Article 138 of the Saudi Commercial Court Law
المادة 138 من النظام التجاري نظام المحكمة التجارية · الفصل الحادي عشر: في العقوبات
The article punishes a merchant who reneges on a valid sale after giving the release order, even in collusion with the warehouse keeper, by requiring delivery and imprisonment of one to three months.
Official text (Arabic)
This article has not been amended since the law was issued.
كل تاجر باع شيئا من أمواله وأموال موكله التي هي تحت تصرفه بيعا صحيحا ثم أعطى للمشتري سند الفسح ( الستمى ) باستلامه من المخزن ثم نكث عن بيعه وعارض في تسليم المبيع ولو بصورة التواطؤ مع أمين المخزن (يعنى مقدم الحوش ) لزيادة سعر المبيع أو نحو ذلك من الأسباب غير الشريفة يعتبر ذلك التاجر مع الأمين الذي قد تواطأ معه قد أساء استعمال الأمانة والشرف التجاري ويلزم بتسليم المبيع عينا وتماما وإذا نقص من المبيع شيء بتصرف البائع يلزم بفرق السعر هذا إنه يستحق الحبس مع الأمين المتواطئ من شهر إلى ثلاثة أشهر
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 138 explained in plain English
This article deals with a form of breach of commercial trust: reneging on a sale after it is completed.
The facts the text addresses:
- A merchant sold something of his property or his principal's property that is under his control, in a valid sale.
- Then gave the buyer the release order (the sitma) to receive it from the warehouse.
- Then reneged on his sale and objected to delivery of the goods, even if in collusion with the warehouse keeper (the yard supervisor), in order to raise the price of the goods or for similar dishonorable reasons.
Description: the merchant and the keeper who colluded with him are considered to have abused trust and commercial honor.
The consequences:
- He is required to deliver the goods in kind and in full.
- If anything is missing from the goods through the seller's own dealing, he is liable for the price difference.
- And he and the colluding keeper deserve imprisonment of one to three months.
The article thus protects the buyer from the seller backing out after the sale is complete in hope of a higher price, and punishes the warehouse keeper who colludes with him.
If a seller refuses to deliver goods you bought and for which you received the release order, consult a lawyer who specializes in commercial cases.
Practical example
A merchant in Jeddah sold a hundred sacks of rice to another merchant and gave him the warehouse release order, then the price of rice rose and he agreed with the warehouse keeper to refuse delivery. Under this article, he is required to deliver the rice in full, and he and the keeper are imprisoned for one to three months.
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 138 of the Saudi Commercial Court Law
What is the penalty for a merchant who backs out of a completed sale?
If he made a valid sale and gave the release order, then reneged and objected to delivery, he is required to deliver the goods in kind and in full and deserves imprisonment of one to three months.
Is the colluding warehouse keeper punished?
Yes. He is considered, with the merchant, to have abused trust and commercial honor, and is imprisoned with him.
What if part of the goods is missing?
If anything is missing from them through the seller's dealing, he is liable for the price difference.
More articles on Commercial Penalties
- Article 5
The article requires every merchant to deal with integrity and honor, without fraud, deceit or swindling, or he deserves the penalty under the penalties in the law.
يجب على كل تاجر أن يسلك في كل أعماله التجارية بدين وشرف، فلا يرتكب غشا ولا تدليسا ولا احتيالا ولا غبنا ولا غررا ولا نكثا ولا شيئا مما يخالف الدين والشرف بوجه من
- Article 41
The article makes every money changer responsible for his work, books and employees, regulates the exchange of coins at the Finance request, and assigns the application of the money changer provisions to municipal councils where there is no Commercial Court.
كل صراف مسئول عن أعماله وانتظام دفاتره وأعمال الأشخاص المستخدمين عنده مما تترتب فيها عقوبة بمقتضى فصل العقوبات : أ- يجب على الطرفين أن يقوموا بكل أمر حكومي إذا
- Article 63
The article prohibits putting dates in transfers ahead of their true date, and treats that as forgery if it occurs.
تقديم التواريخ في التحاويل عن تاريخها الحقيقي ممنوع وإن حصل يعد ذلك تزويرا .
- Article 139
The article punishes a merchant who tricks a discerning minor, exploiting his need, into giving a document, by imprisonment of three months to a year or a fine of fifty to one hundred pounds.
كل من أساء الاستعمال من التجار في احتياجات صبي مميز بأن احتال عليه لأخذ وثيقة منه على أي صورة كانت سواء تضمنت استقراض دراهم واستعارة أشياء أو إعطاء أوراق أو إبر
- Article 140
The article punishes anyone who changes words or inserts phrases in a signed or sealed bond or a commercial book through embezzlement and forgery by imprisonment of three months to a year or a fine.
من أساء الاستعمال في سند أو ورقة فيها ختم أو إمضاء أو في دفتر تجاري بتبديل كلمات أو إدخال عبارات تقضى تعهد أو إبراء على وجه الاختلاس والتزوير يعاقب بالحبس من ثل
- Article 141
This article prevents an agent or broker from buying his principal's property for himself without the owner's permission and knowledge, treats him as an embezzler, and punishes him with imprisonment from one month to one year or a fine.
لا يسوغ للوكيل بالعموم ولا للدلال أن يشتري من نفسه لنفسه مال موكله ما لم يكن بإذن المالك واطلاعه وإذا فعل ذلك بدون دراية صاحب المال أو المالك اختلاسا لترقي الأس
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.