Article 12 of the Saudi Commercial Papers Law
المادة 12 من نظام الأوراق التجارية · الفصل الثاني: تداول الكمبيالة بالتظهير
Article 12 allows a bill of exchange to be transferred by endorsement even if not expressly drawn to order, bars endorsement where the drawer writes "not to order", and permits endorsement to the drawee, the drawer or any other obligor.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز تداول الكمبيالة بالتظهير ولو لم يذكر فيها صراحة إنها مسحوبة (لا أمر). ولا يجوز تداول الكمبيالة التي يضع فيها ساحبها عبارة (ليست لأمر) أو أية عبارة مماثلة إلا وفقا لأحكام حوالة الحق، ويجوز التظهير للمسحوب عليه سواء قبل الكمبيالة أو لم يقبلها، كما يجوز التظهير للساحب أو لأي ملتزم آخر. ويجوز لهؤلاء جميعا تظهير الكمبيالة من جديد.
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 12 explained in plain English
Endorsement is the usual way of transferring a bill of exchange from one person to another: its holder writes on the bill words indicating its transfer and signs. This article sets out basic rules for it:
- Endorsement is permitted as the rule: a bill of exchange may be transferred by endorsement even if it is not expressly written on it that it is drawn "to order."
- The "not to order" clause: if the drawer writes "not to order" or a similar phrase, the bill may be transferred only under the rules on the assignment of a right, not by endorsement.
- Who may be endorsed to: endorsement may be made to the drawee whether or not the drawee accepted the bill, to the drawer, and to any other person bound by the bill.
- Re-endorsement: all of these may endorse the bill again.
The practical benefit is that a bill of exchange is by nature a negotiable instrument; anyone who wants to prevent its transfer by endorsement must say so expressly. The article does not set out the rules of assignment of a right themselves.
Article 13 goes on to provide that an endorsement must be free of conditions and that a partial endorsement is void. If you hold a bill of exchange that you want to transfer or collect, you can consult a lawyer specializing in commercial cases and commercial papers.
Practical example
Majed received a bill of exchange from a customer and wanted to pay his supplier with it instead of cash, so he wrote on its back words indicating its transfer to the supplier and signed. This is a permitted endorsement under Article 12. But if the drawer had written "not to order" on the bill, Majed could not transfer it by endorsement, only under the rules on assignment of a right.
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 12 of the Saudi Commercial Papers Law
Can a bill of exchange be endorsed if it does not say it is to order?
Yes, it may be transferred by endorsement even if this is not expressly stated on it.
What is the effect of the words "not to order" on a bill of exchange?
The bill may then be transferred only under the rules on assignment of a right.
Can a bill of exchange be endorsed to the drawee or the drawer?
Yes, it may be endorsed to the drawee whether or not the drawee accepted it, to the drawer and to any other obligor, and they may endorse it again.
More articles on Endorsing Commercial Papers
- Article 13
Article 13 requires an endorsement to be free of any condition, treats a condition attached to it as if not written, makes a partial endorsement void, and treats an endorsement to bearer as a blank endorsement.
يجب أن يكون التظهير خاليا من كل شرط، وكل شرط علق عليه التظهير يعتبر كأن لم يكن. والتظهير الجزئي باطل. ويعتبر التظهير للحامل تظهيرا على بياض.
- Article 14
Article 14 sets out how an endorsement is written on a bill of exchange or an attached paper and signed by the endorser, permits a blank endorsement, and states the holder's options in that case.
يكتب التظهير على الكمبيالة ذاتها أو على ورقة أخرى متصلة بها ويوقعه المظهر. ويجوز ألا يكتب في التظهير اسم المظهر إليه ، كما يجوز أن يقتصر التظهير على توقيع المظه
- Article 15
Article 15 makes the endorser guarantee acceptance and payment of the bill of exchange unless otherwise stipulated, and lets the endorser prohibit re-endorsement, in which case the endorser does not guarantee to those who receive the bill by a later endorsement.
يضمن المظهر قبول الكمبيالة ووفائها ما لم يشترط غير ذلك. ويجوز له حظر تظهيرها من جديد، وفي هذه الحالة لا يكون ملزما بالضمان لمن تؤول إليهم الكمبيالة بتظهير لاحق.
- Article 16
Article 16 treats the possessor of a bill of exchange as its lawful holder if they prove their right by an unbroken series of endorsements, and protects a holder from having to give up a lost bill unless they obtained it in bad faith or by gross fault.
يعتبر حائز الكمبيالة حاملها الشرعي متى أثبت أنه صاحب الحق فيها بتظهيرات غير منقطعة ولو كان آخرها تظهيرا على بياض. والتظهيرات المشطوبة تعتبر في هذا الشأن كأن لم
- Article 17
Article 17 provides that endorsement transfers all rights arising from the bill of exchange, and bars a defendant from raising against the holder defenses based on their personal relationship with the drawer or earlier holders unless the holder intended to harm the debtor.
ينقل التظهير جميع الحقوق الناشئة عن الكمبيالة. وليس لمن أقيمت عليه دعوى بكمبيالة أن يحتج على حاملها بالدفوع المبينة على علاقته الشخصية بساحبها أو بحامليها الساب
- Article 18
Article 18 regulates endorsement for collection with words such as "value for collection": the holder exercises the bill's rights but may endorse it only as agent, faces only defenses available against the endorser, and the agency does not end on the principal's death or loss of capacity.
إذا اشتمل التظهير على عبارة (القيمة للتحصيل) أو (القيمة للقبض) أو (بالتوكيل) أو أية عبارة مماثلة تفيد التوكيل، فللحامل مباشرة جميع الحقوق الناشئة عن الكمبيالة،
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.