Article 565 of the Saudi Civil Transactions Law
المادة 565 من نظام المعاملات المدنية · الفرع الثالث: انتهاء عقد المضاربة
A mudaraba contract ends on the death, interdiction, insolvency or opening of liquidation proceedings against a party, and a deceased mudarib's qualified heirs who know of the mudaraba must inform the capital owner and preserve the money.
Official text (Arabic)
This article has not been amended since the law was issued.
1- ينتهي عقد المضاربة بموت أحد المتعاقدين أو الحجر عليه أو إعساره أو افتتاح إجراء التصفية له.
2- إذا انتهى عقد المضاربة بموت المضارب وجب على ورثته -إذا توفرت فيهم الأهلية- أو نائبهم وكانوا على علم بالمضاربة أن يبادروا بإعلام رب المال بموت مورثهم، وأن يتخذوا من التدابير ما تقتضيه الحال للمحافظة على المال.
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 565 explained in plain English
This article deals with the ending of a mudaraba for reasons relating to the person of one of the contracting parties, and what a mudarib's heirs must do if he dies.
First: grounds for ending. The mudaraba contract ends if any of the following happens to one of the contracting parties, the capital owner or the mudarib:
- Death.
- Interdiction against him.
- Insolvency.
- Opening of liquidation proceedings against him.
Second: duties of the mudarib's heirs. If the contract ends on the mudarib's death, his heirs, or their representative, must, on two conditions:
- that they have legal capacity.
- that they know of the mudaraba.
do two things:
- promptly inform the capital owner of the death of their predecessor.
- take the measures the situation requires to preserve the money.
The purpose is to protect the capital owner's money that was in the mudarib's hands at his death.
This article is linked to Article 564, which obliges the mudarib, when the contract ends, to return the capital owner's share of the mudaraba money, and places the risk of shortfall on him if he delays the return without an acceptable justification.
On the death of one of the parties to a mudaraba, the heirs or the capital owner can consult a lawyer who specializes in commercial contracts, or in personal status matters as regards the estate.
Practical example
Ibrahim was working as a mudarib with a merchant's money in Madinah, and died suddenly while his warehouse held goods from the mudaraba money. His adult son, who knows of the mudaraba, must promptly notify the merchant of his father's death and take what the situation requires to preserve the goods, such as locking the warehouse and safeguarding its contents.
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 565 of the Saudi Civil Transactions Law
Does the mudaraba end on the death of the mudarib or the capital owner?
Yes. The mudaraba contract ends on the death of one of the contracting parties, and also on interdiction against him, his insolvency, or the opening of liquidation proceedings against him.
What must the mudarib's heirs do after his death?
If they have legal capacity and know of the mudaraba, they or their representative must promptly inform the capital owner and take the measures needed to preserve the money.
Does a party's insolvency end the mudaraba?
Yes. Insolvency is one of the grounds on which a mudaraba contract ends.
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- Article 529
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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
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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.
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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
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.