Insights into Saudi Arabia’s Evolving Laws & Regulations

Contracts & Agreements

Aug 7, 2023

AlGhazzawi & Partners, Contracts & Agreements

Contracts & Agreements

It is common to find people talking about contracts in a way that whatever is stipulated therein or whatever is agreed between parties should invariably be considered valid, lawful, and enforceable.  In jurisdictions that either apply Shari’a in full or use it as guidance, the verse of the Holy Quran that obliges parties to fulfill contracts (Chapter 5 – Verse 1) “O believers! Honor your obligations” is often quoted in support of this argument.  What is ignored and overlooked is the condition that such a basis and argument will only be valid when they are not in conflict with the laws and regulations. The main purpose of any contract is to protect the rights of parties as well as ensure that the parties to the contract shall fulfill their obligations in word and spirit. They also act as a recap of what has been agreed by the parties.  Agreements and contracts are never meant to let one party exploit the situation of the other even if the other party had agreed to such provisions therein.  Certainly, while adjudicating disputes, courts will also determine the true intent of parties to the contract. 

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Contracts and Agreements

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