Article 255 of the Saudi Civil Transactions Law
المادة 255 من نظام المعاملات المدنية · الفصل الثالث: التنازل عن العقد
A contracting party may transfer his capacity in the contract to another with the other party's consent; consent may be given in advance if the contract is specified, and the transfer then takes effect by notifying the counterparty.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز للمتعاقد أن ينقل صفته كطرف في عقد إلى غيره بموافقة المتعاقد الآخر، ويجوز أن تمنح الموافقة مقدمًا إذا عين فيها العقد الذي يراد التنازل عنه، وينفذ التنازل في هذه الحال في حق المتنازل لديه إذا أعلمه به المتنازل.
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 255 explained in plain English
This Article deals with transfer of a contract, which is where a new person takes the place of one of the two parties to the contract in his full capacity, taking his rights and bearing his obligations. There are three parties:
- The transferor: the party who leaves the contract.
- The transferee: the new person who enters the contract.
- The counterparty: the other party to the contract, who remains in it.
The Article sets three rules:
- Consent is required: Transfer is permitted only with the consent of the other contracting party, because the identity of the person he contracts with may matter to him.
- Advance consent: Consent may be given in advance, provided that the contract to be transferred is specified in it. A general, unspecified consent does not meet this condition.
- Effectiveness with advance consent: In this case the transfer takes effect against the counterparty if the transferor notifies him of it.
As for the consequences of the counterparty's consent or lack of it, Article 256 states them: if he consents, the transferor is released toward him as regards the future, and if he does not, the transferor is bound to perform the contract jointly and severally with the transferee, unless otherwise agreed or the circumstances show that the transfer's effectiveness between them was conditional on the counterparty's acceptance.
In practice this Article is useful in long-term contracts, such as supply and service contracts, when one party wishes to leave them and transfer them to another. When concluding the contract, it is useful to provide for a specific advance consent if a transfer is anticipated. To draft this, it is advisable to consult a lawyer specializing in civil cases or a lawyer specializing in commercial cases.
Practical example
An establishment in Jeddah concluded a supply contract with a factory, and the contract provided for the factory's advance consent to the establishment transferring this specific contract to one of its affiliates. When the establishment decided to transfer, it notified the factory, and the transfer took effect against the factory without need for new consent.
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 255 of the Saudi Civil Transactions Law
May a contract be transferred to another person?
Yes. A contracting party may transfer his capacity as a party to the contract to another with the consent of the other contracting party.
Is advance consent to the transfer enough?
Yes, if the contract to be transferred is specified in it, and the transfer then takes effect if the transferor notifies the counterparty.
What happens if the other party does not consent to the transfer?
Under Article 256, the transferor is bound to perform the contract jointly and severally with the transferee, unless otherwise agreed or the circumstances show that the transfer's effectiveness between them was conditional on the counterparty's acceptance.
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 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
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.