Saudi Arabia’s Commercial Transactions Law enhances contractual stability and protects business practices

RIYADH — Saudi Arabia’s Commercial Transactions Law is designed to keep pace with developments in the commercial and investment environment through its comprehensive scope and consistency with legislation that promotes contractual stability and enforceability, while protecting the interests of parties involved in commercial transactions, according to official statements. The law complements the Civil Transactions Law.

Supplementary role of Civil Transactions Law

The Commercial Transactions Law stipulates that the provisions of the Civil Transactions Law apply to cases not expressly addressed by the former when no commercial custom or practice exists. This makes the Civil Transactions Law a supplementary source for filling legislative gaps in the commercial environment. In establishing certain provisions, the law also relies on general rules codified in the Civil Transactions Law to address matters for which no specific commercial provisions exist.

Consistency and harmony between laws

The Commercial Transactions Law, which governs commercial transactions, draws on the terminology and theoretical framework set out in the draft Civil Transactions Law to ensure consistency and harmony between the two pieces of legislation.

New rules for contracts and agencies

The Commercial Transactions Law also addresses commercial contracts and commercial agencies, which had not previously been governed by detailed legislation. It establishes clear procedures and rules for commercial contracts and agencies to promote transparency and fairness in commercial dealings and protect the rights of contracting parties. These matters are covered by approximately 69 of the law’s 271 articles.

The law sets out the rules and requirements governing commercial sales, supply contracts, commercial agencies, and brokerage, addressing the obligations of all parties and the consequences of breaching agreed terms.