Article 281 of the Saudi Civil Transactions Law
المادة 281 من نظام المعاملات المدنية · الفرع الثاني: المقاصة
The article allows a debtor to set off what he owes his creditor against what the creditor owes him, even if the two debts arise from different causes, subject to conditions on the subject and character of the debts.
Official text (Arabic)
This article has not been amended since the law was issued.
للمدين المقاصة بين ما هو مستحق الأداء عليه لدائنه وما هو مستحق الأداء له تجاه هذا الدائن ولو اختلف سبب الدينين، إذا كان موضوع كل منهما نقودًا أو أشياءَ متماثلة في النوع والصفة، وكان كل منهما خاليًا من النزاع، وصالحًا للمطالبة به قضاءً، وقابلًا للحجز.
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 281 explained in plain English
This article regulates set-off: two persons are each other's creditor and debtor at the same time, so one debt is deducted from the other instead of each paying the other.
The article gives the debtor the right to set off what is due for performance by him to his creditor against what is due for performance to him from that creditor, even if the two debts arise from different causes. For example, one may be the price of a sale and the other a loan.
The conditions are:
- Each debt must be due for performance.
- The subject of each must be money or things of the same type and quality.
- Each must be free of dispute.
- Each must be capable of being claimed in court.
- Each must be capable of attachment.
These conditions must be met in both debts, not just one.
Article 282 completes this rule: set-off takes effect only if the interested party invokes it, and it cannot be waived before the right to it is established. Meeting the conditions alone is therefore not enough; set-off must be invoked. The article also relates to Article 280, which regulates substitute performance as another way a debt is discharged.
Because whether the conditions are met, especially that the debt is free of dispute, may be contested, it is advisable to consult a lawyer specializing in civil cases before relying on set-off.
Practical example
Sultan owes an establishment in Riyadh SAR 20,000 for furniture. At the same time, the establishment owes Sultan SAR 15,000 in rent for a warehouse he leased to it. Both amounts are due and undisputed. Sultan may invoke set-off even though the two debts arise from different causes, leaving him owing only SAR 5,000.
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 281 of the Saudi Civil Transactions Law
What does set-off mean under the Civil Transactions Law?
It means that a debtor sets off what he owes his creditor against what that creditor owes him.
Is set-off allowed if the two debts arise from different causes?
Yes. The article provides that set-off is allowed even if the causes of the two debts differ.
What are the conditions for set-off?
The subject of each debt must be money or things of the same type and quality, and each debt must be due for performance, free of dispute, capable of being claimed in court and capable of attachment.
More articles on Performance of Debt and Set-Off
- Article 21
The article distinguishes fungible things, whose units are alike or close and can stand in for one another on performance, from non-fungible things, whose units differ in a way recognized by custom or whose like is rarely found.
1- الأشياء المثلية هي ما تتماثل آحادها أو تتقارب بحيث يمكن أن يقوم بعضها مقام بعض عند الوفاء بلا فرقٍ يُعتد به عرفًا. 2- الأشياء القيمية هي ما تتفاوت آحادها في
- Article 110
The article provides that a bilateral contract terminates automatically if performance becomes impossible for a reason beyond the debtor's control, and sets the rules for partial and temporary impossibility.
1- في العقود الملزمة للجانبين، إذا أصبح تنفيذ الالتزام مستحيلًا بسببٍ لا يد للمدين فيه، انقضى التزامه والالتزام المقابل له، وانفسخ العقد من تلقاء نفسه. 2- إذا ك
- Article 147
What a non-debtor paid cannot be recovered if, as a result, a good-faith creditor lost the debt instrument or its guarantees or abandoned his claim until its period expired, and the payer may have recourse against the original debtor.
لا محل لاسترداد غير المستحق إذا حصل الوفاء من غير المدين وترتب عليه أن الدائن وهو حسن النية قد تجرد من سند الدين أو مما حصل عليه من الضمانات أو ترك دعواه قِبَل
- Article 162
The article provides that an obligation that does not meet the conditions for compulsory enforcement remains owed on a moral basis (diyanah); if the debtor performs it voluntarily, the performance is valid and is neither a gift nor an undue payment.
إذا لم يستوف الالتزام الشروط النظامية لتنفيذه جبرًا يبقى قائمًا في ذمة المدين ديانةً، فإذا وفاه مختارًا كان وفاؤه صحيحًا ولا يُعدُّ تبرعًا ولا دفعًا لغير المستح
- Article 206
The article permits early performance by the person for whose benefit the term was set unless it harms the other party, treats the term as for the debtor's benefit in case of doubt, and returns the debt to deferred status if what was received early is claimed by another.
1- يجوز تعجيل الوفاء بالدين ممن كان الأجل لمصلحته ما لم يلحق التعجيل ضررًا بالطرف الآخر. 2- عند الشك في كون الأجل لمصلحة المدين أو الدائن فالأصل أن يُعدَّ لمصلح
- Article 207
The article provides that a deferred debt does not fall due on the creditor's death, and falls due on the debtor's death unless it is secured by security in kind, the heirs provide adequate security, or the creditor agrees it remains deferred.
لا يحل الدين المؤجل بموت الدائن، ويحل بموت المدين إلا إذا كان الدين موثَّقًا بضمانٍ عينيٍّ أو قدم الورثة ضمانًا كافيًا عينيًّا أو شخصيًّا أو وافق الدائن على بقا
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.