Promissory Agreement Template for Saudi Arabia

The Promissory Agreement is a crucial financial instrument in Saudi Arabian business transactions, commonly used in commercial financing, trade, and various business arrangements. It must strictly comply with both Saudi Commercial Papers Law and Islamic Sharia principles, which prohibit interest-based transactions. The document is particularly valuable in situations requiring documented payment commitments, such as business financing, commercial transactions, or installment purchases. The agreement typically includes specific payment terms, conditions, and enforcement mechanisms recognized by Saudi courts. Its format and content are regulated by the Saudi Arabian Monetary Authority (SAMA) and must meet strict legal requirements to be enforceable.

1. Parties: Identification of the promisor (maker) and promisee (payee) with full legal names and addresses

2. Background: Context of the promissory agreement, including the underlying transaction or reason for the promise to pay

3. Definitions: Key terms used in the agreement, including payment-related terminology and dates

4. Promise to Pay: Unconditional promise to pay a specific sum, with clear amount in numbers and words as per Saudi law

5. Payment Terms: Details of payment including due date, currency, and method of payment

6. Place of Payment: Specific location or account where payment should be made

7. Representations and Warranties: Promisor's declarations regarding capacity, authority, and Sharia compliance

8. Events of Default: Circumstances constituting default and consequences

9. Notices: Process and addresses for formal communications between parties

10. Governing Law and Jurisdiction: Confirmation of Saudi law governance and jurisdiction of Saudi courts