Article 74 of the Saudi Commercial Papers Law

المادة 74 من نظام الأوراق التجارية · الفصل السابع: التدخل في القبول أو في الوفاء

The Article provides that a bill holder who refuses payment by intervention loses the right of recourse against anyone who would have been discharged by that payment.

Official text (Arabic)

This article has not been amended since the law was issued.

إذا رفض حامل الكمبيالة الوفاء بالتدخل فقد حقه في الرجوع على من كانت ذمته تبرأ بهذا الوفاء.

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 74 explained in plain English

This Article is short but significant: if the holder of a bill of exchange refuses payment by intervention, the holder loses the right of recourse against anyone who would have been discharged by that payment.

In practical terms, a holder who is offered payment by intervention and refuses it can no longer have recourse against the parties liable whom that payment would have discharged. This Article does not concern anyone who would not have been discharged by that payment.

To determine for whose benefit payment by intervention was made, Article 75 requires payment by intervention to be evidenced by a receipt written on the bill stating the person for whose benefit payment was made; if the receipt omits this, the payment is considered made for the benefit of the drawer, and the bill and the protest, if one was made, must be handed to the person who paid by intervention.

It is also linked to Article 73, which requires the holder to present the bill to those who accepted it by intervention or were designated to pay it if needed, where they are domiciled at the place of payment, and to make a protest for non-payment if necessary no later than the day following the last day on which a protest may be made; otherwise the person who designated the payer if needed, or the person for whose benefit the acceptance by intervention was made, and the subsequent endorsers, are released from their obligations.

The holder should therefore think carefully before refusing any payment by intervention. If in doubt about the effect of a refusal in a particular case, it is advisable to consult a lawyer who specializes in commercial matters and commercial papers.

Practical example

The drawee did not pay a bill of exchange held by a factory in Jubail, and a person offered to pay the amount by intervention for the benefit of one of the endorsers, but the factory refused because of a commercial dispute with that person. Under this Article, the factory loses its right of recourse against anyone who would have been discharged had it accepted that payment.

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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