Demystifying of The New Civil Transaction Law As we approach the end of 2023, one of the most significant legal events is set to unfold in the Kingdom; namely, coming into force, a new law known as the Civil Transactions Law (Civil Code). This legislative development will have profound implications across various aspects of our legal landscape. While it garnered attention from legal experts, lawyers, and judges, it is essential to explore what this law means for an ordinary individual who may be unfamiliar with its intricate details Download the Provisions for Debt Instruments & Financing Sukuk (PDF) To stay aware of these updates, we encourage you to follow us on social media to be informed of when they are

Introduction The Law not only defines at length the right of ownership of movable and immovable properties but also states restrictions upon the owner and others while exercising their rights.   The section covers issues related to ownership, right in-rem, usufruct, easement etc. Right to use, exploit, and dispose Firstly, the Law restates that the owner shall be entitled to use, utilize, exploit, and dispose of the right owned by him as well as enjoy benefits from all yields, products, and components of the object owned unless there is any statutory provision or an act requiring otherwise.  It goes further and establishes the right of owner over all essential components of the object that he owns and his right over all

Introduction One of the popular forms of investments in the region is Mudarabah or Profit-Sharing Contract wherein a capital owner provides capital to an entrepreneur and the profit generated is shared between the parties.  Many people prefer this arrangement primarily for two reasons, namely; (1) it enables them to participate in trade and business activities through people who have the knowledge and expertise; (2) the profit generated or income earned on capital invested is not treated or considered as interest. Mudarabah Principles The Law restates the principles and rules for Mudarabah contracts that are quite in line with the concept, norms and principles under Shariah.   Besides the capital provided in cash form to the partner managing the project or enterprise

Introduction Lease Agreements are very common and cover not only movable and immovable properties but also benefits and rights that can be used, utilized and exploited.  A properly drafted and well-executed lease agreement protects the rights of all parties. Rent Similar to provisions related to determination of price for purchase and sale, the Law enables parties to decide on rental amount based on certain sound criteria. The rent could also be based on a lump sum amount plus a specific percentage of the proceeds or profits.  Besides, the parties may agree on the mode and period of payments[1]. In case, only aggregate rent is indicated in the agreement covering several units without mentioning rent for each unit; the rent will

Introduction Sale purchase agreements are common for numerous transactions covering movable and immovable properties. The Civil Transactions Law deals with issues surrounding the sale purchase transactions in a greater detail and fill in the gaps that emanate either due to silence by parties with regards to such transactions or ambiguities in contracts. Conditional Sale The Law deals at length with the situation arising from transactions that provide for deferred payments, price determination based on the prevailing market rate and completion of transaction on fulfilment of conditions etc.   For instance, if the sale of property is based on sample, the Law requires the actual property being sold to be identical to the sample and in case the sample is lost or

Introduction Continuing the process of codification of laws and regulations with a view to have clarity vis-à-vis application and interpretation of different situations, conditions and circumstances by all parties including the judiciary, Saudi Arabia has promulgated Civil Transactions Law, the “Law” which will become effective on 21 December, 2023[1]. The Law will be applicable even to incidents, contracts and arrangements that were entered before the Law would become effective, with a few exceptions[2] . Compensation for Damages The Law reiterates the principle of making good the damages sustained by any party and extends this principle to situations where the parties have not agreed in advance in such regard or do not have any contract as well as incidents and acts of

Introduction Civil Transactions Law of Saudi Arabia that has codified the principles and rules covering civil transactions will come into force on 21 December, 2023. This note summarizes and comments on major provisions related to formation, validity and termination of contracts. Pillars of Contract Firstly, the Civil Transactions Law reiterates the pillars of contract, the essential components without which no contract can be considered as legally valid, enforceable and invokable. The Law prescribes in detail the conditions related to offer and acceptance. One of the main requirements for offer and acceptance to be valid is consent by persons having legal capacity to enter into contract and such intent is to be explicitly expressed[1].  While expression of intent could be verbal

Overview of KSA Civil Transaction Law One of the notable features of the Law is its applicability to incidents, contracts and agreements that were entered before the effective date of the Law with the exception of incidents covered by any statutory provision or judicial principle related to the underlying incident and conflicting with the Law. Although the title indicates ‘civil transactions’; yet, the Law contains provisions that are meant to regulate both civil and commercial matters insofar as they are not governed by other statuto-ry laws and provisions under the laws covering those transactions. For instance, the Law briefly covers issues related to Memorandum of Association related to companies; however, the provi-sions will not be applicable to companies formed under

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

Objections against Judgments The Rules of Implementation for Objections against Judgments issued vide Ministerial Decree No: 512 dated 05/01/1445 H. (23 July 2023), the “Rules” replaces completely the Rules of Implementation related to the appeal process dated 21/09/1440 and Section Eleven of the Rules of Implementation of Civil Procedural Law (related to methods of Objections against Judgments). Download the Provisions for Debt Instruments & Financing Sukuk (PDF) To stay aware of these updates, we encourage you to follow us on social media to be informed of when they are posted. If you wish to discuss any of these changes or any impact the New Law may have on you and your business, please reach out to us for assistance. AlGhazzawi