Article 101 of the Saudi Civil Transactions Law
المادة 101 من نظام المعاملات المدنية · الفرع الرابع: آثار العقد
The article allows a person to contract in his own name for obligations stipulated for another's benefit if he has a personal interest, and gives the beneficiary a direct right against the promisor.
Official text (Arabic)
This article has not been amended since the law was issued.
1- للشخص أن يتعاقد باسمه على التزامات يشترطها لمصلحة غيره إذا كان له في تنفيذ هذه الالتزامات مصلحة شخصية مادية كانت أم أدبية.
2- يترتب على الاشتراط لمصلحة الغير أن يَكسِبَ الغير حقًّا مباشرًا تجاه المتعهد يستطيع أن يطالبه بوفائه ما لم يُتفق على خلاف ذلك، وللمتعهد أن يتمسك تجاه المنتفع بالدفوع التي تنشأ عن العقد.
3- للمشترط أن يطالب المتعهد بتنفيذ ما اشترط لمصلحة المنتفع.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 101 explained in plain English
This article regulates stipulation for the benefit of a third party, which involves three parties: the stipulator, who contracts in his own name; the promisor, who undertakes to perform; and the beneficiary, for whose benefit the obligations are stipulated without being a party to the contract.
Paragraph 1 — condition for permissibility: a person may contract in his own name for obligations that he stipulates for the benefit of another, provided that he has a personal interest in their performance, whether material or moral.
Paragraph 2 — the beneficiary's right: the beneficiary acquires a direct right against the promisor and may demand performance from him himself, unless otherwise agreed. In turn, the promisor may raise against the beneficiary the defenses arising from the contract; that is, the beneficiary does not acquire a stronger right than the contract itself gives.
Paragraph 3 — the stipulator's right: the stipulator also keeps the right to demand that the promisor perform what he stipulated for the beneficiary's benefit.
Article 102 regulates the stipulator's right to revoke the stipulation or change the beneficiary, and its limits.
Anyone who believes they are a beneficiary of a contract concluded by others and wishes to claim their right should consider consulting a lawyer who specializes in civil cases to examine the terms of the contract and the possible defenses.
Practical example
A father in Riyadh contracted with a private school for it to provide his son with a paid educational program. The father is the stipulator, with a moral interest in his son's education; the school is the promisor; and the son is the beneficiary. The son acquires a direct right to claim against the school, the father may also demand performance, and the school may raise the defenses arising from the contract.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 101 of the Saudi Civil Transactions Law
Can someone who benefits from a contract claim their right even if they are not a party?
Yes. The beneficiary acquires a direct right against the promisor and may demand performance, unless otherwise agreed.
What is the condition for a valid stipulation for the benefit of a third party?
That the stipulator has a personal interest, material or moral, in the performance of the obligations.
Can the stipulator himself demand performance from the promisor?
Yes. The stipulator may demand that the promisor perform what he stipulated for the beneficiary's benefit.
More articles on Effects and Interpretation of Contracts
- Article 30
The article provides that the rules of the contract chapter apply to named and unnamed contracts, without prejudice to the legal provisions that regulate contracts of a special nature.
تطبق الأحكام الواردة في هذا الفصل على العقود المسماة وغير المسماة، وذلك دون إخلال بالأحكام الواردة في النصوص النظامية التي تنظم عقودًا ذات طبيعة خاصة.
- Article 40
In adhesion contracts, acceptance is limited to mere submission to fixed terms set by the offeror that are not open to discussion.
القبول في عقود الإذعان يقتصر على مجرد التسليم بشروط مقررة يضعها الموجب ولا يقبل مناقشة فيها.
- Article 45
A framework agreement is a contract in which the parties set the basic terms of the contracts they create between them under its provisions, and it is treated as part of those contracts.
الاتفاق الإطاري عقدٌ يُحدد المتعاقدان بمقتضاه البنود الأساسية التي تخضع لها العقود التي ينشئها المتعاقدان بينهما وفقًا لأحكام هذا الاتفاق، ويُعد ذلك الاتفاق جزء
- Article 46
If the contracting parties, expressly or impliedly, refer in the contract to a model document, specified rules or any other document, it is treated as part of the contract.
إذا أحال المتعاقدان صراحةً أو ضمنًا في العقد إلى أحكام وثيقةٍ نموذجيَّةٍ أو قواعد محددة أو أي وثيقة أخرى عُدَّت جزءًا من العقد.
- Article 73
If the parties do not specify the quantity of the subject matter and the contract contains what allows it to be determined, the court determines it; if they do not agree on quality and there is no custom or indication, an item of medium quality must be delivered.
1- إذا لم يحدِّد المتعاقدان مقدار المحل وتضمن العقد ما يمكن للمحكمة تحديده به؛ حددته بناءً على ذلك. 2- إذا لم يتفق المتعاقدان على درجة جودة الشيء ولم يوجد عرف أ
- Article 87
The article permits contracting through representation unless statutory texts require otherwise, and divides representation into agreed, judicial and statutory.
1- يصح التعاقد بالنيابة؛ ما لم تقتض النصوص النظامية خلاف ذلك. 2- تكون النيابة في التعاقد اتفاقيةً أو قضائيةً أو نظاميةً.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.