Breach of Contract

Name: Amlaki Real Estate
Author: Amlaki

Overview

Breach of contract under Saudi law is failure of one party to a rental contract to fulfill stipulated obligations — whether material breach justifying contract termination, or minor breach warranting compensation with contract continuation. It's one of the most important legal concepts in rental relationships. Lessee breach examples: payment delay for material duration (3 months or more usually), using property for purpose other than agreed, causing major damage, subletting without consent, or returning property in poor condition. Lessor breach examples: not delivering property on time, not repairing major defects, interfering with lessee's use without cause, or arbitrarily increasing rent. Legally, material breach gives the injured party the right to request judicial termination, deposit recovery and compensation. With lessee breach, the lessor may request direct enforcement via Najiz. Proof relies on documentation (Ejar notices, emails, photos, invoices), and the dispute is referred to Rental Dispute Committees or enforcement courts.

Legal Basis

Breach of contract is regulated by the Civil Transactions Law issued by Royal Decree No. (M/191) of 1444 AH in articles related to breach effect on the contract. The Enforcement Law also applies to lessee breach (payment delay). Material breach gives the injured party right to judicial recourse, with decisions issued by Rental Dispute Committees or enforcement courts based on breach nature.

Practical Example

An owner of a commercial office in Riyadh discovered that the tenant (a company) sublet part of the office to another company without his consent — a clear breach of the 'no subletting' clause. The owner documented the breach with photos and emails between the companies. He sent an official notice via Ejar requesting subletting termination within 14 days or it would be considered material breach. The company didn't respond. The owner filed a judicial termination and eviction request via Najiz. Within 21 days, a decision was issued: contract termination, property eviction, owner compensation of two months rent (SAR 16,000) as damages, and full deposit retention (SAR 5,000).

Common Mistakes

✗Waiting long before acting on breach — each day adds to your loss; quick action limits damage.

✗Not documenting the breach with evidence (photos, emails, witnesses) — difficult to prove later before judiciary.

✗Attempting personal retaliation (cutting electricity, threats) — turns the situation from victim to perpetrator.

✗Sending verbal notice instead of formal via Ejar — not legally recognized.

✗Assuming any breach automatically leads to contract termination — termination needs material breach and judicial decision, except in rare cases.

International Differences

In the UAE, breach is examined via the Dispute Resolution Center. In Turkey, breach is subject to the Code of Obligations and referred to courts. In the UK, 'Breach of Contract' is a fundamental concept in commercial law. The Saudi advantage: speed in processing breach via direct enforcement of documented contracts (7-30 days), faster than most countries.

FAQs

What's the difference between material and minor breach?▾

Material breach undermines contract foundation and justifies termination (long payment delay, major damage). Minor can be repaired without contract termination (one month delay, minor damage).

How many months delay constitutes material breach?▾

Usually 3 months or more constitutes material breach justifying termination request. One or two months is minor, may claim payment without termination.

How do I prove lessor's breach of obligations?▾

Document the breach: required repairs with photos and video, sending official notices via Ejar and awaiting responses, keeping invoices if forced to repair yourself, independent technical consultations.

What compensations are available for material breach?▾

1) Contract termination. 2) Full deposit recovery (lessee) or retention (lessor). 3) Direct damage compensation (usually two months rent). 4) Interest on overdue amounts.

Can I stop paying rent due to lessor breach?▾

No, correct action: pay rent on time, then demand repair or compensation. Stopping payment is your breach, even if lessor is in breach.

In Other Languages

Arabic

الإخلال بالعقد

عدم التزام أحد الطرفين ببنود العقد، كعدم دفع الإيجار أو سوء استخدام العقار، يعطي الطرف المتضرر حق المطالبة بالتعويض أو الفسخ.

English

Breach of Contract

Failure of either party to comply with contract terms, like non-payment or property misuse, giving the affected party right to claim compensation or termination.

Turkish

Sözleşmeyi İhlal

Taraflardan birinin sözleşme şartlarına uymaması; kira ödememe veya mülkü kötü kullanma gibi, etkilenen tarafa tazminat veya fesih hakkı verir.

Short Definition