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Civil Law

Explanation of Article 318

Explanation of Article 318

The first paragraph clarified the general principle in sales, which is that it results in the transfer of ownership of the sold item from the seller to the buyer upon the mere conclusion of the contract, whether the sold item is real estate or movable property. Consequently, all effects resulting from the transfer of ownership rights to the buyer are transferred, and these effects do not depend on delivery. Thus, the buyer has the right to use, exploit, and dispose of the item in various ways, and to obtain its fruits, products, and accessories, as stipulated in Article (60). If the buyer disposes of what he bought by selling it, the disposition is valid, and the person who bought from him does not have the right to annul it, as per Article (359). However, the risk of the sold item perishing does not transfer with the sale but with the delivery of the item. The article restricted the transfer of ownership of the sold item to the buyer upon the conclusion of the contract by what is stated in the articles referred to in the text of the article, and those articles included the following restrictions:

  1. The seller must own the sold item at the time of the contract, as indicated by Article (655); because if the seller does not own it, he cannot transfer ownership; one cannot give what one does not have. If the sale occurs on a specific item not owned by the seller, the sale is not effective against the owner unless approved by him, and the buyer may request the annulment of the contract pursuant to Article (359). One of the conditions for the validity of fulfilling the obligation is that the fulfiller, who is the seller here, must own the item with which he fulfilled, as stipulated in Article (602).
  2. The sold item must be specifically identified, whether it is real estate or movable. If the sold item is identified by type, ownership does not transfer to any of its individuals until it is separated, as stipulated in Article (656), and the sale contract creates an obligation on the seller to transfer ownership of the sold item to the buyer.
  3. The sold item must not be subject to a specific procedure required by the system for the transfer of its ownership; ownership of that item does not transfer until that procedure is completed, as stipulated in Article (657). Requiring a specific procedure for the transfer of ownership does not mean that the sale has not been concluded; the sale contract imposes an obligation on the seller to complete those procedures to transfer ownership of the sold item to the buyer, as explained in Article (319).
  4. There must be no agreement between the contracting parties to suspend the transfer of ownership of the sold item on a suspensive condition; ownership does not transfer by the sale contract but after the condition is fulfilled, according to the provisions of suspending the obligation on a condition mentioned in the first section. The second paragraph addresses the rule of "bulk sale," which is the sale of an item that is measured, weighed, or counted without estimation, meaning without measuring, weighing, or counting. It clarified that the sale is considered bulk when the sold item does not depend on estimation for its identification; whether the price is determined or its determination depends on the estimation of the sold item, and whether the sale occurs on the entire specified quantity or a common part of it. An example of a bulk sale where the price is determined is selling all the wheat in a specific warehouse for a thousand riyals, or selling half of what is in a specific warehouse for a thousand riyals. An example where the determination of the price depends on the estimation of the sold item is selling what is in a specific warehouse of fabric, each meter of that fabric for ten riyals, or selling half of what is in a specific warehouse of fabric, each meter of that fabric for ten riyals, or selling a specific truckload of watermelons or half of its load, each piece for ten riyals. In all of this, the sale is considered bulk; the important factor is that the sold item does not depend on estimation for its identification, regardless of the estimation of the price and regardless of whether the sale occurs on the entire quantity or a common part of it. Bulk sale is considered a sale of a specifically identified item, and its ownership transfers upon the mere conclusion of the contract, contrary to sale by estimation, which is the sale where the identification of the sold item depends on its estimation by measuring, weighing, or counting; this is identified by type, and ownership does not transfer by the contract but by separation.

Related To

Article 318

  1. Ownership of a sold item shall be transferred to the buyer upon conclusion of the sale, without prejudice to the provisions of Articles 655, 656, and 657 of this Law.

  2. Transfer of ownership shall not be precluded due to the sale of items in bulk, even if the price thereof is determined based on an estimation of the sold items.