Article 240 of the Saudi Civil Transactions Law
المادة 240 من نظام المعاملات المدنية · الفصل الأول: حوالة الحق
The Article requires, for an assignment to be enforceable against the debtor and third parties, that the debtor accept it or be notified of it by a lawful means, and that acceptance relied on against third parties be in writing with a certain date.
Official text (Arabic)
This article has not been amended since the law was issued.
لا تكون حوالة الحق نافذة تجاه المدين أو تجاه الغير إلا إذا قبلها المدين أو أُعلِم بها بأي وسيلة مقررة نظامًا، على أن نفاذها تجاه الغير بقبول المدين يستلزم أن يكون هذا القبول ثابت التاريخ ومكتوبًا.
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 240 explained in plain English
This Article determines when an assignment of a right is enforceable against the debtor and against third parties.
An assignment is concluded between the assigning creditor and the assignee without the debtor's consent being required, as Article 238 provides. But its conclusion is not enough for it to be asserted against the debtor or others.
The condition for enforceability: An assignment of a right is not enforceable against the debtor or third parties except in one of two ways:
- The debtor accepts it.
- Or he is notified of it by any means prescribed by law.
An additional condition for enforceability against third parties by acceptance: If the assignment's enforceability against third parties rests on the debtor's acceptance, this acceptance must be in writing and have a certain date.
A third party means one who is not a party to the assignment and whose rights may be affected by it. The Article does not specify the means prescribed by law for notification, so the relevant legal provisions are consulted.
Practical effect: As long as the assignment is not enforceable against the debtor, it cannot be asserted against him. The assignee should therefore make sure of the debtor's acceptance or notify him of the assignment. If he relies on the debtor's acceptance to assert the assignment against third parties, he must obtain this acceptance in writing and with a certain date.
The Article follows Article 239, which limits the validity of the assignment to the attachable portion of the right, and it is followed in sequence by Article 241, which provides that the right passes to the assignee with its attributes, accessories and guarantees.
To ensure the enforceability of a particular assignment, it is advisable to consult a lawyer specializing in civil cases.
Practical example
A contracting company in Jeddah assigned its receivables from a customer to a financing party. For the assignment to be enforceable against the customer, he must accept it or be notified of it by a means prescribed by law. If the financing party wants to assert the assignment against third parties on the basis of the customer's acceptance, the acceptance must be in writing and have a certain date.
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 240 of the Saudi Civil Transactions Law
Must the debtor be notified of an assignment of a right?
An assignment is not enforceable against the debtor or third parties unless the debtor accepted it or was notified of it by any means prescribed by law.
Is the debtor's oral acceptance enough for enforceability against third parties?
No. Enforceability against third parties by the debtor's acceptance requires the acceptance to be in writing and have a certain date.
Is the assignment concluded before the debtor is notified?
Yes. The debtor's consent is not required for its conclusion (Article 238), but it is not enforceable against him except by his acceptance or notification.
More articles on Assignment of Rights and Debts
- Article 238
The Article allows a creditor to assign his right to another person unless legal provisions, agreement or the nature of the obligation prevent it, and does not require the debtor's consent for the assignment to be concluded.
للدائن أن يحيل حقه إلى شخص آخر، وذلك ما لم تقتضِ النصوص النظامية أو الاتفاق أو طبيعة الالتزام خلاف ذلك، ولا يشترط لانعقاد الحوالة رضى المدين بها.
- Article 239
The Article limits the validity of an assignment of a right to the portion that is attachable, so what cannot be attached cannot validly be assigned.
لا تصح حوالة الحق إلا بقدر ما يكون منه قابلًا للحجز.
- Article 241
The Article provides that the assigned right passes to the assignee with its attributes, accessories and guarantees as it was with the assignor.
ينتقل الحق إلى المحال له بصفاته وتوابعه وضماناته.
- Article 242
The Article determines the assignor's guarantee: in an assignment for consideration he guarantees the existence of the right at the time it is concluded unless otherwise agreed, and in an assignment without consideration he does not guarantee its existence.
1- إذا كانت الحوالة بعوض، لم يضمن المحيل إلا وجود الحق المحال به وقت انعقاد الحوالة، ما لم يتفق على خلاف ذلك. 2- إذا كانت الحوالة بغير عوض، لم يضمن المحيل وجود
- Article 243
The assignor does not guarantee the debtor's solvency except by special agreement, and if he guarantees it, the guarantee applies to solvency at the time the assignment is concluded unless otherwise agreed.
لا يضمن المحيل يسار المدين إلا إذا وجد اتفاق خاص على هذا الضمان، وإذا ضمن المحيل يسار المدين لا ينصرف هذا الضمان إلا إلى اليسار وقت انعقاد الحوالة ما لم يتفق عل
- Article 244
The Article sets the ceiling of the assignee's recourse against the assignor under the guarantee: the assignor is required only to return what he took together with expenses, even if otherwise agreed.
إذا رجع المحال له بالضمان على المحيل طبقًا للمادتين (الثانية والأربعين بعد المائتين) و(الثالثة والأربعين بعد المائتين) من هذا النظام، فلا يلزم المحيل ردُّ أكثر
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.