Article 283 of the Saudi Civil Transactions Law
المادة 283 من نظام المعاملات المدنية · الفرع الثاني: المقاصة
The article allows a debtor to invoke set-off even if the place of performance of the two debts differs, while requiring him to compensate the creditor for any harm resulting from this.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز للمدين أن يتمسك بالمقاصة ولو اختلف مكان الوفاء في الدينين. ويجب عليه في هذه الحال أن يعوض الدائن عما لحقه من ضرر لعدم تمكنه بسبب المقاصة من استيفاء ما له من حق أو الوفاء بما عليه من دين في المكان الذي عين لذلك.
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 283 explained in plain English
This article deals with a special case in set-off: the place of performance differs between the two debts, for example where one debt is payable in one city and the other in another city.
The article lays down two rules:
- Set-off is permitted: the debtor may invoke set-off even if the place of performance of the two debts differs. A difference in place does not prevent set-off.
- Compensation: in this case the debtor must compensate the creditor for any harm suffered because, as a result of the set-off, the creditor could not collect what is owed to him or pay what he owes at the place designated for that.
Note that compensation is tied to harm actually suffered by the creditor because of the set-off and his inability to collect or pay at the designated place. The article does not specify an amount or a method of calculating it.
This article relates to Article 282, which provides that set-off takes effect only if the interested party invokes it, which is why this article speaks of the debtor invoking set-off. It also relates to Article 284, which explains that the effect of set-off is to extinguish the two debts to the extent of the smaller one from the time they become eligible for set-off.
In assessing the harm for which compensation is due, it is advisable to consult a lawyer specializing in civil cases.
Practical example
An establishment in Dammam is owed an amount by a merchant, payable in Dammam, and the merchant is owed an amount by it, payable in Riyadh. The merchant invoked set-off, so the establishment could not receive the amount in Dammam, where it needed it, and suffered harm. Set-off takes effect, but the merchant must compensate the establishment for this harm.
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 283 of the Saudi Civil Transactions Law
Is set-off allowed if each debt is payable in a different place?
Yes. The debtor may invoke set-off even if the place of performance of the two debts differs.
Must the debtor compensate the creditor when set-off is used and the places differ?
Yes. He must compensate the creditor for any harm suffered because, as a result of the set-off, the creditor could not collect or pay at the designated place.
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.