Article 205 of the Saudi Civil Transactions Law
المادة 205 من نظام المعاملات المدنية · الفرع الثاني: الأجل
The article sets the cases in which the debtor loses the benefit of the term: a judgment of his insolvency, failure to provide the agreed security, or its diminution unless he promptly completes it.
Official text (Arabic)
This article has not been amended since the law was issued.
يسقط حق المدين في الأجل إذا حكم بإعساره، أو لم يقدم ضمانات الدين المتفق عليها، أو نقصت تلك الضمانات بفعله أو بسبب لا يد له فيه؛ ما لم يبادر إلى إكمالها.
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 205 explained in plain English
The rule is that a debtor under a deferred debt cannot be asked to pay before the term arrives, but this article sets out cases in which the debtor loses the benefit of the term, so that the debt becomes due before its date.
Cases in which the term is lost:
- A judgment of the debtor's insolvency.
- The debtor's failure to provide the agreed security for the debt.
- Diminution of that security, whether the diminution is by the debtor's act or for a reason beyond his control.
The exception: The term is not lost if the debtor promptly completes the security.
This article is connected with Article 204, which allows the creditor, before the term arrives, to take steps to preserve his right, including requesting security if he fears the debtor's insolvency and relies on an acceptable reason. It is also connected with Article 206, which permits early performance by the person for whose benefit the term was set, unless early performance harms the other party.
To know whether the term has been lost in a particular case, it is advisable to consult a lawyer specializing in civil cases.
Practical example
A company in Khobar bought equipment in installments and agreed with the seller to provide security in kind for the debt, and then this security diminished. If the company does not promptly complete the security, it loses the benefit of the term and the seller may claim the debt before the installment dates.
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 205 of the Saudi Civil Transactions Law
When does the term of a debt fall away?
It falls away if the debtor is judged insolvent, does not provide the agreed security for the debt, or the security diminishes by his act or for a reason beyond his control, unless he promptly completes it.
Does the term fall away if the security diminishes without the debtor's fault?
Yes. The text covers diminution of security for a reason beyond the debtor's control, unless he promptly completes it.
How does the debtor keep the term if the security diminishes?
By promptly completing it.
More articles on Condition, Term and Joint Liability
- Article 127
If several persons are liable for a harmful act, they are jointly liable for compensation, the court sets each one's share, and if that is not possible, liability is divided equally.
إذا تعدد المسؤولون عن فعل ضار كانوا متضامنين في التزامهم بتعويض الضرر، وتعين المحكمة نصيب كل منهم في التعويض وفق القواعد الواردة في هذا الفصل، وإذا تعذر ذلك كان
- Article 197
The article defines a conditional obligation as one whose existence or disappearance depends on a future event that may or may not occur.
يكون الالتزام معلَّقًا على شرطٍ إذا كان وجوده أو زواله مترتِّبًا على أمرٍ مستقبلٍ محتمل الوقوع.
- Article 198
The article provides that an obligation made conditional on an event that has occurred is treated as immediate, and one made conditional on something impossible has a void condition and is itself void.
إذا علق الالتزام على أمر واقع عد الالتزام ناجزًا، وإذا علق على أمر مستحيل عد الشرط باطلًا، ويبطل الالتزام الذي علق عليه.
- Article 199
The article provides that an obligation does not arise if it is made conditional on a condition whose purpose is to encourage something unlawful.
لا ينشأ الالتزام إذا عُلق على شرطٍ يكون القصد من التعليق عليه الحض على أمر غير مشروع.
- Article 200
The article provides that an obligation does not exist if it is made conditional on a suspensive condition making its existence depend on the mere will of the obligor.
لا يكون الالتزام قائمًا إذا علق على شرط واقف يجعل وجود الالتزام متوقفًا على محض إرادة الملتزم.
- Article 201
The article provides that an obligation subject to a suspensive condition is not enforceable unless the condition is fulfilled and cannot be performed before then, while the creditor may take steps to preserve his right.
لا يكون الالتزام المعلق على شرط واقف نافذًا إلا إذا تحقق الشرط المعلق عليه، ولا يكون الالتزام قبل تحقق الشرط قابلًا للتنفيذ، وللدائن أن يتخذ من الإجراءات ما يُح
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.