Article 569 of the Saudi Civil Transactions Law
المادة 569 من نظام المعاملات المدنية · الفرع الأول: أحكام عامة
If an output-sharing contract is annulled, the output belongs to the capital owner and the worker gets the fair wage for his work, unless the materials came from the worker, in which case the output is his and the capital owner gets fair rent.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا أبطل عقد المشاركة في الناتج، فالناتج لرب المال وللعامل أجر مثل عمله ما لم تكن المواد التي تولد منها الناتج من العامل فيكون الناتج له، ولرب المال أجرة المثل عن مدة استغلال الأصل.
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 569 explained in plain English
This article addresses the effect of annulling an output-sharing contract on the output itself and on the parties' rights. When the contract is annulled, the output is not divided in the agreed proportions; a different rule applies.
The general rule:
- The output belongs to the capital owner.
- The worker gets the fair wage for his work, that is, the usual wage for such work.
The exception: if the materials from which the output was produced came from the worker:
- the output belongs to the worker.
- the capital owner gets fair rent for the period during which the asset was exploited.
So the criterion for deciding who owns the output is the source of the materials from which it was produced, and the other party receives the fair equivalent of what he provided: the worker for his work, or the capital owner for the exploitation of his asset.
This article is linked to Article 568, which explains entitlement to the output when it is produced and what is returned to each party when a valid contract ends, so the difference between ending a contract and annulling it appears. It is also linked to Article 570, which lists the grounds for ending an output-sharing contract.
The article does not set out the grounds for annulling the contract; it only explains its effect on the output. To assess the fair wage or fair rent in a particular case, you can consult a lawyer who specializes in civil cases.
Practical example
A farm owner in Al-Jawf handed his land and its well to a worker to cultivate in return for a share of the crop, and the contract was then annulled. If the seeds came from the owner, the crop is his and the worker gets the fair wage for his work. But if the seeds came from the worker, the crop belongs to the worker and the owner gets fair rent for the period the land was exploited.
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 569 of the Saudi Civil Transactions Law
Who gets the output if an output-sharing contract is annulled?
The output belongs to the capital owner and the worker gets the fair wage for his work, unless the materials from which the output was produced came from the worker.
When does the output belong to the worker after annulment?
If the materials from which the output was produced came from the worker, and the capital owner then gets fair rent for the period the asset was exploited.
Is the output divided in the agreed proportions after annulment?
No. The article gives the output to the capital owner or the worker according to the source of the materials, with the fair wage or fair rent for the other party.
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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.