The pillars and effects of the contract

The pillars and effects of the contract

Contracts in the Kingdom of Saudi Arabia are an integral part of individuals’ daily lives, as they play a fundamental role in regulating relations and transactions between individuals and companies, whether those transactions are commercial or civil. Contracts guarantee the rights of the contracting parties and define their rights and obligations in a clear legal manner. Through contracts, trust is achieved between the parties and future disputes are avoided, which contributes to improving the course of contractual transactions Therefore, understanding the importance of contracts and applying them correctly is essential to ensure smooth transactions and protect the rights of all people.

Based on the above, this article aims to clarify the importance and necessity of learning about the concept of the contract, its basic pillars, and the legal effects resulting from it according to what is stated in the Civil Transactions Law. By providing questions and answers regarding this, it helps individuals and companies understand how to form contracts correctly, and ensure that all parties adhere to their legal rights and duties. The article also aims to enhance legal awareness This contributes to avoiding disputes and facilitating the conduct of transactions in a safe and orderly manner.

What is the concept of a contract?

In the civil transactions system, a contract is the connection between offer and acceptance to produce a legal effect, whether the contract is a named or unnamed contract. In other words, a contract is a binding legal agreement between two or more parties, which includes mutual obligations related to a specific subject, and according to which the rights and duties of each party are determined. The conclusion of the contract aims to organize relations and transactions between the parties in a clear manner, as it is an essential tool to ensure commitment and implementation of what has been agreed upon.

What are the pillars of the contract?

The Saudi Civil Transactions Law confirms the existence of basic pillars of the contract, which are considered the basic component for the validity of concluding a contract in the Kingdom. The following are considered among the most important pillars of the contract in Saudi Arabia:

• Satisfaction or satisfaction 

Satisfaction is achieved if the wills of two (or more) contracting parties who have the capacity to contract agree and the will is expressed in a way that indicates it. With regard to expressing the will, there is an offer and acceptance of everything that indicates the will. It is also permissible for the will to be expressed verbally, in writing, by understandable reference, or by giving, and it must be explicit or implicit, unless the regulatory texts, the agreement, or the nature of the transaction require otherwise The person making the offer may change his mind about the offer before the acceptance is issued, unless the offer has a specific period. Furthermore, the silence of the person to whom the offer is addressed is not considered acceptance unless there is an agreement or there is evidence indicating that.

As for the capacity to contract, every person is qualified to act, unless he has no capacity or lacks it according to a legal text. The actions of an unprivileged minor are invalid. If the actions of a privileged minor are purely beneficial, then they are valid. If they are purely harmful, then they are invalid. The actions of an imbecile are the same as the actions of a privileged minor, and the actions of an insane person are the same as the actions of an unprivileged minor.

It is worth noting that the contracting party may request the annulment of the contract if he commits a fundamental error, without which he would not have been satisfied with the contract, especially if the fundamental error is in the nature of the subject or the person of the contracting party, his nature or the regulatory ruling. One of the forms of defects in satisfaction is deception, which is when one of the contracting parties deceives the other in fraudulent ways that force him to conclude a contract that he would not have concluded without them, and coercion, which is threatening a person unjustly with a material or moral means that frightens him and forces him to act Ghamn is the increase or decrease of compensation to a degree that is outside the usual limit. Determining ghabn is based on custom.

• The place and the reason 

The subject of the obligation may be the transfer of a real right, an act, or the abstention from an act. The subject of the obligation may also be something of a certain future type and amount. Except in cases permitted by regulatory texts, the estate of a living person may not be the subject of a transaction, even if it was issued by him or with his consent. The subject of the obligation must meet the following conditions:

• To be possible in itself.
• It must not be contrary to public order.
• It must be specific in itself, by type and amount, or assignable.

On the other hand, any contract in which the reason for contracting is illegitimate is void if it is stated in the contract or indicated by the circumstances of the contract. Furthermore, any contract whose reason is not mentioned is presumed to have a legitimate reason, unless the evidence provides otherwise.

What are the controls for invalidating or voiding a contract?

The Saudi Civil Transactions Law has confirmed that if a statutory text gives one of the contracting parties the right to request the annulment of the contract, the other contracting party does not have the right to cling to this right, and the right to request the annulment of the contract is forfeited by explicit or implicit authorization if it is issued by the person who has this right. If the contract is authorized, the authorization is based on the time of its conclusion.

A claim for annulment of the contract shall not be heard if one year has passed from the date of knowledge due to annulment. If the annulment of the contract is due to lack of capacity or coercion, then after one year has passed from the date of completion of capacity or removal of coercion. Except in the case of lack of capacity, a claim for annulment of the contract shall not be heard if ten years have passed from the date of the contract.

On the other hand, if the contract is signed as invalid, every interested party may insist on the invalidity, and the court may rule on it on its own initiative. The invalidity does not disappear with permission, and a claim for invalidity is not heard if ten years have passed from the date of the contract. However, every interested party may argue for the invalidity of the contract at any time.

It is worth noting that in the event of nullification or invalidity of the contract, the contracting parties shall return to the state they were in before the contract, and if that is impossible, compensation may be awarded. In the event of nullification or invalidity of the contract due to the contractor’s lack of capacity or absence, he shall not be required to return anything other than the significant benefit that accrued to him due to the implementation of the contract. In addition, if the contract is in part void or may be nullified, only that part shall be nullified Unless it becomes clear that the contracting party would not have been satisfied with the contract without that part, he has the right to request the annulment of the contract.

What are the effects of the contract?

The Civil Transactions Law stipulates that if the contract is concluded in its entirety, it may not be annulled or amended except by agreement or pursuant to a statutory text. The rights created by the contract shall also be established immediately upon its conclusion, without prejudice to arrest or otherwise, unless a statutory text stipulates otherwise. The contracting parties must fulfill what the contract requires of them.

The contract must be implemented in accordance with what it contains and in a manner consistent with what good faith requires, in addition to the fact that the contract is not limited to obligating the contracting party to what is stated in it, but includes what is required of it in accordance with what is stipulated in regulatory texts, custom, and the nature of the contract.

It should be noted that if general exceptional circumstances arise that could not have been anticipated at the time of contracting and result in the performance of the contractual obligation becoming burdensome for the debtor, threatening him with a huge loss, he may, without undue delay, invite the other party to negotiate.

The effect of the contract also extends to the contracting parties and the general successor, without prejudice to the provisions relating to inheritance, unless it becomes clear from the contract, the nature of the transaction, or the regulatory texts that this effect does not extend to the general successor If the contract creates personal obligations and rights related to something that was then transferred to a private successor, then these obligations and rights are transferred to him at the time that thing is transferred if they are among his requirements and the private successor knew about them at the time that thing was transferred to him.

The contract does not entail an obligation on the part of a third party, but it may give him a right. Also, if a person pledges to make a third party abide by something, then that third party is not obligated to do so. If the third party accepts that pledge, then his acceptance does not produce effect except from the time of its issuance, unless it becomes clear that he explicitly or implicitly intended that the effect of this acceptance would be based on the time of the pledge However, if the third party refuses that undertaking, the contractor must compensate the contractor if necessary, and the contractor may dispose of the compensation by implementing the obligation he pledged if possible.

A person may also contract in his name for obligations that he stipulates for the benefit of others if he has a personal interest in implementing these obligations, whether material or moral. The condition for the benefit of others results in the third party gaining a direct right towards the contractor that he can demand from him to be fulfilled unless otherwise agreed upon. The contractor may adhere to the defenses that arise from the contract towards the beneficiary, and the condition is that the contractor must demand the implementation of what he stipulates for the benefit of the beneficiary.

What are the controls for terminating a contract?

The contracting parties may exchange the contract with their consent in one or part of the place, and the terms of the contract shall apply to dismissal. It is permissible to contract on the condition of the option to withdraw from the contract, and the person who has the option has the right to withdraw within the specified period, provided that the other contracting party is informed. If the person who has the option withdraws, this is considered a termination of the contract. If the period of the option is not specified, the court shall specify it according to custom and the circumstances of the contract. The option to withdraw from the contract is also dropped by dropping it explicitly or implicitly from the person who has the option It is forfeited after the option period has passed without change. If the option is for the contracting parties and one option is forfeited, the other option is not forfeited.

Finally,

 Familiarity with the elements of the contract, its effects, and the controls for its annulment and termination is essential to ensure the validity of contracts and protect the rights of the contracting parties. This includes a deep understanding of the basic elements of the contract, such as consent, legitimate subject matter, and legal reason, which ensure the integrity of the agreement. Knowledge of the effects of the contract also enhances the parties’ ability to assess their rights and duties On the other hand, understanding the controls for invalidating and terminating a contract provides the parties with legal mechanisms to deal with any disputes or non-compliance with the agreed upon terms, and thus this knowledge contributes to protecting rights and ensuring justice and transparency in transactions in accordance with the civil transactions system.

How can the office of lawyer Abdul Majeed Al Rashid help you draft contracts that contribute to the success of your business?

At the office of lawyer Abdul Majeed Al Rashid, we provide specialized legal services in drafting and reviewing contracts to ensure the rights of contracting parties in the Kingdom of Saudi Arabia.

 Our team of experienced lawyers works to prepare tight legal contracts that are in line with Saudi regulations, which contributes to avoiding future disputes and protecting interests.

We provide thorough legal advice to ensure clarity on contract terms, and we review all clauses to ensure they comply with local and international laws.

 Whether the contract is commercial, real estate or labor, we are committed to providing comprehensive legal solutions that ensure your rights are protected and justice is achieved.