Explanation of Article 397
The article addresses several scenarios in which reconciliation is valid, namely:
The first scenario: reconciliation on the claimed debt with part of it. This occurs when a person claims a right owed to him by another, and the other denies it; they reconcile by the claimant relinquishing part of the claimed right in exchange for the other fulfilling the remainder; for example, if a person claims one hundred thousand riyals owed by another, who denies it; they reconcile by agreeing that the other will pay fifty thousand riyals in exchange for the claimant relinquishing the rest of his claim; thus, the contract is valid as reconciliation and not as an exchange of a claimed debt for a paid debt.
The second scenario: reconciliation on a due debt by deferring it. This occurs when a person claims a due debt owed by another; they reconcile by the claimant relinquishing the due date of the entire debt or part of it to a specific term, provided the other pays the claimed debt at the term without any increase in the amount of the debt; for example, if a person claims one hundred thousand riyals due from another, who denies it; they reconcile by agreeing that the other will pay one hundred thousand riyals after a year, or pay fifty thousand immediately and fifty thousand deferred after a year; thus, the contract is valid as reconciliation. If the reconciled right is of a different type than the reconciled right, it is permissible even if its value at the time of reconciliation is higher, as it may decrease at the time of fulfillment; for example, if a person claims a due debt owed by another; they reconcile by the claimant relinquishing the due date in exchange for the other fulfilling a specific property after a term.
The third scenario: reconciliation on a deferred debt with part of it due. This occurs when the claimed right is deferred; they reconcile by the defendant relinquishing the term and hastening fulfillment in exchange for the claimant relinquishing part of the claimed debt; for example, if the claimed debt is one hundred thousand riyals deferred after a year; they reconcile by agreeing that the other will pay seventy thousand riyals immediately.
Related To
Article 397
-
Reconciliation may be reached on part of the rights claimed by either party.
-
Reconciliation may be reached on the deferral of a claimed debt or part thereof without interest, or on the early repayment of the debt and the reduction of its amount.