The Applications of the Good Faith Principle in the Saudi Commercial Companies System: An Analytical Study

Abstract

Undoubtedly, the principle of good faith in contracts is crucial, particularly in the context of commercial company contracts. Therefore, the adherence to this principle by the contracting parties is of paramount significance. Failure to adhere to it by either party could result in the contract being invalidated. Although not explicitly stated, the Saudi legislator has not overlooked the application of this principle as a fundamental one. Upon examining the general and specific objective elements of the company contract, it becomes evident that they are closely intertwined with this principle. Any deficiency in these elements could have serious repercussions, including the partial or absolute nullification of the contract. Furthermore, it may lead to the imposition of specific penalties on those who fail to uphold this important principle. This study employed the inductive and analytical approach. The research has concluded that there are implications within the Saudi system stemming from the breach of this principle, resulting in the imposition of specific penalties on individuals found to have acted in bad faith. The research recommends that the Saudi legislator explicitly incorporate this principle in one or more articles, whether within the commercial companies' system or in other relevant regulations.