Concept of mistake in islamic contract
Islamic law conceives of mistake as a substantive
or intrinsic element which capable of occurring
only during the formation of contractual
agreement.
Mistake could arise from an assumption as to the
existence, quality or quantity of the contractual
object or to the nature or existence of the contract
itself.
The provisions concerning mistake are
scattered and usually are to be found in the
books of fiqh among the discussion in
option of description, defect or sight.
The Islamic concept of mistake is
inextricably bound to the notion of consent
in contract.
The law lacks in formulated theory because
the provision of mistake are in actuality,
mostly preclusions or safeguards designed
to prevent its very incidence.
Mistake as to meaning(Ghalat al-Maa’na)
According to classical jurists, a mistake with
regard to the substance (Jins) of the object will
constitutes the contract void ab nitio.
It considered as substantive mistake.
Based on Art. 208 of Al-Majella:
“If the object is declared in kind (Jins) and the
object proves to be another kind, the sale is
invalid (batil)”.
In this case, the mistake as to meaning is
also actionable under the option of
description.
This shows that the Islamic doctrine of
mistake takes on noticeably wider ambit
that mistake in common law.
Mistake as to desired quality (insubstantial) of the object
Insubtantial quality (Wasf) of a contract refer to
the object being in the same substance as
contracted for, but different in its quality.
It is regarded as valid but not binding - the remedy
is sought under Islamic law is not under mistake
(ghalat) but either under the option of defect or
description.
1) Manifest expression of intent1) Manifest expression of intent2) Deduction of intent from circumstances of 2) Deduction of intent from circumstances of the case the case 3) Deduction of intent from the nature of the 3) Deduction of intent from the nature of the thingsthings
MISTAKE WITH STIPULATION OF INTENTION
Manifest Expression of IntentManifest Expression of Intent
What is about ?
Expression of intents formula are al- Tasmiya
(nominator) and al- Inshara (indication)
Explanation?
Nomination represents the real will of the
contracting party
Indication represents the apparent will A
Example?
sales by catalogue
Explanation?
• Not necessary for manifestation of a contracting
party’s will to be express.
• The other party may reasonably assume to have
tacitly understood or deduced his co-contractor’s will
from his accompanying circumstances or origin and
be expected to recognised a mistake
Example?
selling stone in a market for a precious jewel may
reasonably be assumed to be that category of
value.
Deduction of Intent from the Deduction of Intent from the Nature of the ThingsNature of the Things
What is about?
The option of defect
Explanation?
• Established option with an implied condition for there is an implied
condition of guarantees concerning the soundness of the object.
• Unless, contractor expressly inserts a condition of waivers against defects
in the contracts.
Example?
• Anything which appreciably diminishes the value of an object of ordinary
commerce is regarded as a defect giving rise to an option.
What is about?
• General Rule in Islamic jurisprudence:
If a contractor agrees to buy an object without
having seen it, he is allowed an Option of
Inspection, which gives him a right to ratify or
rescind the contract.
• In this doctrine:
A contract formed by the will of two parties cannot
be valid when the will of one of those parties has
been breach by mistake as to the intended object.
Mistake As To PersonNot explicitly formulated by the classical
jurist.
Resolution may be adopted to form general
outline of a doctrine.
Not affect the contract unless the persona of
the contractor, or a substantive quality
thereof, which give rise to a mistake, is a
legal cause to the contract.
Mistake As To PersonSpecific contract in which a mistake as to person
of the co-contractor has become importance.
Party who suffers is given the right to annul the
contract following the French Civil Law concept.
Contrasted with English Common Law where
Mistake as to Person falls into the category of
Mistake which negate consent
Mistake As To Person1) Marriage Contract.
The person of the spouse is generally of prime
consideration in the contract.
Sanhuri, a modern author, distinguish between
qualities generally, and essential qualities of the
person.
Mistake as to essential qualities of the person in
Sanhuri’s opinion will invalidates the marriage
contract.
Mistake As To Person
2) Unilateral Contract of Gift.
The donee constitute a substantive aspect
of the contract.
A mistake as to his person will give the
donor the right to withdraw or demand the
return of his gift.
Mistake As To Person3) Unilateral Contract of Bequest
The legatee is regarded as a cause of the
contract.
Al-Kasani states that among the important
condition of a contract is a consent (Rida) of the
testator because it is connected with the
property.
Therefore, a bequest made in jest or by
compulsion or mistake is invalid.
Mistake As To Person4) Contract of Pre-emption and Agency.
In the contract of agency, Mistake pertains not so
much to the identity of the person as to his
substantive qualities.
For example, a minor purporting to be an agent
lacks capacity so to act.
If the third party dealing with the agent believes
the latter has proper capacity to contract, this is a
mistake in the substantial quality of the agent, that
is his capacity to the contracts.
Mistake As To PersonThus the third party who deals unwittingly
with such an agent may avoid the contract
on the ground of Mistake.
Abu Yusuf states that if the buyer is aware of
the status of the agent minor, he is not
allowed to avoid, whereas if he is mistaken
wittingly, he may be given the option to
annul or perform.
Mistake As To LawGeneral principle of the civil law that Mistake
as to Law, like a mistake as to fact, may vitiate
the consent of the contracting party.
Bellafonds states that the Shariah, as
formulated by the classical jurist, rarely
distinguishes between the concept of Mistake
as to Law and that of ignorance of the law.
Mistake As To LawModern exposes of the principle of
contract, there is a distinction made
between Mistake and ignorance of the law.
The general maxim that “ignorance of the
law is no excuse” with regard to Mistake is
not always applicable is Islamic law.
Mistake As To LawCompendiums on Usul al-Fiqh, the principle is that
ignorance of the law is a valid excuse as long as it
is not accompanied by negligence (Taqsir).
Whoever is ignorant of the law and is negligent, is
held answerable to this ignorance and will not be
considered a Mistake in Law.
Whoever is ignorance of the law and is not
negligent in that ignorance is excused his
ignorance and it may be regarded as a Mistake as
to Law.
Mistake As To Law The primary assumption of Islamic Fiqh is that Mistake as to
law is not excusable except if the special surrounding
condition can be established to rebut the charge of the
assumed negligence regarding the ignorance as to the law.
The Hanafi author, al-Kasani states, in the sale of moveable
property, if a neighbour asks for a right of pre-emption to
that property, and the buyer, thinking that his neighbour
may legally have per-emption over it, submits that right of
pre-emption to him, when later one of the two want to revoke
the contract without the other’s consent, he will not able to
because when the submission is made, it became a contract
between them.
Mistake As To LawHere, the buyer mistakenly thinks that pre-
emption may be allowed on moveable objects,
which is mistake in law in Hanafi school.
This ignorance cannot be considered excusable
because it encompasses negligence on the
buyer’s behalf.
Therefore, he is not allowed to revoke the sale
due to ignorance, and the contract is binding
upon him.
MISTAKE AS TO VALUE (GHABN AL-FAHISH)Definition The Islamic Law only recognizes mistake
to value as one of the impediment to contract if it is regarded as Ghabn al-fahish (Flagrant misrepresentation).
The Majelle in its glossary has defined
Ghabn al-fahish as “Excessive deception in the value of goods”
The Articles of the Majelle further elaborate to what extent shall a deception be considered excessive and enable a contract to be vitiated.
Article 165 states that excessive deception means:-not less than 1/20 of the total price in
respect of goods,not less than 1/10 of the total price in respect
of animals;not less than 1/5 of the total price in respect
of real estate unless it is accompanied by verbal deception (Taghrir) or fraud (Tadlis)
Article 356 states that “ If there is an excessive deception without fraud in a sale, the person deceived cannot annul the sale”.
Article 357 states that when one party has
defrauded the other and it has been ascertained that there has been excessive deception the person who is so deceived can annul the sale.
The rationale is that in the case of contract
that is flawed due to excessive deception there is lack of equivalence in the contract which would result injustice to one of the parties.
CONDITIONS ATTACHED (OPINION OF THE JURISTS)
According to Hanafi, Shafi’i and Hanbali school: Ghabn must be accompanied by fraud or verbal deceit.
The Shafi’i school further added that
Ghabn must be accompanied by flagrant misrepresentation. A mistake accompanied by Ghabn alone does not give rise to rescission unless accompanied by taghrir.
According to Hanafi, Shafi’i and Hanbali school: Ghabn must be accompanied by fraud or verbal deceit.
The Shafi’i school further added that
Ghabn must be accompanied by flagrant misrepresentation. A mistake accompanied by Ghabn alone does not give rise to rescission unless accompanied by taghrir.
However the the I’badi school was of the opinion that a contract maybe cancelled for any diminution in value of the object whether or not that diminution is a veritable defect.
Therefore it is clear that in order for a
mistake as to value have effect on the validity of the contract it is very pertinent that it must be accompanied with the element of fraud and verbal deception.
Exception to condition
The only exception to the rule that mistake must be accompanied by fraud and verbal deception is applicable in the case of contract which involves the property of a minor, a waqf donor or treasury.
The effect of Mistake as to value
Ibn Al-Hamam in his book al-Bahr al-raiq
states that a contract for the sale of property (Qunya) if the Buyer is deceived in the exorbitant manner by the seller has the right to return the property to the buyer under the principle of Ghabn. has the right to return the property to the seller.
According to Ibn A’bidin there are 3
different stances taken by Islamic fiqh towards Ghabn unaccompanied by tgahrir:-
1. the sale is valid but maybe rescinded
absolutely;2. rescission is not absolute3. if deceit has also occurred rescission is
absolute.
According to the Shafi’i school: Ghabn accompanied by taghrir maybe rescinded at the option of the buyer
According to Hanbali school which allow option to rescind on 3 grounds and must be accompanied by taghrir as follows:- the sale to receive passenger;al-Najsh; the contract of dispatch when the carrier is unaware of the value of
the commodity and does not consider it to be a condition of the contract. If he asks the contractor for indemnity and is deceived then the carrier is given the option of Ghabn since there is verbal deceit.
Maliki school was of the opinion that rescission is
permissible on 3 conditions as follows:-
where the Ghabn al fahish occurs in a sale other than at
public auction and the Ghabn al-fahish exceed 1/3 of the price or is underpriced by a 1/3 or more in a purchase;
where it occurs in a sale whereby it maybe determined that
any reasonable person might have so been deceived , in which case consideration must be had to the price at the time of contracting. The prejudiced party must have had no knowledge about the value prior to the contract;
the claim must proceed within a year of the action which give rise to the deceit so that longer lapses of time leading to breaches of agreement may not disrupt the ordinary continuance of trading relations.
Application of doctrine of mistake as to value by modern statutes
The doctrine of Mistake as to value has been adopted by the
modern legislations in the Islamic country as follows:-
Article 125 of the Iraqi Civil Code state that Ghabn may be pleaded where the needs of one parties have been exploited or where he has been deliberately confused or intimidated into the agreement, or where he has been misinformed or is of subnormal intelligence.
Article 170, UAE Civil Code, Law No. 2 of 1987 provides that where exploitation or conspiracy has been exerted in the disposition of property of subsequently restricted personthe judge may avoid the contract despite the fact that the disposition were made prior to the court’s restriction.
Article 24 of the Bahrain Contract Law 1969 states that an erroneous opinion as to the value of the of the thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact.
The Malaysian Contracts Act
ConclusionFrom the discussions mentioned above we can
conclude that the Islamic Law does not allow a mistake by itself to form an impediment to the contract or to affect the validity of the contract.
There must be an element of fraud or deceit
exist in the transaction to enable the contracting party to plead that there is a mistake in the contract and subsequently demand that the contract be void or voidable.
This is because by the existence of the element of fraud or deceit, it affected the consent of the parties whereby in the event if the party who is so deceived has the knowledge of the deception than he would not have entered into the contract.
However for the purpose of preserving public interest the only contract that can be avoided on the grounds of mistake even though there is no element of fraud or deceit is the contract involving the property of the minor, waqf donor or treasury.