Article 5 of the Saudi Commercial Court Law
المادة 5 من النظام التجاري نظام المحكمة التجارية · الفصل الأول: التاجر ، شروطه ، صفاته ، أنواعه
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 الوجوه، وإذا فعل ذلك استحق الجزاء الرادع بمقتضى قانون العقوبات المندرج في هذا النظام.
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 5 explained in plain English
This article sets the general ethical and legal rule for the merchant's conduct: he must conduct all his commercial affairs with integrity and honor. It is not content with the general principle, but expressly lists prohibited forms:
- Fraud, deceit and swindling.
- Gross unfairness (ghabn) and uncertainty (gharar).
- Breach of obligation, that is, going back on what he committed to.
- Anything contrary to integrity and honor "in any way", so the list is not exhaustive.
The article provides that if the merchant does any of this he deserves the deterrent penalty under the penal code included in this law. That is, the article does not set the penalty itself, but refers to the penalties section in the law itself.
This article complements Article 4, which gives the person of full capacity the right to practice trade; the right to trade is matched by a duty of honesty in practicing it.
If you have suffered fraud or deceit from a merchant, or an accusation of that has been made against you, it is appropriate to consult a lawyer who specializes in commercial cases to assess the facts and the appropriate step.
Practical example
A merchant in Dammam sells imitation spare parts as genuine. This act is fraud and deceit, which the article prohibits, and makes him deserve the penalty under the penalties in the law.
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 5 of the Saudi Commercial Court Law
What acts does the law prohibit a merchant from doing?
Fraud, deceit, swindling, gross unfairness, uncertainty, breach of obligation, and anything contrary to integrity and honor in any way.
What is the penalty for a merchant who commits fraud?
The article provides that he deserves the deterrent penalty under the penal code included in this law, without setting the penalty itself.
Does the duty cover all of the merchant's affairs?
Yes. The text requires him to conduct all his commercial affairs with integrity and honor.
More articles on The Merchant and Commercial Acts
- Article 1
The article defines the merchant as a person who engages in commercial transactions and makes them his profession.
التاجر هو من اشتغل بالمعاملات التجارية واتخذها مهنة له.
- Article 4
The article states that anyone who is of full legal capacity or has reached the age of majority has the right to practice the profession of trade of all kinds.
كل من كان رشيدا أو بلغ سن الرشد فله الحق أن يتعاطى مهنة التجارة بأنواعها.
- Article 147
This article punishes any merchant who violates the requirement of Article 5 with imprisonment from ten days to three months or a fine of ten to fifty pounds, according to his offense and circumstances.
كل تاجر يخالف مقتضى المادة (5) يجازى بالحبس من عشرة أيام إلى ثلاثة أشهر أو بغرامة مالية من عشرة جنيهات إلى خمسين جنيها على حسب مقتضى جريمته وحاله.
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.