Lending Agreement under the Civil Transactions Law
The Civil Transactions Law issued in 29\11\1444 AH is one of the most important legislative systems in the Kingdom of Saudi Arabia that regulated contracts and transactions between parties.
The civil transactions system addressed many of the problems and challenges faced by many clients, particularly those transactions arising from contractual relationships, such as loan contracts, their terms, the specific term of the contract, and contract expiration dates.
What is naked?
Nakedness is the use of an eye loaned from one person to another without compensation, such as a person giving his car to another person on loan, with the condition that he returns it within two months.
The loan contract model consists of four main pillars:
- Lendrer: The owner of the loaned property.
- Borrower: Loan applicant.
- Loaned property: includes movable property, real estate, and other items that are subject to usufruct.
- The formula of offer and acceptance between the two parties.
What is a loan contract?
Article 451 of the Civil Transactions Law defines a loan contract as a contract that enables the loaner to benefit from something that is not consumable for a specific period or for a specific purpose without compensation. Such as lending a farmer an agricultural plow for harvest.
What are the loan terms?
The Civil Transactions Law stipulates certain conditions for the loan contract to be concluded, which are:
- The loaned item must be non-consumable, such as food or money.
- The loan must be free of charge.
- The borrower receives the loaned item and benefits from it.
What is the difference between a lease and a nude contract?
What is the difference between a lease and a nude contract?
The lease contract shares with the loan contract that both:
- From contracts related to the benefit, such as lending a car or renting a residential apartment.
- The benefit must be for a specific period.
- It is required to return the property to its owner after completion, such as handing over the keys to the rented residence or returning the loaned tools after using them.
A lease contract differs from a loan contract in terms of financial compensation, as the lease contract requires that the lessor deliver the rented property to the lessee in exchange for an agreed-upon fee, unlike a loan contract in which the loan is free of charge.
What is the difference between a loan and a loan?
A loan is a contract of ownership in which the lender gives the borrower money or money in kind, provided that he responds in kind.
The loan contract is a benefit contract in which the owner of the property undertakes to deliver it to the borrower without compensation, provided that the same property loaned from its owner is returned in the same condition before the contract, and the borrower bears any damage caused to it during the period the property remains with him.
How long is the loan?
The loan period is determined by agreement between the two parties to the contract, so the property owner does not have the right to request its return before the expiry of the agreed period.
If the loan period is not specified, the borrower must return the property upon the request of its owner, unless there is harm to the borrower, in which case he has the right to keep the property with him until the harm is removed, and he must pay the equivalent fee to the owner of the property when he exceeds the usual or customary period for benefiting from it.
When does the loan end?
When does the loan end?
The loan contract ends in the following cases:
- The death of the lender or borrower, and the contract is not transferred to the heirs unless they agree to that.
- The end of the period specified for benefiting from the eye or its purpose.
- If the borrower cools the eye before the expiry of the agreed period.
It is important to hire a contract attorney who will help you review and improve contracts and ensure your rights within the contract.
A public defender from the office of Attorney Abdul Majeed Al Rashid specializes in providing various legal services, including studying and analyzing cases, drafting contracts and reviewing clauses, representing the client before the competent authorities and negotiating on his behalf, following up on implementation procedures, attending sessions before judicial courts, and pleading on behalf of the client, among others
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