Civil Transactions Law

Purpose and scope

• The general code of civil rules in the Kingdom: the sources of obligations (contract, unilateral will, harmful act, unjust enrichment), their effects and extinction, named contracts, and ownership and real rights.
• It applies to every civil relationship not governed by a special text, such as sale, lease, contracting, loans, agency, guarantee and settlement; special laws such as the Labour Law and commercial laws prevail where they apply.
• It aims at clear rights and stable dealings, so that parties know in advance a contract's effects and the consequences of breach.

Key rules, rights and obligations

• A contract is formed when offer and acceptance match; a particular form is required where the law or the parties require it, and a contract is interpreted to give effect to the parties' common intention.
• A valid contract binds both parties: neither may amend or end it alone except by agreement or by law, and it must be performed in good faith.
• A contract may be annulled for defects of consent such as mistake, fraud or duress, or for lack of capacity; the right lapses if the contract is ratified expressly or implicitly.
• Where one party exploited an evident weakness or pressing need of the other, causing gross unfairness, the court may reduce the wronged party's obligations, increase the other's, or annul the contract (Article 68).
• Where general, unforeseeable exceptional circumstances make performance onerous though not impossible, the court may reduce the onerous obligation to a reasonable level.
• On breach, the creditor may claim performance or termination with compensation; agreed compensation may be reduced if excessive or if the obligation was partly performed.
• Every fault that harms another obliges its author to compensate, covering the loss suffered and the gain missed where they are a natural result of the act; a principal is liable for harm done by an agent in or because of the work.
• The law covers common contracts: sale with warranties against defects and eviction, lease and the duties of landlord and tenant, contracting and the contractor's liability, agency, guarantee and settlement.

Violations, penalties and common problems

• Relying on oral agreements or vague messages makes proof hard later; a written contract stating the subject, price, periods, termination and compensation is better.
• Delay lets the limitation period run out, and many disputes are lost for this reason rather than for a weak claim.
• Excessive penalty clauses are not always applied as written, since the court may reduce them.
• Defective or incomplete work in construction and finishing is among the most common disputes; document the condition with photos and expert reports before claiming.
• A compensation claim must prove fault, harm and the link between them; breach alone, without showing harm, is not enough.

Procedures and key deadlines

• As a general rule, a claim is not heard ten years after the right fell due (Article 295).
• Five years for the fees of liberal professions and for recurring periodic rights such as rent (Article 296).
• One year for merchants' claims for goods and services supplied to non-traders, hotels and restaurants, and wage-earners' pay (Article 297).
• Compensation for a harmful act: three years from when the injured party knew of the harm and who is liable, and at most ten years from the harm.
• Annulment within one year of learning the ground, and at most ten years from the contract except for lack of capacity (Article 79); any interested party may serve notice on the holder to choose ratification or annulment within at least ninety days, after which the right lapses without excuse (Article 80).
• A claim for exploitation and gross unfairness within one hundred and eighty days of the contract (Article 68).

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.