Reviewing a contract before signing protects you from obligations you missed. Here are 10 clauses to understand first under Saudi civil law.
Short answer: Before you sign, check at least ten clauses: the parties and signing authority, scope, price and payment, term and termination, the penalty clause, limits of liability, changed circumstances, confidentiality and non-compete, dispute resolution, and amendments and notices. Once signed, a valid contract binds you and can only be changed by agreement or by law.
Many people read the first page of a contract and then flip straight to the signature block. Yet what actually governs the relationship usually sits in the final clauses: penalties, termination rights and the competent forum. This checklist covers ten clauses and what the Saudi Civil Transactions Law says about each. For high-value or long-term contracts, you can request a contract review by Kawkaba Law's contracts team before you sign.
Why review a contract before signing?
Because a signed contract binds you. Article 94 provides that a validly concluded contract may not be revoked or amended except by agreement or by law, and Article 104 says that clear wording is not departed from under the pretext of interpretation. What you signed clearly will be applied as written. The law does offer some protection: Article 95 requires performance in good faith, and Article 96 lets a court modify or relieve a party from abusive terms in adhesion (standard-form) contracts. But those are exceptions; the rule is to understand the contract first.
The 10 clauses to check
1. Parties and signing authority
Confirm the other party's legal name, commercial registration or ID number and national address. If someone signs for a company, ask for proof of authority: articles of association, a partners' resolution or a valid power of attorney.
2. Scope and subject matter
"Supply of office equipment" is vague; "supply of 20 computers to the specifications in Annex A within 30 days of the purchase order" is measurable. Check that annexes are signed and referenced. Under Article 95 a contract also covers what is incidental to it by law, custom and its nature, so vagueness invites disputes over what was "included".
3. Price and payment
Check the total, whether tax is included, the currency, the payment schedule, the trigger for each instalment and the consequences of late payment. Illustrative example: on a SAR 500,000 contract with a 30% advance, failing to say when the advance is refunded if the contract ends early can leave SAR 150,000 in dispute.
4. Term, renewal and termination
Look for automatic renewal and the notice deadline to stop it. Check each party's termination rights and notice periods. Under Article 107, if one party fails to perform, the other may, after formal notice, seek performance or rescission plus damages where warranted, and a court may refuse rescission if the unperformed part is minor. Define what counts as a material breach.
5. Penalty clause (agreed compensation)
Article 178 allows the parties to fix compensation in advance, with no formal notice required, unless the obligation is a sum of money. Article 179 limits it: nothing is due if the debtor proves no loss; a court may reduce an excessive amount or one where the obligation was partly performed; a court may increase it to the actual loss in cases of fraud or gross fault; and any contrary agreement is void. Illustrative example: a delay penalty of 1% of the contract value per day with no cap can exceed the contract value within months. Negotiate a reasonable cap.
6. Limitation of liability
Under Article 173, parties may agree to exempt a debtor from compensation for non-performance or delay, except for fraud or gross fault, and liability for harmful acts (tort) cannot be excluded. Check whether the cap is balanced and whether it excludes losses that matter to you.
7. Changed circumstances and force majeure
Article 97 provides that if unforeseeable general exceptional circumstances make performance excessively onerous, threatening the debtor with grave loss, the debtor may call for renegotiation without undue delay; failing agreement within a reasonable time, the court may reduce the obligation to a reasonable level, and any contrary agreement is void. Also review the force majeure clause: covered events, notice procedure and effect on deadlines and payments.
8. Confidentiality and non-compete
These often survive termination. Check what information is covered, for how long, where, and the penalty for breach.
9. Governing law and disputes
Name the governing law and forum: Saudi courts or arbitration. Under Article 9 of the Arbitration Law, an arbitration agreement must be in writing or it is void. See our guide to arbitration clauses and enforcing awards.
10. Amendments, notices and language
Require written, signed amendments, set notice addresses and, for bilingual contracts, state which version prevails.
Common signing mistakes
Signing a version that differs from the reviewed draft.
Agreeing changes verbally without writing them in.
Ignoring annexes, which form part of the contract.
Not keeping a complete signed copy. Under Article 295, claims generally cannot be heard against a denying party after ten years, save where the law provides otherwise, so keep your records.
For partnership deals, see two-party partnership agreement clauses.
When do you need a lawyer?
Consider legal review when the contract is high-value, long-term or auto-renewing, contains penalties, non-compete or arbitration, is a non-negotiable standard form, or is bilingual. Review does not mean rejecting the deal; it means understanding it and proposing targeted changes while you still can.
FAQ
Can a contract be changed after signing?
Under Article 94, only by mutual agreement or by law. Negotiate before you sign and put any later change in writing.
Is a penalty clause always enforced in full?
No. Under Article 179 a court may refuse it where there is no loss, reduce it if excessive, or increase it for fraud or gross fault.
That is an adhesion contract. Article 96 allows a court to modify abusive terms, and under Article 104 doubt in an adhesion contract is resolved in favour of the adhering party. Still, understand the terms before signing.
Can a review be done remotely?
Usually yes: send the contract electronically and discuss comments by video or phone, with an in-person meeting if needed.
Bottom line
Reviewing a contract costs far less than litigating it. Kawkaba Law is based in Jeddah and reviews and drafts contracts for individuals and companies across Saudi Arabia, in person and remotely.
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This article is general information for awareness purposes and is not legal advice for any specific case. Outcomes depend on the facts and documents of each matter, so consult a licensed lawyer before making decisions.
