Analyzing the Consequence of Violating Principle of Good Faith on Commercial Contracts within the Saudi Legal Framework

Abstract

There is no doubt that the principle of good faith in contracts is essential, including what relates to commercial company contracts. Therefore, it is a very important matter for both contracting parties to adhere to it. If one of them fails to adhere to it, this will be grounds for ruling that the validity and enforceability of the contract is invalid. The Saudi legislator - although did not explicitly refer to this issue - did not neglect to implement it as a basic principle. When we look at the pillars of the objective public and private company contract, we find their close connection to this principle, and if one of them is missed, a serious consequence will result, which is the statement that the contract is relatively or absolutely invalidity.  This study explores the consequences resulting from violating principle of good faith on commercial contracts within the Saudi legal framework. This research used the inductive and analytical approach to investigate the research problem. This research found that the Saudi legislator stated that the violation of good faith leads to the invalidating the partnership’s contract, absolutely or relatively. It was also recommended that the Saudi legislator should refer to it independently in one or several articles, whether in the Commercial Companies Law, or in other relevant regulations.