Article 397 of the Saudi Civil Transactions Law
المادة 397 من نظام المعاملات المدنية · الفصل الخامس: عقد الصلح
The article allows a settlement over part of what the settling party claims, a settlement to postpone a debt or part of it without increase, or to accelerate it with a reduction.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يصح الصلح على بعض ما يدعيه المتصالح في ذمة الآخر.
2- يصح الصلح على تأجيل الدين المدعى به أو بعضه دون زيادة، أو على تعجيله والحط منه.
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 397 explained in plain English
This article sets out permitted practical forms of settlement over debts and rights owed:
- Settlement on part of what is claimed (paragraph 1): a person may settle on only a part of what he claims is owed to him by the other, taking some of his right so that the dispute ends.
- Settlement on postponement (paragraph 2): a settlement is valid to postpone the debt claimed or part of it, provided the postponement is without any increase to the debt.
- Settlement on acceleration with a reduction (paragraph 2): a settlement is valid under which the debt is paid early, before its due date, with a reduction of it, that is, a part of it is deducted.
The important restriction here is that postponing a debt by settlement must be without increase; in this form the article does not allow the postponement to be matched by an increase in the amount of the debt. As for acceleration, the article ties it to a reduction of the debt, not an increase to it.
These forms apply the definition of a settlement in Article 391, which rests on each party giving up his claim or part of it, and are completed by Article 396, which allows a settlement whether the defendant admits, denies or stays silent.
To assess a particular situation, it is advisable to consult a lawyer who specializes in civil cases.
Practical example
Abdullah is owed a debt of 50,000 riyals by a small company in Mecca, due in one year. They agreed by settlement that the company would pay 45,000 riyals now in return for giving up the rest, which is a permitted acceleration with a reduction. If they had instead agreed to postpone the debt for another year, the postponement would have to be without increase.
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 397 of the Saudi Civil Transactions Law
Is a settlement over only part of the debt permitted?
Yes. A settlement is valid over part of what the settling party claims is owed to him by the other.
Can a debt be postponed by settlement in return for an increase?
The article permits a settlement to postpone the debt or part of it without increase.
Can a debt be paid early in return for a reduction?
Yes. The article permits a settlement to accelerate the debt and reduce it.
More articles on Settlement Contract
- Article 117
The article binds a person who promises the public a specified reward for a particular act to give it to whoever does the act under the announced conditions, and regulates withdrawal of the promise and the claim period.
1- من وجه للجمهور وعدًا بجائزةٍ محددةٍ على عملٍ معيَّنٍ، التزم بإعطاء الجائزة لمن قام بهذا العمل وفقًا للشروط المعلنة، ولو قام به دون نظر إلى الوعد بالجائزة أو
- Article 232
The Article provides that a settlement between one jointly liable debtor and the creditor takes effect against the others, except where it imposes a new obligation or an increase on them, in which case it takes effect only with the approval of the one affected.
ينفذ الصلح الذي يعقده أحد المدينين المتضامنين مع الدائن على باقي المدينين، ما لم يرتب في ذمتهم التزامًا جديدًا أو زيادةً في التزامهم؛ فإنه لا ينفذ في حق أي منهم
- Article 333
If the buyer settles with the entitlement claimant for money before judgment, the seller may escape the consequences of the warranty by repaying the settlement sum and its costs.
إذا تصالح المشتري مع مدعي الاستحقاق على مال قبل صدور حكم قضائي له، فللبائع أن يتخلص من نتائج الضمان بأن يرد للمشتري ما يعادل بدل الصلح ونفقاته.
- Article 391
The article defines a settlement as a contract by which two parties end an existing dispute or avert a potential one, each giving up his claim or part of it in return for the other's giving up his.
الصلح عقدٌ يحسم بمقتضاه المتصالحان نزاعًا قائمًا أو يتوقيان نزاعًا محتملًا، بأن ينزل كلٌّ منهما على وجه التَّقابل عن مُطالبته أو جزءٍ منها.
- Article 392
The article requires the settling party to have the capacity to dispose of the rights covered by the settlement for consideration, and requires a person who gives up some of his rights without consideration to have full legal capacity.
1- يجب أن يكون المتصالح أهلًا للتصرف بعوضٍ في الحقوق التي يشملها عقد الصلح. 2- إذا تضمن الصلح إسقاط شيءٍ من الحقوق دون مقابل وجب أن يكون من أسقط حقه كامل الأهلي
- Article 393
The article excepts from the capacity requirement in Article 392 the settlement of an authorized discerning minor, which is not valid if it causes him clear harm.
استثناءً من حكم الفقرة (1) من المادة (الثانية والتسعين بعد الثلاثمائة) من هذا النظام؛ لا يصح صلح الصغير المميز المأذون له، إذا ألحق الصلح به ضررًا بيّنًا.
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.