Direct Sales Contract Template for Saudi Arabia

A Direct Sales Contract is a legally binding agreement that governs the sale of goods directly from a seller to a buyer in Saudi Arabia. This document establishes clear terms and conditions for commercial transactions while ensuring compliance with Saudi Commercial Law and Sharia principles that form the foundation of the Saudi legal system.

When do you need this document?

You need a Direct Sales Contract when conducting any direct sale of goods in Saudi Arabia, whether you're a business selling to another company or to individual consumers. This includes manufacturers selling directly to retailers, wholesalers distributing products to businesses, or companies engaging in direct-to-consumer sales. The contract is particularly important for high-value transactions, international sales involving Saudi parties, or when establishing ongoing commercial relationships. You'll also need this document for e-commerce transactions that fall under Saudi Arabia's E-Commerce Law, ensuring your online sales comply with local regulations.

Key legal considerations

Your Direct Sales Contract must include comprehensive product specifications, clear pricing structures, and detailed delivery terms to avoid disputes. Payment obligations should specify methods, schedules, and any applicable VAT under Saudi Arabia's Value Added Tax Law. Warranty provisions must align with consumer protection requirements, while force majeure clauses should address unforeseen circumstances. The contract should include dispute resolution mechanisms that comply with Saudi Commercial Courts procedures and may incorporate arbitration clauses for international transactions. Quality standards and inspection procedures must be clearly defined, particularly for goods subject to Saudi Standards, Metrology and Quality Organization requirements. Anti-fraud provisions should be included to comply with the Anti-Commercial Fraud Law.

Legal requirements in Saudi Arabia

Under Saudi Commercial Law (Royal Decree No. M/32), your Direct Sales Contract must identify all parties with complete legal names, addresses, and commercial registration numbers where applicable. The contract must specify the exact nature of goods being sold, including quantities, specifications, and quality standards. VAT compliance is mandatory for applicable transactions, requiring clear indication of tax rates and responsibilities. Consumer protection provisions must be included when selling to individuals, ensuring compliance with the Consumer Protection Law. For electronic transactions, the contract must meet E-Commerce Law requirements including digital signature validity and electronic record keeping. The agreement must also ensure compliance with Sharia principles, particularly regarding prohibited interest (riba) and excessive uncertainty (gharar) in commercial terms.