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Shariah perspectives of contract

objectives

By the end of the module,


the students should have
acquired a thorough
knowledge of the legal
principles and laws of
contract and compare the
same to Shariah principles.
Shariah perspectives of contract

1
• DEFINITION

2 • PILLARS
– IJAB & QABUL
– PARTIES
– SUBJECT MATTER
– CONSIDERATION
– INTENTION & CONSENT

3 • TERMINATION &
DISCHARGE
Definition
AL-AQD - CONTRACT
- to conjunct, to tie, to knot, to contract
- A contract between two parties on a particular subject matter,
which is concluded upon ijab & qabul of the parties.

The Majallah • ‘Aqd is the 2 parties taking upon themselves an


undertaking to do something. It is composed of the
combination of an offer (ijab) and acceptance (qabul).
The making of ‘aqd is connecting in a legal manner,
one’s offer (ijab) and acceptance (qabul) with the
other, in a way which will be clear evidence of being
mutually connected.’
Pillars / rukn
(i) IJAB & QABUL

Offer : Ijab
Statement of the second party: Qabul
Ijab + Qabul = Contract

• Article 101 of Majallah : Ijab is the word first


spoken – for teh making a disposition of
property and the disposition is proved by it.
• Article 102 of Majallah: Qabul is the spoken
words by the second party when forming
the disposition of property and with it, the
agreement becomes complete.
Pillars / Rukn
(ii) parties to contract (al-aqidan)

Competency = Al Ahliyyah : absolute


fitness or ability to acquire and exercise
rights and accept duties & perform them.
Impediments to
1. Ahliyyah Al-Wujub : Capacity = Mawani’ Al-
the ability of human Ahliyyah
being to acquire
rights and 1. Minority / Sighar
obligations 2. Insanity / Junun
2. Ahliyyah Al-Ada’ : 3. Sleep & Fainting Fits
the ability of human 4.Forgetfulness
being to take action
which is legally 5.Fatal Illness / Marad al-
valid. maut
Pillars / Rukn
(III) SUBJECT MATTER OF CONTRACT / MAHAL AL-‘AQD

3 ATTRIBUTES OF MAL:
i. must have commercial value
ii. must be a thing of benefit permitted under
Islamic law
iii. must be capable of possession
CONDITIONS
Subject matter : FOR VALID MAL
• Should exist at the time of contract.
• Must be legally owned.
• Should bring benefit or significant
result for the contracting parties.
• Should have commercial value in the
light of Shariah principles.
Pillars / Rukn
(IV) CONSIDERATION / Al-‘wad / al-sabab

Mahmassani: the direct purpose intended for the


contract.
Conditions for valid consideration:
• In existence (Mawjud)
• Permissible (Halal)
• Valid (Sahih)
• Valuable (Mutaqawwim)
Consideration also must be known to both parties –
to prohibit from fraud/deceit/conflict

Consideration may come from 3rd party provided with


consent
Pillars / Rukn
(V) Intention to create legal relations (husn al-niyah) &
Consent (al-rida)
4:29, Quran – ‘O you who believe, Do not eat up your property among
yourselves in vanity except in trade and traffic among yourselves with
goodwill.’
Sahih Al-Bukhari, Kitab al-Iman – ‘Validity of the acts depends on (doer)
intentions’
 Duress ( Al-Ikrah)
 Mistake (Al-khata)
Factors that  Fraud (Ghishsh)
- contract should be held void
vitiate consent (batil)
 Misrepresentation (3:167)
- voidable (fasid) at the option
of the representee
TERMINATION & DISCHARGE OF CONTRACT
(INHA’ WA WAFA’ AL-AQD)

1 2
By express agreement
By performance (Ada’)
(Iqalah: to annul & put an end)
5:1 and 17:34 and 2:177
Article 163 of the
Contract
Majallah
Maybe
Terminated
In the 3 4
Following
situations By impossibility of
Performance By breach (Naqd al- ‘Aqd)
(Istihalah at-Tanfidh)
THANK YOU