REPUBLIQUE DU CAMEROUN REPUBLIC OF CAMEROON

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PAIX -TRAVAIL – PATRIE PEACE – WORK – FATHERLAND
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MINISTERE DES MINISTRY OF HIGHER
ENSEIGNEMENTS SUPERIEUR EDUCATION
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Course Title: Business Law

Specialties: All
Level: 200 & 300

Course Master: Dr. TITIAHONG Bertrand SONTAMEH,

PhD in Public Law, University of Dschang
Tell: (+237)651-311-602
Email: titiahongbertrand@[Link]

Academic Year: 2023/2024

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 COURSE OBJECTIVE
The objective of this course is to enable students at the end of the course
to be able to:
1. Identify some fundamental principles of business law and, in particular, Law
of Arbitration, Intellectual property law, Banking Law, Insurance law, Company
law and law of Taxation;
2. Develop in students the capacity to observe and interpret the legal implication
of their activities relating to business;
3. To enable students to put knowledge they have acquired in the course into
practical use both in their future employment and in their lives as private
citizens;
4. To encourage an appreciation of the need for competence and accuracy in
business activities and
CHAPTER ONE
LAW OF ARBITRATION
1.1. General Introduction
1.1.1. The Notion of Arbitration
It is a truism that the intention of the parties to a commercial transaction is
not usually to terminate completely prospects of future business dealings. This
explains why, when entering into a contract of any significant value, the parties
will generally want to ensure that any dispute that might arise under the contract
in the future, should be dealt with efficiently, rapidly and confidentially. This
should not be interpreted to mean that parties to a contract can not seek redress
through arbitration when a dispute had already arisen and the parties did not
expressly state in their contractual agreement that disputes thereto will be settled
by arbitration. Arbitration is thus “a means of settlement whereby parties to a
contract agree that disputes resulting from their contractual relationship
should be solved by either a specific individual or a group of individuals
appointed by them or a particular arbitral tribunal chosen by them”.

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 Arbitration allows parties to settle their dispute in a tribunal consisting of
a sole arbitrator or a panel of arbitrators, who may be chosen by the parties
themselves. The result of arbitration is an arbitral award, which, as a general rule
will be final and binding, subject to any appeals and with no easily enforceable
conditions, if the losing party does not comply spontaneously.
Arbitrations are generally subject to the rules laid down by the law of the
country where the arbitration tribunal has its seat. Until 1999, very few OHADA
member states had legislations specifically relating to arbitration. With the
coming of the OHADA, it is now possible for parties to a contract to include an
arbitration clause providing for proceedings to take place in any of the member
states, in the knowledge that the modern law will apply.
When a contract is negotiated, the parties deal first with the commercial
aspect of the transaction and frequently pay little attention to the dispute
resolution. This often leads to uncomfortable surprises with a dispute arising and
the parties finding that the arbitration clause is imperative or that it has
consequences that they had not anticipated. Vigilance would be required when
the parties envisage arbitration under OHADA law as the organisation has
created different sets of legislation applicable to arbitration.
First, there is the OHADA Treaty itself, which provides for institutional
arbitration under the auspices of the Common Court of Justice and Arbitration
(CCJA), in accordance with the CCJA‟s own arbitration rules (the CCJA rules).
Secondly, there is the Uniform Act (herein after referred to as UA) on
arbitration which lays down basic rules that are applicable to any arbitration
where the seat of the arbitral tribunal is in one of the member states. In other
words, if a contractual arbitration clause simply provide for arbitration under the
UA, there will be no institutional framework but the UA will govern certain
matters relating to the proceedings. Conversely, if the clause states the parties‟
agreement to arbitration under OHADA Treaty or under the CCJA Rules, this
will establish an institutional framework for the arbitration.

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1.1.2. Why arbitration is preferred to the classical court system
Arbitration is often preferred to classical court system due to the
following reasons:
i) Arbitration is more expedient than the classical court system since it is most
often opened to appeals;
ii) It is debatably argued that arbitration is less costly than the classical court
procedure;
iii) Parties have the possibility of participating in the arbitration through the
appointment of arbitrators this is not the case with classical courts;
iv) Arbitration hearings and awards are confidential unlike court hearings that
are in public;
v) The procedure for instituting arbitration is usually less time consuming than
with the courts.
1.2. Other alternative dispute settlement mechanisms
The parties to a dispute who are unable to reach a settlement between
them, have three principal means available to them by which they may resolve
their dispute, namely: court proceedings, arbitration and some form of
Alternative Dispute Resolution, usually known by its acronym “ADR”.
Emphasis shall however be limited to ADR. The rule is that parties should
include the arbitration agreement in the original contract. However, even if an
arbitration agreement was not concluded in the main contract between the
parties, they may, nevertheless, both come to a conclusion that the dispute is of
such a kind (e.g. its existence causes embarrassment to both of them) that it
would best be resolved by arbitration.
1.2.1. Ways in which national courts may act in support of arbitration
National courts are frequently called upon to act in support of arbitration.
They may be asked to:
1) Assist in the appointment and removal of an arbitrator;
2) Issue an injunction protecting property in dispute;

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3) compel production of documents by a third party, or appearance of a witness
at a hearing;
4) Assist in the enforcement of an arbitral award.
It should be noted however that none of these acts involve a court making a final
decision on the merits of the dispute.
1.2.2. Alternative dispute resolution proper
ADR procedures take many forms; the most frequently encountered forms
are the following:
a) Negotiation
This is a method of settlement by which parties settle their dispute
themselves through consultations and exchange of views without the
participation of any third party. It is a means by which large majority of
international disputes are settled. However, the existence of active negotiation
does not preclude the resort to other settlement procedures, including judicial
settlement.
b) Mediation
To many, „mediation‟ and „conciliation‟ are synonymous, but this may not
be true as in a mediation, the mediator (who is appointed by agreement between
the parties) attempts to assist the parties to a dispute to negotiate a settlement.
Mediation is therefore a method of dispute settlement whereby the parties by
agreement appoint a third party to assist the parties to negotiate a settlement. He
may do so by discussing the issue separately with each of them, drawing
attention to the weaknesses and strength of each case and attempting to get the
negotiation process going. If the parties so wish, this may take place in joint
session or in a combination of separate and joint sessions. He does not provide
any opinion as to what he thinks would be fair to settle the dispute.
c) Conciliation
It is an active third party intervention to resolve disputes through the
provision of recommendation which the parties may accept or reject. It is similar

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to negotiation, but it is different in that the conciliator will take a view on what
he considers would be fair to settle the dispute. They may take or reject because
the recommendation is not binding.
d) Inquiry and fact finding
This method of settlement as its name suggest, does not involve the
investigation or application of the rule of law. The function of an inquiry is to
facilitate a solution of dispute by elucidating the facts by means of an impartial
investigation. It involves a third party, but the dispute may be settled by the
finding of the true facts by one party which is accepted by the other. It is defined
as the activity designed to obtain detail knowledge of the relevant facts of any
dispute or situation in order to maintain peace between parties.
1.3. The Arbitration agreement
The most usual form of arbitration agreement is the „arbitration clause‟,
which is inserted in the parties‟ contract at the outset of their business
relationship, i.e. “the parties‟ agreement to settle any disputes that arise in the
contract by arbitration”. However an arbitration agreement may be entered into
at any time subsequently and typically when the dispute arises between the
parties. According to the OHADA UA, parties may enter into an agreement even
if they have already commenced proceedings before a court. (Art 4 of the UA on
Arbitration Law).
Though the arbitration agreement is often encountered as one of a number
of clauses in a written contract, it is widely accepted that it is a separate
agreement and that it does not automatically terminate when the contract in
which it is embedded comes to an end. This is the concept of „autonomy‟,
„separability‟ of the arbitration clause. It can therefore be no surprise that the
law applicable to an arbitration agreement is different from that applicable to the
principal contract between the parties.
Article 3 of the UA provides that the arbitration agreement must be made
in writing or by any other means allowing its existence to be proven. The

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question therefore is whether oral agreement before witnesses who could attest
to that agreement is possible? It would be inadmissible as the UA requires a
copy of the arbitration agreement to be produced in enforcement proceedings in
the member states.
1.4. Arbitration Tribunals
Arbitration agreements will normally contain provisions as to the
composition or appointment of the tribunal as well as the proceedings.
According to Art 8 of the UA, the arbitral tribunal must be composed of either a
sole arbitrator or three arbitrators. The tribunal must be composed of odd
number of arbitrators. This is a mandatory provision, as the article goes further
to list a hierarchy of methods that must be followed for the appointment of an
additional arbitrator if the parties have appointed an even number of arbitrators
or if a previously appointed arbitrator can no longer sit on the tribunal for
whatever reason. The parties are free to determine the rules applicable to the
appointment, dismissal and replacement of arbitrators.
As regards appointments, if there are to be three arbitrators, each party is
to appoint one and those two arbitrator are to agree on a third arbitrator. On the
other hand, if there is to be a sole arbitrator, the parties are to agree on an
appointment. If there is a failure either by the parties or the arbitrators to agree
as required, or through a party‟s refusal to appoint an arbitrator, the appointment
of the arbitrator concerned will be made by the local court in the state where the
seat of the tribunal is located. This is to prevent a party from frustrating the
arbitration process by refusing to appoint its own arbitrator.
1.5. Arbitration Proceedings
Before the proceeding proper the competence of the tribunal to handle the
issue between the parties must be determined.
1.5.1. Competence in matters of arbitration
For an arbitration tribunal to be able to handle disputes between parties, it
must have the competence to do so. Competence of the arbitral tribunal is

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usually decided upon by the parties in their contractual agreement. A challenge
to jurisdiction may arise over the validity of the arbitration agreement and attack
the whole basis on which the tribunal purports to act. For example a challenge
may question the legality or proper execution of the agreement or accept a
waiver of the right to arbitrate or failure to observe requirements in the
underlying contract with respect to assignment or time limits. Or a challenge
may only concern the tribunal‟s jurisdiction over certain subject matter and
question whether some of the claims before the tribunal are included within the
scope of the arbitration agreement or whether the tribunal has gone beyond the
particular problem submitted to it for resolution.
Resolution of doubts over the arbitral jurisdiction is important, because it
determines whether or not the arbitration will go ahead. The legal question can
be simply put “is there an agreement to arbitrate this dispute”? Where this
dispute arises, the common law courts will be in the position to determine the
jurisdiction of the tribunal. An arbitration agreement usually take the form of a
clause in an underlying contract between the disputing parties, or less
frequently, a separate submission entered into when a dispute has arisen. In most
situations, without an arbitration agreement, there can be no valid arbitration;
neither the parties nor the courts can be expected to defer to a tribunal in respect
of matters that were never submitted to it.
Two principles provide a platform for the tribunal to deal with disputes
over arbitration jurisdiction. The first is “competence-competence”, which
confers on the tribunal jurisdiction to rule on its jurisdiction when the validity or
scope of the agreement to arbitrate is in doubt. As a consequence of the tribunal
having power to rule over its own jurisdiction, neither the parties nor the tribunal
is required to ask a court to resolve jurisdiction questions.
The second principle is “separability”, which treats the arbitration clause
as an autonomous agreement that survives the invalidity or termination of the

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main underlying contract, and requires arguments in jurisdiction challenges to
be addressed to facts and law relevant only to the validity of the clause.
1.5.2. The arbitration proceedings proper
Parties to an arbitration agreement must be treated on equal footing and
must be allowed to start their claims. The manner in which arbitration is
commenced varies depending on the relevant arbitral rules or laws applicable to
the arbitration. The following examples explain the various ways in which
arbitration may be commenced.
a) The UNCITRAL arbitration rules: by notice of arbitration given to the
other party with the arbitration commencing on the date the date the notice is
received by the party. The notice must include a proposal as to the number of
arbitrators.
b) The UNCITRAL Model law: request address to the other party.
TIME LIMITS
Time limit for bringing claims in arbitration may take two forms:
a) Contractual: these are limits contained in the parties‟ agreement. The relevant
period should be established in a properly drafted agreement.
b) Statutory: these are limits established in relevant legislations. The question
however is which legislation? Is it that of the country which the arbitration takes
place (the lex arbitri) or that of the country whose law is applicable to the
dispute (the lex causa).
If the parties have not agreed otherwise, the deadline of six months is laid
down for the award to be issued.
1.6. Arbitration awards and appeals
1.6.1. The award
Awards are those decisions of the tribunal which dispose of issues
between the parties and which will be given recognition and effect by the courts.
The parties are expected to abide by the decisions of the awards. The UA lays
down formal requirements that must be included in the award, such as the name

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of the parties and the arbitrators. The award must indicate the reasoning upon
which it is based.
[Link]. TYPES OF AWARDS
The principal types of awards are the following:
i) Interim/interlocutory awards: These are awards which are made in the
course of the arbitration and which do not dispose of all the issues between the
parties. They include awards dealing with challenges to the jurisdiction or
procedural matters and not the issue.
ii) Partial awards: These are awards which deal with only a part of the issues
before the tribunal. They are very similar to interim awards. However their
difference is that partial awards are those awards which require a payment to be
made by one party to another whether on account of damages to be assessed, or
on disposal of a part.
iii) Final awards: They are those awards which dispose of all the issues in an
arbitration (or all the remaining issues, if there has already been an interim
award) and which concludes the function of the arbitral tribunal.
iv) Consent awards: They are those made with the consent of the parties
following a settlement of their dispute.
v) Default awards: It is an award made in proceedings in which one of the
parties (usually the defendant) has refused to participate either in their entirety
or for a part of them.
[Link]. Remedies Available in Arbitration
There no universal rules establishing the remedies which are available in
an international arbitration. However, available remedies include:
a) Order for payment of money: This is the most common remedy found in
awards. Except with the consent of the parties, an arbitrator will not generally
make an award directing payment of an accrued dept or damages by way of
instalments.

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b) Declaration: Parties, especially those in a continuing relationship, may which
to have their legal rights and obligations clearly established in an award.
c) Specific performance: It is an order included in the award, requiring the
defendant (opponent) to perform the obligations which are established in the
declaration. The difficulty here is that such an order will depend on the courts
for enforcement.
d) Injunction: Under the law of many countries, the arbitral tribunal has the
power to institute the relief of injunction. It is an order instructing a party to do
or not to do something. There are two types of injunctions, mandatory and
prohibitory injunctions. The former (mandatory), being an order to do something
and the latter (prohibitory), being an order not to do something.
1.6.2. Enforcement of an arbitral award and appeal
In order to be enforceable, the award must be submitted to the national
court for an enforcement order. The court order enforcing an award is called
“exequatur”. Any of the parties not satisfied with the award or even the
exequatur may appeal the decision contained in the award or the court order
(exequatur). However, in certain circumstances, a party may apply to the court
to set aside or annul the award. Appeals against arbitration awards are directed
to the court of appeal. The appeal may be filed at any time between the issuance
of the award and one month following service of the award after it has been
declared enforceable by court order. Unless the arbitral tribunal has ordered
provisional execution of the award, an application to set aside the award
suspends enforcement.
1.6.3 CIRCUMSTANCES UNDER WHICH AN AWARD MAY BE SET
ASIDE
An application to set aside an award is admissible only if it is based on
one or more of the following grounds:
-there was no arbitration agreement, or the arbitration agreement was null and
void or had expired by the time the tribunal gave its award;

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-the arbitral tribunal was improperly constituted;
-the arbitral tribunal failed to comply with its terms of reference;
-there was a lack of due process in the proceedings;
-the award does not contain reasoning or
-the arbitral tribunal has violated a rule of international public policy of the
OHADA Member States.
CHAPTER TWO:
INTELLECTUAL PROPERTY LAW
Intellectual property law is that branch of law which protect applications
of ideas and information that are of commercial value. The subject matter is
gaining grounds, to the advanced industrial countries in particular, as the fund of
exploitable ideas becomes more sophisticated and as their hopes for a successful
economic future come to depend increasingly upon their superior corpus of new
knowledge.
Intellectual property is a generic term encompassing a variety of sub
notions such as patent, trademarks, copyrights etc. All these are legal
contraptions developed to protect the product of the intellect or inventions from
being unjustly exploited by persons who are not their authors. Intellectual
property is divided into two categories: industrial property which includes
inventions, industrial designs, integrated circuits, trademarks and geographic
indications and copyright which covers literary works such as novels, poems and
plays, films, musical works: artistic works such as drawings, painting,
photographs and sculptures, and architectural.
2.1. World Intellectual Property Organisation (WIPO) and other
Conventions Dealing with Intellectual Property (IP)
IP is not necessarily exploited at the national level; it is in fact exploited at
a global level. For instance, video cassettes and CDs which contains materials
protected by copyright are marketed in an increasing number of countries.
2.1.1. The WIPO

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 The idea of a WIPO had its origin in the 1883 Paris Convention for the
protection of industrial property and 1886 Berne Convention for the protection
of literary and artistic works. The convention establishing WIPO was signed in
1967 and entered into force in 1970. WIPO became a specialised agency of the
UN on 17 December 1974.
The main objectives of WIPO are, to maintain and increase IP, throughout
the world in order to favour industrial and cultural development by stimulating
creative activities and facilitating the transfer of technology and the
dissemination of literal and artistic works.
2.1.2. The Paris Convention
In the area of patent, the minimum international rules are found in the
Paris Convention for the Protection of Industrial Property which was signed in
1883. It has been revised many times with the most recent being in 1964. The
most important provisions of the convention are: “the principle of national
treatment” and that of “Unionist treatment”. The former, is to the effect that no
distinction is made between treatment of domestic citizens and that of foreign
nationals.
2.1.3. The Universal Copyright Convention
The UCC is another convention in the area of copyrights. This convention
was entered into by 36 member states in 1952 in Geneva. It was promoted by
UNESCO, but lost most of its importance when it most of their influential
member, the USA, joint the Berne convention. Unlike the Berne Convention, it
provides protection only for 25 years.
2.1.4. The African IP Organisation (OAPI)
The OAPI is the successor and continuation of the African Malagashie
intellectual property office which was set up by virtue of an agreement signed in
Libreville on September 13, 1964 between 12 African states. Based on a
common system of obtaining and maintaining industrial property rights on
patent, trademarks and industrial designs the office created a central body and

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that will act for each member state as a specialised national service. Later on in
December 31st 1976, the board decided to call the body African Intellectual
Property Organisation.
Duties of the OAPI
The OAPI carries out inter alia the following tasks entrusted to it by the
Bangui agreement.
- Reception and centralisation of deposits
- Registration and delivery of titles
- Administrative and regularisation of received application for declaration
- Publications: it is bound to bring out two compulsory publications annually,
namely, official bulletin and patent booklets
- keeping of special registers
- Dissemination of documents on information on patent and copyrights.
- Collection of fees.
It should be noted that the head quarter of the OAPI is located in Yaoundé,
Cameroon.
2.1.5. The Stockholm Convention
At the international level, the developing countries advocated major
changes to the Berne Convention during the 1960s. They requested to be
allowed certain translations and publication of certain works if these are note
otherwise made available. This saw the birth of the Stockholm Convention on
July 14, 1967 establishing the WIPO.
2.1.6. The Berne Convention
The most important international convention on copyright is the Berne
Convention for the Protection of literary and artistic works. This convention is
to copyright what Paris convention is to industrial property right. The
convention was signed in 1886 by 10 states. Today, the convention has 117
member states. This convention was revised in 1908, 1928, 1948 and 1964. This
convention enunciated three basic principles as far as copyright are concerned.

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 The first was the principle of “national treatment”, by which authors enjoy
the same rights as nationals in any of the states which are members of the union.
The second was the principle of “automatic protection”, by which no
formalities are required for the protection of these rights.
The third was the principle of “independent protection”, by which
protection of the enjoyment of these rights is independent of the existence of
their protection in the state of origin.
2.2. PATENT LAW
2.2.1. Introduction
Invention: invention means an idea that permits a specific problem in the
field of technology to be solved in practice (Art 1 of Bangui Agreement).
Patent: A patent is a title granted for the protection of an invention. Simply put,
“a patent is a right granted by the state to an inventor to exclude others from
commercially exploiting the invention for a limited period, in return for the
disclosure of the invention so that others may gain the benefit of the invention.
An invention may consist or relate to a product or process or use thereof
2.2.2. Conditions for patentability
An invention must meet several criteria for it to be eligible for patent
protection. These include Novelty, inventive step, industrial applicability, non-
patentable subject matter.
a) Novelty
This is an important criterion for patentability. It should be emphasised
however that, novelty is not something which can be proved; only its absence
can be proved. An invention shall be new if it is not anticipated by a “prior act”.
“Prior Act” is, in general, all the knowledge that existed prior to the relevant
filing or priority date of the patent application.
b) Inventive Step (Non Obviousness)
An invention shall be regarded as resulting from an inventive step if,
having regard to the prior act, it would not have been obvious to any person

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having ordinary knowledge and skill in the art on the filing date of the patent
application or, if priority has been claimed, on the priority date validly claimed
for it. The expression “ordinary knowledge” (skill) is intended to exclude the
“best” expert that can be found. It is intended that the person be limited to one
having the average level of skill reached in the field in the country concerned.
c) Industrial Applicability
An invention, in order to be patentable must be of a kind which can be
applied for practical purposes, not be purely theoretical. If the invention is
intended to be a product or part of a product, it should be possible to make that
product. The term industrial shall cover handicraft, agriculture, fishery and
services.
d) Non Patentable subject matter
Patent shall not be granted for the following:
- Inventions, the exploitation for which is contrary to public policy or morality;
- Discoveries, scientific theories and mathematical methods;
- Computer programs;
-Mere presentations of information;
- Methods for the treatment of human or animal body by surgery or therapy,
including diagnostic methods.
2.2.3. Drafting and filing a patent application
a) Identification of the invention: The first task in drafting a patent application
is the identification of the invention. This involves:
- summarising all the necessary features which in combination solve a particular
technical problem; and
- An examination of this combination to determine whether it fulfils the
conditions for patentability.
b) Practical aspects of drafting patent: Drafting practices and requirements
differ from country to country. However there are basically three requirements
to comply with;

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 First, the application must relate to one invention only or to a group of
inventions so linked so as to form a single general inventive concept;
Secondly, the description should disclose in a manner sufficiently clear
and complete for the invention to be evaluated and to be carried out by a person
having ordinary knowledge in the art;
Finally, for the application to proceed it must contain claims which
determine the scope of application.
2.2.4. Infringement
i) Exclusive right of the patent owner: Generally speaking, a patentee acquires
the right, enforceable at law to decide who shall and who shall not exploit his
patented invention. He maintains this right for the term of the patent provided he
pays maintenance fee.
ii) Enforcement of rights: Initiative for enforcing a patent rest exclusively with
the patent owner. It is he who is responsible for detecting infringements and for
bringing the to the infringer‟s attention.
2.2.5. License contracts
As provided by Article 36 of the Bangui agreement, the owner of a patent,
may, by contract grant to a person, whether natural or legal entity, a license
enabling him to exploit the patented invention. The duration of the license may
not be longer than that of the patent. The license contract shall be drawn up in
writing and signed by the parties. The contract shall be entered in a special
register of patents.
Non Voluntary Licenses or Compulsory Licenses
Licenses that are granted by the owner of the patent are considered
“voluntary” and are distinguished from compulsory or non-voluntary licenses.
Where a voluntary license is granted, the beneficiary has the right to perform
acts covered by the exclusive right under an authorisation from the owner of the
patent. This authorisation in a contract is called a license contract concluded
between the owner of the patent for invention and the beneficiary of the license.

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 A non voluntary license is a license granted by the government to an
individual authorising him to exploit a particular patent for invention against the
will of the owner of the patent, either due to abuse of patent or for public
interest.
Penalties for violation of patent
As per Article 58 of the Bangui agreement, any violation of the rights of a
patentee by the use of means forming the subject matter of his patent, by the
receiving or sale or display for sale or by the introduction into the national
territory of one of the member states or more, objects shall constitute the offence
of infringement. Such offence shall be punished with a fine of 1,000,000 to
3,000,000CFAF without prejudice to the right to compensation.
2.3. TRADEMARK AND SERVICE MARK LAW
2.3.1. Introduction
A trademark is any mark that individualises the goods of a given
enterprise and distinguishes them from the goods of its competitors. In order to
individualise a product for the owner, the trademark must indicate its source.
This does not mean that it must inform the consumer of the actual person who
has manufactured the product or even the one who is trading it.
According to Art 2(1) of Annex III of the Bangui Agreement, a trademark
or service mark is “any visible sign used or intended to be used and capable of
distinguishing the goods or services of any enterprise, including in particular
surnames by themselves or in a product or its packaging, labels, wrappers,
emblems, prints, stamps, seals, vignettes, borders, combinations, or arrangement
of colours, drawings, reliefs, letters, numbers, devices and pseudonyms.
Service marks
In modern trade, consumers are confronted not only with a vast choice of
goods of all kinds, but also with an increasing variety of services. There is also
the need for signs that enables the consumers to distinguish between the

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different services such as insurance companies, car rental firms, airlines etc.
these signs are called service marks.
Collective marks
This is a mark owned by an association which itself does not use the
collective mark, but whose members may use the collective mark. Typically, the
association has been founded in order to ensure the compliance with certain
quality standards by its members.
2.3.2. Signs which may serve as trademarks
If we adhere strictly to the principle that the sign must serve to distinguish
the goods of a given enterprise from those of others, the following signs can be
imagined:
-Words: this category includes company names, surnames, forenames,
geographical names and any other words or set of words whether invented or not
and slogan;
- Letters and numerals: examples are one or more letters, one or more numerals
or any combination thereof;
- Devices: this category includes fancy devices, drawings, drawings and symbol
containers;
- Coloured marks: this includes words devices and any combinations thereof in
colour;
- Three-dimensional signs: a typical category of three dimensional sign is the
shape of goods and their packaging. However, other three-dimensional signs like
such as the three pointed Mercedes star can serve as a mark.
- Audible signs (sound marks): two typical category of sound marks can be
distinguished, namely those that can be transcribed in musical notes and others
(eg the cry of an animal)
- Olfactory marks (smell marks): imagine that a company sells its goods (eg
writing paper) with a certain fragrance and consumer becomes accustomed to be
recognising the goods by their smell.

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Duration of rights, removal from register and penalties
Duration of rights
According to Art 19 annex III, the registration of a mark shall be valid for
only 10 years from the filing date of the application for registration. However,
the ownership of a mark may be preserved indefinitely through successive
renewals of the registration which may be effected every after 10 years.
Removal of the trademark from the register
A trademark may be cancelled from the register for the following reasons:
- Removal for failure to renew;
- Removal at the request of the registered owner;
- Removal for failure to use; and
- Removal as a result of lack of distinctiveness.
Counterfeiting
It is the imitation of a product. A counterfeit is not only identical; it also
gives the impression of being the genuine product. Eg, the false PUMA,
REEBOK sports shoes, the false LACOSTE sports shirts.
Penalties
The following persons shall be punished by a fine of 1,000,000 to
6,000,000FCFA and with imprisonment of 3months to 2 years:
- Those who fraudulently affix on their goods a mark belonging to another;
- Those who knowingly sell or offer for sale one or more goods bearing a
counterfeit or fraudulent affixed mark;
- Those that make a fraudulent imitation of a mark in such a way as to mislead
the buyer.
Trade names: Trade names look similar to trademarks and service marks.
Unlike trademarks and service marks, trade names distinguish one enterprise
from the others quite independently of the goods and services that the enterprise
markets or renders.
2.3.6. Franchising

20
 Franchising may be defined as an arrangement whereby one person (the
franchisor), who has developed a system for conducting a particular business,
allows another person (the franchisee), to use the system in accordance with the
prescriptions of the franchisor in exchange for compensation.
Factors that characterise a franchise relationship
a) A license to use the system: In return for a fixed payment, the franchisee is
allowed to use the franchise system. Where the franchise system is to be
exploited at a particular location, such as at a franchise restaurant or shop, that
location is referred to as a franchise unit.
b) An on-going interactive relationship.
c) The franchisor’s right to prescribe the manner of operating the business:
Such directives may include quality control, protection of the system, territorial
restrictions, operational details etc.
Types of franchise
1. Unit franchising: It is a franchising that involves direct relations between the
franchisor and the franchisee, whereby the franchisor enters into a franchise
agreement directly with the franchisee. Where the franchisor and franchisee are
in the same country, unit franchising is the most commonly used.
2. Territorial franchising: These are franchise agreements which aim at
covering a substantial territory or geographical area by setting up, a number of
units, shops, over the agreed period of time.
2.3.7 PALMING-OFF
This is the misrepresentation of someone else‟s goods or services as one‟s own
in business. It is a tort that is actionable in law. This tort is known as palming-
off in the US, passing-off in the British Isles and most of the Commonwealth
and unfair competition elsewhere. It is usually committed by imitating the
appearance of the plaintiff‟s goods or by selling under the same or a similar
name. If the name used by the plaintiff merely describes his goods, then
generally no action will lie. However, it is possible for a name that was

21
originally only descriptive to come to signify goods produced by the plaintiff. It
is also possible for a word to lose its trade meaning and become merely
descriptive. The tort may also be committed by applying the name of the locality
in which the plaintiff produces goods to the defendant‟s goods. It should be
noted, a person may usually carry on business under his own name unless he
does so fraudulently. But he must not mark his goods with a name (even his own
name) if this will have the effect of passing-off those goods as goods of another.
Finally it may also be committed by using another person‟s name or trade name.
2.3.8. Character merchandising
The notion of character
Broadly speaking, the term “character” carries both fictional human
beings ( for example, Tarzan or James Bond) or non human characters (e.g.
Donald Duck or Bugs Bunny) and real persons (for example, famous
personalities in a film or music business, sportsman. In the context of
merchandising of characters, it is mainly the essential personality features easily
recognised by the public at large which will be relevant. Those personality
features are, for example, the name, image, appearance or voice of the character
or symbols permitting the recognition of such character.
Character merchandising can be defined as “the adaptation or secondary
exploitation, by a creator of a fictional character or by a real person of the
essential personality features (such as name, image or appearance) of the
character in relation to goods or services with a view to creating in prospective
customers a desire to acquire those goods because of the customer‟s affinity
with the character.
Sources of primary use of character
The main sources of fictional characters are
- Literary works (such as Pinocchio by Collodi or Tarzan by E.R Burroughs)
- Strip cartoons (such as Tintin by Herge or Asterix by Uderzo and Goscinny)
- Artistic works.

22
 The following examples of character merchandising can be given:
- A toy is the three-dimensional character Mickey Mouse;
- A T-shirt bears the name or image of fictional character;
- The label attached to a perfume bottle bears the name of an actor or actress;
- An advertising movie campaign for a drink shows a pop star drinking it.
Types of character merchandising
i. Merchandising of fictional character: It involves the use of essential
personality features (name, image etc) of fictional characters in the marketing
and or advertising of goods and services.
ii. Personality merchandising: this more recent form of merchandising
involves the use of essential attributes (image, name, voice and personality
features) of real persons (in other words, the true identity of an individual) in the
marketing and or advertising of goods and services.
iii. Image merchandising: It involves the use of fictional films or television
characters played by real actors in the marketing and advertising of goods and
services.
iv. Industrial design: It refers to the right granted in many countries pursuant to
a registration system to protect the original ornamental or non-functional
features of an industrial article or product that results from design activity.
2.4 COPYRIGHT AND RELATED RIGHTS
2.4.1. Introduction
Copyright law is a branch of law that deals with the rights of intellectual
creators. It deals with particular forms of creativity. It does not only deal with
printed publications but also with such matters as sound and television
broadcasting, films for public exhibition in cinemas etc. copyright can therefore
be defined as “the protection granted to the author of any literary and artistic
work. This area of activity in Cameroon is regulated by Law No 2000/11 of 19
December 2000 on Copyright and Neighbouring rights.

23
 Copyright protection is one of the means of promoting, enriching and
disseminating the national cultural heritage. A country‟s development depends
to a very great extent on the creativity of its people, and encouragement of
individual creativity is a condition sine qua non for progress. Legislation could
provide for the protection not only of the creators of intellectual works but also
of the auxiliaries that help in the dissemination of such works, in respect of their
own rights. Rights related to copyright include those of performing artists in
their performances, producers of phonograms, and those of broadcasters in their
radio and television programs. Thus we can say that copyright seeks to protect
all original and artistic creations (novels photographic works, drawings, musical
compositions etc).
2.4.2. Subject matter of copyright protection
The subject matter of copyright protection includes every production in
the literary, scientific and artistic domain whatever the mode or form of
expression for a work to enjoy this protection, it must be an original creation. To
be protected by copyright law, an author‟s work must originate from him; they
must have their origin in the labour of the author. Practically, all national
copyright laws provide for the protection of the following types of works:
Literary works: Novels, short stories, poems, dramatic works and any other
writings, irrespective of their content (fiction and non-fiction), length, purpose
(amusement, advertisement, education) form (handwriting, typed, printed; book,
pamphlet, newspaper, magazine etc) whether published or unpublished.
Musical works: Whether serious or light; songs, choruses, musicals
Artistic works: Whether two-dimensional (drawings, paintings) or three-
dimensional (sculptures, architectural works) irrespective content and
destination.
2.4.3. Rights comprised in copyright
The owner of copyright in a protected work as he wishes but not without
regards to the legally recognised rights and interest of others and may exclude

24
others from using it without his authorisation. Rights comprised in copyright are
the economic and moral rights of the author.
a) Moral rights
The original authors of works protected by copyright also have “moral
rights” in addition to their exclusive rights of an economic character. The moral
right of the author includes:
- The right to claim authorship or the work (i.e. right to be footnoted whenever
his work is used);
- The right to object to any distortions, or other modification of or other
derogatory action in relation to the work which will be prejudicial to the
author‟s honour or reputation. These rights which are generally known as the
moral rights of the author are required to be independent of the usual economic
rights and to remain with the author even after he has transferred his economic
rights.
b) Economic rights: This includes the right to monetary earnings from the
exploitation of his work or creation.
Duration of copyright: According to the 2000 Law on copyright, the duration
of protection given to the owner of copyright is the lifetime of the author and 20
years after his death.
2.4.4. Defences to copyright infringement
Copyright restrictions will be stifling if there were not some latitude in the
application to meet special cases. They may be grouped under the following
headings
1. Fair dealing:
Fair dealing with a literal, dramatic, musical or artistic work or a
published edition does not infringe copyright if it is for the purpose of research
or private study. But the problem is what is fair dealing? A typical situation
involves a researcher or a student who photocopy materials from learned
periodicals, various guidelines have been produced as a very rough guide

25
making a single article from anyone issue of a journal is acceptable and
probably a single chapter from a book.
2. Educational news
It is a truism that communication works already made available to the
public shall be lawful if they are done free of charge strictly for educational or
school purpose.
3. Library and archives
The other group of permitted acts concerns prescribed libraries provided
that they are non-profit making.
4. Public administration
Copyright is not infringed by anything done for the purpose of
parliamentary or judicial proceedings.
5. Authorisation and consent of the owner
Copyright in a work is not infringed if the owner of the copyright in the
work authorised or consented to the allegedly infringed act.

CHAPTER THREE:
INSURANCE LAW
3.1. INTRODUCTION
Every activity in life involves risks. A producer will be afraid to produce
because he is scared that the goods may be destroyed or the industry destroyed
either by the risk of fire, flood, storm etc. the same fate is contemplated upon by
a businessman. It is for these reasons that insurance companies have been
created, with the objective to give financial security and protection to the
insured for any future uncertainties.
In financial sense, insurance is defined as “a social device in which a
group of individuals (insured) transfer risk to another party (insurer), in order to
combine loss experienced which permits statistical prediction of losses and

26
provides for payment of losses from funds contributed (premium) by all
members who transferred risk”.
In the legal sense, “insurance is a contract by which one party (insurer) in
consideration of price paid to him proportionate to risk (premium), provides
security to the other party (insured) that he shall not suffer loss, damage or
prejudice by the happening of a certain specified event”.
Insurance activities in Cameroon are regulated by the Conference
Interafricaine des Marchés d‟Assurances (CIMA), translated in English as Inter-
African Conference on Insurance Markets, established by the Treaty signed in
Yaoundé, on July 10, 1992. Signatories to this treaty include: Benin, Burkina
Faso, Cameroon, Central African Republic, Comoros, Congo, Ivory Coast,
Gabon, Equatorial Guinea, Guinea Bissau, Mali, Niger, Senegal, Chad and
Togo.
Importance of Insurance to the Country
1. It encourages investment since many people who fear risk will take out
policies to protect themselves against any insurable eventuality.
2. Earnings from insurance constitutes a substantial portion of the country‟s
foreign exchange.
3. It helps to reduce the social cost of some family members obligations eg
contribution to the National Social Insurance Fund (CNPS)
4. It guarantees workers security against industrial accidents and occupational
diseases
5. Contributes to infrastructural development and provides an avenue for the
employment of Cameroonians
6. It encourages savings in the country especially life insurance
8. Insurance reduces the cost of social services. E.g. Providing National
insurance annuities take the place of government financial assistance to the very
poor.
3.2. FUNDAMENTAL PRINCIPLES OF INSURANCE

27
 The main objective of every insurance contract is to give security and
protection to the insured from any future uncertainties. The insured must never
try to misuse the safe financial cover. Seeking profit opportunities by reporting
false occurrences violates the terms and conditions of an insurance contract. It is
also a duty of the insurer to accept and approve all genuine insurance claims
made, as early as possible without any future delays.
1. The principle of Uberimae Fidei (Utmost good faith)
- Both the parties i.e. the insured and the insurer should act in good faith towards
each other
- The insured must provide the insurer complete, correct and clear information
on the subject matter.
- The insurer must provide the insured complete, correct and clear information
regarding terms and conditions of the contract
- This principle is applicable to all contracts of insurance, i.e. life, fire, marine
etc.
The principle of Uberimae fidei or utmost good faith is a very basic and
first primary principle of insurance. According to this principle, the insurance
contract must be signed by both parties (insurer and insured) in an absolute good
faith or belief or trust. The person getting insured must willingly disclose and
surrender to the insurer, his complete true information regarding the subject
matter of insurance. The insurer‟s liability gets void (ie legally revoked or
cancelled) if any facts about the subject matter of insurance are either omitted,
hidden, falsified or presented in a misrepresented manner by the insured.
2. Principle of insurable interest
- The insured must have insurable interest in the subject matter of the insurance
- In life insurance, it refers to the life insured
- In marine insurance, it is enough if the insurable interest exists only at the time
of occurrence of the loss.

28
- In fire and general insurance, it must be present at the time of the occurrence of
loss
- It is applicable to all kinds of insurance
This principle states that the person getting insured must have insurable
interest in the object if insurance. A person has an insurable interest when the
physical existence of the insured object gives him some gain, but its
nonexistence will give him a loss. In simple words, the insured person must
suffer some financial loss by the damage of the insured object. For example, the
owner of a taxi has insurable interest in the taxi because he is getting income
from it. But, if he sells it, he will not have an insurable interest left in the taxi. A
man cannot insure his neighbour‟s house against fire destroying it, rather, a man
may insure his wife‟s life against any damage. From the above examples, we
can say that ownership plays a very important role in evaluating insurable
interest. Every person has an insurable interest in his own life. A merchant has
insurable interest in his business of trading. Similarly, a creditor has insurable
interest in his debtor‟s life.
3. The principle of indemnity
- Indemnity means a guarantee or assurance to put the insured in the same
position in which he was immediately prior to the happening of the uncertain
event. The insurer undertakes to make good the loss.
- It is applicable to fire, marine and other general insurance except life.
-Under this, the insurer agrees to compensate the insured for the actual loss
suffered.
According to the principle of indemnity, an insurance contract is signed
only for getting protection against unpredicted financial losses arising due to
future uncertainties. In an insurance contract, the amount of compensation paid
is in proportion to the incurred losses. The amount of compensation is limited to
the amount assured or the actual losses, whichever is less. The compensation

29
must not be less or more than the actual damage. It refers to putting the insured
in the same position in which he was before the event that caused him the loss.
Compensation is not paid if the specific loss does not happen due to a
particular reason during a specific time period. Thus insurance is only for giving
protection against losses and not for making profit. However, in case of life
insurance, the principle does not apply because the value of human life can not
be measured in terms of money.
4. Principle of Contribution
This principle is a corollary of the principle of indemnity. It applies to all
contracts of indemnity, if the insured has taken out more than one policy on the
subject matter. According to this principle, the insured can claim the
compensation only to the extent of actual loss either from all insurers or from
only one insurer. If one insurer pays full compensation, then that insurer can
claim proportionate contribution from the other insurers.
For example, Mr Tamfu insures his property worth 1,00,000frs with two
insurers “ Zennith Ltd” for 90,000frs and “Metlife Ltd” for 60,000frs. If Mr
Tamfu‟s actual property destroyed is worth 60,000frs, then Mr Tamfu can claim
the full loss of 60,000frs either from Zennith or Metlife Ltd, or he can claim
36,000frs from Zennith and 24,000frs from Metlife.
5. The principle of subrogation
According to the principle of subrogation, when the insured is
compensated for the losses due to damage to his insured property, the ownership
right of such property, shift to the insurer. This principle is applicable only when
the damaged property has any value after the event that caused the damage. The
insurer can benefit out of subrogation rights only to the extent of the amount he
has paid to the insured as compensation. The principle is applicable to all
contracts of indemnity. For example, Mr Paul insures his house for £1,000,000.
The house is totally destroyed by the negligence of his neighbour, Mr Tom. The
insurance company shall settle the claim of Mr Paul for £1,000,000. At the same

30
time, it can file a law suit against Mr Tom for £1,200,000, the market value of
the house. If the insurance company wins the case and collects £1,200,000 from
Mr Tom, the insurance company will retain £1,000,000 (which it had already
paid to Mr Paul) plus other expenses such as court fees. The balance amount, if
any will be given to Mr Paul the ensured.
6. The principle of loss minimisation
This principle is to the effect that the insured has the duty to take all
possible steps to minimise the loss to the insured property on the happening of
uncertain event. The insured must always try his level best to minimise the loss
of his insured property, in case of uncertain event like a fire out break, or blast
etc. the insured must take all possible measures and necessary measures to
control and reduce the losses in such a scenario. The insured must not neglect
and behave irresponsibly during the event just because the property is insured.
For example, assume, Peter‟s house is set on fire due to an electrical
short-circuit. In this tragic scenario, Peter must try his level best to stop the fire
by all possible means, like first calling the nearest fire department office (fire
brigade), asking neighbours for emergency fire extinguishers. He must not
remain inactive and watch his house burning hoping “why should I worry? I
have insured my house.
7. The principle of Causa Proxima (Proximate or nearest cause)
- The loss of insured property can be caused by more than one cause (risk) in
succession to another.
- The property may be insured against some risk and not some cause and not
against all causes
- In such an instance, the proximate cause or nearest cause of loss is to be found
out
- If the proximate cause is the one which is insured against, the insurance
company is bound to pay the compensation and vice versa.

31
Indemnity or compensation shall be paid only if the insured property was
destroyed by the risk against which the insurance was taken. Causa proxima,
translated in English as proximate or nearest cause means when a loss is caused
by more than one causes, the proximate or nearest or closest cause should be
taken into consideration to decide the liability of the insurer and not the remote
(farest) cause.
3.3. RISKS AND INSURANCE AS A POOL OF RISKS
3.3.1. RISKS
As said earlier, all economic activities involve an element of risk. Indeed,
there is no business venture which does not involve risk taking. A student who
decides to become a lawyer takes a risk in that, if there are new regulations
which restrict his practicing, he will remain unemployed. The risks may be
divided into insurable and non-insurable risks.
Insurable risks are all risks whose occurrence in a given period can be
calculated based on past experience. Only such risks are usually covered by
insurance companies since they are in a position to fix a premium, which has to
be paid by the insured. These risks include: fire, theft, accident, damage, fidelity
guarantee, consequential loss, employer‟s liability, motor insurance, life etc.
Non insurable risks on the other hand, are all risks which cannot be
calculated. Their occurrence is unpredictable and as such, it will be difficult to
pay a premium which has to be paid by the insured. These risks may be guarded
by the entrepreneur himself. They include:
Changes in demand due to change in tastes and fashion, poor management,
changes in the price of raw materials, changes in climatic conditions, cost of
labour etc.
3.3.2. INSURANCE AS A POOL OF RISKS
Insurance is the pooling of risk by those who belong to a similar situation
in life. To protect themselves against certain risks, contribute towards a pool
from which it can restore the unfortunate among them to their former situation.

32
The principle is based on the fortunate helping the unfortunate. It is different
from other situations whereby it is the unfortunate that help the fortunate such as
gambling.
It may so happen that the insurance company wants to relief itself from
taking total responsibility for compensating the insured in the event of loss.
When this happens, the insurance company registers with another company in a
policy known as “reinsurance”.
Reinsurance is a contract made between an insurance company and a third party
to protect the insurance company from losses. The contract provide for the third
party to pay for the loss sustained by the insurance company when the company
makes a payment on the original contract.
3.4. HOW AN INSURANCE AGREEMENT IS UNDERTAKEN
An insurance policy is a document that shows evidence of an agreement
between the insurer and the insured. An individual taking out an insurance
policy against any insurable risk, will contact an insurance broker. The broker
will arrange for the individual to complete a proposal form issued by the insurer
(the insurance company). The proposal form is a questionnaire prepared by the
insurer to facilitate his work and assist the insured in his attempt to disclose all
facts, which will enable the insurer to determine the premium to be paid. In the
absence of an insurance broker, the insured will contact the insurance house
himself. There, a similar process will occur. When the questionnaire is
completed and signed by the insured, the form is then handed to an expert called
“Actuary” who will calculate the premium from statistical information for loss
incurred.
In practice, the sum to be paid in most cases is already predetermined for
certain risks. For example, cars valued at 1 million FCFA may be insured for
60,000FCFA for third party, fire and theft. The amount to be paid as premium
depends on a number of factors. In certain insurance, the risk content and the
safety measures taken will influence the premium; in others, age of the person

33
wishing to take out the policy will be considered whether it deals with large
sums or not. When the premium has been paid by the insured, the insurer issues
him a cover note to serve as a temporary protection while the policy is being
written up.
Later on, insurance company will forward to the insured an insurance
policy (the contract of insurance). This policy binds the insurer to restore the
insured to his former position provided he has not breached any special
conditions accompanying the policy. Special clauses, if added, are often referred
to as “warrantees”. This may warrant the insured to do certain things in order to
minimise the risk. For instance, an insurance cover against car theft may warrant
that the car must always be packed at night in a locked up garage. If the car is
stolen on the playground in the compound, then the special conditions have been
violated and hence the insurer cannot be bound to honour his pledge.
3.5. INSURANCE AGENTS AND BROKER (INTERMEDIARIES OF
INSURANCE)
INSURANCE BROKER
An insurance broker is an independent insurance agent who works with
many insurance companies to find the very best available policies for his/her
clients. While an insurance broker is different from the typical agent, the two are
otherwise similar. Both, structure policies, settle claims and usually work on a
commission basis. Some insurance brokers may specialise in one specific type
of insurance or deal in many different types including health, life, auto, home
and other specialised varieties of insurance. In most countries, both the agent
and the insurance broker must be licensed after haven passed an insurance exam.
It is worth noting that a Degree is not a requirement for someone who wants to
become an insurance broker. However, taking college courses that are related to
the insurance field may be good preparation for the career.
INSURANCE AGENT

34
 They are insurance professionals that serve as an intermediary between
the insurance company and the insured. As a broad statement of law, agents
liability to customers are administrative, i.e., agents are only responsible for the
timely and accurate processing of forms, premiums and paper work. Insurance
agents may be captive or Independent
a) Captive agent: This is an agent who works for only one company and is a
captive of the company. He sells policies only for that insurer.
b) Independent Agents: He is one who works as an agent for a variety of
different insurers.
3.6. COMMENCING AN INSURANCE CLAIM
There are a number of procedures that must be followed in order to be
able to establish a claim in insurance. It should however be noted that there are
standard procedures relating to the particular type of insurance policy. For all
other insurance except life insurance, it must be established that loss has be
suffered by the insured and it has been caused by a particular risk insured
against. That is, there must be that causal link. The damage must also be
assessed in order to determine the amount of compensation. The assessment of
the damage suffered is based on the market value of the damaged property at the
time of damage.
PROCEDURAL STAGES
Example: Commencing an auto insurance claim
To start an auto accident insurance claim for instance, five steps should be
followed;
1. Calling the insurance company
The victim of the damage (insured) has to call the insurer or insurance
company which he intends to collect money from and start a property damage
claim. The victim can file this claim under his own collision coverage or against
another‟s liability insurance. At this juncture, a compensation claim has been
started and a claim number will be given.

35
2. Collection of Evidence
If the insured brings the claim, files an auto-accident insurance claim
against another driver‟s insurance company, the extent of fault of the other
driver in causing the car crash must be proven. This can be done either by
having pictures of the car accident scene, checking the car accident report
established by the police and getting witness statement. The importance here is
that the amount of compensation given depends on the amount of blame
assigned on the other driver. If we assumed for example that damages are worth
600000frs, after assessing the evidence collected, the insurance company
decides that their insured was 80% at fault and the victim 20% at fault for the
accident, the outcome would be that the insurance claim will be reduced by 20%
to 480000frs.
3. Assessment of the repair Costs (Estimates)
The next thing to do is the vehicle to be taking to a local repair shop to get
list of estimated repairs. The car should be returned to its original condition,
using the same quality parts. If there is any need for re-painting, then it must
also be included. The repair shop should be that which is familiar with that type
of vehicle. This will give an accurate estimate plus the cost of labour. A copy of
this detail estimate is then forwarded to the insurance company with list of
replacement parts and costs of labour. If the car was completely destroyed such
that the cost of repairs is more than the cost of the vehicle, the insurance
company will pay for the car‟s actual cash value.
4. Discuss Damage with Insurance Claim Adjuster
When the estimate gets to the insurance company, they try to evaluate the
cost by assigning an insurance adjuster who may want to examine the car or
property to see if the estimate is reasonable. The may proposed the insured to
visit their own repair shop if they have one.
5. Signing of a Property Damage Release Form

36
 Once the victim and the insurance have agreed on a settlement amount, a
property damage release form is sent to the insured. This form is to close the
settlement and protect the insurance company from any future property damage
claims from the accident. Once the form is signed, no more money can be
collected from the insurance company.
CHAPTER FOUR:
BANKING LAW
4.1. INTRODUCTION
4.1.1. The History of Banking Law in Cameroon
Pre-colonial Cameroon did witness the operation of the banking operation
as its exist today. Before her contract with the European, small groups of
contribution existed in which money circulated among members providing
credit and saving facilities on interest known as “Njangi” or “Tontin”. The
German colonisation witnessed the creation of banks like Deutsch, West
Afrikanische, Handelsgesellschalt, MBH, Bibundi and West Afrikanische
Pflanzungsgellschaft Victoria.
During the reign of the British, the desire to replace the German in all
spheres saw the creation of branches of Barclays Banks in British Cameroons.
Another bank was the bank of West Africa. In 1959, the government of
Southern Cameroons decided to create a national bank in order to enhance
economic development and for Commercial banks, the first in British
Cameroons was Cameroon Bank Ltd incorporated on the 29th July 1961.
Meanwhile, in East Cameroon, the French were administering the Banque
de l‟Afrique Occidental. After East and West Cameroon had their independence,
they fused to form the Federal Republic of Cameroon. A local law, Decree No
62/DF/90 of 24th March 1962 was passed regulating the banking profession in
Cameroon. Today, there are a host of banks in Cameroon.
4.1.2. Applicable Laws

37
 The first national law relating to the control of banking profession in
Cameroon was Decree No 62/DF/90 of 24th March 1962 Regulating the Banking
Profession in Cameroon. This Decree remained in force until 1973 when it was
replaced by Ordinance No 73/27 of 30th August 1973 Regulating the Banking
Profession. In 1985, Ordinance No 85/02 of 31st August 1985, Relating to the
Operation of Credit Establishment was passed. The principal international bank
legislation applicable in Cameroon is the Convention of 16 th October 1990
creating the Banking Commission of Central African States (COBAC).
4.1.3. Definition of Bank or Banker and Customer
The word bank is said to be derived from the Italian word “Banco”, a
bench. This is because the early Jewish bankers transacted their business at
benches in the market place. The Cameroonian legislator in Article 1 of the 1962
decree defined a bank as “an establishment whose activities is to receive fund
from the public in the form of deposit, with the view to carrying out discount and
credit operation investment and other financial transactions”.
Customer
At one time, it was thought that a person became a customer of a bank
only when banking services were habitually performed for him by the bank. The
mere opining of an account by the bank in the customer‟s name was considered
inadequate. The view was later argued and even castigated in some cases.
Today, it is evident that “a customer of a bank is one who opens an account with
the bank”. It is immaterial that the account is overdrawn and it is irrelevant
whether account is of the current type or some other such as deposit and savings
accounts.
4.2. FUNDAMENTAL PRINCIPLES OF BANKING LAW
It is a fact that banking regulations (laws) can change depending upon the
requirements of every country or state. However, there are certain principles of
bank regulations that never change. In other words, these are the principles
which are there in every country‟s bank regulations. There are three fundamental

38
principles of bank regulations that are bound to last as long as bank regulations
will do.
1. Meeting the Minimum Capital Ratio Requirements
Every bank regulation in the world has a clause requiring the bank to
maintain a minimum capital ratio. These are requirements levied on the banks so
that they can promote duty of being regulators. Every bank must follow this
principle in order to remain licensed.
2. Maintaining Market Discipline
Another very crucial principle of bank regulations which must be
conformed to by every bank of the country is that of maintaining market
discipline. This principle compels the banks within the states to disclose
financial and other similar information yearly or monthly to the public. The
reason for this principle is to ensure that the investors, depositors and the
employees of a bank can assess the financial risks a bank may face.
3. Getting Licensed
No bank in a country is allowed to function without a license from the
regulators. The regulator is responsible for supervising all the licensed banks
and monitor whether they are complying with the regulations. Where any bank
goes against this requirement, it license may be suspended or withdrawn.
There above principles discussed are just three regulating worldwide
today. However, this does not mean that bank regulations worldwide only have
three principles.
4.3. MONEY LENDER AND A BANKER DISTINGUISHED
The obvious and important different between a banker and a money
lender are as follows:
1- The banker is a debtor, being a receiver of money from depositors without
providing security and in turn lends this money with collateral. The bank is
bound to make payment on demand, of the amount not exceeding the total of
their bank balances to its customers whereas, a money lender on the other hand,

39
provides its own funds through many means including borrowing from friends
or even banks and lends always on the provision of tangible securities.
2- The bank is obliged to collect drafts on behalf of its customers and discounts
promissory notes and bill of exchange as well. A money lender may not discount
notes, and certainly is under no obligation to collect draft for its customers.
In sum, whereas the relationship of debtor and creditor exist between
banker and customers, the reverse is the case with a money lender. The money
lender is usually the creditor and his client always the debtor.
4.4. THE NATURE OF THE CONTRACT AND THE RELATIONSHIP
BETWEEN BANKER AND CUSTOMER
A- THE NATURE OF THE RELATIONSHIP
The contract between the bank and the customer in Cameroon is an
example of what is known in French as a “synallagmatic contract” and in
English as “A bilateral contract”. This is so because it is a contract which creates
reciprocal obligations, each party having both rights and duties.
B- The Nature of the Relationship between Banker and Customer
As said earlier, the general relationship between a banker and customer is
a contractual one. From this contractual relationship spring other relationships:
1- Debtor and Creditor Relationship
This relationship of banker and customer is most easily understood when
one reflect on the nature of the agreement between them. It is agreed that an
amount equal to that deposited has to be repaid by the bank. In the case of a
current account, the amount is repayable without interest against the customer‟s
demand.
The right to draw on the funds by means of cheques and money transfer
constitute the benefit derived by the customer from his deposits with the bank.
The essence of the contract of banker and customer is therefore the bank‟s right
to use the money for its own purposes and its undertaking to repay an amount
equal to that paid in with or without interest.

40
2. Principal-Agent Relationship
The relationship of creditor and debtor arises out of the deposit of money
in the bank. When the banker is performing certain duties, he frequently acts as
an agent. Banks often collect the proceeds of cheques as agent for their
customers. When banks accept the instructions of customers to purchase and sell
stocks and shares, they do so as agents.
3. Bailor-bailee Relationship
Deposit of goods for safe custody is an example of an important type of
contract called bailment. Bailment is a term which signifies the delivery of good
by one person, the bailor, to another, the bailee, on the term that in due course
they are to be delivered to the bailor or to his order. When banks receive
valuables from customers for safe custody, a relationship of bailor-bailee is
created between them.
4.5. Rights of a Banker
It is not that the bank has only duties toward its customers, it also has
certain rights vis-à-vis its customers. These rights can broadly be classified as:
- The right to general lien (banker‟s lien),
- Right to set-off,
- Right of appropriation,
- act as per mandate of customers
- Right to charge interest, commission, incidental charges etc.
4.5.1. BANKER’S LIEN
A lien is the right of a creditor in possession of goods or securities or any
other asset belonging to the debtor to retain them until the debt is repaid,
provided that there is no contract express or implied to the contrary. It is a right
to retain possession of specific goods or securities or other movables of which
the ownership vest in some other person and the possession can be retained till
the owner discharges the debt or obligations to the possessor. The creditor

41
(bank) has the right to maintain the security of the debtor but not to sell it. There
are two types of lien; viz particular lien and general lien.
A. Particular Lien
A particular lien gives the right to retain possession only of those goods in
respect of which the dues has arisen. It is also termed ordinary lien. If the bank
has obtained a particular security for a particular debt, then the banker‟s right
gets converted into a particular lien.
B. Right of General Lien
The banker has the right of general lien against his borrower. General lien
confers bank‟s rights in respect of all dues and not a particular due. It is a
statutory right of the bank and is available even in the absence of an agreement
but it does not confer the right to pledge. A general lien gives the right to
retained possession of any good in the legal possession of the creditor until the
whole of the debt due from the debtor is paid. Banks have a right of lien only
when goods and securities are received in the capacity as creditor. While
granting advances, bank takes documents. A banker‟s lien is more than a general
lien, it is an implied pledge and he has the right to sell the goods. In case of
default banks have a “right of sale” of good under lien.
Exercising right of lien
Banks have the right of lien on goods and securities entrusted to it legally
and standing in the name of the borrower. Banks can exercise right of lien on the
on the securities in its possession for the dues of the same borrower, even after
the loan taken against that particular security has been repaid. Right of lien can
be exercised on bills, cheques, promissory notes, share certificates, bonds,
debentures etc.
Limitations to the right of lien
Banks cannot exercise right of lien on goods received for safe custody, goods
held in capacity as a trustee, or as an agent of the customer or goods left in the
bank by mistake.

42
4.5.1. RIGHT TO SET-OFF
The bank has the right to set-off the accounts of its customer. It is a
statutory right available to a bank, to set off a debt owed to it by a debtor from
the credit balance held in other accounts of the borrower. This right can be
exercised only if there is no agreement express or implied to the contrary. This
right is applicable in respect of dues that are due or are becoming due. It is not
applicable on future debts. The right is also available for deposits kept in other
branches of the same bank. The right can be exercise after death, insolvency and
dissolution of a company, after receipt of a garnishee attachment order.
Deposits held in the name of a guarantor cannot be held set off to the
debit balance in borrower‟s account until a demand is made to the guarantor and
his liability become certain. Banks cannot set off the credit balance of
customer‟s personal account for joint loan account of the customer with another
person, unless both the joint account holders are jointly and severally liable.
Banks exercise this right only after serving a notice to the customer informing
him that the bank is going to exercise the right to set off.
Automatic right to set-off
Depending on the situation, sometimes the set-off takes place
automatically without the permission from the customer. In the following events
the set-off happens automatically
- On the death of the customer
- On the customer becoming insolvent
- On receipt of a garnishee order on customer‟s account by court
- On receipt of a notice of assignment of credit balance by the customer to the
banker.
Conditions for the exercise of the right to set-off
1. The account should be in the sole name of the customer
2. The amount of debts must be certain and measurable
3. There should not be any agreement to the contrary

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4. Funds should not be held in trust account
5. The right cannot be exercised in respect of future debts
4.6. BANK GUARANTEES AND SECURITIES
4.6.1. BANK GUARANTEES
A guarantee “is a promise to answer for the debt, default or miscarriage of
another, if that person fails to meet the obligation”. According to the Statute of
Frauds 1677, Section 4, primary liability for the debt is incurred by the principal
debtor. The guarantor incurs secondary liability, that is, the guarantor becomes
liable only if the debtor fails to pay. If the principal debtor‟s liability to the bank
is void, the guarantor will not be liable.
A guarantee must be evidenced by a written note or memorandum signed
by the guarantors or their agent. Without such written evidence, the guarantee is
unenforceable. A guarantee differs from an indemnity. An indemnity imposes
direct or primary liability to pay and need not be evidenced in writing.
[Link]. Attributes of a guarantees as security
Advantages
- An unsupported guarantee is a very simple security to take. No registration is
involved and no complications concerning proof of title arise.
- A guarantee can easily and immediately be enforced by court action
- As with any other security given by a third party (collateral security), it can be
ignored when claiming against the principal debtor
- As several parties can guarantee a loan, it is useful security where the principal
debtor is unable to provide security but offer‟s a viable business proposition.
Disadvantages
- Unless supported by a cash deposit or other security, a guarantee is always of
an uncertain value as a security. A guarantor‟s financial position can change
very quickly.
- Enforcing a guarantee may cause bad feeling, particularly if the guarantor is a
valued customer.

44
- Litigation may be necessary to enforce payment where the guarantee was not
supported by other security.
[Link]. TYPES OF GUARANTEE
1. Specific Guarantee: It is when the guarantor‟s liability to a particular
between the debtor and the bank is limited to a specific sum.
2. Continuing guarantees of a limited amount: It is a situation where the
guarantor guarantees the debtor‟s liability to the bank for a specific sum, thus
limiting his own liability. If possible, banks usually obtain a continuing
guarantee.
[Link]. General considerations
Undue influence: The basis of undue influence is to ensure that the guarantor is
not unduly influenced by the bank or more likely by the principal debtor to sign
the guarantee. If undue influence is proved, the guarantee may be set aside.
Guarantee by the wife or an elderly relative: Problems are most likely to
occur where a wife guarantees her husband‟s borrowing or elderly persons, that
of their child. In such instances, the bank is expected to give an independent
advice to the wife or the guarantee may be set aside for undue influence.
Principal debtor obtaining the guarantee: It is not advisable to ask the
principal debtor to obtain the guarantor‟s signature. Apart from the obvious risk
of forged signature, the debtor would almost certainly be deemed to act as the
bank‟s agent and the bank would be responsible for any misrepresentation.
4.6.2. Bank Securities
Securities also known as “collaterals” are properties or assets (whether
fixed or not, or movable or immovable) used by an individual or an institution
usually on the demand of the bank to obtain a bank loan.
Elements that determine the acceptability of a fixed asset as bank security
1. The title to the property: For an asset to be acceptable by the bank as
security to obtain a bank loan, the bank has to investigate the title to the

45
property. This is to ensure that the asset intended to be used as collateral is
legally owned by the debtor.
2. Location: The location of the property plays a great role in determining the
acceptability of the security. If the asset is accessible, the chances to be accepted
is collateral are greater as accessibility also determines the value.
3. State of the property: The bank has to investigate whether the property is
not on mortgage to another person or institution.
4. Value: The bank will always want to consider the market value (monetary) of
the particular property to determine whether it is acceptable or not as collateral.
5. The Marketability: Most often than not, the bank would be reluctant to
accept assets that are not easily to market as security for the granting of loans.
4.7. NEGOTIABLE INSTRUMENTS
A negotiable instrument is a document guaranteeing the payment of a
specific amount of money either on demand or on a specified period of time. It
may also be defined as “an unconditional promise or order to pay a fixed amount
of money with or without interest or other charges described in the promise or
order, if it:
a) Is payable to the bearer or to order at the time it is issued;
b) Is payable on demand or at a definite time; and
c) Does not states any other undertaking or instruction by the person promising
or ordering payment to do any act in addition to the payment of money”.
Negotiable instruments within the CEMAC sub region are governed by
regulation no. 02/03/CEMAC/CM relating to the systems means and incidences
of payment signed in Yaounde on April 4 2003 and entered into force on 1 st July
2004 within all the Member States of CEMAC. We must however note that this
part of the course has not yet been adapted to this new dispensation of the law.
4.7.1. ELEMENTS OF NEGOTIABLE INSTRUMENTS
Negotiable instrument has been defined as a written document, signed by
the maker or the drawer of the instrument, that contains an unconditional

46
promise or order to pay an exact sum of money (with or without interest in a
specified amount or at a specified rate) on demand or at a specified future time,
to a specified person or order or to its bearer.
1. Must be in writing: A negotiable instrument must be in writing for it to be
valid
2. Must be signed: For an instrument to be negotiable, it must be signed by the
maker or drawer. A signature may be any symbol made by the maker or drawer
with the present intention to be a signature.
3. Unconditional promise
a) Promise or order: A negotiable instrument must contain an express promise
or order to pay. A mere acknowledgement of a debt is not sufficient without
evidence of an affirmative undertaking on the part of the debtor to repay the
debt. However, the exception to this rule is a Certificate of Deposit.
b) Unconditionality of promise or order: A promise or order is conditional
(and therefore not negotiable) if it states:
- an express condition to payment
- that the promise or order is subject to or governed by another writing or
- that the rights and obligations with respect to the order or promise are stated in
another writing.
4. A fixed amount: The fourth requirement of negotiability is that it must state a
fixed amount of money. Fixed amount means an amount that can be determined
from the face of the instrument. This requirement applies only to the principal
amount of money. The instrument can refer to an outside source to determine the
rate of interest. Payable in money means the medium of exchange authorised by
the state.
5. Time for payment:
a) Payment on demand: An instrument is payable on demand “at sight” or
“upon presentation” if it is subject to payment upon being presented to the

47
drawee. If no time for payment is presumed, a negotiable instrument is
presumed to be payable on demand.
b) Payment at a definite time: An instrument is payable at a definite time if it
states that it is payable i) on a specified date; ii) within a definite period of time;
or iii) on a date or at a time readily ascertainable at the time the promise or order
is made. Such instruments are often referred to as time instruments.
Acceleration Clause: It is a clause that permits a payee or other holder of a time
instrument to demand payment of the entire amount or balance due, with
interest, if a certain event occurs, such as default in payment of an instalment
when due.
Extension clause: It is a clause in the time instrument that permits the date of
maturity to be extended.
6. To whom it must be paid
a) Order instrument: It is a negotiable instrument that is payable “to the order
of” an identified person or “to” an identifiable person “or order”.
b) Bearer instrument: A negotiable instrument payable “to bearer” or to “cash”
rather than to an identifiable payee.
Bearer: The person possessing the instrument. Any instrument payable to
following is a bearer instrument: i) “Payable to the order of bearer”; “Payable to
Jane Smith or bearer”; iii) “Payable to bearer”; iv) “Pay cash”; or v) “Pay to the
order of cash”.
4.7.2. FACTORS NOT AFFECTING NEGOTIABILITY
Certain ambiguities or omission resolvable by applicable provisions will
not make an instrument non-negotiable. For example:
i) The fact that the instrument is undated does not affect its negotiability, unless
the date of the instrument is necessary to understand the payment term;
ii) Postdating or antedating an instrument does not affect its negotiability;
iii) Interlineations and other written or typewritten alterations need not affect
negotiability;

48
iv) If the instrument fails to specify the applicable interest rate, the judgement
rate of interest would be considered.
4.7.3. TRANSFER OF INSTRUMENTS
a) Assignment: Under general contract principles, a negotiable instrument may
be transferred to an assignee, who then holds the instrument with all the rights of
the assignor.
b) Negotiation: Transfer of an instrument in such a form that the transferee
becomes a holder, who has at least the same rights in the instrument as the
transferor, and may have more rights than the transferor.
Negotiating order instruments: An Order instrument may be negotiated by
delivery with any necessary endorsement
Negotiating Bearer instruments: Unlike an Order instrument, a bearer
instrument need not be endorsed to transfer the payee‟s rights to the transferee.
All that is required is delivery to a new bearer.
4.7.4. TYPES OF NEGOTIABLE INSTRUMENTS
1. Draft: An unconditional order to pay by which the party creating the draft
(the Drawer) orders another party (the Drawee), typically a bank, to pay money
to a third party, (the Payee). E.g. a cheque.
2. Promisory Note: It is an unconditional promise in writing made by one
person (the maker) to pay a fixed sum of money to another (the payee) on
demand or at a specific time period.
3. Certificate of Deposit: It is a note by which a bank or similar financial
institution acknowledges the receipt of money from a party and promises to
repay the money, with interest, to the party on a certain date.
4. Bill of Exchange: A bill of exchange is a written order by the drawer to the
drawee, to pay money to the payee. Bills of exchange are used primarily in
international trade and are written orders by one person to his bank to pay the
bearer a specific sum on a specific date. It requires in its inception three parties:
the drawer, the drawee and the payee. In other words it an unconditional order in

49
writing addressed by one person to another signed by the person giving it,
requiring the person to whom it is addressed to pay on demand or at a fixed or
determinable future time a sum certain in money to, or to the order of, a
specified person or bearer. The bill of exchange is frequently used in
international commercial transactions.
5. Cheques: A cheque is an unconditional order in writing addressed by one
person to another who must be a banker, signed by the person giving it,
requiring the banker to pay on demand a sum certain in money to or to the order
of a specified person or to bearer. According to article 13 of the CEMAC cited
above, a cheque must contain the following:
-The indication cheque inserted within the context of title and expressed in the
language used in drafting the cheque;
-A simple and pure order to pay a determined sum;
-The name of the person who shall pay, named Drawee;
-The indication of the place where payment shall take place;
-The indication of the date and the place of creation of the cheque; and
-The signature of the person issuing the cheque, named Drawer.
Article 237 of the CEMAC regulation punishes anyone who issues a cheque
without cover to a prison term of from six months to five years or with a fine of
from 100 000frs to 2 000 000frs or with both such fine and imprisonment.
Article 196 provides that the issue of a cheque without cover may lead to a
prohibition from the courts or banks to issue cheques.
4.7.5 THE BANKERS COMMERCIAL CREDIT
It is a pre-approved amount of money issued by a bank to a company that can be
accessed by the borrowing company at any time to help meet various financial
obligations. It is commonly used to fund the day to day operations or fund new
business opportunities or to pay for unexpected charges. It is often repaid once
funds become available. It is also referred to as commercial line of credit or
business credit.

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4.8. Bank-client confidentiality (Bank secrecy)
This is a legal obligation on the bank protect and keep transactions
between the bank and the customer secret. It can also be termed the duty not to
disclose customer‟s account or other transactions with the customer. Economic
policy has been advanced to as a justification of the duty of secrecy. This is
because the bank has a very detailed knowledge of the customer‟s affairs
acquired while acting as its customer‟s pay-master and receiver of amounts due
to him. This includes privacy in relation to financial income and assets. The
banker‟s duty of security was succinctly enacted by the Cameroonian legislator
in Ordinance No 85/002 of 31st August 1985 relating to the operation of credit
establishments. However, the law applicable today is Law No 2003/004 of 21 st
April 2003.
Limits to bank confidentiality
A banker's obligation to respect his/her clients' privacy is not absolute, and no
protection is afforded to criminals. In particular, there is a duty for banks to
provide information under the following circumstances:
1. Compulsory at law: That a bank may be compelled by law to disclose the
state of its customer‟s account is recognised by the proviso of Article 45 of the
1985 Ordinance and Article 8 to 25 of the 2004 law.
a) Civil Proceedings (inheritance or divorce, for example): For the purpose
of evidence clarity in matters of inheritance and divorce (especially where the
parties are in a joint property regime, the banks may be called upon to divulge
information relating to the bank-customer transactions and customer accounts.
c) Criminal Proceedings: Money laundering, association with a criminal
organisation, theft, tax fraud, blackmail are all cases of criminal proceedings. If
circumstantial evidence gives rise to a suspicion that the financial assets are the
proceeds of a crime, then financial institutions may inform the authorities
without thereby breaching bank-client confidentiality; if the suspicion is well-
founded, they must inform the Money Laundering Reporting Office.

51
c) Debt recovery and bankruptcy proceedings: Banks may also be called
upon to expose customer‟s information during debt recovery and bankruptcy
proceedings.
2. Disclosure in the bank’s own interest: Whenever there is litigation between
the bank and the customer, the bank, in order to prove its case has the right to
make disclosure which ordinarily will be sanctioned. For example, if a bank sues
to recover money it lent to a customer, the bank has the right to disclose in its
pleading the state of the customer‟s account and the amount owed by him to the
bank.
3. Disclosure with customer’s consent: Section 310 and 311 of the Penal Code
acknowledge consent of the customer as exception to the banker‟s duty of
secrecy. A customer is said to have expressly consented when he clearly
authorises his bank to disclose his affairs to a third party.
4.9. DUTIES OF THE BANKER
i) The banker’s duty of secrecy (see notes above)
ii) The bank’s duty to rectify errors: The problem arises when the bank
credits the customer‟s account with the wrong amount or with a sum not due to
him. The moment the bank discovers the mistake, it rectifies the entry. If the
customer disputes the bank‟s right to do so he has to institute proceedings.
iii) The bank’s duty to pay cheques: A cheque is an unconditional order in
writing addressed by one person to another who must be a banker, signed by the
person giving it, requiring the banker to pay on demand a sum certain in money
to or to the order of a specified person or to bearer. The bank‟s duty to honour or
refuse to honour a cheque is owed to the customer alone. This duty is however
subject to limitations:
- the amount of the cheque must not exceed either the balance standing in the
customer‟s account
- the cheque must be presented at the branch of the bank where the account is
kept

52
- the bank‟s duty to pay the cheque may be abrogated by law.
- if the cheque is defective
iv) The duty of the bank not to wrongfully pay a cheque
Determination of the contract between the banker and the customer
The contract between the banker and the customer may be terminated by
the following:
a) Closure of account
i) Closure of account by the customer: Suppose the customer is operating a
current account and wishes to close it, the balance standing to a customer‟s
credit on such account is repayable on demand. Consequently, he may close his
current account which is in credit by demanding repayment of the balance due,
less accrue bank charges.
ii) Closure by banker: The banker, like the customer has the right unilaterally
to terminate he contractual relationship existing between him and the customer.
b) Death of the customer: the contract of banker-customer being of a personal
nature terminates automatically when the customer dies. When the customer
dies, the right to receive any sum owed him as a general rule goes to his
personal representative.
c) Mental incapacity of the customer: Once it is determined that a person is
incapable by reason of mental disorder, of managing and administering his
property and affairs, it becomes the responsibility of the bank to terminate the
contract if the mental state of the customer dully certified.
d) Bankruptcy of the customer: A banker can decline to honour his customer‟s
cheque if he had notice of an act of bankruptcy committed by the customer. A
bank will be protected if it continues to pay cheques drawn by a customer until it
learns that a bankruptcy petition has been presented
e) Winding-up of company: Banks have as customers companies. Once a
company is wound up, it ceases to have any legal existence and all its
contractual relationship comes to an end.

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f) Winding up of the Bank: When a bank winds-up, the contract between it and
the customer is put to an end.
CHAPTER FIVE:
TAXATION LAW
5.1. General Introduction
Fiscal or taxation law may be defined in several ways. Firstly, it is a
collection of rules and regulations governing taxes. Secondly, it has been
defined by Trotabo and Cotteret as branch of law that governs the tax collector‟s
right and the exercise of their prerogatives. The right to levy taxes which is a
royal or legal prerogative is linked to the exercise of sovereignty and is checked
by the courts. The word tax is complicated and a universally accepted definition
in time and space is difficult to come by. A tax is therefore defined as “a
compulsory payment, levy, duty or contribution, without direct
compensation demanded by the state or its decentralised organs from
natural and artificial persons to cover public charges”. The following are
particularities futures of a tax:
a) A compulsory or permanent payment: it is an obligation for the fiscal
administration to collect its taxes (attribution of sovereignty) and the tax payer
equally has the obligation to pay the taxes.
b) A pecuniary payment: Because it is basically a financial settlement, tax is
different from other types of levies.
c) A settlement defined to cover public charges: The purpose of levying taxes
is to cover public charges. In this light, the payment of taxes is meant to take
care of general interest both nationally and locally.
d) No specific gain in return: A tax is a payment without any direct
compensation required to be provided to the payer. The tax payer may enjoy
certain benefits from the state, but they hardly correspond to the amount paid as
taxes.
5.2. SOURCES OF TAXATION LAW

54
1. Statute
Statute is an essential source of taxation. The levy of taxes falls within the
jurisdiction of the legislator. In tax matters, the law maker is involved at two
levels. In the first place, it is solely by law that a new tax may be created,
modified or an old one eliminated. See article 26 of the 1996 constitution of
Cameroon. Secondly, a law has to authorise the government to collect taxes on a
yearly bases. This authorisation is usually given in the form of finance bills.
2. Legal precedence: Only a small package of laws is provided by this source.
3. Administrative Doctrine: Because of the technical nature of most taxation
law provisions, the administration usually by service notes, instructions and
secular letters issued by the minister of finance and the department of taxation
its concepts of application to its agents.
4. International norms:
a) International conventions on taxation: these are conventions on taxation
concluded between Cameroon and other countries with the aim of setting the
situation of persons against whom taxes may levied because of the activities,
place or residence or the revenue of each of the states concerned.
b) Community Law: Community law also plays a substantial role as a source
of taxation law. Some of these communities include; CEMAC, OHADA,
UDEAC.
5.3. FUNCTIONS AND PURPOSES OF TAXES
The functions of taxes can be classified into two categories, i.e. the fiscal
function and instrumental function.
5.3.1. The fiscal function:
This is the expenditure function of taxes. In a state, the citizens or
members of that community require a certain number of needs. Individually,
they cannot succeed in acquiring all these needs. Collectively through the state
they can meet these challenges. Some of the duties of collective interest include
- national defence, - social security, - payment of interest for money borrowed

55
through treasury bonds, -Police and fire protection, - public health services, -
provision of education facilities etc.
5.3.2. Instrumental function of taxes: In addition to using taxation to raise
money, governments use taxes as an means of intervention in the economy or
the society. Taxes are used by governments to:
- protect infant industries from foreign competition
- stabilise economic growth through taxation policies
- orientate, regulate and promote certain economic activities
- encourage investments by offering tax reliefs
- redistribute incomes in favour of the poor etc.
5.4. TAXABLE ACTIVITIES:
Taxable activities include:
- the possession of a movable or immovable property
- the possession of capital or wealth;
- the manufacture of product
- the transfer of a right or ownership
5.5. TYPES OF TAXATION SYSTEMS
Tax systems are the means by which taxes are raised and collected
1. The proportional tax system: A proportional tax imposes the same amount
of tax on everyone, regardless of income. The amount of tax to be paid is
obtained by applying a fixed rate on the assessment base of the tax. For
example, if a tax rate is 10% on the monthly income, a person earning
100,000frs is required to pay 10,000frs as tax, while another person who earns
150,000 also pays 10%, that is 15,000frs.
2. Progressive tax system: This tax system imposes a higher percentage of
taxation on those with higher incomes. Here, the rate of taxation increases as
income increases, so that a person with high income pays more. It is often
referred to as “pay as you earn” (PAYE)

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3. Regressive tax system: this system imposes a higher tax rate on low incomes
than on high incomes
4. The ad valorem or percentage tax system: Here the amount of tax paid is
determined by the commodity.
5. The per capital tax system: This is tax levied per head. Every tax subject
pays the same amount as tax not withstanding his income or social capacity.
Direct and Indirect taxes: The administration defines direct tax as all taxes
directly collected by the administration while indirect taxes refer to all taxes
indirectly collected by the administration.
5.6. THE PRINCIPLES/CANONS OF TAXATION
Canons of taxation describe the fundamental principles to be followed by
governments when formulating their taxation policies. These principles include
Equality, certainty, convenience, economy, efficiency, simplicity, impartiality
1. Equality: According to this principle, the subject of every state ought to
contribute towards the in proportion to their respective abilities. That is in
respect of the revenue that they enjoy under the protection of the state.
2. Economy: This principle is to the effect that the tax should be designed to
take out and keep out of the pockets of people as little as possible over and
above what it brings to the state treasury. This means in other words that the
yield should be greater than the spent in the collection because if it is the
contrary, then it is a waste of time.
3. Convenience: This principle states that any tax should be levied at a time and
manner in which it is convenient for the tax payer to pay. It helps the
government to maintain the flow of revenue at the same pace as that of
expenditure.
4. Fairness: Two principles are considered here to determine whether the
burden of a tax is distributed fairly. They include the ability to pay and the
benefit principle.

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i) The ability to pay principle: This principle is to the effect that people‟s taxes
should be based on their ability to pay as measured by income and wealth. One
implication of this principle is horizontal equity which states that people in equal
position should pay the same amount as tax.
The second requirement of the ability to pay principle is vertical equity.
The idea is that a tax system should distribute the burden fairly across people
with different abilities to pay.
ii) The Benefits Principle: This principle states that only the beneficiary of a
particular government program should pay for it.
5. Impartiality: Taxes should be impartial, ie not favouring one or another.
Complete impartiality is achieved by direct taxation, if it is designed to be
progressive in as „fair‟ a way as possible.
6. Simplicity: Tax law should be written in a manner in which both the tax
payer and the tax collector can easily understand them. Though not usually easy,
people will be more willing to pay taxes if the understand how to calculate them.
7. Efficiency: In addition to fairness, a good tax system should be efficient,
wasting as little money and resources as possible. Efficiency refers to three
issues: administrative cost, compliance cost and excess burden.
i) Administrative costs: Running tax collection authority cost money. The
government must hire tax collectors to gather revenue, data entry clerks to
process tax returns, Auditors to inspect questionable returns, lawyers to handle
disputes, and accountants to track the flow of money.
ii) Compliance cost: Paying taxes cost tax payers more that the actual tax bill.
The cost of compliance of any taxation system should be as low as possible.
iii) Excess Burden: the excess burden simply indicates that when the
governments impose taxes on certain commodities, it distorts consumer
behaviour as people buy less of the taxed goods and more of other goods. In this
case, the choice of consumers is influenced by taxes.
5.7. COMPANY OR CORPORATION TAX

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 Company tax is levied on all profits and income made by companies and
other corporate bodies. This tax is charged on the net profit before tax or the
profit chargeable to the company tax realised by incorporated profit making
organisations and persons operating in Cameroon. In law, company tax is based
on Act No 3/UDEAC/153 of 22nd December 1972 on the harmonisation of
company tax within the UDEAC, copied by the general Code of taxes.
Persons subject to company tax (scope of application)
In principle, those subject to company tax are corporate bodies. However,
the relations among persons liable for company tax are unequal. A distinction
should thus be made between those totally liable for company tax, those only
partially liable and corporate bodies that are entirely exonerated from this.
Those totally liable for company tax:
This category is stratified, on the one hand, there are those corporate
bodies that are compulsorily liable for company tax and on the other hand, they
are those for whom the payment of company tax is only an option.
Compulsory liability for company tax:
These no matter their form are:
- All incorporated businesses or incorporated persons carrying out profit making
activities such as limited liability companies.
- All micro-finance establishments, whatever their legal status: Cooperative
societies, independent micro finance establishments, common initiative groups,
mutual organisations.
- All enterprises that offer financial services, collect savings and offer loan
granting operations no matter their legal status.
- Civil societies that carry out profit-making or lucrative activities.
- Public organisations carrying out profit-making activities
Optional Liability for company tax
Partnerships are allowed by law to opt for company tax. The list of such
companies comprises partnership firms, limited liability partnership, joint

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ventures and financial syndicates. This option is equally open to civil societies
where they are not automatically liable for company tax.
Corporate bodies exempted from company tax
According to section 4 of the general code of taxes, the following are exempt
from company taxes:
- Non profit agricultural establishments
- Any organisation that is registered as a non profit organisation or whose
activities are observed to be non-lucrative such as:
i) Regional and local authorities (councils) and their public utility services;
ii) Bodies responsible for regional development, which are recognised as
being of public utility;
iii) Real estate public bodies for the allocation of low-cost housing
iv) Private clubs and societies for their non-profit making activities
v) National Social Insurance Fund for the share of profit coming from
contributions on salaries
vi) Non-profit private establishments.

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