What to know about Saudi’s new Civil Transactions Law

The Kingdom of Saudi Arabia's flag

The Saudi Cabinet, chaired by Crown Prince Mohammed bin Salman, approved in its meeting last week the Civil Transactions Law.

The Umm Al-Qura newspaper, considered the first Saudi paper, published the details of the new law, which included several chapters and 720 articles. The law will be enforced after 180 days from the date of this publication.

The Law's first article states that the Civil Transactions Law's provisions must be applied to all matters addressed in either their wording or content; however, if no applicable provision is available, the final provisions' general rules must be applied; and if there is no applicable rule, the Shariah-derived provisions that are most appropriate to this Law must be applied.

According to Article 38 of the Law, unless otherwise agreed, the contract shall be deemed to have been concluded at the time and place where the acceptance was issued, whether the contracting parties are physically present there or communicate directly from two different places.

Also, if neither party is present, the contract will be deemed to have been reached at the time and place where the offeror learned of the acceptance, unless otherwise agreed.

Article 40 of the Law states that acceptance in adhesion contracts is limited to mere delivery of the predetermined conditions set forth by the offeror and is not subject to discussion.

A person who negotiates or ends the negotiation in bad faith is liable for any losses suffered by the other party, but this does not include compensation for the loss of expected gain from the contract under negotiation, as per Article 41. Also, if a contract is negotiated, this does not obligate the negotiating parties to conclude such a contract.