ISLAMIC LAW

OF

CONTRACT

Contract

Definition : Offer and Acceptance of two or more parties on a specific subject with mutual consent.

CONTRACT IN ISLAM

* Present

* Unconditional

* Non-restricted

* Sane

* Mature

* Specified* Quantified

Wording ofContract

ContractorsSubjectMatter

CONTRACT

CONTRACT OF SALE (BAI)

exchange of a thing of value with

another thing of value with mutual

consent

the sale of a commodity in exchange of

cash

ISLAMIC LAW OF CONTRACT

ISLAMIC LAW OF CONTRACT

TYPES OF SALE

1. Valid sale (Bai Sahih)

2. Void/Non existing Sale (Bai Baatil)

3. Existing sale but void due to defect (Bai

Fasid)

4. Valid but disliked sale (Bai Makrooh)

ISLAMIC LAW OF CONTRACT

1. VALID SALE (Bai Sahih)

a sale is valid if all elements together with their conditions are present

elements of valid sales are:1. Contract (Aqd)2. Subject matter (Mabe’e)3. Price (Thaman)4. Possession or delivery (Qabza)

ISLAMIC LAW OF CONTRACT

C on trac t o r tran sac tion(A q d )

1

S old g ood s o rsu b jec t m atte r

(M u ta 'aq u ad een )2

P rice(T h aman )

3

D elive ry o r p ossess ion(Q a b za )

on ly in resp ec t o f m ovab leg ood s , n o t im m ovab le 4

V alid S a le(B a i S ah ih )

ISLAMIC LAW OF CONTRACT ELEMENTS OF A VALID SALE ( Bai

Sahih)

CONTRACT (Aqd)▪ Offer & Acceptance (Ijab-o-Qobool)

▪ Oral (Qauli)▪ Implied (Isharaa)

Credit sales (Istijrar) Hand to Hand (Taati)

▪ Buyer and seller (Muta’aquadeen) must be:▪ Sane▪ Mature

ISLAMIC LAW OF CONTRACT

ELEMENTS OF A VALID SALE (Bai Sahih)

CONTRACT (Aqd)▪ Conditions of contract (Sharaet-e-Aqd)

▪ sale must be non-contingent unconditional contract under reasonable conditions under unreasonable conditions but at market

practice

▪ sale must be immediate

ISLAMIC LAW OF CONTRACT

ELEMENTS OF A VALID SALE (Bai Sahih)

SOLD GOOD OR SUBJECT MATTER (Mube’e) must be:

▪ Existing▪ Valuable▪ Usable▪ Capable of ownership/title▪ Capable of delivery/possession▪ Specific & Quantified▪ Seller must have title & risk

ISLAMIC LAW OF CONTRACT

ELEMENTS OF A VALID SALE (Bai

Sahih) PRICE (thaman) must be:

▪ Quantified (Maloom)

▪ Specified & certain (Muta’aiyan)

ISLAMIC LAW OF CONTRACT

ELEMENTS OF A VALID SALE (Bai

Sahih)

DELIVERY OR POSSESSION (QABZA)

▪ Physical (Haqiqi)

▪ Constructive (Hukmi)

ISLAMIC LAW OF CONTRACT

2. VOID/NON EXISTING SALE (BAI BAATIL)

certain conditions are not met. These relate to:▪ conditions of offer and acceptance

▪ Oral acceptance

▪ Implied acceptance

Credit sales

Cash sales

ISLAMIC LAW OF CONTRACT

VOID/NON EXISTING SALE (BAI

BAATIL) …contd.! certain conditions are not met. These relate to:

▪ conditions for Buyer and Seller

▪ Sane

▪ Mature

ISLAMIC LAW OF CONTRACT

VOID/NON EXISTING SALE (BAI BAATIL) …contd.! certain conditions are not met. These

relate to:▪ conditions for Sold Goods where goods should

be:

▪ Existing

▪ Valuable

▪ Usable

▪ Capable of ownership/title

▪ Capable of delivery/possession

ISLAMIC LAW OF CONTRACT

VOID/NON EXISTING SALE (BAI BAATIL) …contd.! certain conditions are not met. These

relate to:

▪ the buyer does not have the title to subject matter

▪ the seller does not have title to price▪ Both subject matter and price cannot be used

lawfully▪ the produce of both will be unlawful

ISLAMIC LAW OF CONTRACT VOID/NON EXISTING SALE (BAI BAATIL)

…contd.!

Shari’ah Status

Transaction is completely null and void. Ownership doesn't transfer. For Seller taking price is not Halal. Transaction is haram from its inception.

ISLAMIC LAW OF CONTRACT

3. EXISTING SALE BUT VOID DUE TO DEFECT (BAI FASID) Sale exists but will be void due to defect of non

compliance to:

▪ Conditions of a contract▪ Sale must be immediate not deferred to future▪ Sale must be non-contingent unconditional under reasonable conditions under unreasonable conditions but within market practice

ISLAMIC LAW OF CONTRACT EXISTING SALE BUT VOID DUE TO

DEFECT (BAI FASID) …contd.! Sale exists but will be void due to defect

of non compliance to:

▪ Conditions of Sold goods :▪ goods should be specified and quantified▪ seller must have title and risk

▪ Conditions of Price▪ quantified▪ specific and certain

ISLAMIC LAW OF CONTRACT EXISTING SALE BUT VOID DUE TO DEFECT

(BAI FASID) …contd.!

Shari’ah Status

the subject matter should not be possessed by the buyer

if possessed with the consent of the seller, title or ownership will be passed to the buyer but usage of subject matter will be impermissible

Buyer must return the goods to the seller However if the defect is rectified the sale becomes

valid

ISLAMIC LAW OF CONTRACT

4. VALID BUT DISLIKED SALE (BAI MAKROOH) sale is valid but not liked due to certain

conditions like:▪ sale after Juma Azan

▪ sale after hoarding

▪ sale by intervention of a third party while two are negotiating

ISLAMIC LAW OF CONTRACT

O ra l(Q au li)

(In p as t ten se)1 .1 .1

C red it S a le(Is tijra r)

(eg se tt lem en t a t th e en d o f th e m on th ) 1 .1 .2 (a)

C ash S a le(T a a ti)

(eg as in su p erm arke ts )1 .1 .2 (b )

Im p lied(Ish a ra a )

(In p as t ten se) 1 .1 .2

O ffe r & A ccep tan ce(Ija b -o -Q oboo l)

1 .1

S an e

1 .2 .1 .

M atu re(If m in or, m u s t u n d ers tan d

n atu re o f tran sac tion )1 .2 .2

B u yer & S e lle r(M u ta 'aq u ad een )

1 .2

U n con d ition a l con trac t

1 .3 .1 (a)

U n d er reason ab le con d itiion s

1 .3 .1 (b )

U n d er u n reason ab le con d itionb u t in m arke t p rac tice(eg . warran ty o f 1 year

on sa le o f frid g e 1 .3 .1 .(c )

S a le m u s t b en on -con tin g en t

1 .3 .1

S a le m u s t b e im m ed ia teN ot d e fe rred to fu tu re(eg p rop erty m u s t p ass 1 .3 .2 .on sa le d a te n o t on fu tu re d a te

C on d ition s o f C on trac t(S h a ra e t-e -A qd )

1 .3

C on trac t o r Tran sac tion(A q d )

1

Jazak-a-Allah-al-Khaira