Article 41 of the Saudi Civil Transactions Law
المادة 41 من نظام المعاملات المدنية · الفرع الأول: أركان العقد أولًا: الرضى
Negotiating does not oblige the parties to conclude a contract, but a person who negotiates or ends negotiations in bad faith is liable for the harm, not for expected profit; bad faith includes lack of seriousness and concealing an essential fact.
Official text (Arabic)
This article has not been amended since the law was issued.
1- ذا تمَّ التفاوض على عقد فلا يرتب ذلك على أطراف التفاوض التزامًا بإبرام هذا العقد، ومع ذلك يكون من يتفاوض أو يُنهي التفاوض بسوء نية مسؤولًا عن الضرر الذي أصاب الطرف الآخر، ولا يشمل ذلك التَّعويض عمَّا فاته من كسب متوقع من العقد محل التفاوض.
2- يُعدُّ من سوء النية عدم الجدية في التفاوض، أو تعمد عدم الإدلاء ببيانٍ جوهريٍّ مؤثرٍ في العقد.
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 41 explained in plain English
This article regulates the stage of negotiating a contract, and balances the parties' freedom not to contract against the protection of a person harmed by conduct in bad faith.
First rule: negotiating a contract does not create an obligation on the parties to conclude that contract. Each party is free not to conclude the contract in the end.
Second rule: a person who negotiates or ends negotiations in bad faith is liable for the harm caused to the other party. However, compensation does not include expected profit lost from the contract being negotiated; the injured party is not compensated for the profits it hoped for had the contract been concluded.
Third rule: paragraph 2 mentions two forms that are considered bad faith:
- lack of seriousness in negotiating.
- deliberately failing to disclose an essential fact that affects the contract, that is, intentionally concealing from the other party an essential piece of information that affects the contract.
The phrase "is considered bad faith" indicates that these are forms of bad faith; the article does not mention others.
This article is connected to Article 42, which provides that the parties' agreement on the essential matters while postponing the non-essential ones is enough for the contract to be concluded, unless they make its conclusion depend on later agreement on them. It also differs from the case regulated by Article 40, where acceptance in adhesion contracts is limited to submission to terms the offeror does not allow to be discussed.
A person harmed by negotiations that were ended in bad faith would do well to consult a lawyer who specializes in civil cases and compensation.
Practical example
A startup in Riyadh negotiated a partnership with an investor, and at its own expense prepared a financial study the investor requested, then it became clear that the investor had not been serious in negotiating. If his bad faith is proven, he is liable for the harm caused to the company, and that does not include the profits it expected from the partnership.
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 41 of the Saudi Civil Transactions Law
Does negotiating a contract oblige me to conclude it?
No. Negotiating does not create an obligation on the parties to conclude the contract.
When am I liable for ending negotiations?
If you negotiated or ended the negotiations in bad faith, you are liable for the harm caused to the other party.
What are the forms of bad faith in negotiations?
The article mentions lack of seriousness in negotiating and deliberately failing to disclose an essential fact that affects the contract.
Is the injured party compensated for expected profits?
No. Compensation does not include expected profit lost from the contract being negotiated.
More articles on Elements of the Contract
- Article 11
The article allows a chosen domicile to be adopted for a particular act, serving as the domicile for everything relating to it unless expressly limited, and requires writing to prove it.
1- يجوز اتخاذ موطنٍ مختارٍ لعملٍ معيَّن، ويكون هو الموطن لكل ما يتعلق بهذا العمل؛ ما لم يُشترط صراحةً قصر هذا الموطن على أعمالٍ دون أخرى. 2- لا يجوز إثبات وجود
- Article 30
The article provides that the rules of the contract chapter apply to named and unnamed contracts, without prejudice to the legal provisions that regulate contracts of a special nature.
تطبق الأحكام الواردة في هذا الفصل على العقود المسماة وغير المسماة، وذلك دون إخلال بالأحكام الواردة في النصوص النظامية التي تنظم عقودًا ذات طبيعة خاصة.
- Article 31
A contract arises when one party's offer is joined to the other's acceptance to produce a legal effect, subject to the particular forms the legal provisions set for the formation of certain contracts.
ينشأ العقد بارتباط الإيجاب بالقبول لإحداث أثر نظامي، مع مراعاة ما تقرره النصوص النظامية من أوضاعٍ معيّنةٍ لانعقاد العقد.
- Article 32
Consent in a contract is achieved when the wills of two or more contracting parties who have capacity to contract coincide and the will is expressed by what indicates it.
يتحقق الرضى إذا توافقت إرادتا متعاقدين (أو أكثر) لديهما أهلية التعاقد وعُبِّر عن الإرادة بما يدل عليها.
- Article 33
Offer and acceptance may be by anything that indicates the will: words, writing, an understood gesture or mutual exchange, explicit or implicit, unless the legal provisions, the agreement or the nature of the transaction require otherwise.
1- يكون الإيجاب والقبول بكل ما يدل على الإرادة. 2- يجوز أن يكون التعبير عن الإرادة باللفظ أو بالكتابة أو بالإشارة المفهومة أو بالمعاطاة، وأن يكون صريحًا أو ضمني
- Article 34
Displaying goods and services with their price stated is an offer, and an advertisement with the prevailing prices is not an offer, unless there are indications to the contrary in either case.
1- يعد عرض البضائع والخدمات مع بيان ثمنها إيجابًا، إلا إذا قامت دلائل تفيد خلاف ذلك. 2- لا يعدُّ الإعلان مع بيان الأسعار المتعامل بها إيجابًا، إلا إذا قامت دلائ
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.