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Debt Settlement Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Debt Settlement Agreement

"I need a Debt Settlement Agreement for my manufacturing company to settle an outstanding supplier debt of SAR 2.5 million through 12 monthly installments, with the first payment starting March 2025, including provisions for early payment discounts and security in the form of equipment collateral."

Document background
The Debt Settlement Agreement is a crucial legal instrument used in Saudi Arabia when parties wish to formally resolve outstanding debt obligations through a mutually agreed settlement arrangement. This document is particularly relevant when the original debt needs to be restructured, reduced, or settled through an alternative payment arrangement. The agreement must strictly comply with Sharia principles, especially regarding the prohibition of interest (riba), and adhere to Saudi Arabian commercial laws and regulations. It typically includes comprehensive details about the original debt, the agreed settlement amount, payment terms, and conditions for final discharge. This type of agreement is commonly used in both commercial and personal contexts, providing legal protection for both creditor and debtor while ensuring the settlement terms are enforceable under Saudi law. The document becomes especially important in scenarios involving financial distress, debt restructuring, or when parties seek to avoid more formal legal proceedings through amicable settlement.
Suggested Sections

1. Parties: Identification of the creditor and debtor, including full legal names, addresses, and official registration numbers if applicable

2. Background: Description of the original debt, its origin, and current status

3. Definitions: Key terms used throughout the agreement, including 'Settlement Amount', 'Original Debt', 'Payment Date', etc.

4. Acknowledgment of Debt: Formal acknowledgment of the original debt amount and its validity

5. Settlement Terms: Details of the agreed settlement amount and confirmation that it complies with Sharia principles

6. Payment Terms: Schedule of payments, payment method, and payment instructions

7. Representations and Warranties: Statements by both parties regarding their capacity and authority to enter into the agreement

8. Default Provisions: Consequences of failing to meet payment obligations and remedies available

9. Release and Discharge: Terms of release from the original debt upon completion of settlement payments

10. Governing Law and Jurisdiction: Confirmation of Saudi law as governing law and specification of competent courts

11. Notices: Method and addresses for official communications between parties

12. Entire Agreement: Confirmation that this document represents the complete agreement between parties

Optional Sections

1. Security Provisions: Include when additional security or collateral is being provided for the settlement amount

2. Guarantor Provisions: Include when a third party is guaranteeing the settlement payments

3. Confidentiality: Include when parties wish to keep the settlement terms private

4. Force Majeure: Include when parties want to address potential extraordinary circumstances affecting payment ability

5. Assignment: Include when either party needs the right to assign their rights or obligations

6. Partial Payments: Include when specific rules for allocation of partial payments need to be established

7. Early Payment Provisions: Include when early payment options and any associated discounts are being offered

Suggested Schedules

1. Schedule 1 - Payment Schedule: Detailed breakdown of payment amounts and due dates

2. Schedule 2 - Original Debt Documentation: Copies or details of original debt agreements or instruments

3. Schedule 3 - Security Details: Details of any security or collateral provided (if applicable)

4. Appendix A - Calculation of Settlement Amount: Detailed calculation showing how the settlement amount was determined in compliance with Sharia principles

5. Appendix B - Form of Release: Template for the final release document to be issued upon completion of payments

6. Appendix C - Payment Instructions: Detailed banking or payment information and procedures

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions




























Clauses




























Relevant Industries

Banking & Financial Services

Islamic Finance

Real Estate

Construction

Manufacturing

Retail

Healthcare

Education

Professional Services

Telecommunications

Energy

Trading & Commerce

Investment Services

Insurance

Relevant Teams

Legal

Finance

Credit Control

Collections

Risk Management

Compliance

Treasury

Accounts Receivable

Islamic Banking

Corporate Affairs

Debt Recovery

Business Development

Relevant Roles

Chief Financial Officer

Financial Controller

Credit Manager

Collections Manager

Legal Counsel

Compliance Officer

Sharia Compliance Officer

Risk Manager

Treasury Manager

Accounts Receivable Manager

Debt Recovery Specialist

Corporate Lawyer

Financial Analyst

Business Development Manager

Contract Administrator

Islamic Banking Specialist

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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