What is the Penalty For a Promissory Note in Saudi Law?

A promissory note is defined as a document or a pledge from one person to another to pay a sum of money at a specific time, and the promissory note is used in many financial, commercial, and legal transactions, and for this reason, Saudi law has set strict penalties in the event that the debtor fails to pay the dues owed by the creditor, and we will explain In this article for you, what is the penalty for a promissory note in Saudi law, its types, when the penalty is imposed on the debtor, and much other information on this subject, so follow us…………

What is the penalty for a promissory note in Saudi law?

Saudi law has established severe and existing penalties in the event of non-compliance with an order, and among these penalties are executive imprisonment, and bank account suspension and seizure.

And because the promissory note is used in many transactions, the Saudi regime has also set harsh penalties for late payment of the promissory note or evasion of payment.

The aim of imposing these sanctions is to preserve citizens’ money and rights within the Kingdom of Saudi Arabia and to give them more confidence in the justice of the Kingdom.

(To Know about the procedures for implementing a promissory note)

Types of punishment for bond for order in Saudi law?

The penalty for a promissory note is divided into two parts: compulsory penalties and optional penalties.

First, mandatory penalties:

They are the penalties that the judge is obligated to apply compulsorily to the debtor. These mandatory penalties are as follows:

• Depriving the debtor of travel.
• Suspending the issuance of power of attorney instruments from him.
• Attachment and enforcement of the debtor’s funds, as well as announcing his existing funds as well as the funds received in the future.
• A list of the debtor’s activity records, as well as his commercial and professional licenses.

Secondly, optional penalties:

It is the type of penalties that the judge has the discretionary power to inflict on the debtor, which is as follows:

• Prohibition of government agencies from conducting transactions with this debtor, as well as withholding the financial dues of the debtor with them.
• Financial authorities are also prohibited from doing business with him for any reason.
• Disclosure of the funds of the debtor’s spouse, children, and anyone related to the debtor that allows him to transfer funds to him.
• Imposing a prison sentence on the debtor.

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When is the penalty imposed on the debtor with the promissory note?

The legislator has protected the creditor with several guarantees, and the guarantees are the penalty for the promissory note, so the first thing that the creditor must do when the debt is due is to go to the debtor and inform him of the bond whose value is required to be paid, and in the event that the debtor refuses to pay the value of the bond, the creditor must go to a court Execution It is the duty of the judge to issue an order to execute the bond and notify the debtor.

The debtor must implement the judge’s ruling within five days from the time of notification, but if the period expires and the debtor does not pay, in this case, the judge will impose the necessary penalty on him.

( To Know how to appeal a promissory note in KSA).

Is it possible to cancel the bond for an order?

A distinction must be made here between the party that wishes to cancel the promissory note:

• If the request for cancellation is by the creditor, he can cancel the bond.
• As for the debtor, he cannot cancel the promissory note.
• If approval is signed to establish the bond, it cannot be amended.

What is the validity period of the bond for an order?

The Kingdom of Saudi Arabia strives to preserve all the rights of citizens and everyone who resides on its land, so it has allowed a claim for the order by going directly to the execution court to submit an execution request without the need to file a lawsuit, and the execution court directly verifies the request and then issues the declaration and informs the debtor.

However, it is required that the validity of the bond is valid, which was determined by the Saudi project with a period of three years from the date of maturity of the debt, after which the expiry of this period means that the bond is void, and in the event that the maturity date is not specified, then the validity period of the bond is four years.

When does a promissory note nullify?

There are several cases in which the validity of the promissory note is invalidated, so it is not suitable as a tool to prove debt, and among these cases are the following:

1. If there is a text in the bond stipulating recourse without protest, then the bond is considered void.
2. If three years have passed from the maturity date of the debt stipulated in the bond.
3. If a full year has passed since the date of the objection of the bearer of the bond to the endorsers.
4. If the claim of recourse against the endorsers has expired, which has been set for six months from the date of filing the claim or from the date of payment.

Conditions to be met for the validity of the promissory note?

The commercial papers system in Saudi Arabia has indicated some conditions that must be met for the validity of the promissory note. These conditions are as follows:

• The presence of the word “Promissory Note” at the front of the document in the same language in which the promissory note was drawn up.
• State an obligation to pay an amount due, provided that such obligation does not relate to any conditions attached to the payment.
• The name of the person required to pay the debt specified in the voucher must be written.
• Mention the date of payment as well as the address to which the debt will be delivered.
• Mention the day, date, and place where the bond was held.
• The signature of the bond issuer.

What is the competent court to consider cases related to a promissory note in Saudi Arabia?

The court that has jurisdiction to consider cases related to a promissory note differs according to the type of complaints submitted. If the complaints are related to commercial papers, the formal form of the promissory note, or signature forgery, then in these cases the case is filed in the Execution Court. Goods, for example, the court that has jurisdiction to adjudicate in this case is the trial court.

Conditions for objection to a promissory note?

The penalty for the promissory note is one of the penalties that constitute severe damage to the future of the debtor, so the Saudi law gave the debtor the right to object to the promissory note, but there are conditions that must be followed, as follows:

• The maturity of the debt must be the reason for filing the objection.
• In the event that a bond is a civil contract, the objection must be submitted in one of the general courts.
• As for commercial contracts, the bond is presented in the commercial courts.
• In the event that the legal bond between the two parties is absent, you can submit a request that the bond is not valid.
• In the event that there is a legal bond between the two parties, whether this bond is civil or commercial, the debtor has no right to object.

Procedures for objection to a promissory note in the Saudi system?

 The procedures that must be followed to file an objection are as follows:

• Submit an official request for objection to the competent authority.
• Determine the reasons that prompted the person to object to the bond, and these reasons must be legal and legitimate.
•  Submit the necessary documents that prove the validity of the reasons mentioned, such as contracts and certificates
• The competent authorities review these reasons and evidence and take the appropriate decision. The objection may be rejected if the reasons are not convincing or if the appropriate evidence is not presented. The objection may also be accepted and amendments may be made to the order document or canceled.

Read an objection against a judgement via najiz in KSA

Assigning a commercial lawyer to object to a promissory note in Saudi Arabia

If you have a dispute related to executive bonds or business and want to resort to commercial litigation, please do not hesitate to contact the Commercial Law experts At Al-Othman Law Firm, because they have legal experts whose experience extends for more than 15 years in commercial systems, and the expertise of their staff of consultants exceeds more than 22 years in Saudi commercial systems and Al-Othman Company includes The best commercial lawyer in Saudi Arabia and Riyadh.

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Claim for recovery of possession of a promissory note

The possession suit is a claim by the debtor to return a financial right to the creditor, whether this right is a promissory note or other securities.

In order for the creditor to apply for recovery of possession:

•  He must have proof of physical ownership of the bond.
• And proof of the damage incurred by the debtor’s possession of the promissory note.

In this case, the creditor can file a lawsuit to recover possession of the bond.

Frequently Asked Questions

Does the creditor have to file a lawsuit in court first to implement the promissory note?

no; As the creditor can go to the execution court directly to submit a request for the execution of the bond without the need to file a lawsuit in court.

What if the debtor (the issuer of the bond) claims that the bond is forged and the bond is valid?

In this case, the debtor is considered a liar, and a prison sentence is imposed on him or he is obliged to pay a large financial fine because of his lying and evading the payment of the right to his family.

Is the penalty for a bond order up to prison?

In advance, if the amount of the bond exceeded a certain amount, the judge used to sentence the debtor to imprisonment, but after that another ruling was issued during the Covid-19 period not to imprison the debtor in financial claims.

Is a promissory note without a maturity date considered void?

The Ministry of Justice has indicated that in Saudi Arabia, in the absence of mentioning the date of maturity of the bond, the period during which the validity of the contract continues is four years.

Conclusion

Thus, we have finished our article about the penalty for a promissory note in Saudi law, and we talked about the types of punishment imposed and when they are inflicted on the debtor. We also talked about canceling the promissory note, its validity, the conditions that must be met for the validity of the promissory note, the conditions for objection and its procedures, and we do not forget the most important procedures, which is the appointment of a lawyer who specializes in this. One of the best law firms in Jeddah and Riyadh is the Al Othman Law Firm, so do not hesitate to contact them, and we hope that we have provided you with everything you want to know in this regard.