Unauthorized Sale and Purchase: A Foundational and Applied Jurisprudential Study in Financial Institutions and the Saudi Civil Transactions Law

Abstract

Abstract

This study examines the concept of unauthorized sale and purchase (Bayʿ al-Fuḍūlī). It first investigates the legal validity of transactions concluded by an unauthorized person through a comparative jurisprudential analysis, clarifying the precise scope of scholarly disagreement as well as the points of consensus and divergence among jurists. The study concludes that an unauthorized sale or purchase is valid if it is subsequently ratified by the owner or by a person legally authorized to act on the owner's behalf, such as a guardian or an agent, subject to the conditions discussed in the study. It further concludes that the legal effects of an unauthorized contract, whether involving a sale or a purchase, take effect retroactively from the date of the contract rather than from the date of ratification.

The study also examines the obligation-creating rulings for the unauthorized agent's disposition. It concludes that this ruling varies according to the circumstances and the individuals involved. Such conduct is prohibited when the person knows, or has strong reason to believe, that the right holder would not consent to the transaction. It is permissible when there is uncertainty regarding the right holder's consent and the transaction serves the holder's interest or benefit. It is recommended when the person knows, or has strong reason to believe, that the right holder would consent and the transaction clearly serves the holder's interest or benefit.

The study further discusses unauthorized transactions in financial institutions, highlighting a number of practical applications and legal issues arising in this context. It also examines the treatment of unauthorized transactions under the Saudi Civil Transactions Law by analyzing the relevant statutory provisions, identifying the legal foundations upon which they are based, and demonstrating that these provisions rest on sound and well-established legal principles