Document background
The Loan Agreement Between Friends is a specialized legal document designed for use in Saudi Arabia when one individual wishes to lend money to another in a personal capacity. This document becomes essential when friends engage in financial transactions to ensure clear understanding and prevent future disputes while maintaining compliance with Islamic law. The agreement must strictly adhere to Sharia principles, particularly the prohibition of interest (riba), while providing clear terms for loan amount, repayment schedule, and default scenarios. It's particularly relevant in situations where formal banking solutions may not be suitable or desired, but parties still want documentary evidence of their arrangement. The document includes provisions for witness signatures, optional security arrangements, and dispute resolution mechanisms, all framed within Saudi Arabian legal requirements and Islamic banking principles.
