during bankruptcy proceedings shall be repaid to

the creditor disbursing them, out of moneys received on account of

the bankruptcy estate in preference to any other debt.

(1) The execution of claims of a monetary nature against

the bankrupt or the bankruptcy estate shall be stayed in respect of

all debts referred to in article 487 upon the delivery of the judgment

declaring bankruptcy.

(2) The stay of the execution of claims as provided for in sub-

article (1) shall cease with regard to the bankrupt, upon the

rehabilitation of the bankrupt in terms of articles 524(1)(b) or

534(1)(b), as the case may be.

Every act transferring property, whether corporeal or

incorporeal, including any renunciation of any succession or of an

acquired prescription, and every obligation incurred, or other act

made by the bankrupt which defrauds his creditors, shall be null

and void, even though the parties interested have acted, and, or are

in good faith.

(1) Upon the appointment of a bankruptcy trustee in

accordance with article 488, the bankrupt shall be ipso jure relieved

of his existing title to all assets other than those assets referred to in

article 492, whether corporeal or incorporeal, and whether relating

to his business or not. The ownership of such assets shall, by

operation of law, devolve upon and vest in the bankruptcy trustee

who shall receive and hold such assets for the benefit of the body of

creditors. All debts, including the debts referred to in article 487,

sh all, by opera tion of law, be come due and payable by the

bankruptcy estate as vested in the bankruptcy trustee

Provided that, notwithstanding anything stated in any other

law, no charge, levy or other dues shall become payable in Malta by

way of tax, duty or other government tariff or levy, notwithstanding

the manner in which it is described, upon, or as a result of the

transfers contemplated in terms of this article.

(2) Everything that devolves on the bankrupt after the

bankruptcy but prior to the occurrence of the events referred to in

articles 524(1) or 534(1), as the case may be, shall, by operation of

law, when and as the same so devolves, vest in the bankruptcy

trustee who shall receive and hold the thing for the benefit of the

body of creditors

Provided that, notwithstanding anything stated in any other

law, no charge, levy or other dues shall become payable in Malta by

way of tax, duty or other government tariff or levy, notwithstanding

the manner in which it is described, upon, or as a result of the

transfer contemplated in terms of this article.

(3) Any assets that shall devolve upon the bankruptcy trustee

by operation of sub-articles (1) and (2) shall be received by the

bankruptcy trustee subject to any third-party rights, whether real or

personal, in existence at the time, which rights shall be preserved

and shall not be prejudiced thereby.

Debts owing by the bankrupt which have not fallen due, even

if privileged, secured by pledge or hypothecary, shall become payable

upon the judgment of the court declaring the bankruptcy.

Title II

OF THE RIGHTS AND DUTIES OF THE BANKRUPTCY TRUSTEE

(1)The court shall, in the judgment declaring bankruptcy,

appoint one (1) or more persons as the bankruptcy trustee to

exercise the functions assigned to the bankruptcy trustee under this

Part

Provided that, where more than one (1) person is appointed

as the bankruptcy trustee, the persons so appointed shall be

appointed to act jointly as the bankruptcy trustee and they shall be

jointly responsible for the exercise of the functions assigned to the

bankruptcy trustee under this Part.

(2) The bankruptcy trustee shall be deemed to be an officer of

the court, and as such shall be subject to the orders of the same.

(3) In the event of the death, interdiction, incapacitation or

resignation of the bankruptcy trustee or any one (1) or more of the

persons so appointed, the court shall, at the instance of any

interested person or on its own motion, release the said person or

persons of their appointment. The court shall appoint one (1) or

more other persons as the substitute bankruptcy trustee, and

immediately upon the appointment being made, the provisions of

articles 486, 489 and 490 shall apply mutatis mutandis to the

substitute bankruptcy trustee.

(4) Any interested party may, within twenty (20) days from the

publication of the notice referred to in article 490, apply to the

court for the substitution of the bankruptcy trustee on the basis that

the latter is not fit and proper, whether due to the subsistence of a

conflict of interest or for any other valid reason.

The bankruptcy trustee appointed by the court shall be a

person duly authorised to act as such, in terms of article 4 of the

Insolvency Practitioners Act and whom the court deems fit to

faithfully discharge the duties of his office.

(1)The bankruptcy trustee shall, within fourteen (14) days

from the judgment declaring bankruptcy, notify the competent

authority and the registrar of the said judgment, and cause a notice

containing an abstract of the judgment to be published in the

Gazette and in one (1) or more newspapers, which notice shall

clearly indicate the name, surname and business address of the

person or persons appointed as the bankruptcy trustee.

(2) An abstract of the judgment declaring the bankruptcy shall

also be enrolled in the Public Registry within fourteen (14) days

from the judgment.

(1) The court may, at any stage of the proceedings, of its

own motion or upon the demand of one (1) or more creditors or of

the bankrupt, remove the bankruptcy trustee.

(2) No appeal shall lie against the pronouncement of the court

made in terms of sub-article (1).

(3) Upon the removal of the bankruptcy trustee by the court,

the court shall appoint a substitute bankruptcy trustee and the

provisions of article 488 shall apply mutatis mutandis.

Where the bankrupt is a natural person, the bankrupt shall

be entitled to retain the use, possession and ownership of any

property that, as the bankrupt may reasonably demonstrate to the

satisfaction of the bankruptcy trustee, comprises

(a)

the bankrupt’s main residence;

(b)

any vehicle, tools, or equipment of the bankrupt,

insofar as the bankrupt may reasonably demonstrate these to

be necessary for the performance, by him, of an activity

permissible in terms of article 498(3);

(c)

any apparel and other movable effects necessary

for the personal use of the bankrupt or that of any person

related to him by consanguinity or affinity to the third degree

inclusively;

(d)

any medical supplies or equipment of the

bankrupt, insofar as the bankrupt may reasonably demonstrate

these to be necessary for his own physical or mental well-

being or that of any person related to him by consanguinity or

affinity to the third degree inclusively; and

(e)

any right of nomination that the bankrupt may

have to any vacant ecclesiastical benefice.

(1) In order to secure possession of the property of the

bankrupt, including his books, records and other papers, the

bankruptcy trustee, shall apply to the Civil Court (Commercial

Section), for the issue of a warrant of seizure against any person

who may have possession of the property, including the bankrupt.

(2) In the case of bankruptcy of a legal person, the warrant of

seizure shall be executed not only at the principal offices or

premises of the bankrupt, but also at the residence or premises of

each of the persons jointly and severally liable for the debts of the

legal person.

The books, records and other papers of the bankrupt shall

be kept at such place as the court may direct, and shall be open to

inspection by all interested parties on a written request made to the

bankruptcy trustee, provided that the bankruptcy trustee is satisfied

that the person making the request is an interested party.

(1)The bankruptcy estate shall include all sums due to the

bankrupt, including any amounts derived by the bankrupt from the

conduct of any activities in terms of articles 496, 497 and 498

Provided that the provisions of this article shall cease to

have effect until they are superseded by a debt agreement or

bankruptcy order made in terms of this Part, and shall, in no event,

apply for a period longer than three (3) years from the date of the

judgment declaring bankruptcy.

(2) Where the bankrupt carries out activities in terms of article

498(3), the bankrupt shall be entitled to receive from the

bankruptcy trustee, out of any sum due to the bankrupt by way of

remuneration for the said activities, an amount to be determined by

the bankruptcy trustee, which amount shall not be less than the

national minimum wage established for persons of eighteen (18)

years and over, calculated pro rata throughout the duration of the

appointment of the bankruptcy trustee.

(3) Where the bankrupt is unable, for reasons which the

bankruptcy trustee finds to be legitimate, to carry out activities in

terms of article 498(3), the bankrupt shall be entitled to receive,

from the bankruptcy estate, an allowance which shall not be less

than the national minimum wage established for persons of

eighteen (18) years and over, calculated pro rata throughout the

duration of time during which the bankruptcy trustee is appointed.

(4) The amount referred to in sub-articles (2) and (3) shall

exceed the national minimum wage where the bankrupt reasonably

demonstrates to the satisfaction of the bankruptcy trustee, that the

bankrupt has an overriding need for the additional amount on

account of grave and justifiable circumstances specific to the

bankrupt or his dependants.

(1) The bankruptcy trustee shall, without delay sell,

whether by means of a licensed auctioneer or otherwise, such assets

as the bankruptcy trustee shall deem to be perishable.

(2) Any perishables in respect of which a right of recovery in

terms of Title III has not been exercised prior to their sale, shall be

sold in terms of sub-article (1), and any respective right of recovery

shall be extinguished and the moneys realised shall form part of the

bankruptcy estate in terms of article 495.

(1) Non-perishable assets cannot be sold by the bankruptcy

trustee prior to the confirmation of the proposed terms of a debt

agreement in terms of Title V or the sale of assets held on trust in

terms of Title VI, as the case may be, except in pursuance of a

summary judgment of the court, upon a sworn application issued

against the parties interested.

(2) In deciding upon the sworn application, the court shall,

among other things, consider

(a)

whether the value of the asset will be

substantially preserved by its immediate sale;

(b)

whether the bankruptcy trustee requires

additional liquidity to continue the trade, business, craft or

profession of the bankrupt in accordance with article 498; and

(c)

whether the bankrupt is urgently in need of

moneys to satisfy his ordinary and reasonable daily expenses.

(3) No appeal shall lie against the pronouncement of the court

made in terms of sub-article (1).

(1) It shall be lawful for the bankruptcy trustee, with the

authority of the court, by a decree, to, where possible, cause the

continuation of the trade, business, craft or profession of the

bankrupt, where the bankruptcy trustee is of the opinion that the

said continuation will afford a means of increasing his assets for

the benefit of the body of creditors

Provided that, as may be necessary for the continuation of

the trade, business, craft or profession of the bankrupt, the

bankruptcy trustee may request the authority of the court to make

use of any property held on trust in the exercise of the said trade,

business, craft or profession.

(2) The court shall, when granting such authority, give such

directions by a decree as the court deems most advantageous to the

interests of the body of creditors

Provided that where any creditor files an opposition to a

decree by the court in terms of this article, the court may, on just

cause being shown, after hearing the bankruptcy trustee, withdraw

the authority.

(3) Without prejudice to the provisions of sub-article (1), the

bankrupt shall not carry out any act of trade until rehabilitated in

terms of this Part. Any bankrupt who is a natural person may, prior

to the rehabilitation in terms of articles 524(1)(b) or 534(1)(b), as

the case may be, pursue the lawful conduct of any activity

Provided that the conduct of that activity shall not require,

give rise to, or necessitate, the performance of any acts of trade by

the bankrupt

Provided further that the exercise of any act of

extraordinary administration in terms of article 1322 of the Civil

Code by the bankrupt after the declaration of bankruptcy but prior

to the rehabilitation in terms of articles 524(1)(b) or 534(1)(b), as

the case may be, shall, at all times, require the express prior written

consent of the bankruptcy trustee.

(1) The bankruptcy trustee may appropriate such sum or

sums as the court shall determine, to remunerate the bankruptcy

trustee and to meet any expenses as the bankruptcy trustee may

reasonably incur in the performance of his duties in terms of this

Part, as a first charge out of the bankruptcy estate in preference to

any other expense. All other moneys shall continue to be held by

the bankruptcy trustee on trust, distinct and separate from the

personal property of the bankruptcy trustee and from other property

held by the bankruptcy trustee under any other trust.

(2) The Minister may, in consultation with the competent

authority mentioned in the Insolvency Practitioners Act, make

regulations for the payment of the expenses and remuneration of

the bankruptcy trustee.

(3) The Court shall have the power to order that of the expenses

and remuneration of the bankruptcy trustee are paid in terms of

regulations made in terms of sub-article (2).

(1) An action against the bankruptcy trustee may be

brought by an interested party only on the grounds that the

bankruptcy trustee has failed to carry out his functions, whether

arising in terms of this Part or by order of the court.

(2) The bankruptcy trustee shall be unlimitedly and personally

liable for any damages caused as a result of fraud or gross

negligence on his part.

(1) The bankruptcy trustee, once appointed, shall take

every necessary step for the preservation of rights previously

pertaining to the bankrupt as against his debtors and shall also

cause to be registered in the Public Registry any hypothec affecting

the property of the debtors of the bankrupt, if the bankrupt has

failed to do so.

(2)

It shall be the duty of the bankruptcy trustee to sue for the

payment of any debts due to the bankrupt, for the benefit of the

bankruptcy estate.

(3)

It shall not be lawful for the bankruptcy trustee to make

any compromise or refer any dispute to arbitration without the

consent in writing of the majority in value of the creditors of the

bankrupt and the authority of the court.

(1) Within thirty (30) days from the judgment declaring

bankruptcy, the bankruptcy trustee shall make up an inventory of

the property comprising the bankruptcy estate and file such

inventory in the registry

Provided that the inventory shall be updated by the

bankruptcy trustee with such frequency as the bankruptcy trustee may

deem appropriate, having regard to the facts and circumstances, and

in no case later than three (3) months from the last filing of the

inventory.

(2) The period for the making up of the original inventory may,

on the request of the bankruptcy trustee and for just cause, be

extended to not more than forty-five (45) days.

(3) Every creditor has a right, and the bankrupt is bound, to

assist in the making up of the inventory.

The inventory shall contain a true list, together with a

description and the estimated value, of all the property movable

and immovable comprising the bankruptcy estate held on trust by

the bankruptcy trustee, a statement of the debts owing to or due by

the bankruptcy estate, a statement of the profits and losses of the

bankrupt, and a statement of the expenses.

It shall be lawful for the Civil Court (Commercial Section),

of its own motion or on the demand of the bankruptcy trustee or of one

(1) or more of the creditors, to compel the bankrupt and any other

person to declare on oath all such information as it may deem

necessary or useful in the interest of the body of creditors or for the

making up of the inventory, or to confirm on oath the correctness of

the inventory.

Title III

OF THE RIGHTS OF RECOVERY

In case of bankruptcy, it shall be lawful to recover all bills

of exchange and other documents of title yet unpaid which are

found in kind in the possession of the bankrupt at the time of the

bankruptcy, whenever such bills of exchange or documents of title

shall have been endorsed by the owner for collection for his own

account.

(1) It shall likewise be lawful to recover goods delivered to

the bankrupt by way of deposit or sold on account of the owner, so

long as the same exist in kind, wholly or in part.

(2) It shall also be lawful to recover the price or part of the

or set off in account current between the bankrupt and the buyer.

(1) Goods sold to the bankrupt or forwarded to his account

may be recovered, so long as they are in his possession or in the

possession of the bankruptcy trustee.

(2) Nevertheless, such right of recovery may not subsist in

cases where, before their arrival, the goods have been, without

fraud, sold on invoices or bills of lading signed by the party

forwarding the goods.

(3) The party recovering the goods shall be bound to return to

the bankruptcy estate the sums received by him on account, and all

advances made in respect of freight, commission, insurance or

other expenses, and shall pay what remains due in respect of such

charges.

It shall be lawful for the seller to retain any goods sold by

him to the bankrupt that are yet unpaid for by the bankrupt, and

which have not yet been delivered to the bankrupt or not yet

forwarded to him or to a third party on his behalf.

In the cases mentioned in articles 507 and 508, the

bankruptcy trustee shall have the power to take the goods on paying

the seller the price agreed upon between him and the bankrupt.

Title IV

OF THE PROOF OF DEBTS AGAINST THE BANKRUPTCY ESTATE

(1) Within fourteen (14) days of filing the inventory in the

registry, the bankruptcy trustee shall make a list of all the creditors,

and file such list in the registry.

(2) Within fourteen (14) days of the filing of the list of

creditors in the registry, the registrar shall, by order of the court,

summon a meeting of the creditors by means of a notice published

in the Gazette and in one (1) or more newspapers, which meeting

shall be held not later than thirty (30) days from such order, in the

presence of the court on the day and at the place fixed in the notice

Provided that a copy of the notice shall be served upon

the listed creditors at their residential or business address, by means

of registered post.

(3) The bankruptcy trustee shall, at such meeting, present a

written debt register, by virtue of which the bankruptcy trustee

s h a l l e x a m i n e t h e b a n k r u p t ’s d e b t s a n d o rg a n i s e t h e d e b t s

separately into commercial debts and personal debts, having regard

to the quality and nature of such debts, and the manner in which

they arose or were incurred

Provided that, in the event that the debt register

comprises a debt that has not been incurred exclusively in the pursuit

of a trade, business, craft or profession, the bankruptcy trustee shall

designate the said debt as being a commercial debt only to the extent

that the debt has been incurred in a manner that would cause the debt

to be treated as a commercial debt in accordance with article 477,

having regard, in particular, to

(a)

the manner in which any asset, good, or service

that has been acquired by virtue of the debt under examination

has been utilised or consumed;

(b)

the importance of any asset, good, or service that

has been acquired by virtue of the debt under examination, to

the trade, business, craft or profession of the bankrupt and the

manner in which said asset, good, or service has been

integrated into the bankrupt’s commercial practices and relied

upon for the purposes thereof; and

(c)

the extent to which any asset, good, or service

that has been acquired by virtue of the debt under examination,

has been enjoyed for purposes extraneous to the trade,

business, craft or profession of the bankrupt.

Therefore, and for the purposes of this Part, any debt

that has not been incurred exclusively in the pursuit of a trade,

business, craft or profession shall, to the extent that the said debt has

been designated as being a commercial debt in terms of this article,

be treated as a commercial debt, and otherwise as a personal debt.

(4)

The debt register shall comprise, as a minimum

(a)

the value of each debt;

(b)

the name and address of the creditor to whom

each debt pertains;

(c)

the date on which each debt arose;

(d)

the bankruptcy trustee’s classification of each

debt as a commercial or personal debt, provided that, where

the debt has not been incurred exclusively in the pursuit of a

trade, business, craft or profession, the bankruptcy trustee

shall set out the extent to which the debt has been designated

as being a commercial debt in terms of sub-article (3), and

shall provide any relevant documentation or information

substantiating the manner in which the debt has been

designated;

(e)

the cause and nature of any preference or

security, if any, attaching to each debt; and

(f)

the manner in which all of the bankrupt’s debts

shall rank according to law.

(1) Every creditor of the bankrupt shall, at any time prior

to such meeting, submit a request to the bankruptcy trustee for the

admission of his debt, and shall produce and specify the documents

in support of the same, on the basis of which the bankruptcy trustee

shall decide whether to admit or refuse the claim, and the contents

of the inventory and debt register shall be determined accordingly.

(2) Any interested party may, within twenty (20) days of such

meeting, make submissions against the veracity of the contents of

the inventory and debt register. The court shall only make the

determination contemplated in article 514 after having heard the

debtor, the bankruptcy trustee, or the creditors, as the case may be.

(3)

A procès verbal shall be drawn up containing the pleas set

up by the debtor, the bankruptcy trustee and the creditors.

Any person, although his debt has not been proved and

admitted, may, on summarily showing that he is interested, assist in

the examination of the claims of the other creditors and set up pleas

in regard thereto, and shall, following a request made to the

bankruptcy trustee, be provided, at his expense, a copy of the

inventory and debt register.

(1) Where any person wilfully makes any false claim or

falsely claims a larger sum than that actually due to him, he may be

sued before the Civil Court (Commercial Section), and shall, on

conviction, be liable for the payment of twice the amount falsely

claimed, for the benefit of the estate of the bankrupt.

(2) Such an action may be brought by the bankrupt, by any

creditor of the bankrupt, or by the bankruptcy trustee, and shall

lapse after a period of five (5) years from the date of such claim.

(1) Following the submissions referred to in article 511(2),

the court shall proceed to the examination of the submissions. The

court shall confirm or vary the contents of the debt register, as may

be relevant within thirty (30) days of the submissions of an

interested party in terms of article 511(2).

(2) The bankruptcy trustee shall, within fourteen (14) days,

supplement the contents of the inventory referred to in article

502(1), by the publication of the debt register drawn up in

accordance with the requirements of article 510, and the debt

register shall be maintained and updated with such frequency as the

inventory in accordance with the requirements of article 502(1).

(3) Notwithstanding the expiration of the period referred to in

article 511(2), any interested person may, by application to the

court, request leave to present an application to the bankruptcy

trustee for the admission of a debt not previously brought to his

attention. Where the court accedes to the request, the bankruptcy

trustee shall update the debt register and the procedures in articles

511(1) and (2), and 514(1), shall, mutatis mutandis, apply.

(1) Any decree made in terms of article 514(1) shall be

subject to appeal, by application filed in the registry of the Court of

Appeal within twenty (20) days from the date of the decree, and

any such appeal shall have no suspensive effects on proceedings in

terms of this Part

Provided that where more than one (1) appeal against

the decree is filed, the Court of Appeal shall hear all appeals

simultaneously

Provided further that in hearing the appeal, the Court of

Appeal may decide to admit any new document or testimony as

evidence of a debt being claimed. Where, however, the Court of

Appeal finds that the claim itself, or any new document or testimony

related to it, could have been filed at the time of the submissions

made in terms of article 511(2), the Court of Appeal may order the

appellant to bear the costs of the appeal, in whole or in part.

(2) An appeal against the decree shall not lie on the grounds

that a debt, not incurred exclusively in the pursuit of a trade,

business, craft or profession, has been incorrectly apportioned in

terms of the proviso to article 510(3), except where the respective

creditor is able to demonstrate that the apportionment has been

performed in a manner that is manifestly incorrect, grossly

negligent, or fraudulent.

(1) The debt register shall separately identify and contain

the names of any known creditors who failed to appear, in person or

by proxy, at the meeting referred to in article 510(2), and the said

creditors who failed to appear shall not be taken into account

Provided that any listed creditor who would have ranked

below the debt pertaining to known creditors who failed to appear,

shall only receive payment of his debt, in terms of this Part, on

condition that he provides sufficient security to the satisfaction of the

bankruptcy trustee that will ensure the making, by him, of a pro rata

contribution in favour of any creditor who has failed to appear in the

event of their appearing within one (1) year from the day on which

the security was given.

(2) Any creditor that has failed to appear at the meeting referred

to in article 510(2) shall have the right to request the court to order his

inclusion in the debt register and to order the taking of such other

action as may be necessary so as to give effect to their inclusion.

Title V

OF BANKRUPTCY WITH DEBT AGREEMENT

(1)After the publication of the debt register in accordance

with article 514(2), the registrar shall call a meeting of the creditors

whose claims have been admitted, that shall be held within thirty

(30) days of the publication.

(2) The bankrupt shall also be summoned to such meeting. He

cannot attend by proxy except with the approval and for reasons

approved by the court. The court shall examine the instruments of

proxy of those who appear on behalf of absent creditors.

(1) The court shall cause the bankruptcy trustee to give, in

its presence, an account of the state of the bankruptcy and of

everything that has taken place since the commencement of

proceedings, including but not being limited to

(a)

any property of the bankruptcy estate that the

bankruptcy trustee has determined to fall within the terms of

article 492;

(b)

the admitted debts, and the contents of the

inventory and debt register; and

(c)

whether, in the view of the bankruptcy trustee,

any evidence subsists to indicate that the bankruptcy may be

fraudulent.

(2) The bankrupt may, in all cases, be heard. If absent, the

meeting shall continue without him and the bankruptcy trustee shall

file a note in the registry recording this absence.

(1) During the meeting, the bankruptcy trustee shall

propose for discussion and approval by the creditors, the terms of a

debt agreement, for the settlement of the claims of the creditors, in

whole or in part, out of the bankruptcy estate, which terms have

been agreed to by the bankrupt.

(2) Where the bankrupt is a natural person, the bankruptcy

trustee may propose, within the terms of the debt agreement

referred to in sub-article (1), an income payment plan, in terms of

which the bankrupt shall be required to continue to contribute a

defined amount of money towards the bankruptcy estate in the

hands of the bankruptcy trustee, out of anything that devolves on,

or is derived by, the bankrupt after the rehabilitation in terms of

article 524(1)(b), for a period not exceeding three (3) years to be

reckoned from the date of appointment of the bankruptcy trustee,

for the further settlement of debts, in whole or in part, in

accordance with the terms of the debt agreement.

(3) The bankruptcy trustee shall, in support of the debt