Mutual Contract Termination Agreement template

Mutual Contract Termination Agreement Template Compliant with the Laws of Saudi Arabia

Praise be to Allah alone, and peace and blessings be upon the one after whom there is no prophet. To proceed: With the praise and help of Allah, this mutual termination agreement was concluded in the city of ___________ on / / AH, corresponding to / / AD between:

1. First Party: Mr/Ms ____________, Nationality: ________, National ID/Iqama No.: ____________, National Address: ____________, Mobile: ________.
2. Second Party: Mr/Ms ____________, Nationality: ________, National ID/Iqama No.: ____________, National Address: ____________, Mobile: ________.

Article One: Preamble

The two parties acknowledge their legal capacity under Sharia and the law, and that they previously concluded between them a ____________ contract dated / / AH, the subject of which is: ____________, hereinafter referred to as the “Original Contract”. They have agreed, of their own free will, to mutually terminate it as follows.

Article Two: Effect of the Mutual Termination (select one option and strike out the other)

• Option One — rescission with retroactive effect: The Original Contract shall be deemed rescinded from the date it was concluded, as if it had never existed, and each party shall return what it received under it in accordance with Article Three.
• Option Two — termination with immediate effect: The Original Contract ends as of the date this mutual termination is signed; whatever was performed before that date remains valid and effective, and no consideration is refundable for what has actually been performed.

Article Three: Settlement and Return of What Was Received

• Party ________ shall refund an amount of ____________ Saudi riyals to Party ________ within ________ days of the date of signing, by bank transfer to IBAN: SA..............................
• Party ________ shall return/deliver: ____________ (any property or documents it received) in their current condition within ________ days.
• If either party has issued a tax invoice in respect of the Original Contract, the Value Added Tax shall be dealt with by way of a credit note in accordance with the applicable regulations.

Article Four: Mutual Release

• Upon fulfilment of the obligations set out in Article Three, each party releases the other fully and finally from every right, claim or action arising from or connected with the Original Contract, whether present or future.
• This release does not cover the obligations set out in this mutual termination agreement itself, nor anything arising from fraud or deception that is later proven.

Article Five: Representations of the Parties

• Party ________ represents that it has not disposed of the ____________ that was the subject of the Original Contract, and that it is free of any third-party rights or claims.
• The two parties acknowledge that this mutual termination was made by mutual consent, without duress or exploitation.

Article Six: Breach and Compensation

Should either party breach its obligations set out in Article Three, and after being notified at its National Address and given a period of ________ days, the other party shall be entitled to compensation of ____________ Saudi riyals, together with the right to claim performance.

Article Seven: Jurisdiction and General Provisions

• This mutual termination and its interpretation are governed by the laws of the Kingdom of Saudi Arabia, in particular the Civil Transactions Law.
• The competent judicial authorities in the Kingdom have jurisdiction to hear any dispute arising from it.
• The National Address and mobile number recorded above are adopted as the chosen address for the service of notices.
• Executed in two signed copies, one held by each party.

Signatures of the Parties

First Party: Name: _______________ Signature: _______________ Date: / / AH Second Party: Name: _______________ Signature: _______________ Date: / / AH