Oman Commercial Law (Royal Decree 55/90)

The Oman Commercial Law (Trade Law) was issued by Royal Decree 55/90 and is shown on our page as amended up to Royal Decree 53/2019. It applies to traders and to all commercial acts carried out by any person, even a non-trader (Article 1), and covers commercial acts, traders and their duties, the business establishment, commercial contracts, banking operations, bills of exchange and cheques.

Note: this page is an English summary prepared by our office for guidance. It is not an official translation, and the binding text is the Arabic text of the law, which you can read in full on our Arabic page for this law.

Key facts

Issued by Royal Decree 55/90; amended up to Royal Decree 53/2019.
Articles 1 to 578 remain in force. Book Five (bankruptcy and preventive composition) was repealed by Royal Decree 53/2019.
A paragraph on guarantees of personal bank loans was added to Article 238 by Royal Decree 75/2010.
Article 6 defines "the court" as the Commercial Disputes Settlement Authority or any other court later established by law for commercial matters.

Structure of the law

General provisions: Articles 1 to 7.
Book One, commercial acts and the trader: Articles 8 to 36 (commercial acts 8 to 15; traders 16 to 26; commercial books 27 to 36).
Book Two, the business establishment: Articles 37 to 73 (trade name 39 to 46; unfair competition 47 to 51; sale, lease and pledge of the business 52 to 73).
Book Three, commercial obligations and contracts: Articles 74 to 414 (commercial obligations 75 to 92; commercial sale 93 to 155; carriage 156 to 216; pledge, guarantee and public warehouses 217 to 275; commercial agency and brokerage 276 to 338; banking operations 339 to 414).
Book Four, commercial papers: Articles 415 to 578 (bill of exchange 415 to 517; promissory note 518 to 521; cheque 522 to 570; transferable securities 571 to 576; other endorsable instruments 577 to 578).
Book Five, bankruptcy and preventive composition: repealed.

Main provisions

Sources of rules

Commercial contracts take effect once offer and acceptance match (Article 2). Where there is no contract term, the legislative provisions apply; failing these, custom (special or local custom before general custom), then Islamic Sharia, then the rules of justice (Articles 4 and 5).

Commercial acts and traders

Article 9 lists commercial acts, including buying goods for resale, supply contracts, banking, agencies, commercial papers, insurance, transport and construction.
A trader is anyone with capacity who carries on commercial acts in his own name as a profession, and every commercial company (Article 16). Capacity to trade starts at 18 (Article 21).
A non-Omani may trade only if permitted under the laws in force (Article 24), and a foreign company may open a branch or trade only through an Omani trader agent on the conditions set by law (Article 25).
A trader declared bankrupt in the first year of trading, or convicted of offences such as fraudulent bankruptcy, fraud, breach of trust or forgery, may not trade unless rehabilitated (Article 26).

Commercial books

A trader must keep at least a journal and an inventory book, and keep copies of business correspondence and invoices (Article 28). Small traders and traders whose capital does not exceed OMR 10,000 are exempt.
The journal and inventory book must be kept for 10 years after closing; correspondence and documents for 5 years (Article 31).

Commercial register duties under this law

The trade name is entered in the commercial register, and no other trader may then use it in the same type of trade (Article 40).
The sale of a business must be a formal contract and be registered within one month (Articles 52 and 53).
A person who leases a business must register within 15 days (Articles 61 and 62). A pledge of a business must be registered within 30 days (Article 69).

Commercial obligations

Debtors of a commercial debt are jointly liable unless the law or agreement says otherwise (Article 75), and commercial guarantors are jointly liable with the debtor (Article 238). For personal bank loans, the guarantor may ask for a clause requiring the creditor to pursue the debtor first (Article 238).
A creditor may charge a return on a commercial loan or debt within the limits set each year by the Ministry of Commerce and Industry with the Oman Chamber of Commerce and Industry, and the agreed return runs during late payment (Article 80).
The court may not give a commercial debtor time to pay except in cases set by law or in extreme necessity (Article 84).
Commercial matters may be proved by any means whatever the value (Article 91). Obligations between traders are time-barred after 10 years (Article 92).

Commercial sale, carriage and agency

A defect claim in a commercial sale is time-barred one year after delivery (Article 118), as are claims under contracts of carriage (Article 157). Claims under a contract agency are not accepted three years after it ends (Article 296).

Cheques and bills of exchange

A cheque is payable on sight; a post-dated cheque may not be paid before its date (Article 544). A cheque drawn and payable in Oman must be presented within six months (Article 545).
The drawer may stop payment only if the cheque is lost or the holder is bankrupt (Article 547).
Non-payment is proved by protest or a statement from the bank or clearing house (Article 557); the holder's recourse claims are time-barred one year after the presentation period ends (Article 561).
Claims against the acceptor of a bill of exchange are time-barred after three years from maturity (Article 514).

Penalties

Trading in breach of the ban in Article 26: imprisonment of up to one year and/or a fine of up to OMR 200, with closure of the business (Article 26).
A business lessee who does not state that status on business documents: OMR 10 to OMR 500 (Article 63).
Issuing a cheque in bad faith without sufficient funds, withdrawing funds, or ordering the bank not to pay: the penalties set by the Penal Code (Article 565). Convictions are published in the Official Gazette (Article 566).
A bank that refuses in bad faith to pay a valid cheque with funds: up to OMR 200 (Article 567). Undated cheques, cheques drawn on a non-bank and related breaches: up to OMR 100 (Articles 568 to 570).

Related guides and services

Frequently asked questions

How long must a trader keep commercial books?

The journal and inventory book must be kept for 10 years after they are closed, and correspondence, invoices and other documents for 5 years (Article 31).

When can a cheque be presented for payment?

A cheque is payable on sight, but a post-dated cheque cannot be paid before its stated date (Article 544). A cheque drawn and payable in Oman must be presented within six months of its issue date (Article 545).

Can a court give a commercial debtor more time to pay?

Only in cases provided for by law, or in extreme necessity where the creditor suffers no serious harm (Article 84).

This summary is general information and not legal advice. For advice on how the law applies to your situation, contact Dr. Abdullah Al Rashdi Office, Advocates and Legal Consultants, on WhatsApp or call +968 92000841.