Article 77 of the Saudi Government Tenders and Procurement Law
المادة 77 من نظام المنافسات والمشتريات الحكومية · الفصل الثامن: إنهاء العقود
The Article allows a government entity to terminate a contract when the public interest requires it, or by agreement with the contractor after the Ministry's approval, in accordance with the Implementing Regulations.
Official text (Arabic)
This article has not been amended since the law was issued.
للجهة الحكومية إنهاء العقد إذا اقتضت المصلحة العامة ذلك، أو إذا تم الاتفاق على الإنهاء مع المتعاقد معه وذلك بعد موافقة الوزارة، وفقاً للشروط والإجراءات التي توضحها اللائحة.
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 77 explained in plain English
This Article adds two ways of terminating a government contract that are not tied to any fault by the contractor, unlike many of the cases in Article 76.
The first way: termination in the public interest. The government entity may terminate the contract if the public interest requires it. The test here is a public interest calling for termination, not a breach by the contractor.
The second way: termination by agreement. The contract may be terminated if the entity and the contractor agree to it, after the approval of the Ministry (the Ministry of Finance).
Procedures: Termination is carried out under the conditions and procedures set out in the Implementing Regulations. The phrase "after the approval of the Ministry" appears in the text after the case of termination by agreement, and the text does not state that it applies to termination in the public interest.
The Article does not say what settlement or compensation follows this kind of termination, nor what happens to the final guarantee, so the Implementing Regulations and the contract terms must be consulted. The cases in which the Law provides for forfeiture of the guarantee cannot be applied by analogy here, because this Article contains no such provision.
The Article is linked to Article 76, which sets out the mandatory termination cases (such as bribery, bankruptcy and assignment without approval) and the discretionary ones (such as delay not corrected within 15 days, death, and subcontracting without approval), and to Article 78, which provides for forfeiture of the final guarantee when a contract is terminated for specified reasons in Article 76. A person who is offered termination by agreement, or notified of termination in the public interest, would do well to consult a lawyer specialized in government contracts to learn their rights.
Practical example
A government entity in Makkah contracted with a company to build an administrative building, then decided to move its activity to another site, so the building was no longer needed. The entity may terminate the contract in the public interest, or agree with the company to terminate it after the approval of the Ministry of Finance, as the Implementing Regulations set out.
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 77 of the Saudi Government Tenders and Procurement Law
Can a government entity terminate a contract without any fault by the contractor?
Yes, it may terminate it if the public interest requires it, under the conditions and procedures set out in the Implementing Regulations.
Can a government contract be terminated by mutual agreement?
Yes, it may be terminated by agreement with the contractor, after the Ministry's approval and under the conditions and procedures set out in the Implementing Regulations.
Is the contractor entitled to compensation when the contract is terminated in the public interest?
The Article does not address compensation; refer to the Implementing Regulations and the contract terms.
More articles on Terminating a Government Contract
- Article 56
The Article caps continuing service contracts at five years unless the Ministry approves more, requires the term to fit the work, and requires performance and evaluation conditions allowing termination or reduced payments.
1- لا تتجاوز مدة عقود الخدمات ذات التنفيذ المستمر، كالصيانة والنظافة والتشغيل والإعاشة، (خمس) سنوات، وتجوز زيادتها في العقود التي تتطلب طبيعتها ذلك؛ بعد موافقة
- Article 76
The Article lists the cases in which a government entity must terminate a contract and those in which it may, and how the remaining work is re-tendered after termination.
1- يجب على الجهة الحكومية إنهاء العقد في الحالات الآتية: أ- إذا تبين أن المتعاقد معه قد شرع -بنفسه أو بوساطة غيره بطريق مباشر أو غير مباشر- في رشوة أحد موظفي ال
- Article 78
The Article requires the final guarantee to be forfeited when a contract is terminated for reasons specified in Article 76, preserves the entity's right to compensation, and refers the decision to the Article 88 committee to consider a ban.
يجب عند إنهاء العقد بموجب الفقرة (1) أو الفقرة (2 / أ) أو الفقرة (2 / ج) من المادة (السادسة والسبعين) من النظام، مصادرة الضمان النهائي وذلك دون إخلال بحق الجهة
- Article 79
The Article requires the government entity to evaluate the contractor's performance after the contract is fully performed, using the performance evaluation form, and results are announced only once the evaluation is final.
تتولى الجهة الحكومية تقييم أداء المتعاقد معها بعد اكتمال تنفيذه للعقد، وذلك باستخدام نموذج تقييم أداء المتعاقدين. ولا تعلن نتائج تقييم أداء المتعاقدين؛ إلا بعد
- Article 92
The Article requires the government entity to perform its contractual obligations, lets the contractor claim compensation before the Administrative Court if it breaches them, allows arbitration with the Minister's approval, and refers other dispute resolution means to the Regulations.
1- على الجهة الحكومية تنفيذ التزاماتها في العقد وفقاً لشروطه، وإذا أخلت بتنفيذ التزاماتها جاز للمتعاقد معها التقدم إلى المحكمة الإدارية للمطالبة بالتعويض. 2- لل
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.