Article 528 of the Saudi Civil Transactions Law
المادة 528 من نظام المعاملات المدنية · الباب الرابع: عقود المشاركة
The article requires partnership contracts and their amendments to be in writing or be void, while barring reliance on the voidness against third parties and limiting its effect between the contracting parties to the period after a voidness claim is filed.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يجب أن تكون عقود المشاركة الواردة في هذا الباب مكتوبة، وإلا كانت باطلة، ولا يجوز أن يحتج المتعاقد بالبطلان تجاه الغير، ولا يكون للبطلان أثر فيما بين المتعاقدين أنفسهم إلا إذا طلب أحدهم الحكم به، فيسري ذلك من تاريخ قيد الدعوى.
2- يسري حكم الفقرة (1) من هذه المادة على أي تعديل يطرأ على عقود المشاركة الواردة في هذا الباب.
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 528 explained in plain English
This article, which falls in the fourth part on partnership contracts, sets an important formal requirement: the partnership contracts covered by this part must be in writing, or they are void.
But the text does not leave voidness unlimited; it sets limits that protect those who dealt with the partners:
- Toward third parties: A contracting party may not rely on voidness against third parties. A partner cannot evade an obligation toward those he dealt with on the ground that the partnership contract was not written.
- Between the contracting parties themselves: The voidness has no effect unless one of them asks for a judgment of it, in which case the voidness takes effect from the date the claim is filed, not from the date the contract was concluded. According to the text, voidness does not touch the partners' relationship before the claim was filed.
Paragraph (2) extends this rule to any amendment made to the partnership contracts covered by this part; an unwritten amendment is subject to the same rules.
It is followed by Article 529, which defines the partnership as a contract under which two or more partners contribute a share of money or work or both to a project in order to divide the profit or loss arising from it, and which excludes partnerships whose rules are set in special legal provisions from the rules of its chapter.
The practical message: put the partnership contract and any amendment in writing. To review an existing contract or assess the effect of its not being written, it is advisable to consult a lawyer specializing in civil or company matters.
Practical example
Two friends in Riyadh agreed orally on a joint project in the date trade, and dealt with suppliers. Later one of them filed a claim asking for a judgment that the partnership is void because it was not written. Neither of them can rely on voidness against the suppliers, and between them the voidness takes effect only from the date the claim was filed.
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 528 of the Saudi Civil Transactions Law
Must a partnership contract be in writing?
Yes, the partnership contracts covered by this part must be in writing or they are void.
Can a partner rely on the voidness of an unwritten partnership against those he dealt with?
No, a contracting party may not rely on voidness against third parties.
From when does the voidness of a partnership contract take effect between the partners?
It has no effect between them unless one of them asks for a judgment of it, in which case it takes effect from the date the claim is filed.
Must an amendment to a partnership contract be written?
Yes, the writing requirement applies to any amendment made to the partnership contracts covered by this part.
More articles on Partnership and Mudaraba
- Article 529
The article defines the partnership as a contract under which two or more partners contribute a share of money, work, or both to a project in order to divide its profit or loss, and excludes partnerships governed by special legal provisions.
1- الشركة عقد يسهم بمقتضاه شريكان أو أكثر بتقديم حصة من مال أو عمل أو منهما معًا في مشروع لاقتسام ما ينشأ عنه من ربح أو خسارة. 2- لا تسري أحكام هذا الفصل على ال
- Article 530
The article bars a partner's influence, reputation or financial credibility from being his share, explains how a non-cash share is valued, and says when a partner's obligation ends if his share is a debt owed by a third party.
1- لا يصح أن تكون الحصة أو بعضها ما للشريك من نفوذ أو سمعة أو ثقة مالية. 2- إذا كانت حصة الشريك غير نقدية، قُدرت الحصة بقيمتها عند التعاقد أو بما يتفق عليه الشر
- Article 531
The article allows a partnership to be based on the partners' joint liability for what they undertake in their obligations for its benefit, makes each partner's share in the capital equal to what he undertook unless otherwise agreed, and allows partners to differ in their obligations.
1- يصح أن تقوم الشركة على أساس تضامن الشركاء فيما يلتزمون به في ذممهم من مال أو عملٍ لمصلحة الشركة، وتكون حصة كل منهم في رأس مال الشركة بقدر ما التزم به في ذمته
- Article 532
The article provides that each partner's share is determined by what he undertook in the partnership contract, and that he may not increase it except with the consent of the other partners.
تتحدد حصة كل شريك بالحصة التي التزم بها في عقد الشركة، ولا يجوز للشريك زيادة حصته عن الحصة المحددة في عقد الشركة إلا بموافقة باقي الشركاء.
- Article 533
The article subjects the guarantee of a partner's share to the rules of sale if it is a right of ownership or another real right, and to the rules of lease if it is merely the use of property.
إذا كانت حصة الشريك حق ملكية أو أي حق عينيّ آخر فإن أحكام البيع هي التي تسري على ضمان الحصة إذا هلكت أو استحقت أو ظهر فيها عيب، وإذا كانت الحصة مجرد الانتفاع با
- Article 534
The article makes the division of profits in proportion to each partner's share unless otherwise agreed, and distributes losses in proportion to each partner's share.
1- تكون قسمة الأرباح بين الشركاء بنسبة حصة كل شريك في الشركة، ما لم يتفق على خلاف ذلك. 2- توزع الخسائر بين الشركاء بنسبة حصة كل منهم في الشركة.
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.