Article 243 of the Saudi Civil Transactions Law
المادة 243 من نظام المعاملات المدنية · الفصل الأول: حوالة الحق
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 على خلاف ذلك.
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 243 explained in plain English
Solvency is the debtor's financial ability to pay the debt. This Article deals with a question faced by everyone who accepts an assignment of a right: if the debtor is unable to pay, does the assignor bear that?
The Article sets two rules:
- The default is no guarantee of solvency: The assignor does not guarantee the debtor's solvency unless there is a special agreement for this guarantee. If this was not stipulated in the assignment, the assignee bears the risk of the debtor's inability to pay.
- The scope of the guarantee when agreed: If the assignor guarantees the debtor's solvency, the guarantee applies to solvency at the time the assignment is concluded only, not to what arises afterwards, unless otherwise agreed.
This supplements Article 242, which makes the assignor in an assignment for consideration guarantee the existence of the right at the time it is concluded unless otherwise agreed, and does not make him guarantee its existence in an assignment without consideration. Guaranteeing the existence of the right is one thing, and guaranteeing the debtor's ability to pay is another that needs an agreement.
Even where recourse is had under the guarantee, Article 244 sets a limit: the assignor is not required to return more than he took from the assignee together with expenses, even if there is an agreement to the contrary.
A person who accepts an assignment of a right against a debtor whose solvency he does not know should expressly stipulate a guarantee of solvency, and specify, if he wants, a time other than the time of conclusion. When drafting these terms it is advisable to consult a lawyer specializing in civil cases.
Practical example
Majed assigned to a company in Jeddah a right he had against a small establishment, and the company stipulated in the contract that Majed would guarantee the establishment's solvency. The establishment was able to pay when the assignment was concluded, then fell into difficulty a few months later. Since the contract did not specify another time, Majed's guarantee applies to solvency at the time of conclusion only.
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 243 of the Saudi Civil Transactions Law
Does the assignor guarantee the debtor's ability to pay?
He does not, unless there is a special agreement to guarantee the debtor's solvency.
If the assignor guarantees the debtor's solvency, until what time does the guarantee extend?
The guarantee applies to solvency at the time the assignment is concluded, unless otherwise agreed.
What is the maximum the assignor returns when recourse is had against him under the guarantee?
Under Article 244, he is not required to return more than he took from the assignee together with expenses.
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 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 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.