Common market practice, has it become a contract term?

Illustrative photograph by Amina Atar Unsplash

Two parties may disagree over freight or service charges, one says the arrangement is customary while the other points to a silent contract, identify the issue first, then examine the claimed custom, its existence, limits and connection to the agreement rather than relying on a familiar phrase.

Custom has a role and limits

The Saudi Civil Transactions Law recognises that contractual obligations may include necessary incidents under law, custom and the contract’s nature, custom can assist interpretation where needed while clear wording should not be displaced under the guise of interpretation.

The Evidence Law permits reliance on custom or practice between parties within its rules, custom cannot override a specific applicable provision or agreement governing the issue or contravene public order, establish what the parties actually regulated and what still needs clarification.

Party practice may differ from the market

A company and supplier may consistently inspect goods or settle charges one way while their sector generally acts differently, the Evidence Law distinguishes practice between parties, specific custom and general custom, giving the first two priority over the general in a conflict.

Repeating a procedure does not necessarily make it obligatory in every transaction, it may be an exception, accommodation or condition-specific, review correspondence, reservations and consistency before drawing conclusions.

Prove the practice at the relevant time

The party relying on custom or practice must prove it existed when the event occurred, the other may challenge it or counter it with stronger evidence, examine practice in the transaction’s time and field, not what became widespread after the dispute.

Consistent transaction records, sector information or a specialist’s opinion may help depending on the case, but one employee’s view or a single event alone does not establish settled practice, organise evidence to show its connection to the disputed obligation.

Write important customs into the contract

If a point affects margin or operations, state it clearly even if you believe everyone knows it, specify when the agreement changes previous practice and how approvals and exceptions work, this reduces disagreement about the practice and its scope.

• Identify the issue not settled by applicable text or agreement.
• Distinguish sector custom from practice between the parties.
• Gather evidence of practice at the event and document future terms.

For a contract review or dispute, seek an analysis combining written terms, practice and proof, then turn key operational points into clear conditions that preserve expectations and support a continuing commercial relationship.

General educational content, not a substitute for advice on your facts and documents, and not a guarantee of any outcome.

Translations refer to Saudi law, consult the official legal text when applying it.