In-House Brief Supplement: Price Fluctuation Under Saudi Law Compared

Professor Indrawansa Samaratunga

Steven Hunt of C&IDS

13 October 2026

This Supplement should be read with In-House Brief: Price Fluctuation Under the New UAE Civil Code: What Changed and What Did Not, referred to below as the main paper.

Several readers with projects in Saudi Arabia have asked how the position there compares. The short answer is that, on price fluctuation, the UAE has moved towards the Saudi model. Article 829 of the new UAE Code closely follows Article 471 of the Saudi Civil Transactions Law, which has been in force since 16 December 2023.¹ Contractors in the Kingdom have been working with the same three-paragraph structure for almost three years.

The common ground

Article 471(1) states the lump sum rule in terms almost identical to Article 829(1). A contractor engaged on an agreed design for a lump sum may not claim an increase, even if the prices of materials, wages or other expenses rise.² Article 471(2) contains the same variation rule as Article 829(2), including the employer fault limb that is new in the UAE.² Article 471(3) gives the court or tribunal the same power to restore the contractual balance where general exceptional circumstances, unforeseeable when the contract was made, undermine its financial basis. The available remedies are the same: more time, an increase or reduction in the price, or termination.³

The same questions therefore arise, and in our view the answers are the same.

• Clause against Code. Article 471(1) contains no words making it mandatory. We have not found any Saudi commentary suggesting that a price adjustment clause in a lump sum contract is ineffective. The Kingdom’s own procurement law requires price adjustment in government contracts (see below), which is difficult to reconcile with any suggestion that such clauses offend the lump sum rule.

• Exclusion. Article 471(3), like Article 829(3), lacks the express mandatory wording of the general hardship provision. Commentators suggest that it may be excluded by clear drafting, while noting that the point depends on how the Saudi courts approach it.³,⁴

• Re-measured contracts. Article 471(3) sits within the lump sum Article, so the same uncertainty about its reach to re-measured contracts applies.

Where Saudi law differs

The general hardship provision. Article 97 is the Saudi counterpart of UAE Article 224. Like Article 224, it is mandatory, and any agreement to the contrary is void.⁴,⁵ It differs in procedure. The affected party must first call on the other to renegotiate without unjustified delay. A request to renegotiate does not entitle it to stop performing. Only if the parties fail to agree within a reasonable time may the court intervene, and its power is framed as reducing the onerous obligation to a reasonable level.⁴ Article 97 does not carry the express power of rescission that Article 224 now contains. Article 471(3), by contrast, does not require a prior attempt at negotiation.³

Transition. The UAE position, on the prevailing view, is that the new Code does not apply to contracts concluded before 1 June 2026. Saudi Arabia took the opposite course. The Civil Transactions Law applies to existing contracts, save where it conflicts with a statutory provision or an established judicial principle on which a party relies, or where prescription had already run.² Most live Saudi projects are therefore governed by Article 471 whatever the date of the contract.

Government contracts. For public sector work, Saudi law goes further than the Civil Code. Article 68 of the Government Tenders and Procurement Law 2019 allows the contract price to be adjusted for changes in raw material prices and in government charges and levies, among other things.⁶ Article 113 of the Implementing Regulations sets the detail. Adjustment is only considered where the market price of an individual item moves by more than 10% on the official price indices and the change affects the total contract cost by more than 3%. It runs both ways, so the price is reduced if costs fall. A new Government Tenders and Procurement Law was published on 4 September 2026 and takes effect 120 days later, with new Implementing Regulations to follow.⁷ Whether the adjustment mechanism and its thresholds carry over unchanged should be checked once the Regulations are issued.

Foreseeability. The same date applies. A Saudi contract signed after the conflict began on 28 February 2026 will face the same argument that the disruption should have been priced.

What this means in practice

The drafting lessons in the main paper apply equally in the Kingdom. Say whether the price adjusts, say how, and say what is to happen to Article 471(3). Two points are specific to Saudi Arabia. A contractor relying on Article 97 should request renegotiation promptly and in writing, keep performing, and keep a record of the exchanges, because the attempt to negotiate is a step towards relief. A contractor on a government contract should check the statutory adjustment mechanism, and its thresholds, before assuming that the lump sum rule leaves it with the price risk.

How to obtain the Practice Note

The companion "Practice Note: Price Fluctuation Under the Saudi Civil Transactions Law" sets out the practical steps for contractors and subcontractors working under contracts governed by Saudi law, before contract, during the works and when a claim arises. It is available to Steven's LinkedIn connections. If you are already connected with him, you will find it posted on his profile. If you are not, send him a connection request through his LinkedIn profile and you will secure access to the Note.

C&IDS places fractional in-house construction counsel with contractors, developers and consultants across the GCC, Africa and the UK. If you would like to discuss how a placed counsel could support your team on price adjustment and hardship provisions in live projects or tenders in Saudi Arabia, please get in touch at admin@candids.legal.

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Notes to this supplement

1. Civil Transactions Law, Royal Decree No. M/191 of 1444H (19 June 2023), in force 16 December 2023.

2. Construction Insights: Dubai DWF (May 2024).

3. Saudi Arabia’s Civil Code: exceptional unforeseen circumstances and reallocation of risk in construction contracts Pinsent Masons (20 February 2024).

4. Price Escalation in Saudi Arabia and Kuwait: Comparing the Routes to Relief Beale & Co (August 2026).

5. Middle East conflict: force majeure and Saudi contracts Pinsent Masons (2026).

6. Construction Litigation Update: New Public Procurement Laws in Saudi Arabia Quinn Emanuel (May 2020).

7. Riyadh rewrites government contracting rules MEED (10 September 2026).

This article is published for general information purposes only. It does not constitute legal advice.