Article 242 of the Saudi Civil Transactions Law
المادة 242 من نظام المعاملات المدنية · الفصل الأول: حوالة الحق
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 الحق.
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 242 explained in plain English
This Article answers an important question: what does the assignor (the original creditor) guarantee to the assignee (the new creditor) when he assigns a right to him? It distinguishes between two cases:
- Assignment for consideration: for example, where the creditor sells his right for a sum. Here the assignor guarantees only the existence of the assigned right at the time the assignment is concluded. If it turns out that the right did not exist at that time, the assignor is liable. The parties may agree otherwise than this rule.
- Assignment without consideration: for example, where the creditor assigns his right as a gift. Here the assignor does not guarantee the existence of the right at all.
The reasoning is clear: one who took consideration for the right is required at least to make sure the right actually exists, whereas the donor took nothing.
This guarantee does not automatically extend to the debtor's ability to pay; Article 243 provides that 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. As for the right itself, it passes under Article 241 with its attributes, accessories and guarantees.
A person who buys a right should therefore verify its existence, and set out in the contract any additional guarantees he wants. In case of dispute over the existence of the right or the scope of the guarantee, it is advisable to consult a lawyer specializing in civil cases.
Practical example
Fahd sold Saad a right worth SAR 50,000 owed by a merchant in Dammam for SAR 45,000. It then turned out that the merchant had paid the debt to Fahd before the assignment, so the right did not exist when it was concluded. Fahd is here liable to Saad because the assignment was for consideration. Had Fahd assigned the right to Saad as a gift without consideration, he would not have guaranteed its existence.
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 242 of the Saudi Civil Transactions Law
Does the assignor guarantee the existence of the right in an assignment of a right?
He guarantees it if the assignment is for consideration, as of the time the assignment is concluded unless otherwise agreed, and he does not guarantee it if it is without consideration.
Can the assignor's guarantee in an assignment for consideration be changed by agreement?
Yes. The Article states the rule unless the parties agree otherwise.
Does the assignor guarantee that the debtor is able to pay?
No, unless there is a special agreement to guarantee the debtor's solvency, under Article 243.
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 240
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.
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 يك
- 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 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.