Article 492 of the Saudi Civil Transactions Law
المادة 492 من نظام المعاملات المدنية · الفرع الثاني: التزامات الوكيل
The article sets out the rule when an agent buys at an unfair price or above the set price, and when an agent declares in the principal's presence that he bought for himself.
Official text (Arabic)
This article has not been amended since the law was issued.
1- إذا اشترى الوكيل بغبن أو عين الموكل الثمن واشترى الوكيل بما يزيد عليه؛ انصرف العقد إذا لم يُجزه الموكل إلى الوكيل، وإذا أجازه الموكل نفذ في حقه وله مطالبة الوكيل بالتعويض.
2- إذا صرح الوكيل بأنه اشترى الشيء لنفسه في حضور الموكل كان الشراء للوكيل.
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 492 explained in plain English
This article deals with what happens when an agent breaches the price limits in a purchase, and sets out two rules:
- Buying at an unfair price or above the set price: If the agent buys at an unfair price, or the principal set a price and the agent bought for more, the principal has two options:
- Not ratifying the contract: The contract passes to the agent himself, meaning the purchase becomes his rather than the principal's.
- Ratifying the contract: It takes effect against him, and he keeps the right to claim compensation from the agent.
- Declaring a purchase for oneself in the principal's presence: If the agent declares, in the principal's presence, that he bought the item for himself, the purchase is the agent's.
The second paragraph complements the rule in Article 491, under which the purchase of a specific item is for the principal even if the agent declared that he was buying it for himself; the difference here is that the declaration was made in the principal's presence.
This article is followed by Article 493, which gives an agent who paid the price of the purchased item from his own money the right to recover it from his principal, together with what he spent in carrying out the agency to the usual extent.
The article does not define unfair pricing or fix the amount of compensation. To assess this in a particular case, it is advisable to consult a lawyer specializing in civil matters.
Practical example
Talal instructed his agent to buy a plot of land for him in Madinah for no more than SAR 300,000, and the agent bought it for SAR 340,000. Talal may refuse to ratify the purchase, in which case the contract passes to the agent, or he may ratify it, in which case the purchase is his, with the right to claim compensation from the agent.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentA question about Article 492 of Civil Transactions Law?
Describe what happened and specialist lawyers answer. You can write in English.
- Completely free
- Lawyers from the directory answer
- Your name stays hidden
Civil Litigation & Compensation lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Civil Litigation & Compensation lawyers
Lawyers who handle this kind of case
Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Active contributor
Unwan Law Firm
Frequently asked questions about Article 492 of the Saudi Civil Transactions Law
What happens if the agent buys for more than the price the principal set?
If the principal does not ratify the contract, it passes to the agent. If he ratifies it, it takes effect against him and he may claim compensation from the agent.
Is the principal entitled to compensation if he accepts the purchase at the higher price?
Yes, if the principal ratifies the contract, it takes effect against him and he may claim compensation from the agent.
When is the purchase the agent's own?
If the agent declares in the principal's presence that he bought the item for himself, the purchase is the agent's.
More articles on Agency Contract
- Article 87
The article permits contracting through representation unless statutory texts require otherwise, and divides representation into agreed, judicial and statutory.
1- يصح التعاقد بالنيابة؛ ما لم تقتض النصوص النظامية خلاف ذلك. 2- تكون النيابة في التعاقد اتفاقيةً أو قضائيةً أو نظاميةً.
- Article 88
The article prohibits a representative from exceeding the limits of his representation as set in the instrument creating it, whether a contract, a court judgment or a statutory text.
ليس للنائب أن يتجاوز حدود نيابته المعيَّنة في سند إنشائها، سواء أكان السند عقدًا أم حكمًا قضائيًّا أم نصًّا نظاميًّا.
- Article 90
If the representative contracts within the limits of his representation and in the principal's name, the rights and obligations arising from the contract are attributed to the principal.
إذا تعاقد النائب في حدود نيابته باسم الأصيل فإن ما ينشأ عن العقد من حقوقٍ والتزاماتٍ يُضاف إلى الأصيل.
- Article 152
The article provides that when the beneficiary approves what the volunteer agent did, the rules of agency apply to that work.
تسري أحكام الوكالة إذا أجاز المنتفع ما قام به الفضولي.
- Article 356
A representative may not buy for himself what he was entrusted to sell, even at auction or in another's name, without permission; the same applies to an intermediary, expert and the like.
مع مراعاة النصوص النظامية؛ ليس للنائب أن يشتري لنفسه باسمه أو اسم غيره ولو بطريق المزاد ما عهد إليه بيعه بمقتضى نيابته ما لم يكن مأذونًا له بذلك، كما لا يحق ذلك
- Article 357
A sale by a representative, intermediary or expert to himself does not take effect against the owner unless he approves it, while a good-faith specific successor who acquired a real right for consideration is protected.
إذا تمَّ البيع في الأحوال المنصوص عليها في المادة (السادسة والخمسين بعد الثلاثمائة) من هذا النظام، لم ينفذ في حق من تم لحسابه إلا إذا أجازه، وليس له أن يحتج بعد
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.