PRECONTRACTUAL LIABILITY UNDER THE NEW SAUDI CIVIL TRANSACTIONS LAW: A COMPARATIVE STUDY

Abstract

Objective: This paper critically examines the effectiveness of the regulation of precontractual liability by the 2023 Saudi Civil Transactions Law (SCTL) in preserving the interests of contract negotiators. Theoretical Framework: The focus of analysis is the duty to negotiate in good faith in lights of judicial rulings, whether that refuse or recognize such duty. Method: The paper discusses and assesses precontractual liability under Article 41 SCTL in comparison with some other civil codes. The paper adopts a desk research methodology to analyze and synthesize related academic writings and court rulings. Results and Discussion: While most Arab civil codes do not directly regulate precontractual liability, Article 41 SCTL expressly provides essential legal protection of parties’ interests during contract negotiations. However, Article 41 SCTL does not address all situations of bad faith negotiation. It also limits precontractual liability to negative interests. This paper identifies some areas for improvement, like enabling the court to order the interrupting negotiator to continue contract negotiations or to consider the intended contract as concluded. Research Implications: These results encourage the legislature in Arab States to follow the Saudi model and directly regulate precontractual liability; they also offer the policy-maker in Saudi Arabia to reform the regulation of precontractual liability. Originality/Value: This paper offers a unique study of the regulation of precontractual liability under the newly enacted SCTL. It also provides recommendations for improvements of Article 41 SCTL as well as other Arab civil codes.