What is the best security against small down payment in Saudi Arabia?

 

Down Payments under contracts in Saudi Arabia – The laws of Saudi Arabia are Shari’ah Law and are based upon the principles in the Quran. The law is uncodified and recognises that contracting parties are permitted to negotiate and agree contracts on their own terms, unless the activities are prohibited elsewhere under Shari'ah Law or violate the requirements of public policy. The principles of the Law require the contracting parties to conduct themselves with fairness and in good faith in their dealings with each other, which implies absolute clarity on certain contract terms and provisions, The law does not recognise the principle of “consideration” which under English Law, for example, is a fundamental requirement of a valid contract. The principle of consideration under English Law requires that payment for goods or services will be made for work to be performed. Shari’ah Law, unlike common law or English Law, does not require consideration. It is assumed that the parties to the contract will act honourably with each other and that the agreement is irrevocable.

 

Since consideration is not a provision of the Laws of Saudi Arabia it could be argued that a Down Payment is not necessary under the contract. However since Shari’ah Law does not actively exclude the provision of Down Payments and where there is a requirement for a Down Payment or Advance Payment the Buyer should protect the contract by requiring the Seller to establish an Advance Payment Guarantee prior to commencement of the contract. It should be a requirement that such Advance Payment will be for goods or services actually performed rather than being a nominal provision for which no value for money is received by the buyer. Advance Payment Guarantees in Saudi Arabia are often “on-call guarantees/bonds” giving the Buyer the opportunity to make a calling against the Guarantee where it is perceived that the Seller has not performed under the requirements of the contract. The Seller should be required to incur all charges, including bank charges associated with the Guarantee.

 

Have a proper documents. Indicate the possibilities of the consequences and the Do's and dont in order to protect both parties involve.

Totally agree with elaborate reply given by Malcolm Appleton.