The distinction between nominate contracts and innominate contracts is one of the fundamental pillars of the Saudi legal system, as it has a direct impact on contractual relationships and the legal responsibilities of the parties.
>Nominate contracts are those specifically regulated by civil or commercial law, which precisely defines their elements, effects, and obligations of the parties — such as contracts of sale, lease, contracting, agency, and others.
This classification ensures that the legal positions of the parties are clearly defined and pre-protected by statutory provisions, thereby reducing potential disputes and enhancing confidence in commercial dealings.
>Innominate contracts, on the other hand, are those not specifically regulated under Saudi laws but remain valid as long as they meet the general conditions of a contract — consent, lawful object, and legitimate cause.
Their interpretation relies on the principle of freedom of contract, as well as on general rules of obligations, judicial precedents, and established doctrines of justice and fairness.
>However, this type of contract places a greater responsibility on the parties to clearly define their respective obligations and rights within the contract itself, since there are no pre-existing statutory provisions governing them.
>Accordingly, the classification significantly affects the scope of legal liability: while nominate contracts enjoy a protective legal framework that limits risks, innominate contracts offer greater flexibility but require precise drafting and good faith in performance to avoid unfavorable judicial interpretation.
Impact of Classification on Evidence and Proof
In terms of evidence and proof, the treatment of nominate and innominate contracts under Saudi law differs significantly, reflecting the inherent nature of each.
In nominate contracts, proof is generally easier because the law has already defined them and specified their essential elements.
It is therefore straightforward to rely on statutory provisions or judicial precedents to prove the existence or the content of such contracts. The judge, in this case, is guided by established legal rules, and it is presumed that the parties are aware of them.
Thus, disputes rarely arise over the nature of obligations or their legal effects.
Moreover, the existence of a recognized legal model (such as sale or lease) means that written evidence or witness testimony merely supports factual proof rather than defining the contract’s nature.
In innominate contracts, the situation is entirely different.
The burden of proof lies primarily on the parties, as there is no statutory framework to rely upon. Generally, a clear and detailed written agreement is required to establish the parties’ intentions, the scope of obligations, and the basis of mutual consideration.
The judge will then interpret the contract based on general principles, equity, and the shared intent of the parties.
Making precise documentation and proof a decisive factor in upholding rights.
Accordingly, nominate contracts benefit from statutory support in matters of proof,
whereas innominate contracts depend entirely on the strength of the submitted evidence and the clarity of their drafting.
This highlights the importance of seeking professional legal assistance when preparing such contracts to avoid ambiguity and safeguard rights.
Examples of Nominate and Innominate Contracts in the Saudi Legal System
Within the Saudi legal framework, the distinction between nominate and innominate contracts can be better understood through
practical examples that illustrate the nature of each category:
First: Nominate Contracts
These are contracts explicitly regulated under Saudi law, with defined provisions governing their formation, effects, and detailed obligations. The most notable include:
- Contract of Sale: Regulated by the Civil Law, which defines the seller’s obligations to deliver the goods and guarantee hidden defects, and the buyer’s obligations to pay the price and conditions of rescission, among other matters.
- Lease Contract: Governing the relationship between lessor and lessee in terms of duration, rent, and obligations, pursuant to the Civil Transactions Law and the Real Estate Lease Law.
- Contracting (Muqawala) Contract: Regulates the obligations of the contractor and the employer in performing specific work for remuneration, covering matters of execution, defects, and liability.
- Agency Contract: Defines the agent’s authority and liability toward the principal.
- Partnership Contract: Regulated under the Companies Law, covering various forms of companies (joint-stock, limited liability, general partnership, etc.).
- Guarantee or Surety Contract: A nominate contract that creates a secondary obligation to secure performance of a principal obligation.
- Employment Contract: Regulated under the Labor Law, which comprehensively governs the relationship between employer and employee, defining contract validity, probation period, wages, working hours, leaves, termination, and compensation.
Second: Innominate Contracts
These are contracts not specifically regulated under Saudi law but remain valid if they do not violate public order or Sharia principles,
based on the principle of contractual freedom.
Prominent examples include:
- Online Marketing or Commission Contract: A modern form combining elements of agency, contracting, and brokerage.
- Domestic Franchise Agreement between individuals (outside the scope of the Franchise Law), where the structure does not precisely match the statutory model.
- Digital Account Management or Brand Management Contract: Involving mutual obligations to provide specific digital services.
- Joint Operation Agreement between companies: Applicable when not classified as a partnership or contracting arrangement under existing laws.
- Training-for-Profit-Share Agreement: Common in start-ups, based entirely on mutual consent and private arrangement between the parties.
These examples demonstrate that nominate contracts derive their legal strength from statutory regulation,
whereas innominate contracts derive theirs from the parties’ agreement and the precision of their drafting.
This underscores the importance of understanding Saudi legal provisions to ensure contractual validity and clear delineation of responsibilities.
Use of Innominate Contracts and Legal Challenges
Investors may resort to drafting innominate contracts when new arrangements arise that are not fully covered by existing legislation.
Because of their inherent flexibility, innominate contracts allow the parties to design customized terms that may not fit within the scope of any specific nominate contract.
such as investment partnership agreements or joint development contracts.
However, this flexibility is accompanied by legal challenges, the most significant being the absence of defined rules.
There may be no explicit legal reference governing obligations such as profit distribution or termination mechanisms in unregulated cases.
Consequently, courts may apply general legal principles (including interpretations based on Sharia and equity).
And the interpretation of obligations may vary depending on commercial customs and prevailing practices.
Therefore, such contracts must be drafted with great precision, including detailed clauses (e.g., profit ratios, reporting schedules, notice and breach mechanisms, and termination conditions).
To safeguard both parties’ rights and prevent future disputes.
Importance of Clear Drafting in Innominate Contracts
A clear and precise text in the clauses of innominate contracts is the key to avoiding disputes.
Legal studies indicate that many disputes arise from ambiguity or omission in drafting —
such as failure to specify duration, termination procedures, or dispute resolution mechanisms.
To prevent this, innominate contracts must contain detailed provisions on the parties’ obligations, methods of performance, and dispute-resolution clauses.
For example, it is advisable to include arbitration clauses or specify the competent court.
And providing a clear definition of the contract’s product or service and performance metrics.
Contracts lacking such “essential” clauses become vulnerable to divergent interpretations.
Hence, it is crucial to seek the assistance of a specialized attorney when drafting innominate contracts to ensure compliance with applicable laws, clarity of obligations.
Also prevention of potential legal loopholes.
Conclusion
In conclusion, the Saudi legal system harmonizes Sharia principles with modern legislative standards,
Ensuring both flexibility and robustness in contract regulation.
Whether dealing with nominate or innominate contracts, investors gain legal certainty through well-defined rules —
yet the risk lies in the ambiguity of some innominate contracts, which require meticulous legal drafting.
Here lies the value of consulting a professional attorney:
Al-Moshora Law Firm possesses extensive expertise in drafting and reviewing all types of contracts.
Our legal team is committed to protecting investors’ interests by providing specialized advice that includes contract drafting,
compliance with Saudi regulations.
And tailored legal solutions for complex contractual relationships.
Rely on Al-Moshora to secure a balanced and transparent contract that protects your rights .
And supports your success within the promising Saudi business environment.