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The Preliminary Sales Agreement is a crucial document used in Saudi Arabian commercial transactions when parties have reached initial understanding on key terms of a sale but require a formal framework for further negotiation and due diligence. This document, while preliminary in nature, creates binding obligations under Saudi law regarding confidentiality, exclusivity, and key commercial terms. It serves as a bridge between initial negotiations and the final sale agreement, particularly useful in complex transactions requiring regulatory approvals or detailed due diligence. The agreement must comply with both Saudi commercial regulations and Sharia principles, making it distinct from preliminary agreements in other jurisdictions. It typically precedes major asset sales, business acquisitions, or significant commercial transactions where parties need to formalize their initial commitments while maintaining flexibility for detailed terms in the final agreement.

1. Parties: Identification of all parties to the agreement, including full legal names, commercial registration numbers, and authorized representatives

2. Background: Context of the transaction, brief description of the parties' businesses, and purpose of entering into the preliminary agreement

3. Definitions: Key terms used throughout the agreement, ensuring clarity and consistent interpretation

4. Subject Matter of Sale: Clear identification and description of the goods/property/business assets to be sold

5. Preliminary Purchase Price: Agreed initial price or price determination mechanism, including any deposits or advance payments

6. Payment Terms: Structure and timing of payments, including any conditions precedent to payment

7. Due Diligence: Process and timeline for conducting due diligence investigations

8. Conditions Precedent: Conditions that must be satisfied before proceeding to final sale agreement

9. Timeline: Key dates and deadlines for various stages of the transaction

10. Exclusivity: Commitment not to negotiate with other parties during the preliminary agreement period

11. Confidentiality: Obligations regarding confidential information exchanged during negotiations

12. Binding Effect: Clear statement of which provisions are binding and which are non-binding

13. Governing Law and Jurisdiction: Confirmation of Saudi law as governing law and jurisdiction for disputes

14. Termination: Circumstances under which the preliminary agreement may be terminated

15. Notices: Process and contact details for formal communications between parties