Article 383 of the Saudi Civil Transactions Law
المادة 383 من نظام المعاملات المدنية · الفصل الرابع: عقد القرض
The article provides that a loan contract is formed only when the borrower takes possession of the borrowed thing.
Official text (Arabic)
This article has not been amended since the law was issued.
لا ينعقد القرض إلا بقبض الشيء المقترض.
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 383 explained in plain English
This article sets out an essential condition for the formation of a loan: taking possession of the borrowed thing.
This means:
- A loan is not formed merely because the parties agree that one will lend to the other.
- The contract is formed upon possession, that is, when the borrower receives the borrowed money.
This is consistent with the definition of a loan in Article 382 as a contract by which the lender transfers ownership of a fungible thing to the borrower on condition that he returns its equivalent; the transfer of ownership and then the obligation to repay are tied to the money actually reaching the borrower.
The practical result is that a promise to lend, or an agreement to lend before the money is handed over, is not regarded as a formed loan under this article. The effect of such a promise in itself is not addressed by this article.
The article does not specify a particular form of possession; it requires possession without detailing its methods.
Connected to it is Article 384, which requires the lender to have full legal capacity, and which prevents a guardian or custodian from lending the money of a person under his authority, or borrowing for him, except in accordance with the legal provisions.
Anyone who lends to another should keep proof that the amount was handed over, and in case of a dispute over whether a loan exists, it is advisable to consult a lawyer who specializes in civil cases or in banking and finance, depending on the nature of the loan.
Practical example
Hani agreed with his cousin that he would lend him twenty thousand riyals next week, but he has not yet handed over the amount. Under this article the loan is not formed until the cousin actually receives the amount.
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 383 of the Saudi Civil Transactions Law
Is a loan formed by mere agreement?
No. A loan is formed only by taking possession of the borrowed thing.
When does a loan become an existing contract?
When the borrower takes possession of the borrowed thing.
Is capacity required of the lender?
Yes. Article 384 requires the lender to have full legal capacity.
More articles on Loan Contract
- Article 382
The article defines a loan as a contract by which the lender transfers ownership of a fungible thing to the borrower, on condition that the borrower returns its equivalent.
القرض عقد يُمَلِّكُ بمقتضاه المقرِضُ شيئًا مثليًّا للمقترض على أن يرد مثله.
- Article 384
The article requires the lender to have full legal capacity, and prevents a guardian or custodian from lending the money of a person under his authority, or borrowing for him, except in accordance with the legal provisions.
1- يجب في القرض أن يكون المقرض كامل الأهلية. 2- ليس للولي أو الوصي إقراض مال من هو في ولايته ولا اقتراضه إلا وفقًا للنصوص النظامية.
- Article 385
The article makes void any condition, made at the time of the contract or when payment is deferred, that includes an increase in the repayment of the loan paid by the borrower to the lender.
يقع باطلًا كل شرط عند العقد أو عند تأجيل الوفاء يتضمن زيادة في رد القرض يؤديها المقترض إلى المقرض.
- Article 386
The lender does not guarantee against a third-party claim to the borrowed money or its defects unless he concealed them or guaranteed it is free of them; the borrower's duty to return an equivalent lapses on a claim, and a defective item is returned at its value as defective.
1- لا يضمن المقرِض استحقاق المال المقترَض ولا خلوه من العيوب، ولكنه مسؤولٌ عما يلحق المقترض من ضرر بسبب الاستحقاق أو العيب إذا تعمد إخفاء أيٍّ منهما أو ضمن خلو
- Article 387
The article sets the time for repaying a loan: if a term or purpose was fixed, repayment is not due before it ends; otherwise it is due when the lender asks, unless the borrower would be harmed.
1- إذا عُيِّن للقرض أجلٌ أو غرضٌ لم يلزم المقترض الوفاء قبل انقضاء الأجل أو المدة المعتادة للانتفاع به في مثل ذلك الغرض. 2- إذا لم يعين للقرض أجلٌ أو غرضٌ لزم ا
- Article 388
The article obliges the borrower to return the equivalent of the borrowed thing in amount, type and description when the loan period ends; if returning the equivalent is impossible, he must return its value on the day of borrowing.
يلتزم المقترِض برد مثل الشيء المقترَض مقدارًا ونوعًا وصفةً عند انقضاء مدة القرض، فإذا تعذر رد مثله وجب رد قيمته يوم الاقتراض.
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.