Article 29 of the Saudi Commercial Papers Law
المادة 29 من نظام الأوراق التجارية · الفصل الرابع: مقابل الوفاء
Article 29 requires the drawer of a bill of exchange, or the person for whose account it is drawn, to provide funds for payment with the drawee, without relieving a drawer drawing for another's account of personal liability toward endorsers and holders.
Official text (Arabic)
This article has not been amended since the law was issued.
على ساحب الكمبيالة أو من سحب الكمبيالة لحسابه أن يوجد لدى المسحوب عليه مقابل وفائها ولكن ذلك لا يعفي الساحب لحساب غيره من مسئوليته شخصيا قبل مظهريها وحامليها.
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 29 explained in plain English
Funds for payment means the amount or debt that must be held by the drawee so that the drawee can pay the value of the bill of exchange from it. This article specifies who bears the duty to provide it:
- the drawer of the bill of exchange, or
- the person for whose account the bill is drawn, if the drawer drew it for the account of another person.
One or the other must provide funds with the drawee for payment of the bill.
The rule for a drawer drawing for another's account: even if the duty falls in the first place on the person for whose account the bill was drawn, this does not relieve the drawer drawing for another's account of personal liability toward the bill's endorsers and holders. The drawer remains liable to them in a personal capacity.
The practical benefit is that the holder and endorsers of a bill are not affected by internal arrangements between the drawer and the person for whose account he or she drew; the drawer remains liable to them.
After this, Article 30 explains when funds for payment are considered to exist with the drawee, and on whom the burden of proving their existence falls. It was preceded by Article 28, which binds the accepting drawee to pay on the due date.
To ask about liability in a particular relationship, you can consult a lawyer specializing in commercial cases and commercial papers.
Practical example
A company in Riyadh asked a commercial intermediary to draw a bill of exchange for its account on one of its customers. Under Article 29, the duty to provide funds for payment with the customer falls on the company, as the person for whose account the bill was drawn, or on the intermediary as drawer, and the intermediary remains personally liable to those to whom the bill is endorsed.
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 29 of the Saudi Commercial Papers Law
What are funds for payment of a bill of exchange?
They are what the drawer, or the person for whose account the bill is drawn, must provide with the drawee to pay it; Article 30 explains when they are considered to exist.
Is a drawer drawing for another's account relieved of liability?
No, the drawer remains personally liable toward the bill's endorsers and holders.
More articles on Bill of Exchange
- Article 1
The article sets out the eight particulars a bill of exchange must contain, including the word "bill of exchange", the amount, the name of the drawee, the due date and the drawer's signature.
تشتمل الكمبيالة على البيانات الآتية: أ - كلمة (كمبيالة) مكتوبة في متن الصك وباللغة التي كتب بها. ب - أمر غير معلق على شرط بوفاء مبلغ معين من النقود. ج - اسم من
- Article 2
An instrument lacking the particulars of Article 1 is not a bill of exchange, except where the due date, place of payment, drawee's domicile or place of issue is missing, each of which has a substitute rule.
لا يعتبر الصك الخالي من البيانات المذكورة في المادة السابقة كمبيالة إلا في الأحوال الآتية: أ - إذا خلت الكمبيالة من بيان ميعاد الاستحقاق، اعتبرت مستحقة الوفاء ل
- Article 3
The article permits three ways of drawing a bill of exchange: to the drawer's own order, on the drawer himself, or for the account of another person.
يجوز سحب الكمبيالة لأمر الساحب نفسه، ويجوز سحبها على ساحبها، ويجوز سحبها لحساب شخص آخر.
- Article 4
The article permits stipulating that a bill of exchange be paid at the domicile of a person other than the drawee, whether in the drawee's town or in another.
يجوز اشتراط وفاء الكمبيالة في موطن شخص آخر غير المسحوب عليه سواء كان هذا الموطن في الجهة التي فيها موطن المسحوب عليه أو في جهة أخرى.
- Article 5
If the amount of a bill written in words differs from the amount in figures, the words prevail; if the amount is written several times and differs, the smaller amount prevails.
إذا كتب مبلغ الكمبيالة بالحروف وبالأرقام معا فتكون العبرة عند الاختلاف بالمكتوب بالحروف، وإذا كتب المبلغ عدة مرات بالحروف أو بالأرقام فتكون العبرة عند الاختلاف
- Article 6
Article 6 provides that any stipulation of interest on the amount of a bill of exchange is treated as if it had not been written.
اشتراط فائدة الكمبيالة يعتبر كأن لم يكن.
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.