Article 385 of the Saudi Civil Transactions Law
المادة 385 من نظام المعاملات المدنية · الفصل الرابع: عقد القرض
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.
Official text (Arabic)
This article has not been amended since the law was issued.
يقع باطلًا كل شرط عند العقد أو عند تأجيل الوفاء يتضمن زيادة في رد القرض يؤديها المقترض إلى المقرض.
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 385 explained in plain English
This article sets out an important rule in the loan contract: the invalidity of a condition for an increase.
The invalidity applies to any condition that has the following elements:
- It includes an increase in the repayment of the loan, meaning that the borrower repays more than he borrowed.
- The increase is paid by the borrower to the lender.
- Whether it was required at the time of the contract or when payment is deferred, such as agreeing, when the repayment date arrives, to postpone it in return for an increase.
The words "any condition" mean that the rule is general and is not limited to a particular form of increase.
The text of the article makes the condition the thing that is void, and does not address the effect of this on the loan contract itself; the article does not provide that the whole loan is void.
Connected to this article are Article 384, which requires the lender's capacity, and Article 386, on the lender not guaranteeing against third-party claims and defects except in specific cases.
To find out the effect of a particular condition in an existing contract, 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
Nawaf lent his friend ten thousand riyals and required him to repay eleven thousand. Then, when the date arrived, the friend asked for a postponement, and Nawaf agreed on condition of a further increase. Both conditions are void under this article, because each includes an increase in the repayment of the loan paid by the borrower to the lender.
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 385 of the Saudi Civil Transactions Law
Can an increase over the loan amount be required?
No. Any condition made at the time of the contract that includes an increase in the repayment of the loan paid by the borrower to the lender is void.
Can an increase be requested in return for postponing repayment of a loan?
No. The article also makes void any condition made when payment is deferred that includes an increase in the repayment of the loan.
Is the whole loan contract void because of a condition for an increase?
The article provides that the condition is void, and does not provide that the loan contract itself is void.
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 383
The article provides that a loan contract is formed only when the borrower takes possession of the borrowed thing.
لا ينعقد القرض إلا بقبض الشيء المقترض.
- 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 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.