Article 37 of the Saudi Commercial Papers Law
المادة 37 من نظام الأوراق التجارية · الفصل الخامس: الضمان الاحتياطي
Article 37 makes the surety's obligation the same as that of the person guaranteed, valid even if the guaranteed obligation is void for a reason other than a defect of form, and transfers the bill's rights to the surety if he or she pays it.
Official text (Arabic)
This article has not been amended since the law was issued.
يلتزم الضامن الاحتياطي على الوجه الذي يلتزم به المضمون، ويكون التزام الضامن الاحتياطي صحيحا ولو كان الالتزام الذي ضمنه باطلا لأي سبب غير العيب في الشكل، وإذا وفى الضامن الاحتياطي الكمبيالة آلت إليه الحقوق الناشئة عنها وذلك اتجاه مضمونه وتجاه كل ملتزم نحو هذا الأخير بموجب الكمبيالة.
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 37 explained in plain English
Article 37 defines the position of the surety (aval) in three points:
- Extent of the obligation: the guarantor is bound in the same way as the person he or she guaranteed; if he or she guaranteed the drawer, the guarantor is bound as the drawer is, and if he or she guaranteed an endorser, the guarantor is bound as that endorser is.
- Independence of the obligation: the guarantor's obligation remains valid even if the obligation guaranteed is void for any reason, unless the invalidity is due to a defect of form.
- Subrogation to rights: if the guarantor pays the bill, the rights arising from it pass to him or her, against the person guaranteed and against everyone who is bound toward that person under the bill.
The meaning of the second point is that the guarantor cannot escape the obligation by arguing that the obligation guaranteed is void, unless the invalidity is due to a defect of form. The third point protects a guarantor who has paid, by enabling him or her to claim against the person guaranteed and those bound toward that person.
This article complements Article 36, which explains the form of the guarantee and who is treated as guaranteed where no name is given, in which case the guarantee is treated as given for the drawer.
To assess whether a particular defect is one of form, it is advisable to consult a lawyer specializing in commercial cases and commercial papers.
Practical example
Fahd guaranteed one of the endorsers of a bill of exchange for SAR 60,000, then the drawee refused to pay and Fahd paid the amount to the holder. Under Article 37, the rights arising from the bill pass to Fahd, and he claims on them against the endorser he guaranteed and against everyone who is bound toward that endorser under the bill.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentA question about Article 37 of Commercial Papers Law?
Describe what happened and specialist lawyers answer. You can write in English.
- Completely free
- Lawyers from the directory answer
- Your name stays hidden
Commercial & Corporate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Commercial & Corporate Law lawyers
Lawyers who handle this kind of case
شركة امتداد النظام للمحاماة والاستشارات المهنية
- Labour & Employment Law
- Criminal Law
- Criminal Law
- Commercial & Corporate Law
Frequently asked questions about Article 37 of the Saudi Commercial Papers Law
Is the surety bound to the same extent as the person guaranteed?
Yes, the surety is bound in the same way as the person guaranteed.
Is the guarantee void if the guaranteed party's obligation is void?
No, the guarantor's obligation remains valid even if the guaranteed obligation is void for any reason other than a defect of form.
Does the guarantor have a right of recourse after paying the bill?
Yes, the rights arising from the bill pass to the guarantor against the person guaranteed and against everyone bound toward that person under the bill.
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.