Law of Contract

Law of Contract
Legal meaning of contract (Aqd) A Knot To bind Essential elements of contract Contracting parties The words of the contract (the contract itself) Object of contract

Law of Contract
CONTRACT

OFFER & ACCEPTANCE

SUBJECT MATTER

CONTRACTORS

WORDING OF CONTRACT Present Unconditional Non-contingent N g

By words By By acts By Writing By Indicating

Specified Quantified Quantified

Non-restricted Sane Mature

Law of Contract
Contracting Parties Age of maturity Sane Words of contract (Offer & Acceptance) The form through which a contract can be executed Spoken word Written word Deed

Law of Contract

Object of contract Should be property of Value (Maal-e-Mutaqawam) Must have a value Can be owned Should not be under anothers right

Islamic Contract

Islamic Law is expressed not as a general theory of contract but as a set of rules for various specific contracts, e.g. Law of sale, Lease, pledge The closest thing to a general law of contract is the law of sale. It is used by jurists as a prototype and analogy for all other contracts.

Types of Contract
Compensatory Contracts (Uqood-eMuawada) ) Sale Ijarah Non-Compensatory Contracts (Uqood-eGhair Muawada) Gift(Hiba) Gif (Hib ) Loan Guarantee

Contract in Islam
VALID CONDITIONS 1. A condition, which is not against the contract, is a valid condition. For example, a condition of obtaining some sort of security of from the customer in case of credit sale. 2. A condition, which seems to be against the contract, but it is in the market practice, is not void, if its voidness is not proved with the clear injunctions of the Holy Quran and Sunnah.

Contract in Islam
For example, a condition that the seller will provide five-year p y guarantee g and one year y free service. 3. A condition that is against the contract and not in market practice but is in favor of one of the contractors or subject matter, the condition is void. For example, if A sells a car with a condition that he will use it on a fixed date every month, this contract will be void.

Contract in Islam
4. A condition, which is against the contract, not in the market practice and not in favor of any contractor, that is not a void condition. For example, if both A and B decide to give to charity, a certain percentage of both subject matter and consideration, upon completion of sale.

Contract in Islam
VOID CONDITIONS AND VOID CONTRACTS p (Uqood ( q The contracts of compensation Muawadha) like sale, purchase, lease agreements become void by putting void condition. Non-compensatory (voluntary) agreements (Uqood Ghair Muawadha) like contract of loan (Qard-e-Hasanah), do not become void because of void condition. The void condition, however, becomes itself ineffective.