COMMERCIAL LAW 1 Purchase contract Definition Seller undertakes to deliver to purchaser a movable thing specified individually or at least in kind and quantity, and to transfer to purchaser ownership title to such thing; purchaser undertakes to pay the purchase price (Section 409 of the Commercial Code) Main components of purchase contract: determination of subject matter of contract only movable thing determined either as individually specified thing or as certain amount of things of certain kind

COMMERCIAL LAW 2 Obligation of seller to deliver the sold thing to purchaser seller is obligated to transfer the thing to purchaser or to a person authorized to accept it Obligation of seller to transfer ownership to purchaser delivery must be made with the intention to transfer the ownership of the thing subject to sale

COMMERCIAL LAW 3 Obligation of purchaser to pay purchase price Determination of purchase price Specification of sum of money to be paid or specification of method of subsequent price determination Determination of price is not necessary if such intention is expressed by parties during their negotiations If price is not determined it equals to price for which the identical or comparable goods were sold at the time of execution of contract under similar terms and conditions

COMMERCIAL LAW 4 Liability for defects of goods Seller is liable for factual and legal defects of goods delivered Factual defects Goods do not have the properties agreed by the parties or stipulated by legal regulations Legal defects Purchaser does not acquire legal position with respect to goods as it is expected if contract is duly performed (e.g. the goods are subject to rights of a third person)

COMMERCIAL LAW 5 Seller is liable for all defects, regardless of their origin except for defects about which purchaser knew or ought to have known at the time of entering into contract, unless the defects affect the properties explicitly agreed Purchaser’s rights in case of defective goods differ depending on gravity of defects:

COMMERCIAL LAW 6 Defects which constitute fundamental breach of contract - purchaser may: demand elimination of such defects (delivery of substitute or missing goods) demand elimination of certain defects by their repair, if feasible demand appropriate reduction of purchase price withdraw from contract Choice among rights pertains to purchaser, provided that he notifies seller accordingly when sending the notice of defects Choice cannot be changed without seller’s consent

COMMERCIAL LAW 7 Defects which constitute non-fundamental beach of the contract - purchaser may demand: delivery of missing goods elimination of other defects in the goods appropriate reduction of purchase price

COMMERCIAL LAW 8 Quality warranty Obligation of seller that goods will be fit for agreed or otherwise customary purpose, or that the goods will maintain their agreed or customary properties for warranty period Quality warranty can be undertaken only in writing Liability for defects covered by quality warranty does not extend to defects caused to goods by extraneous events after the risk of damage to goods passed to purchaser

COMMERCIAL LAW 9 Contract on sale of enterprise Enterprise - definition Things, rights and other property values which belong to the entrepreneur and which are used to operate the enterprise or which are intended to serve this purpose, are appurtenant to the enterprise (Article 5 of the Commercial Code) Aggregate of tangible, personal and intangible components relating to a business activity

COMMERCIAL LAW 10 Sale of enterprise - purpose of contract Disposition of assets and other items as a “going concern” Need for protection of interests of parties to contract as well interests of other affected persons, i.e. shareholders and creditors of seller

COMMERCIAL LAW 11 Definition of contract on sale of enterprise Seller undertakes to pass over to purchaser a certain enterprise and assign to him ownership title to such enterprise, and purchaser undertakes to assume obligations (debts) of seller relating to the enterprise and pay the purchase price (Article 476 of the Commercial Code)

COMMERCIAL LAW 12 Subject matter of contract on sale of enterprise Main components of contract on sale of enterprise Determination of contracting parties Determination of an enterprise by all components comprising the enterprise, i.e. all tangible things, intangible assets such as know how, licenses, personnel, markets, good will, all contracts and agreements relating to the enterprise Expression of will of purchaser to take over the whole enterprise and pay the purchase price

COMMERCIAL LAW 13 Enterprise is being transferred as a going concern All rights and obligations pertaining to business carried out through enterprise are transferred to purchaser No approval of transfer by creditors is necessary Purchaser must notify creditors of his assumption of the debts to them Seller must notify debtors of the assignment of the receivables to purchaser

COMMERCIAL LAW 14 Rights and obligations arising from labor relationships with employees of seller are transferred to purchaser All rights and obligations of seller ensuing from intangible industrial and other intellectual property related to seller’s business activity of the enterprise pass to purchaser The same applies to contract the subject of which is a part of the enterprise

COMMERCIAL LAW 15 Protection of creditors Seller’s creditors are not able to influence the change of their debtor Seller is liable (guarantees, stands as surety) for all obligations pertaining to the enterprise that were transferred to purchaser together with enterprise Creditor may seek with court declaration of ineffectiveness of assignment of seller’s debts to purchaser if sale of enterprise makes it undoubtedly difficult for him to recover his debts

COMMERCIAL LAW 16 Rights and obligations of parties Seller is obligated to transfer to purchaser all rights pertaining to individual components of the enterprise Purchaser is obligated to take over all these components and pay the purchase price Parties should draw a protocol on take-over of the enterprise evidencing all tangible and intangible assets transferred to purchaser as well as all missing and defective things

COMMERCIAL LAW 17 Liability for defects Purchaser’s rights arising in case of defect of the enterprise differ depending on the nature and gravity of the defect Purchaser may: demand appropriate discount from the purchase price corresponding to the value of the missing or defective things as listed in the take-over protocol withdraw from contract if the enterprise is not fit for operations specified in the contract and the notified defects and not rectifiable

COMMERCIAL LAW 18 demand an appropriate discount in respect of debts that were transferred but were not listed in the take-over protocol withdraw from contract in case he did not acquire the ownership right to the real estate pertaining the enterprise and such defect is not rectified Form of contract Mandatory written form Corporate requirements Contract on sale of enterprise or part of an enterprise is subject to approval of general meeting of both parties

COMMERCIAL LAW 19 Contract on sales representation Definition Commercial representative (agent) who is an independent entrepreneur undertakes to engage in long-term activity on behalf of principal aimed at the conclusion of specified contracts or to negotiate and conclude transactions in the name of principal and on his account (Article 652 of the Commercial Code)

COMMERCIAL LAW 20 Long-term sales activity for another entrepreneur Sales representation may consist of Entering into contracts on behalf of principal Acting as an intermediary and creating an opportunity for principal to enter into contracts Content, main components of contract Description of business in which agent acts for principal (types of contracts, services) Determination of territory in which activities are performed

COMMERCIAL LAW 21 Determination of commission Determination whether sales representation is exclusive or non- exclusive Term of contract If no term agreed it is deemed that contact is entered into for indefinite period of time

COMMERCIAL LAW 22 Exclusive sales representation Principal is obligated not to use another representative in the agreed territory Agent is prohibited from acting for another principals Principal may enter into contracts by himself but is obligated to pay the commission to agent as if agent had assisted in connection with these transactions

COMMERCIAL LAW 23 Non-exclusive sales representation Principal may authorize another persons to engage in commercial representation which has been agreed with the agent Agent may engage in the activity he has undertaken for principal also for other persons or conclude these transaction on his own account In case of doubt sales representation is deemed to be agreed as non-exclusive

COMMERCIAL LAW 24 Rights and obligations of agent Obligation to act in good faith and with expert care and in compliance with principal’s reasonable instructions Obligation to inform principal of the developments of the market in the agreed territory Rights and obligations of principal Obligation to act fairly and in good faith Obligation to provide agent with all documentation relating to the sales Obligation to provide agent with all information necessary for performance of the obligations arising from contract

COMMERCIAL LAW 25 Commission of agent Amount agreed in contract If nothing is agreed, commission which is customarily paid for comparable commercial representation If no customary comparable practice exists, reasonable commission taking into account all circumstances of concluded transactions Commission should cover All transactions implemented during the term of sales representation, i.e.all transactions concluded as a result of agent’s activity

COMMERCIAL LAW 26 All transactions concluded with customer contacted by agent before entering into sales representation contract with principal All transactions concluded after expiry of sales representation contract if transaction was concluded as a result of agent’s activity

COMMERCIAL LAW 27 Termination of sales representation Sales representation contract for indefinite period of time: by notice of termination; notice period 1 to 3 months unless agreed otherwise Sales representation contract for definite period of time: upon expiry of agreed term by notice of termination if during at least 12 months volume of transactions arranged for by agent has not reached agreed volume, or volume proportionate to sales on the relevant market (if no volume agreed)

COMMERCIAL LAW 28 Indemnification of agent after termination of contract Agent is entitled to indemnification if: he has acquired new customers or substantially increased volume of trades for principal and principal still enjoys benefits from this effort and the indemnification is fair given all circumstances of termination Indemnification is fair if it equals to the agent’s average annual commission calculated from commissions acquired during last 5 years or during the term of contract if term is less than 5 years

COMMERCIAL LAW 29 Non-compete clauses Parties may agree that agent may not engage in Activity that was subject to sales representation contract with principal within the agreed territory or towards groups of customers within that area Activity competitive to sales representation under contract either on his own or someone else’s account This prohibition may not last longer than 2 years