Reaffirmation Settlement Agreement Template for Saudi Arabia

The Reaffirmation Settlement Agreement is utilized in Saudi Arabia when parties seek to formally acknowledge and restructure existing debt obligations while ensuring compliance with both Saudi commercial law and Sharia principles. This document becomes necessary when a debtor faces challenges in meeting original payment terms but demonstrates willingness and ability to honor the debt under revised conditions. The agreement typically follows negotiations between creditors and debtors, documenting the reaffirmed debt amount, new payment terms, any security arrangements, and compliance with Islamic financial principles. It serves as a crucial tool in debt restructuring, providing legal certainty while maintaining the enforceability of the obligation under Saudi jurisdiction. The document must carefully address both the commercial aspects of the settlement and religious compliance, making it distinct from similar agreements in non-Islamic jurisdictions.

1. Parties: Identification of all parties to the agreement, including their full legal names, addresses, and registration details

2. Background: Details of the original debt obligation, circumstances leading to the settlement, and purpose of the reaffirmation

3. Definitions: Key terms used throughout the agreement, including defined payment terms, relevant dates, and technical terminology

4. Acknowledgment of Debt: Clear statement of the original debt amount being reaffirmed and acknowledgment by the debtor

5. Settlement Terms: Detailed terms of the settlement, including payment amounts, schedule, and method of payment in compliance with Sharia principles

6. Representations and Warranties: Statements from both parties confirming their capacity, authority, and ability to enter into and perform the agreement

7. Compliance with Sharia: Explicit confirmation that the agreement complies with Sharia principles and specific provisions ensuring compliance

8. Events of Default: Circumstances that constitute default and consequences of default

9. Governing Law and Jurisdiction: Confirmation of Saudi law as governing law and specification of competent courts

10. Notices: Process and addresses for serving formal notices under the agreement

11. Entire Agreement: Confirmation that this agreement represents the complete understanding between parties