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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