Thousands of deals are made across the Kingdom every day: a shop buys goods to sell, a factory agrees to receive monthly supplies of materials, a broker brings a buyer and seller together for a commission, and a cheque is written to repay a debt. Behind all these transactions are rules that define rights and obligations. Today, those rules are brought together in a single law: the Commercial Transactions Law.

What is the Commercial Transactions Law?

In October 2026, the Council of Ministers, chaired by His Royal Highness Prince Mohammed bin Salman, Crown Prince and Prime Minister, approved the Commercial Transactions Law. The law consists of 271 articles and aims to develop the business environment and strengthen the stability of transactions by bringing the rules governing commercial activities, contracts, and commercial papers together in a single framework.

The law replaces three existing laws: the Commercial Law, the Commercial Papers Law, and the Commercial Books Law. It takes effect 180 days after its publication in the Official Gazette. According to Minister of Commerce Majid Al-Qasabi, the law complements the Civil Transactions Law within the legislative framework.

Who is a trader, and what is a commercial activity?

The law establishes rules defining commercial activities, traders, and businesses. It specifies which activities are considered commercial as soon as they are carried out, even once, and which qualify as commercial only when practiced professionally.

This distinction has major practical significance because being classified as a “trader” brings specific obligations, including obligations related to commercial books, which are regulated by the law.

Trading from age 15: what are the conditions?

One of the law’s most notable provisions is that it allows minors aged 15 and over to engage in trade, provided they obtain permission from a guardian, custodian, or the court. The Minister of Commerce said that the law “allows our sons and daughters, once they reach the age of 15, to engage in trade subject to specific controls.”

Legal adviser and commercial law professor Osama bin Ghanem Al-Obaidi believes this provision could help young Saudis gain practical experience at an early age, broadening the base of people involved in entrepreneurship.

Commercial books: paper or electronic?

The law allows accounting books to be kept electronically or on paper, in Arabic while permitting the use of other languages. It also exempts certain categories of traders from keeping such books. Al-Obaidi notes that the law regulates electronic documents and gives them the same evidentiary weight as original paper documents.

Commercial contracts in one law

For the first time, the law regulates four types of commercial contracts in a single legislative instrument:

Commercial sale: the sale of goods as part of a commercial activity.

Supply contract: one party undertakes to supply goods periodically over a specified period, such as a factory supplying raw materials to another factory each month.

Commercial agency: one party undertakes to market or sell another party’s products on its behalf, as commercial brand agents do.

Brokerage: a broker brings two parties together to complete a deal in return for a commission, without becoming a party to the deal.

Commercial papers: bills of exchange, promissory notes, and cheques

The law covers the rules governing all three types of commercial paper:

Bill of exchange: A commercial paper containing an order from the drawer to the drawee to pay a specified sum to the beneficiary or to their order, on the legally prescribed maturity date.

Promissory note: A commercial paper containing an undertaking by its maker to pay a specified sum to the beneficiary or to their order, on the legally prescribed maturity date.

Cheque: an order from an account holder to a bank to pay a specified amount to the beneficiary when presented.

Fair competition

The law promotes fair competition among traders, prohibits harming competitors, and gives anyone affected the right to seek a court order to stop the harm and claim compensation.

Why does this law matter?

Because clear rules make the outcomes of transactions more predictable and reduce commercial disputes. The Ministry of Commerce described the law as “a comprehensive framework governing commercial activities” that reflects international best practices and aims to protect traders and small and medium-sized enterprises, as well as support their growth through commercial contracts and agencies.

Al-Obaidi believes the law will strengthen the investment environment and the competitiveness of the Saudi economy. Meanwhile, economics and investment specialist Tahani bint Abdullah Al-Khayyal believes that clear rules help businesses avoid disputes and anticipate legal outcomes. She emphasized the law’s importance to small and medium-sized enterprises, and noted that its impact will grow when it is integrated with digital services and legal awareness initiatives.

Commercial books have a longer history than we might think. In 1494, Italian mathematician Luca Pacioli published the first printed explanation of the “double-entry” bookkeeping system in Venice. Under this system, each amount is recorded twice—once as a debit and once as a credit—balancing the books and revealing errors. More than five centuries later, the ledger has become an electronic file that can be carried on a phone, but its purpose has not changed: to build trust between traders, their partners, and their customers. That is what commercial laws ultimately protect. Clear rules do not constrain commerce; they make trust possible between parties who may not know one another.

Disclaimer: This article is for informational purposes and aims to explain the news in clear, accessible language. The information is drawn from published news sources and has been adapted and simplified; it does not represent the position or an official statement of any entity. Information may be updated after publication, so readers are advised to consult official sources for full details.