Saudi Cabinet approves new Commercial Transactions Law
Saudi Arabia has approved a comprehensive Commercial Transactions Law, regulating business practices, contracts, and commercial papers in line with global standards.
Key Takeaways
AIThe Saudi Cabinet has approved the Commercial Transactions Law, a comprehensive framework regulating commercial activities, businesses, related obligations, contracts, and commercial papers, in line with international best practices.
The Ministry of Commerce explained that the law comprises 271 articles, covering the definition of commercial activities, merchants and businesses, traders’ obligations, accounting records, commercial contracts, and rules for commercial papers such as promissory notes, bills of exchange, and checks. It replaces three previous laws: the Commercial Law, the Commercial Papers Law, and the Commercial Books Law.
The new law allows minors aged 15 and above to engage in commercial activities with permission from their guardian, trustee, or the court. It redefines the term 'merchant' and specifies which activities are considered commercial, including those that are commercial by nature even if performed only once, and those requiring habitual practice to be classified as commercial.
The law promotes and encourages fair competition among traders, prohibits traders from harming competitors, and clarifies the rights of affected parties to seek court intervention to stop harm and claim compensation.
Certain categories of traders are exempted from maintaining accounting records. The law emphasizes the preservation of records, either electronically or on paper, in Arabic, while also allowing them to be kept in another language. It aims to enhance predictability in commercial transactions and reduce disputes.
For the first time in a single legislative document, the law addresses commercial contracts and regulates the rules for commercial sales, supply sales, commercial agency, and brokerage, outlining provisions that protect all parties’ rights.
The Commercial Transactions Law, which will come into effect 180 days after its publication in the official gazette, provides protection for business dealings, especially for small and medium enterprises, and supports their growth through commercial contracts and agency work.