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    Thursday, 3 July 2014

    Define Contract under Islamic Law and it’s Essentials

    The most important and prevalent mode of acquisition of ownership and possession of property is transfer by the act of the persons, having legal title to another person. Such transfer is implemented by means of a mutual liability called contract, which has a broader significance in Muhammadan Law than in English Law.


    (a) Derivation
    The corresponding Arabic term for “Contract is ‘aqd’.”
    (b) Linguistic Meaning
    Literally ‘aqd’ means ‘conjunction or tie.’
    (c) Legal Meaning
    As a term of Islamic jurisprudence ‘aqd’ means conjunctions of the elements of disposition, namely, proposed (Aijab) and acceptance (qubool).


    (a) Article 3 of “Al Mujallah”
    The obligations and engagements of two contracting persons in respect of particular matter. It expresses combination of offer and acceptance.
    (b) Sir Abdul Rahim
    A contract is “The conjunction of the elements of disposition namely offer and acceptance.”

    Contract in the Light of the Holy Quran

    • And keep the covenant, Lo! Of the covenant it will be asked”.   (BANI – ISRAIL:34)
    • O ye who believe fulfill your agreements. (Al-Maidah:1)

    Contract in the Light of Hadith

    Prophet ( Peace Be Upon Him) said “The Muslims will fulfill their settled contracts”.

    Essentials of Contract

    Islamic Law specifies following four essentials of a valid contract.

    (i) Faa’lia (Parties)

    This cause appertains to the persons making the contract. A valid contract requires that there must be two parties involved.

    (ii) Mad’dia (Proposal and Acceptance)

    This appertains the essence, namely, Proposal and acceptance. It is essential to constitute a valid contract that there must be two parties, one parties, one party should make a proposal and the other should accept it.

    (iii) Suaria (Agreement of Minds)

    This cause related to the outward manifestation, that is the minds of parties must agree and their declaration must related to the same matter.
    A owns two houses, one in Karachi and second in Hyderabad. B offers him to buy one of his houses. B wants to buy the house in Karachi and pursuance of the object he makes offer, but on the other hand. A accepts his offer considering the house in Hyderabad as the subject matter of the contract. The contract is not valid because their promises do not release to the same matter.

    (iv) Ghyia (Legal Relationship)

    This cause relates to the result aimed at, i.e, the object of the contract must be to produce a legal result. This is regarded as the dominant idea of a contract in Muhammadan Law that it establishes a tie of legal relations arising from the consent of the minds of two persons to deal with each other in respect of certain rights.
    A sells or gives an object to B. the former consents to pass on his proprietary rights therein to the latter who consent: to take the property with whatever obligations might be incidental thereto, such as the liability to pay taxes if the subject matte of the transaction be land, and to feed if the thing sold or given be an animal and in the case of sale, also to pay the price. In the case of a gift, on the other hand, there is the moral obligation of gratitude on the part of the done towards the donor, and Muhammadan Law does not ignore the moral aspect of a transaction.

    Formation of Contract

    Generally, Muhammadan Law does not require any formality such as English law but the following requirements have to be fulfilled to form a valid contract.

    (i) Declaration of Consent

    All that is required, as we have seen, is declaration of consent by each party. The declaration which is first made is called proposal and the second declaration is called acceptance. The two minds must be in agreement otherwise there is not real consent.

    (ii) Same Meeting (Majlis)

    The proposal and acceptance must be made at the same meeting (Majlis), either in fact or what the law considers as such.
    A man proposes face to face to another to sell his horse to him, if the person addressed leaves the place without signifying his acceptance the offer comes to an end, because there is no obligation on the owner of the horse to keep his offer open.
       But, if the offer is communicated by means of a messenger or a letter, the meeting for the purpose of acceptance is held to be at the place and time the message reaches the person for whom the offer was intended. If the person then signifies his acceptance the contract is concluded.

    (iii) Use of Words

    The Books speak of certain words as being plain (Surech) and certain other words as being allusive (Kinaya) in relation particular kind of disposition. What is meant is that when a man has used plain language, there is not need for inquiry as to what he meant, but such an inquiry becomes necessary when he has used ambiguous language. It is not to be supposed that so far as contracts and dispositions relating to property are concerned that the mere utterance of certain words without the corresponding intention as understood in Muhammadan Law, would effectuate a transfer of property or create any obligation.

    Conditions of a Contract

    Following conditions are provided under Islamic Law for the validity of a contract

    (i) Legal capacity of Parties

    The validity of a contract depends first of all on the legal fitness of the person entering into it. If the persons making a contract or disposition have not the necessary capacity, contract would be void altogether.

    (ii) Fitness of Subject Mater

    Another essential of a valid contract like that of any other juristic act is the fitness of its subject matter (mahal); if the subject matter is not fit for he purpose, the contract relating there to would be void altogether.
    If A and B enter into a contract for the sale of a horse and while they discuss the sale price, the horse dies, there is no consent, as the subject of the contract itself is extinct. Similarly, a marriage within prohibitory relationship is void ab initio.

    (iii) Free Consent

    Consent is the essential of contract; where there is no consent there is no agreement and the consent should be free.
    The contract of marriage must be based on the free consent of parties, if the consent is not free the marriage is not valid under Islamic Law.

    (iv) The consent without knowledge of the Articles

    It is again necessary that a contract for an article which does not exist or which is defective apparently or otherwise is ineffective is void.

    (v) Consideration

    This is an important factor but it can explained that in agreements where price is a deciding factor, the consideration surely passes on to the other. As regards agreement of gift though there is no exchange of consideration, yet the done is morally obliged to the donor.

    Final Analysis

    Hence for final analysis, we can say that a contract is a biding agreement between two parties which is legally enforceable. The Rules regarding contract under Islamic law is very strict. Under Islamic law for a valid contract there must be present four causes in the contract viz., faa’lia and mad’dia and suria and ghayia. The first essential of valid contract is that parties must have reached agreement. To constituents of an agreement are Ijab and Qabul which forms it into a promise which is enforceable by Law. 
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    Item Reviewed: Define Contract under Islamic Law and it’s Essentials Rating: 5 Reviewed By: Usman Ali
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