The Saudi Commercial Agencies Law requires a commercial agent to be a Saudi national (an individual, or a company fully owned by Saudis with a Saudi board and authorized signatories), and commercial agency work may not be conducted until the agency is recorded in the Ministry of Commerce's commercial agents register within three months of the agreement taking effect. Failure to register doesn't invalidate the contract between the parties, but it denies the agent the full protection the law provides and exposes them to regulatory liability.
If the contract provides for exclusivity, the principal is barred from appointing another agent or selling directly within the agent's designated geographic area for the duration of the contract, and any breach of this term entitles the agent to full compensation for damages, including lost profits. In return, the agent is obligated to permanently secure spare parts and necessary maintenance for the agency's products, even for a year following the agency's end or the appointment of a new agent.
The required notice period for ending an agency depends first on what the contract itself specifies; absent that, general provisions in the Civil Transactions Law apply, requiring reasonable notice proportionate to the contract's nature, term, and the investment the agent built based on the relationship continuing. Sudden termination without adequate notice, especially after years of an active agency, can open the door to substantial compensation claims by the agent.
To register or review a commercial agency contract in Jeddah, contact us on WhatsApp.
You may also find it useful to review Competition & Antitrust Lawyers in Jeddah or Franchise Lawyers in Jeddah, both topics our team handles regularly in Jeddah and which may relate to your situation.
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