The concept of agency contract in Saudi law and its importance

The concept of agency contract in Saudi law and its importance

The agency contract is one of the most important civil contracts that plays an important role in regulating relations between individuals and companies, as it is based on the principle of authorizing a person called (the agent) to act on behalf of another person called (the principal) in performing a specific task or carrying out a specific legal action. This contract contributes to facilitating civil and commercial transactions, whether local or international, and enhances the speed of completion and saves effort In the civil transactions system, the agency contract is of particular importance due to the legal flexibility it provides in line with economic and commercial developments in the Kingdom. Its provisions include several conditions and principles that regulate the rights and obligations of both parties, whether with regard to the agent carrying out his duties or the client’s obligation to provide the necessary powers and information. These provisions come as part of a broader vision aimed at achieving justice and protecting rights within the framework of legal relations.

The agency contract in Saudi Arabia must include a clear definition of the powers, responsibilities, rights and duties of both parties, the agent and the principal. The contracts must be written in clear and specific language, with an explanation of the agency’s time period and other controls that must be stated in the system Given the importance of the agency in facilitating business, whether individual or commercial, protecting rights, and benefiting from various services, it was necessary for us at Mohammed bin Afif Law Firm to clarify the most important points related to the agency contract in Saudi Arabia, and to understand the requirements and obligations required by the civil transactions system for the agency contract to be valid and productive of its effects, in a way that ensures the availability of legal protection, enhances trust, and raises the level of efficiency. When the authorized agent is aware of the legal and regulatory requirements for work, It can execute contracts in a committed and efficient manner, achieve the objectives specified in the agency contract, and maximize the agent’s benefits. Knowing the agent’s and client’s obligations in the agency contract increases cooperation and understanding between the two parties, reducing the occurrence of disputes and disagreements, thus saving time, effort, and expenses that could be spent in the event of legal disputes.

This article aims to shed light on the various aspects of the agency contract in the Saudi legal system, starting from its definition and concept, through the obligations of the agent and principal and its legal effects, all the way to how to terminate the contract and terminate the agency in accordance with Saudi regulations.

What is the definition of an agency contract in Saudi law?

The Civil Transactions Law defines an agency as a contract by which the agent takes his place in a regular transaction, as it is considered one of the contracts included in work in the field of civil transactions.

What are the controls for an agency contract in Saudi Arabia?

In Saudi Arabia, an agency may be absolute, restricted, conditional, or added to a term. An agency may not be valid with general terms that do not specify the type of legal action in place of the agency.

The special agency is also valid in a specific type of regular conduct, even if the subject of this conduct is not specified unless the conduct is from donations. In every work that is not part of the administration’s work, the agency must be special and specify the type of work and the actions required by the agency in it. This is considered the subsequent leave to act in accordance with the previous agency.

The concept of agency contract in Saudi law and its importance

What are the obligations of an agent in the agency in Saudi Arabia?

We begin by stating that the agent is established, by virtue of the agency contract, the right to dispose of what the agency deals with and the necessary consequences it requires, according to the nature of the disposal, what the will of the contracting parties has turned to, and what is customary. The money that the agent received on behalf of his client is considered a deposit, and the agent’s disposal of what is most beneficial to the client is not considered a transgression of the limits of the agency, unless the client has a purpose in determining the agency.

If the agency is unpaid, the agent is obligated to exercise in its implementation the care he exerts in his own work without costing more than the care of the usual person, and if the agency is paid, the agent is obligated to exercise in its implementation the care of the usual person.

On the other hand, if there are multiple agents and each of them has an independent contract, he has the right to be alone in what he is assigned to, unless the principal stipulates that they are not alone. If there are multiple agents and they are all appointed in one contract without the principal authorizing any of them to act alone, they must work together. If there are multiple agents, they are jointly liable whenever the agency is indivisible, or the damage suffered by the principal is the result of a joint error Agents, even if they are jointly and severally liable, shall not be liable for what one of them did that exceeded the limits of the agency or was arbitrary in its implementation.

Also, the agent may not appoint someone else in what he was appointed to or in some of it unless he is authorized to do so by the principal. The second agent is considered an agent for the original principal, and the agent authorized to appoint someone else without appointing his person is not responsible towards his principal except for his error in choosing the agent or in the instructions he issued that were the cause of the harm Also, each of the principal and his agent has the right to dismiss the second agent appointed by the agent, and the dismissal of the first agent results in the dismissal of the second agent, and the agent who is assigned to buy something without stating its price does not have the right to buy it for more than the price of the equivalent.

Likewise, it is not permissible for someone who is assigned to buy a specific thing in particular to buy it for himself, and the purchase is for the principal even if the agent declares that he is buying it for himself, and it is not permissible for the agent in the purchase to buy it from his money or from the money of his assets, branches, spouse, or from someone with whom the transaction would bring spoils or pay a fine except with the permission of his client.

If the agent buys the price in the principal’s favor or in kind and the agent buys more than it, the contract is terminated if the principal does not approve it to the agent. If the principal approves it, it is executed against him and he has the right to demand compensation from the agent. Also, if the agent declares that he bought the thing for himself in the presence of the principal, the purchase is for the agent.

Also, if the agent pays the price of the sold item from his own money in the purchase, he has the right to return it to his client along with what he spent in order to implement the agency in the usual amount. If the client assigns to the agent in the sale the price of the sold item, he does not have the right to sell for less than it. If he does not assign the price, he does not have the right to sell for less than the equivalent price. If the agent sells for a decrease without the client’s permission, the sale is not implemented against the client He has no right to claim that the sale is not enforceable against the buyer in good faith. If the principal permits the sale, it will be executed against him, and he has the right to demand compensation from the agent.

The agent in a sale may not buy for himself what he was entrusted with selling except with the permission of his client, and the agent in a sale may not sell to his assets, branches, spouse, or to the person with whom the transaction would bring spoils or pay a fine except with the permission of his client. Likewise, the agent in a sale may not sell his client’s money at a deferred price except with explicit or implicit permission If the agent sells deferred, he may take a mortgage or guarantor from the buyer for what he sold deferred, even if the principal does not authorize him to do so.

Finally, the agent must provide his client with the necessary information about what he has achieved in implementing the agency, and provide him with an account of it, unless the agreement or the nature of the transaction requires otherwise.

The concept of agency contract in Saudi law and its importance

What are the client’s obligations at the agency in Saudi Arabia?

The principal must pay the agreed-upon wage to the agent whenever the work is completed. If they do not agree to pay a wage and the agent is one of those who work for a wage as a habit, then he has the same wage. Otherwise, he is a donor. The principal is obligated to return to the agent what he spent in order to implement the agency in the usual manner. The principal is obligated to pay everything that is due to the agent due to implementing the agency in the usual manner The principal shall also be liable for any damage caused to the agent due to the agency’s normal implementation, unless the damage arises from his fault.

What are the controls and cases for terminating an agency contract in Saudi Arabia?

It is noted that the agency contract ends with the completion of the work assigned to him, or with the expiration of the period specified for the agency, or with the death of the principal or agent, or with the loss of one of them of his capacity. It should be noted that the principal may dismiss his agent or restrict his agency whenever he wants, unless it was issued in favor of the agent or in favor of others. The principal may not dismiss him or restrict the agency without the approval of the person for whom it was issued. In all cases, the principal must inform the agent of this.

If the agency is paid and the principal dismisses his agent at an inappropriate time or without acceptable justification, he must compensate the agent for the damage he causes as a result.

Likewise, the agent may relinquish the agency if it is not related to the interest of others, provided that his client is informed of his relinquishment of it. If the agency is related to the interest of others, the agent may not relinquish the agency unless there are serious reasons justifying that, provided that others know about that and give him sufficient time to take what he deems appropriate to take care of his interest The agent is also obligated in all cases to continue carrying out the work he began until he reaches a stage where there is no fear of harm to the principal, otherwise he is obligated to compensate for the harm. Likewise, if the agency is paid and the agent abandons the agency at an inappropriate time or without an acceptable justification, he is obligated to compensate the principal for the harm he causes as a result of that, even if the agent’s abandonment was for work that he did not initiate.

Legal services related to the agency contract

The agency contract requires a deep understanding of the regulations relating to the rights and obligations of both the agent and the client. The office of Attorney Abdul Majeed Al Rashid provides legal advice related to establishing the contract, interpreting legal clauses, and protecting the interests of the parties involved.

Drafting the agency contract

This service consists of preparing a precise legal formulation of the agency contract in accordance with the provisions of the Civil Transactions Law, including determining the scope of powers granted to the agent, and determining the time period for

Agency documentation

It is essential to document agency contracts with official authorities to ensure their legality. A specialized lawyer from the office of Attorney Abdul Majeed Al Rashid provides agency contract documentation services, without the need to visit a notary public.

Termination of agency contract

The office of lawyer Abdul Majeed Al-Rasheed provides assistance in preparing and drafting procedures for terminating the agency contract, whether at the will of one of the parties or based on judicial rulings, and also provides advice on the implications of terminating the contract and how to protect the rights of both parties after its termination.

Legal protection of the principal and agent

Lawyer Abdul Majeed Al Rashid’s office provides a service to monitor the parties’ compliance with the terms of the agency contract, ensure that the agent does not exploit or exceed his powers, in addition to assisting clients in following up on the proper implementation of the agency and protecting their legal rights.

Resolving agency contract disputes

In the event that a dispute arises between the agent and the client as a result of one of the parties violating the terms of the contract, the office of lawyer Abdul Majeed Al-Rasheed provides dispute settlement services, whether through negotiation, mediation, or litigation, in line with the judicial systems in Saudi Arabia.

These services are essential to ensure that contracts proceed legally and orderly, and contribute to protecting all parties and ensuring compliance with Saudi regulations.