Dissolution of Contract in Islamic Law Author(s): Muhammad Wohidul Islam Source: Arab Law Quarterly, Vol. 13, No.

4 (1998), pp. 336-368 Published by: BRILL Stable URL: http://www.jstor.org/stable/3382091 . Accessed: 04/07/2011 04:20
Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at . http://www.jstor.org/action/showPublisher?publisherCode=bap. . Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.

BRILL is collaborating with JSTOR to digitize, preserve and extend access to Arab Law Quarterly.

http://www.jstor.org

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

Muhammad Wohidul Islam*

INTRODUCTION

In the Islamic legal system, like other legal systems of the world, certain formalities and substantive elements are essential for juristic acts to become legally binding on the parties. Classical Muslim jurists developed a clear concept of juristic acts which produced a legal effect. Contractual transactions, whether written or unwritten, constitute the vast majority of juristic acts. That being so, Muslim jurists of various classical schools stipulated a clearly defined idea of the conditions and requirements of validity and binding force in juristic transactions concluded between parties. These essential conditions and requirements of substantive and procedural law now provide the criteria for void, valid, binding and enforceable elements of contractual transactions. Muslim jurists laid down a set of criteria for distinguishing between essential conditions on which the valid conclusion of the contract depended, and those which were regarded as less fundamental and which might affect its binding force on only one of the parties. Islamic law, taking into account the nature of the legal requirements which have not been complied with, laid down a distinction between absolute (mutlaq) and relative (nisbf) nullity and between contracts which were void ab initio, and contracts which were merely voidable. Muslim jurists went further and spoke of non-existence of the contract as a radical form of nullity under which the contract was considered as if it had never taken place. They also recognised, in contrast to the above category, contracts the effects of which were merely suspended (mawquf'ala al-ijazat), depending on the choice of the party whose intention was not validly expressed, and for whose protection the nullity was prescribed.' I shall attempt to outline the principles and rules relating to dissolution of contract under Islamic law on various possible grounds. A contracting party might sometimes not receive the performance which was due to him because of the failure of the other contracting party to honour his side of the bargain. Thus, contractual liability arises, generally speaking, when one of the contracting parties fails to perform his contractual obligation. On the other hand, the fulfilment of a contractual undertaking may be disturbed or permanently frustrated as a result of
* LLB (Hons); Master of Comparative Law (MCL), International Islamic University Malaysia. Saba Habachy, "The System of Nullities in Muslim Law", The AmericanJournal of Comparative Law, Vol. 13, 1964, p. 61, at pp. 62-63.

ArabLaw Quarterly, [1998]336-368

336

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

337

events or occurrencesfor which none of the contractingparties is responsible.In any case, the obligation arising out of a contractis, like all other obligations,corelativeof individualright which in fact does not claim permanence,but ratheris time-bound and may, at any time, cease to exist due to determinate causes. of the contract Whateverthe causesmight be, the situationmakesthe performance either impossibleor totally differentfromthat which was initiallycontemplated by the parties. Sometimesthe impactof such eventsmay appearso considerablethat the performance of the contract is completely hindered and the parties are thereforedischargedfrom their obligations.Sometimesthere may be a case where the contract only needs readjustmentto enable reasonableperformanceof the parties' obligations. The readjustmentmay be contractualand an out of court settlement,if the partiesagree,or judicial,if the partiesarein dispute. In my study of the subject, reference will be made to the traditionalIslamic law as well as relevant modem statutory provisions and judicial precedents in some selected Arabcountriesas though they are not totallyreflectiveof but highly influencedby the traditionalIslamic law.

GROUNDS

FOR DISSOLUTION

The Shari'a attempts to ensure the eliminationof all sorts of risk or uncertainty transactions. This noble attemptof the Shari'aled Muslim (gharar)in contractual all to discover and thus may causes thatmight resultin uncertainty jurists possible form bases for the dissolution of a contract.All causes of dissolution, therefore, contain as a general rule in most of the cases, elements of ghararwhich in turn ties betweenthe parties.Experts plays a pivotal role in breakingup the contractual in the Islamic law of contract have categorisedthe causes into various classes. Coulson opines that only two modes of dissolution are known to Islamic law, which are unique in their applicationfrom a comparativestandpointand which have a vital significance in contemporarycommercialtransactionsin the Gulf States. The first is the right of a party to rescind the contractunilaterally,and "without fault or legal cause". The second is terminationon the legal ground of His categorisation seems to be defectiveand biasedas he ignoressome frustration.2 of the modes of dissolution familiarin Islamic law, such as "mutual agreement (iqalah)"of the parties which is a well recognisedremedy in Islamic law. Niazi contends that a contractis discharged: (1) (2) (3) (4) By performance; By express agreement; and By operationof the doctrineof frustration; By breach.

Graham& Trotman, 1984),p. 75.

Coulson, Noel J., Commercial Law in the Gulf States: The Islamic Legal Tradition (London,

338

ARAB

LAW

QUARTERLY

As regardstermination by agreement(1) and (2), he againstatesthat the law is as follows: (1) Dissolution simpliciter:an abrogationof the rights and duty under the contract; differentdutiesfor the old one which (2) Novation:by agreement,substituting
is called hawalah;

(3) Partialdissolution; (4) Accord and satisfaction:by doing a specified act not originallyrequired under the contract;one partydischarges his obligationsunder the existing contract.3 Sanhuriholds that by cessation(zawal)of contract is meantdissolution(inhilal)of a contractafter its formationas valid (sahih)and enforceable and before (nafidh); the completionof its execution, and thereforehe excludes two things from the

cessation or extinction and discussion, by execution namely: (inqida'); (tanfidh) annulment of the contract. Thesewillbe looked at in turn. (ibtal)
Cessation by execution (tanfidh) or extinction (inqida') This is due to the fact that a contract usually ends upon the fulfilment of of sale,for example,ends by the transferof obligationsarisingout of it. A contract the subjectmatterfromthe vendorto the purchaser andpaymentof the pricefrom the purchaser to the vendor.All obligations shouldbe fulfilledimmediately before the expiryof the time for theirfulfilment.A time-bound contract end with the may extinctionof a fixed period of time, becausethe periodof time in such a contract may extinguish with the extinctionof the period, becausethe period of time in such a contractis a vital element.Therefore,a contractof lease, for example,will cease with the expiry of the fixed period. Annulment (ibtal) of the contract This type is also excluded because annulmentarises in cases of invalid (ghayr whereas the purported dissolution sahih)or unenforceable (ghayrnafidh)contracts, involves a contractthat is valid and enforceable.4 It is evident from the above discussionthat Sanhuriexcludesthe discussionof cessationby extinction (inqida')and annulment(ibtal);and concentrates on the discussion of cessation by dissolution (inhilal). He also strikes a distinction between the two former and the latter. He states that the distinction between dissolution(inhilal)and extinction(inqida') is that dissolutiontakes place before the executionof the contractor, in otherwords,beforethe executionof a contract
3 Niazi, Dr. Liaquat Ali Khan, Islamic Law of Contract (Lahore, Research Cell, Dyal Sing Trust Library, n.d.), p. 301. 4 Sanhuri, 'Abd al-Razzaq, Masadir al-Haqq fi al-Fiqh al-Islami (Cairo, Dar al-Nahdah al'Arabiyyah, n.d.), Vol. 6, p. 201f.

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

339

is completed; and extinction arises only after the completion of execution. The distinction between dissolution and annulment(ibtal)is that dissolutionarises in the case of a contractwhich came into being as valid and enforceable,however, subsequently dissolved either with retrospective or non-retrospective effect; annulment, on the other hand, arises in the case of a contractwhich came into being as invalid or unenforceableand subsequentlyannulledin all circumstances with retrospectiveeffects.5 Sanhuri,thus, confined the causes of dissolution into three categories: (1) Dissolution due to non-binding (ghayrlazim) contract; (2) Dissolution for termination(faskh);and (3) Dissolution by mutual agreement(iqalah).6 Mahmassanimaintainsthat for the cessationof a contractualobligation, there are several special causes which should ensue from the dissolutionof a contract before or duringthe continuanceof its executionor on accountof the expiryof its period. He categorisesthese causes into three classes,' namely: (1) Rescissionor dissolutionby mutualagreement(iqalah)in bindingcontracts; (2) Terminationrevocation(faskh)in non-bindingcontractsdue to their nature or on account of any of the options; (3) Nullity (butlan)or defect (fasad)in invalid contracts. Without prejudice to the above categorisationsof the causes by prominent Muslim scholars,the followingcategorisation would, it is submitted,pragmatically combine all the above and serve to facilitatethe discussion in a comprehensive manner.Thus, in my assumption,the causes of dissolutionwould be categorised as: (1) Dissolution by mutual agreement(iqalah); (2) Automatic dissolution by death, destruction of subject matter, expiry of period, achievementof purpose and stipulatedrepudiation,etc; (3) Dissolution by revocationand termination(Al-Faskh): (a) unilateral termination in permissible contracts ('Uqud Ja'izah)/contracts of licence, (b) terminationfor nullity and illegality, (c) terminationfor options (Khiyarat), (d) terminationby non-approvalto suspend contracts, (e) terminationfor breachor fault; (4) Dissolution for impossibility (istihalah) of contractual performance doctrine of changed circumstances,doctrine of frustration, doctrine of and act of God, etc. interveningcontingencies,doctrineof force majeure
5 Ibid., p. 202. 6 Ibid., p. 204. Mahmassani, Sobhi Rajab, Al-Nazariyyah al-'Ammah Li'l-Mujibat wa'l-'Uqud (Beirut, Dar al-

'Ilm Li'l-Malayin,1983),p. 485.

340 AUTHORITIES

ARAB LAW QUARTERLY AND LEGAL VALIDITIES FOR DISSOLUTION

Islamiclaw was not familiar There is an unfoundedallegationthat the traditional with such principlesas dissolutionof contractas a form of remedyfor breachor frustration. In fact, jurists have located the authority for the principle of dissolutionin varioussources which tend to refutethe allegationand assertthat the concept of dissolutionof contractis deeplyrootedin Islamiclaw. Qur'anic principle of justice and equity There are verses in the Qur'anwhich show how flexible the Law-Giver(Shari') can be as a matterof justiceand equityin casesof difficulty.A few versesare cited below which demonstrate this: (1) Allah intends every facility for you: He does not want to put you to difficulties;8 (2) Allah has imposedno difficultieson you;9 (3) On no soul does Allah place a burdengreaterthan it can bear;'0 (4) Allah commandsjustice and equity." Prophetic sanction in performing Dissolutionis designedto avoidhardship the contract and alsoharm to the contracting this: "Thereshall partiesandthe followingHadithdemonstrates be no unfairloss nor the causingof such loss (La dararwa la dirar)".'2 Al-Zarqa,referringto the abovecited versesand Prophetictradition,maintains that the principleof dissolutioncan easilybe deducedfromthe Islamiclaw ideals of justice and equity.13 This proposition has been further supported by assimilatingthe remedy of terminationfor breach to the classical Islamic law This legalconceptis to the effectthat conceptof paymentoption (khiyaral-naqd). a sellerand a buyercanagreeon a certainperiodof timefor payment,failingwhich the seller has the right to terminatethe contract.'4This rule was included in Article313 reads:"If the buyerand selleragree Majallatal-Ahkamal-'Adliyah.'5 thatthe price shallbe paidat sucha time, andthatif it is not paid,thereis not to be any sale between them, this is a valid agreement.This is called 'money option'
(khiyar al-naqd)".
Al-Qur'an,Surahal-Baqarah (2): 185. 9 Surahal-Hajj(22): 78. (2: 233); Surahal-An'am 1o Surahal-Baqarah (2): 286; see also Surahal-Baqarah (6): 152;SurahalA'araf(7): 42; Surahal-Mumimun (23):62; Surahal-Talaq(65):7. 11 Surahal-Nahl:90. 12 Quotedfrom Coulson,see n.2, supra. for Breachin ArabContract Law" [1995]ALQ 17. 13 AdnanAmkhan,"Termination 15 OttomanCivil Code, well known as the Mejelle,trans. (Eng.) by Tyser, C.R. (Lahore,Law PublishingCompany,1967).
14 Ibid.

DISSOLUTION

OF CONTRACT IN ISLAMIC LAW

341

Legal maxims and the principle of necessity The primarypurpose of religion or divine legislationis to preservefive vital and necessary elements;belief, life, intellect, posterity and property.Any occurrence which hinders the enjoymentof any of these elements must, if at all possible, be avoided. In addition, the applicationof divine law should not result in injury or harm to either individuals or the public at large.'6 Hence, the following legal maxims signifying equitable and common sense rules of necessity relatingto the human transactionsset out in the preliminarychapter of the Mejelle could be referredto as authorityfor the theory of dissolution: (1) Necessity (darurat)allows actions which would otherwise be prohibited (Art. 21); (2) Hardship is solved by tolerance(Arts. 17 and 18); (3) There shall be neither retaliatorydamagenor causingof damage(Art. 19); (4) Necessity is judged accordingto its merits (Art. 22); (5) A damagemust be broughtto an end (Art. 20); (6) A majordamagemay be replacedby a lesser one (Art. 27). Theory of interdependence of obligations Adnan Amkhan contends that the most widely held theory as an authority for of obligations.This theory dissolution of contractis that of the interdependence on each other, and so the that contractual are implies obligations dependent of one cancellation of the counter lead to should disappearance obligation well. evolved which as Linked has with involvesthe another obligation this, theory notion of an impliedresolutivecondition.In otherwords,everyreciprocalcontract has an implied terminatingclause, which becomes operative when one of the contracting parties fails to perform his contractualobligation. This theory of "impliedresolutivecondition"has been severelycriticisedby legal writers,since it suggests that whenevera contractis breachedit will be automatically terminated, which is not the case. The aggrievedparty must, in the absenceof any agreement to the contrary, seek terminationthrough a court order, and the court has the discretionary power to grant or refuse the request.'7 Theory of equilibrium Islamic law emphasises the idea of balance of countervaluesin a contract and provides a binding force only for contractssatisfying this requirement,because Islamic law always respects the real intent of society.'"Therefore, contractsare
16 AdnanAmkhan,"The Effect of Changein Circumstances in Arab ContractLaw" [1994] ALQ 258, at 259.

'8sHideyuki Shimizu, "Philosophy of the Islamic Law of Contract,A ComparativeStudy of Contractual Justice"(IMES WorkingPapersSeriesNo. 15, I.U.J., March 1989),p. 75.

17 See Amkhan, n. 13, supra, pp. 18-19; Bel-'Uyur, Abdul Karim, Nazariyyat Faskh al-'Aqdfi alQanun al-Madani al-Jaza'iri al-Muqaran, n.p., 1986, pp. 85-113.

342

ARAB LAW QUARTERLY

never legally bindinguntil the real equilibriumis ascertained or both partiesare satisfied. Thus, the attitude of Islamic law is not always formal but is very unlike Western law which emphasisesthe mutual consent of the substantial,19 parties irrespectiveof their equality of bargainingpower. Although a mutual agreementis a causeof contract,Islamiclaw regardsa causenot basedon the real and ultimate reason as meaningless.In other words, a mutualagreementwhich neverbringsmutualsatisfaction it is judgedby fully is not respected. Accordingly, a a of in contract where total context the principle of the society considering the rule of a over that is to say, has equilibrium binding contract,20 priority a valid contract the creates mutual the Islamic by although agreement, legalsystem contractdoes not have a binding force until the partiescan ascertainthat their proper expectation can be substantiallyrealised. Thus, Islamic law provides at the beginning agreement bindingforceto the contractwherea just andapparent the satisfaction of a contractis not realised,but afterascertaining of the partiesreal agreement is realised. It is at the time of ascertainingthe equilibrium of and as a that the contractbecomeslegallybindingin Islamiclaw,21 countervalues of result, in the absence of such equilibrium countervalues or, in other words, of a substantial mutualagreement,the where there is difficultyin the realisation contractis susceptibleto dissolution.
IQALAH: OF CONTRACT DISSOLUTION AGREEMENT BY MUTUAL

After the formationof a valid, enforceableand binding contract,the partiesare underan obligationto performit. If one of the partiesregretshis actionsand wants in the contract,he is not permittedto do so to revokehis part of the undertaking except with the consent and approvalof the other party. This principlecan be justifiedin the sense that a contractis formedby mutualconsentand, therefore, cannotbe dissolvedexceptby the samemutualconsent.22 states,"None Al-Zaila'yi of the partieshas the right to unilaterally dissolvethe contract as none of them can unilaterallyform it, because the contract is a shared right".23The Shari'a considersit permissible,however,if one or both of the contracting partiesregret their actions for them to dissolve the contractwith mutual satisfaction, and this of is called dissolution procedure "iqalah".24

15h),p. 198.

'9 74. 20 Ibid., p. Ibid., pp. 84-85. 21 Ibid., p. 88. 22 See n. 7, supra, p. 486. 23 A1-Zaila'yi, Uthman ibn Ali, Tabyin al-Haqa'iq Sharh Kanz al-Daqa'iq, Vol. 4 (Boulac, 1313See n. 7, supra, p. 486.

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

343

Definition of iqalah Al-Zuhaili defines iqalah as "terminationof contract by mutual consent of the parties in case one of them is regretful and wants to turn away from the contract".25 According to Ibn Najim, "iqalahis withdrawalof contract and its cancellationby the agreementof the partiesin case of bindingcontracts".26 This is also called the agreementin contrastto the contentsof contractwhich is termedin
Roman law "Contrarius Consensus".27

nadiman bai'atahu aqala Allahu 'athratahu yawma al-Qiyamah)".28 Formation of iqalah

Authority for iqalah The authorityfor iqalahis attributedto a famousHadith of the Prophet(PBUH) who is reported to have said, "whoever discharges a regretful person of his undertaking,Allah (SWT) will remove his obstaclesin the hereafter(Man aqala

The element (rukn)of iqalahin Islamiclaw is the offerfrom one of the contracting parties and the acceptance of the other party.29Therefore, the offer and the acceptance expressed in word(s) constitute the element of iqalah. There is no dispute as to the issue that iqalahcan be constitutedby two wordsboth signifying the past tense. Accordingto Imam Abu Hanifa and Abu Yusuf, iqalahcould also be constitutedby two words(ijab)and (qabul), one signifyingthe past tense and the other the future tense as prevalentin the marriagecontractbut not in the contract of sale, in which case this may not applyin the initialcontractbut may apply at the subsequentiqalahcontract.This view is, however,opposedby ImamMuhammad who is of the opinion that iqalah constitutestwo words both signifying the past tense as in the case of an initial contractof sale.30 Al-Kasaniholds that the element of iqalahis offer and acceptanceas in the case of a contractof sale. However, in his view, the elementof a sale contracttakesthe form of two wordsboth signifyingthe past tense, and the same applies in the case of iqalah. Nevertheless, there is a differencebetween both the wordsaccordingto the contextsof iqalahand the sale contractin the sense that the use of the future tense for bargainis real (haqiqah) and the bargainin the sale contractis periodboundand, therefore,the word can be convertedto its realform. Consequently,it does not standas acceptance. This is in
25 Al-Zuhaili, Wahbah, Dr., Al-Fiqh al-Islami wa Adillatuhu, Vol. 4 (Damascus, Dar al-Fikr, 1984), p. 277. 26 Ibn Najim, Zainul 'Abidin, Al-Bahr al-Ra'iq Sharh Kanz al-Daqa'iq, Vol. 4 (Egypt, 1334h), p. 277. 27 See n. 7, supra, p. 486. 28 Narrated by al-Baihaqi on the authority of Abu Huraira, quoted from Al-Zuhaili, see n. 25, supra, p. 277. 29 Mejelle, Art. 191. 30 Sanhuri, see n. 4, supra, p. 269.

344

ARAB LAW QUARTERLY

contrast to the situation in iqalah whereby the word cannot be converted to its real sense (haqiqah)because the bargain in iqalah is not period bound and therefore this can stand as acceptance. This is in line with the marriage contract where such word is considered as acceptance.31

Conditions for the validity of iqalah

Sanhuri stipulates five conditions for the validity of iqalah:32 (1) Satisfaction (rida') of the parties to iqalah, i.e., the consent should be free from duress (ikrah) because duress invalidates contract; (2) Meeting (Majlis), i.e., iqalah should be concluded in a meeting because the substance of contract is present in iqalah and therefore the condition of majlis should apply in iqalah in the same way as it applies in contract;33 (3) Reciprocal possession of equivalent reimbursed money in the process of dissolution of a money exchange contract, i.e., the iqalah should be effected by reciprocal delivery and possession; (4) In the case of a contract of sale the thing sold should be in existence in the hands of the buyer at the time of iqalah. Therefore, if the thing has been completely destroyed, the iqalah is not valid.34However, if there is only a partial destruction of the object, with regard to the rest, the iqalah is valid with its equivalent portion of the fixed price.35 As far as the price is concerned, its destruction does not prevent the validity of iqalah;36 (5) The thing sold should be susceptible of being terminated for all causes of termination, such as revocation for the options of stipulation (shart), sight (ru'yah) and defect ('ayb). If it is not so, that is if there is something additional which prevents the right to revocation ensuing from those causes, the iqalah is not valid according to Abu Hanifa and Zufar. However, Abu Yusuf does not consider it as a condition.

Modes of iqalah
Mahmassani maintains that, as the iqalah can be validly constituted by express (sarih) or implied (dimni) consent, similarly iqalah itself can be express or by way of indication.37 Iqalah by way of mutual delivery to one another is also valid, the delivery standing in the place of an offer and acceptance.38As it is evident that iqalah is notionally as well as practically analogous to a fresh contract, all the
31 Al-Kasani, 'Alauddin, Bada'i~i al-Sana'i'ifi Tartib al-Shari'i (Egypt, 1327-28 h), Vol. 5, p. 306. 32 See Sanhuri, n. 4, supra; for a detailed discussion on the conditions of iqalah see also al-Kasani,

n. 31, supra, pp. 308-310. 33 Mejelle, Art. 193. 34 Ibid., Art. 194. 3s Ibid., Art. 195. 3 Ibid., Art. 196. 37 Mahmassani, see n. 7, supra, p. 487. 38 Mejelle, Art. 192.

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

345

modes of contract may apply in iqalah. Having established this, what is now necessaryin the formationof a contractis the mutualassentof the parties.What is important is that, irrespectiveof the modes, the consent which is an intangible mental fact has to be manifested before its existence can be known. Thus the emphasis is on the objective manifestationof assent, and not on assent as a subjectivemental fact.39There should be no dispute as to the validity of ways by which an assent may adequatelybe manifestedand communicated.The Malikis were prepared to accept as sufficient manifestationof assent, anything that is customarilyregardedas indicativeof consent. Similarly,Hanbalis hold the view that a contractcan be concludedby whateveris customarilyregardedas indicative of mutual assent. In tune with this view, the Hanafis hold that consent can be inferred even from mutual delivery (mu'atah)without a word being uttered in a customary sale contract.4 The same rule is applicablein iqalah for the shared similarityof nature and form between contractand iqalah.
Iqalah and the common law doctrine of recession compared

There is a similarity between iqalah in Islamic law and recession in English common law in the sense that both requirea new offer and acceptancefor their formation and thus none of the contractingparties can independentlyannul the existing contract. However there are some differencesbetween the two systems. The recession in English common law does not bear retrospectiveeffect by itself unless the parties agree. The Islamic law doctrineof iqalah,on the other hand, is regardedas revocationat one time and a new contractat another time. If it is regarded as revocation then it removes the effect of the original contract with retrospectiveeffect and renders it as if there was no such contractat all. If it is regardedas a new contract,the originalcontractstill exists, and subsequentlythe subjectmatterof the contractis re-exchanged by the fresh contractwith the effect of iqalah;and thus, iqalahdoes not bearretrospective effect. As a result, if iqalahis regardedas revocationwith retrospectiveeffect, it would not be restrictedto the contractingparties but would extend to a third party;and if it is a fresh contract with no retrospectiveeffect, its effect would not be restrictedto a third partyonly but also in relationto the contractingparties.41
AUTOMATIC DISSOLUTION OF CONTRACT

There are certaincauseswhich give rise to the automaticdissolutionof a contract. I will now discuss them.
Hamid, Mohmed Al-Fatih, "Mutual Assent in the Formationof Contractsin Islamic Law",

Journal of Islamic and Comparative Law, Vol. 7, 1977, p. 41. 40 Ibid., pp. 42-43. 41 Sanhuri, see n. 4, supra, pp. 275-276.

39

346 Death

ARAB LAW QUARTERLY

A contracting party is naturally exempted by his death from the liability arising out of the contract. However, contracts are not dissolved in general by the death of either of the contracting parties, unless the subject matter of the contract is of a personal nature, such as, for instance, as in the case of a lease, where if either the landlord, or the farmer dies, the contract is dissolved on the occurrence of that event. Similarly, in the case of partnerships, the surviving partners are not bound to continue in business with the heirs of the deceased partner, and vice versa.42Not all types of contract are susceptible of automatic dissolution by death. Al-Zuhaili has determined certain types of contract which may be dissolved by the death of one of the contracting parties as follows.43 Contract of lease (ijarah) According to the Hanafi School, the lease contract, despite being legally binding from both sides, is automatically dissolved by the death of one of the contracting However, according to non-Hanafi jurists, the lease contract does not parties."44 dissolve upon the death of one of the parties.4 This difference of view is due to the different perception with regard to the formation of a lease contract. Hanafis perceive that ijarah takes place in benefits (manafi')according to its gradual accrual, i.e., the lessee owns benefit graduallywith the passage of time. Therefore the benefit accrued after the death of the lessee can not be owned by him. Thus the contract does not validly exist after death. The non-Hanafis, on the other hand, hold that the benefit is considered to be present during the formation of the contract and the lessee owns it at once and that it is a legally enforceableownership. Therefore, it can be inherited like other purchased things. Thus, the lease contract like other sale contracts does not dissolve upon the death of one of the contracting parties.46 Mortgage (rahn) and surety (kafalah) They are binding contracts only on the part of the obligor (da'in), that is the mortgagee or the one for whom the surety is created (makful lahu). So, if the mortgagor dies, the mortgage may be sold out by his will and his debt may be settled in this way if his heirs are minors. However, if the heirs are adults, they have to inherit the property and they are under an obligation to release the lease by settlement of the debt.47As regards the surety (kafalah), if it is by debt, it does not
42 Niazi, n. 3, supra, p. 74; Standish Grover Grandy, Manual of the MohammadanLaw of Inheritance and Contract (London, Allen & Co., 1869), p. 168. 43 AI-Zuhaili, n. 25, supra, pp. 277f. " Al-Zaila'yi, n. 23, supra, Vol. 5, p. 144; Al-Kasani, n. 31, supra, Vol. 4, p. 201. 45 Al-Shirazi, Abu Ishaq, Al-Muhadhdhab (Egypt, Matba'ah Halabi, 1343h), Vol. 1, p. 406; Ibn Rushd, Al-Hafid, Bidayat al-Mujrahid (Egypt, Matba'ah Sabih, 1347-52h), Vol. 2, p. 227. 46 Al-Zuhaili, n. 25, supra, p. 278. 47 Ibid.

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

347

dissolve upon the death of the originaldebtor;ratherit dissolves in two ways: by rendering back the debt to the creditor, or by exemption from the debt. If the guarantor(kafil) dies, the debt would be settledfrom his bequest. However, if the kafalahinvolves the kafil himself as opposedto debt, it would be dissolvedby the bi nafsihi);and death of the originaldebtorwho was guaranteed by himself (makful by the death of the kafil because of the inabilityto bring the originalcreditorin whose favour the surety was created(makful'anhu).48
Partnership (sharikah) and agency (wakalah)

Both are non-binding contractson the part of both parties.They are dissolvedby death. Partnershipis dissolved by the death of one of the partnersregardlessof whether the other partnersknow about the death or not.49Similarly,wakalahis of the knowledgeof the dissolvedby the deathof the agentor principalirrespective other about the death.50
Contracts of muzara'ah and musaqat51

They are non-binding contractsfrom both sides. Hanbali jurists recognise both the contracts.Accordingto them, the contractwould be dissolvedby the death of of whetherhe dies afteror beforehis eitherthe landowneror the peasantregardless work on the land or plantationand regardlessalso of whetheror not harvesthas taken place.52However, if the landownerdies before the crops or fruits are ripe, the land should be left in the custody of the peasantuntil harvestfor the sake of preservingthe interest of both the parties. If the peasant dies, his heirs should continue work until the harvest.53 Expiry of the period of contract and achievement of purpose The contractwould automaticallybe dissolved if the limited period of its effect expires or the purportedobject of the contractis achieved.This is like the expiry period in the case of a time-boundlease contractand the settlementof debt in the case of mortgageand surety contractsand executionof the agent of the tasks for which he was made agent in the case of a contractof agency.54

49 Al-Sarakhsi, Shams al-Din, Al-Mabsut Sharh al-Kafi (Egypt, Matba'ah al-Sa'adah, 1331h), Vol. 11, p. 212; AI-Kasani, ibid., p. 78. 50 Al-Sarakhsi, ibid., Vol. 19, p. 13; Al-Kasani, ibid., p. 38; Al-Zuhaili, n. 25, supra, p. 278. 51 Muzara'ah is a temporary sharecropping contract; Musaqat is a sharecropping contract over the lease of a plantation, limited to one crop period. 52 Al-Kasani, n. 31, supra, Vol. 6, p. 185. 53 Al-Zuhaili, n. 25, supra, p. 279. 54 Ibid., p. 277.

48 Ibid.; Al-Kasani, n. 31, supra, Vol. 6, p. 11.

348

ARAB

LAW

QUARTERLY

Non-performance

within stipulated time

If a contract stipulates that non-performance of a party within a fixed period would entitle the other party to repudiate the contract, such repudiation gives rise to automatic dissolution of the contract. It can be illustrated by reference to a rent contract, where if there is a condition for the immediate payment of rent and the hirer refuses to pay when the lessor demands the rent in ready money, the lessor has the right to repudiate the contract5s which would lead to the automatic dissolution of the contract. Similarly, if there is a stipulation that the price shall be paid at such a time (khiyar al-naqd) in a contract of sale and the purchaser fails to pay the price at such a time, the contract is dissolved.56 Destruction of the subject matter

If the thing sold is destroyed while in the hands of the vendor, before receipt by the purchaser, the loss does not affect the purchaser, it falls on the vendor,57 and according to Abu Hanifa and Shafi'i the contract is dissolved by such destruction of the subject matter. However, Malik and Ibn Hanbal are of the view that such destruction does not give rise to dissolution of the contract, rather the purchaser may oblige the vendor to deliver an equivalent similar thing or an equivalent price. Ibn Hanbal further observes that the purchaser may revoke the contract and claim restitution of the price he has paid.58 If the thing sold is destroyed by a stranger before its receipt by the purchaser, then the purchaser may, in the opinion of the majority, dissolve the contract and claim restitution of the price paid.59

AL-FASKH:

DISSOLUTION AND

OF CONTRACT TERMINATION

BY REVOCATION

There are certain types of contract that may be dissolved by revocation of one of the parties or termination by operation of law. In Islamic law al-Faskh is the common term which adequately accommodates these two grounds of dissolution of contract. I will attempt to discuss in brief the contracts which may be unilaterally revoked by one of the contracting parties. Then I will discuss in greater length the causes which may lead to termination of contract by operation of law.

55

56 Mejelle, Arts. 313 and 314.

The Mejelle (trans. in English by Tyser, C.R., Lahore, Law Publishing Co., 1967), Article 648.

57 Mejelle, Art. 293. 58 Mahmassani, n. 7, supra, p. 501. 59 Al-Ghazali, Al- Wajiz (Egypt, Matba'ah al-Muwabbad wa'l-Adab, 1317h), Vol. 1, p. 145; AlRafi'i, Fath al-'Aziz Sharh al Wajiz (Taba' Badhil, Kitab al-Majmu' Li'l-Nawawi), Vol. 8, pp. 399400.

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

349

Unilateral revocation of contract A group of contracts susceptible of being dissolved by unilateralrevocation is known as 'uqudja'izah. Coulson criticises its common translation as "lawful contracts".He maintains,ja'izah is the plural adjectivalform of the noun jawaz, which is best rendered,in technicallegal terminology,as "licence".A licence has the characteristicof being revocable at will; and it is this same feature of revocabilitywhich is the real significanceof the 'uqud ja'izah under Islamic law and it distinguishes them from binding (lazim) contracts. These contracts, 0 Mahmassani therefore, may appropriatelybe called "contracts of licence".6 categorises them as non-binding contracts either from both sides or only one side.61They may be terminatedby the revocationof the partyfor whom they are licensed. If such contractsare non-binding for both the parties, each of them is allowed to revoke the contractwithout the consent of the other. For instance, a partnershipis dissolved by the revocation of one of the partners, but it is a condition that the other should know of its dissolution. If one has revoked his the dissolutionof the partnership is not effecteduntil the otherknows partnership, of it.62 Similarly, in the case of agency (wakalah),the principalcan dismiss his agent (wakil).However, he cannotdismisshim if there is a right of anotherrelated to the agency.63 Likewise, the agent too has the right to resign from the agency. as stated But, above, if the right of another is dependentupon him, he cannot and he is compelled to performhis agency.64 Another instance in which resign, both the parties have the right to revoke the contract is in the case of deposit (wadi'ah),where each person who deposits his propertyfor safe-keepingwith a person who promisesto keep it safe, has a right to dissolvethe contractof wadi'ah at any time.65 There are certaincontractswhichare regarded as bindingfor one partyand nonbindingor, in other words, permissible/licence (ja'izah)for the other. They can be terminatedby the agreementof both parties;or the partyfor whom it is licensed may dissolve by revocation. For instance, in the case of a mortgage (rahn), the mortgagor and the mortgagee can by agreement dissolve the contract of
mortgage.66 The mortgagee can also of his own accord dissolve the contract of

However, the mortgagorcannotrevokethe contractuntil the assent of mortgage.67 the mortgageehas been given.68

61 Mahmassani, n. 7, supra, p. 487. 62 Tyser, n. 15, supra, Art. 1353.

60 Coulson,n. 2, supra,p. 76.

Ibid.,Art. 1521. Ibid.,Art. 1522. 65 Ibid., Art. 774. 66 Ibid.,Art. 718. 67 Ibid.,Art. 716.
63 64

68 Ibid., Art. 717.

350

ARAB LAW QUARTERLY

In all the circumstancesabove, the dissolution does not depend on a court effect. For example,when the principal and does not have retrospective order,69 has dismissedhis agent, until notice of his dismissalis receivedby the agent, he continuesas agent, and his dispositionof propertyas an agent up to that time is valid.70 Termination for nullity and illegality Nullity and illegality of form and substance may be one of the grounds of dissolution in Islamic law. Rayner shares the view that, despite some striking and peculiarto similarities,the system of nullity in Islamiclaw is incomparable other legal systems. The numberof contractswhich are absolutelynull and void of Islamiclaw, and the due to religioussanctionsaffirmthe distinctivepersonality system of options to be found within the Islamic doctrineof nullity is indeed The systemof nullityin Islamtakesits starting system.71 peculiarto thatparticular point from the Qur'an, which provides the basic principles, morals and of Islamicpublic orderfor the guidanceof the Muslimcommunity. fundamentals The Qur'anicprecepts take the effect of mandatoryrules of good morals and public order. In principle, therefore,any attemptby the contractingparties to the Qur'anicrestrictionsshould exercisetheir freedomof contractto circumvent as contraryto the Shari'a.72 and batil is contract the ineffective: void) (null prove The neo-Hanbalijurist Ibn Taymiyyahand his eminentdisciple Ibn QayyimalJawziah have contributed greatly to the understandingof the general rules governingthe validity of contractsin Islamiclaw.73It was Ibn Taymiyyahwho of beforethe eighteenthcenturyhad madean attemptat a generalsystematisation the theory of nullity, who covered most of the salient featuresof nullity in his One of the general rules chapter on contractsin the luminous book Fatawa.74 to the Shari'ais that Ibn according Taymiyyah nullity, as perceivedby concerning or a either absolute nullity must be based on pillar (rukn) cause (sabab)of the or the contract,and this, as often as not, concernseitherthe offer and acceptance, these nullitiesinto SabaHabachyhas categorised objectof the contract,or both.75 the following broadcategories.76

69 Ibn Rajab, Abu al-Fath 'Abd al-Rahman, Al-Qawa'idfi'l-Fiqh al-Islami (Egypt, Matba'ah al-Sidq

1933),rule 63. al-Khairiyyah,

71 Rayner, &Trotman, 1st edn, S.R., Dr., The Theoryof Contractsin Islamic Law (London,Graham 1991),p. 147.

70 Mejelle, Art. 1523.

Habachy,n. 1, supra, p. 61 at 63. Fatawa(Mabhath (Cairo,1326al-'Uqud), 74 Ibn Taymiyyah,Sheikhal-IslamTaqi al-DinAhmad, 29h), Vol. 3, 387ff.
73

72 Ibid., p. 152.

printing,n.d.), pp. 224-25.

Al-Jaziri, 'Abd al-Rahman, Kitab al-Fiqh 'ala al-Madhahib al-Arba'ah, Vol. 3 (Beirut, 7th

76 Habachy, n. 1, supra, 63ff.

DISSOLUTION Unlawful contracts

OF CONTRACT IN ISLAMIC LAW

351

As mentionedearlier,the Shari'a, like every system of law, has a set of mandatory rules of public orderand good morals.These rules, which are meantto protectthe interestof the community,cannotbe contravened by privatecontracts.Wherethey are, such infringementof the law carriesthe sanctionof the absolutenullity of the offending contracts.The Shari'arequiresconformityto these rulesin determinate terms. Private contractsinvolving acts which are contraryto the Shari'a are null and void.77For instance, a contractto commit a crime or to performany other unlawful or immoral act would be invalid under Islamic law. The yardstick of an act is to be measuredis accordingto which the unlawfulor immoralcharacter the revealedlaw of Allah (SWT), and not, unlike other systems, looked at from a purely human angle. The Islamic law of obligations and contracts takes into consideration,as a religio-legal system, the prohibition on religious grounds of certain transactionsamong Muslims. Therefore, the list of unlawful contracts under the Shari'a is to be longerand more detailed.78 Raynerhas classifiedthe list of unlawful contractsinto the following three classes:79 of legalityconcerningthe objectof contract Firstly, when the Shari'arequirements are not realised at the time of contract, then the contract is void (batil).80For instance, existence of the object at the time of the contractis a requirementof legality;and if the object does not exist a contractof sale of it is invalid(batil),for example, to sell fruit which has not yet appeared on the tree.81 Another and requirementof legality of the object is that it should be mal mutaqawwim, therefore,to sell a thing which cannotbe accountedas property(mal)82 amongmen is invalid (batil), for exampleto sell an unclean carcasseor a man is invalid,83 for they are not regardedas property.Similarly,a sale of property(mal)which is not
mutaqawwim is invalid (batil).84

Secondly,the sale of any article which cannot be separatedwithout harm, and is not deliverableis invalid. Thus a beam in the roof of a house would not be the fromthe rest of the lawful object of a contractas that beam could not be separated house without causing harm to the whole structure.85 Likewise, the sale of an

80 Sanhuri,n. 4, supra, Vol. 4, p. 135;for a detaileddiscussionof the requirements of legality,see also ibid., 131ff. Rayner, 81 Mejelle, Art. 205; see also Art. 363; this requirementis dispensedwithin the case of salam contractsand contractsfor servicesor acts. contracts,certainagricultural 82 For the definitionof Mal Mutaqawwim, see Art. 127 of the Mejelle. 83

77 Ibid., pp. 64-65. 78 Ibid. 79 Rayner, n. 71, supra, pp. 153-154.

84
85

Ibid., Art. 210. Ibid., Arts. 211 and 363. Rayner; n. 71, supra, p. 154.

352

ARAB LAW QUARTERLY

object the delivery of which is impossible is invalid, e.g., the sale of an escaped animal.86 Thirdly, things which are deemed or declared unlawful by the Shari'a, or which offer no benefit, or which have restricted disposal rights, or which are ritually impure, or things without market value, are unlawful objects of contract. For example, Islam prohibits the consumption of carcass, blood, pork and wine.87 Consequently, any transaction between Muslims which involves these things for its object is stricken with absolute nullity. Islam also categorically prohibits contracts based on usury (riba).88Therefore, any contract involving usury is null and void under the Shari'a. Islamic law never recognises any contract which has an apparently illegal purpose such as the commission of an anti-social act like killing. Muslim jurists also developed the theory of gharar (risk/uncertainty) on the and extended the sanction of absolute Qur'anic interdiction of gambling (maysir)89 nullity to all contracts where a risk was to be taken in a spirit of speculation, or where the extent of the obligations undertaken by one of the parties and of the advantages which would rebound to the other party were not clearly defined at the time the contract was entered into. Defects of formality Islamic law is generally free from the fetters of external formalism as it places importance upon intention and mutual consent. Article 3 of the Mejelle states that in contracts effect is given to the intention and meaning and not to the words and phrases. Saba Habachy contends that this informalism emanated from the saying attributed to the Prophet (PBUH) which puts the emphasis in human behaviour on intention rather than form. According to the saying, acts shall be judged and appraised in the light of the intention which inspires them; and each man shall be judged according to what he intended by his actions.90 Sanhury explains that the absence of formalities derives from the religious character of Islamic law.91Nabil Saleh, however, maintains that the Islamic informality in the technique of contracting is the Qur'an's concern to protect the Islamic community from any undue hardship;92 that concern being a distinctive feature of the teaching of Islam.93 This being the case, in general, a few contracts, however, do remain

Mejelle,Art. 209; see also Art. 363. Al-Qur'an,Surahal-Ma'idah (5): 3 and 90. 88 Surahal-Baqarah SurahAl'Imran (2): 275; (3): 130. 89
87 91 Sanhuri, n. 4, supra, p. 37.

86

9o Habachy,n. 1, supra,pp. 66-67.

Surah al-Ma'idah (5): 90.

Qur'an, xxii, 78. andthe IslamicTheoryof Obligations Transactions and Contracts", 93 Saleh,Nabil A., "Financial IslamicLaw andFinance(ed. C. Mallat,London, 1988),p. 4.
92

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

353

subjectto conditions,which, althoughnot all are recognisedas strict conditionsof form, if omitted, would renderthe contractdevoid of effect such as:9 (1) The contract of pledge depends on the transfer of possession to the pledgee.95 In pledge and mortgage transactions, either physical or constructivepossessionof the pledge by title deed is requiredfor the pledge to have valid effect. If possessionof the pledge is not transferred the pledge is renderedincompleteand revocable; (2) The contract of gift depends on the delivery of the object to the second party. Until delivery has been executed the contractremainsrevocableby the donor;96 (3) Islamic law looks on marriage as an ordinary contract subject to two conditions.97The first, which is applicableto all four schools, is that a certainnumber of witnesses are required.The second condition is that the expressionsemployedmust conveyan unequivocalintentionthat the parties intend to become husbandand wife; (4) The contractof salam, being a contractinvolving future delivery requires immediateconsideration to pass in orderfor it to be valid and not contrary to the rules of gharar;98 (5) The contractof barter,by its very essence,requiresimmediateconsideration to pass; (6) The contract of mufawada(unlimited mercantilepartnership)is created either by intention of the term "mufawada" itself, or by mention of every single legal effect. Here effect is given only to formal declarationof the (7) The contractsof 'ariyah(hire) and qard (loan)are dependentfor their legal effect on the takingpossessionof the object of the contract,100 or deliveryof the moneys to the borrower. In all the situations above, defect with regard to formalities may make the contractinvalid and thus susceptibleof dissolution.
Termination for lack of constitutive elements and incidental conditions

preciseterms;"

Void and voidable contracts

The constitutive elements or the intrinsic conditionsare the foundation(arkan), without which a contractcould not be validly concludedand if one of them was
94 Habachy,n. 1, supra,67ff.; Rayner,n. 71, supra,164ff. 95 Mejelle, Art. 706.
96

Ibid.,Art.837.

n. 7, supra,Vol. 2, pp. 31-32. 97 Mahmassani, 98 Al-Jaziri,n. 75, supra,Vol. 2, 397ff. to IslamicLaw (Oxford,1964, reprinted1966, 1979),p. 116. 99 Schacht,Joseph,Introduction Ibn 'Abidin, MuhammadAmin, Radd al-Muhrar'ala al-Durr al-Mukhtar(Dar al-Sa'adah, 00oo 1324h),Vol. 4, 531ff.

354

ARAB LAW QUARTERLY

lacking, there could only be the external form or similitude of a contract, but that contract would be non-existent in law. Such an act would be absolutely null and void. But, on the other hand, despite the presence of all the basic constitutive elements of a contract, one of them may be imperfect or vitiated by an initial weakness. That contract would then be only voidable, the defect of which may either be subsequently remedied, in which case the cause of relative nullity would disappear, or the person with whom rests the action to challenge the validity of the contract may choose to expose the defect, in which case the contract would be voided.101 It should be noted that Muslim jurists have classified contracts into three categories of valid (sahih), void (batil) and voidable (fasid). That division is demonstrated in Articles 106-109 of the Mejelle in the Chapter on sales. However, the rules which apply to sale also apply mutatis mutandis, to other commutative contracts. 102 Thus, Article 108 of the Mejelle defines a valid sale as a contract which is lawful, both "in itself' (dhatan, in se, or in its essence) and "as regards matters incidental thereto" (wasfan, in its qualifications). In view of Article 107, a "non-concluded sale" is regarded "as a sale which is void", and it makes "non-existent" and "void" contracts, interchangeable terms which equally stand for absolute nullity. In between the two categories of valid and void contracts stands the third category of voidable contracts. Article 109 of the Mejelle states: "A voidable sale is a sale which, while valid in itself, is invalid as regards certain external particulars". The constitutive elements without which a contract would be an absolute nullity and thus dissolved are the following:103 (1) The agreement of the parties which consists in a meeting of minds as expressed in an offer by one side and an acceptance of that offer by the other side; (2) The capacity of the parties. The contract of a child who has not yet reached the age of reason, or the contract of a person who is completely insane, is non-existent, or absolutely null and void;'" (3) The object of the contract must be in existence, and must be capable of being the lawful object of a transaction according to the Shari'a. We have seen above that wine and pork are not merchantable according to the teaching of the Shari'a, and consequently they cannot be objects of a lawful contract among Muslims; (4) The purpose or cause of the contract must be valid. To be valid under Islamic law, a contract must not have for its object the commission of an unlawful or an immoral act.

101

102 Habachy, Ibid. 104

n. 1, supra, p. 69.

'03 Ibid., pp. 69-70.

Mejelle,Arts. 361 and 362.

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

355

The causes which do not bring about the absolute nullity of a contract, but merely vitiate one of its elements and make it voidablefollow.105 Lack of legal capacity.In the case of contractswhere it is not certainwhetherthey or to his disadvantage, will be to the benefit of a minor of perfect understanding such contractsare concluded subject to the permissionof his tutor.106 A person interdictedfor prodigalityis also treatedlike a minor of perfect understanding.'07
Defective acceptance vitiated by constraint, error or fraud. Article 1006 of the

Mejelle states that contractsenteredinto as a resultof constraintare invalid.Error as to a desirablequality of the object of the contractmakes the contractvoidable. This is called in Islamic law "optionfor misdescription".'l0 Article72 providesto the effect that: "No validity is attachedto conjecturewhich is obviouslytaintedby error". Fraud is another cause vitiating the will of one of the parties to a commutative contract and making such contract voidable at the choice of the defraudedparty. Article 164 of the Mejelle defines fraud as cheating and Article 357 provides that: "If one of the two parties to the sale deceives the other, and is also proved to be present in the sale, the person so flagrantmisrepresentation deceived can cancel the sale". Termination by options The system of options (khiyaratpl. of khiyar)aimed at removingas much risk as possible and realising the fundamentalaspirationof Islamic law - the highest possible degree of certaintyin the rights and obligationsarising from a contract, that is to say, that a contractwill not be legally binding without ascertainingthe lawfuland voluntary equalityof countervalues.It often happensthat an apparently contract involves a latent flaw or defect unknown to the parties at the time of formation.'" It is not acceptable,in the Islamic legal system, to enforce such a defective agreement. Unless the defect is removed, the agreement cannot be binding. Ibn Taymyyah observes: "If proper fulfilment of obligations and due respect for covenantsare prescribedby the Law-giver,it follows that the general rule is that contractsare valid. It would have been meaninglessto give effect to contractsand recognizethe legalityof their objectives,unless these contractswere themselves valid".110 In order to lawfullyterminatesuch a defective and invalid after its agreement conclusion,the systemof options exists. The right of options is accorded by the Shari'a as a unilateral "choice" to cancel (faskh) or to ratify
Habachy,n. 1, supra,70ff. Mejelle,Art. 967. 1'6 107Ibid., Art. 990. 108 Habachy,n. 1, supra,p. 71. Saleh,n. 93, supra,57ff; HideyukiShimizu,n. 18, supra,p. 69. 109 110 Ibn Taymiyyah, Shaikh al-Islam Taqi al-Din Ahmad, Fatawa (Mabhathal-'Uqud), Vol. 3; quoted in Habachy,op. cit., and HideyukiShimizu,loc. cit.
105

356

ARAB LAW QUARTERLY

(imda')a contract."' If the option is to cancel,the effect is to renderthe situation as if the contracthad never existed, althoughthese acts are not void ab initioas in the case of contractstainted with nullity. The juristssimply categorisedthem as or revocation,therefore, valid legal acts subject to ratification.Until ratification the acts are non-binding(ghyrlazim)or suspended(mawquf).112 Islamiclaw recognisesa wide numberof optionswhichmay be dividedinto two broadcategories: parties (1) Those which are createdby the mutualconsent of the contracting affectingthe formationof the contract,such as the option of acceptanceor rejection within the contractualsession (khiyar al-majlis),the option of distinction (khiyaral-ta 'yin) and the option to defer payment within a
specified time limit (khiyar al-naqd);

(2) Those which are createdby operationof law affectingthe bindingforce of the contract, such as the option of fraud (khiyaral-tadlis),the option of inspection(khiyar al-ru'yah) and the option of defect (khiyar al-'ayb).113 Even though the systemof optionsin Islamiclaw is, to a certainextent, similar to the corresponding systemin modem law, the formeris moreextensivethan the is an optionnot so latter.For instance,the option of the session(khiyaral-majlis) of existence this in law. The modem option Islamiclaw shows easily acceptedby that the equity of a contract is more essential than the mutual agreement. Accordingly,the act of inspection or investigation,such as wearing clothes or riding a vehicle, is recommendedin order to ascertainthe equalityof counterin favourof the purchaser. Goodsand values.1"This Islamicsystemis remarkably of the purchaseror he has the right to servicesmust fulfil the properexpectation terminate the contract. It is noteworthythat the Islamic law of contract has since more than ten centuriesago.15 assumeda consumerprotectionistcharacter Thus, this idea of protectingthe weakagainstexploitation by the strongled to the that transactions should elaborationof a rule of generalapplication, commanding be devoid of uncertaintyand speculation,and this could only be securedby the intendedto be exchanged parties'havinga perfectknowledgeof the countervalues otherwisethe purchaser can use a properoptionfor as a resultof their transaction, a respectivereason116 to terminatethe contract.

of IslamicLaw on Contemporary 113 Rayner,ibid.;Kourides,P. Nicholas,"The Influence Middle Eastern Legal Systems: The Formationand Binding Force of Contracts",Columbia Journal of Transnational Law, Vol. 9(2) (Fall, 1970),p. 407. 114
115 116

"' Schacht, n. 99, supra, p. 152. 112 Sanhuri, n. 4, supra, Vol. 4, p. 216; Rayner, n. 71, supra, p. 305.

Hideyuki Shimizu, n. 18, supra, p. 70. Coulson, n. 2, supra, p. 67. Hideyuki Shimizu, n. 18, supra, p. 71.

DISSOLUTION

OF CONTRACT IN ISLAMIC LAW

357

Termination by non-approval to contingent contracts Islamic law recognisescertainnon-bindingcontingentcontractswhose effects are until ratification suspended(mawquf) by the partywho has been grantedthe option to terminatethe contract.It is pertinentto note that two things, authorityover the for the creationof a objectand authorityof disposition,area necessaryprerequisite relationshipbetween the contractingparty and the object of the contract. In the a contractmay be validly concluded, absence of either of these two requirements, however, it would not be effectively enforced, rather its effects would be suspended. The authority of a contractingparty over the object of the contract may be realised by a proof of his right to ownershipover it or of his capacityas representativeof the owner. The right of a third party should not be attachedto the object of the contract, and thus, the non-owner or, in other words, the unauthorised (fudulh)person has no authority over the object. Therefore, the contractconcluded by an unauthorisedperson is valid for he has the capacityto conclude it, but it is contingent due to his lack of authorityover the object, and consequently it would not be effectively enforced without the approval of the In such a situation, if the owner approvesthe transaction,the contract owner.117 turns enforceableand if he does not approve,it becomesterminatedas if there was Thus the mawqufcontract also arises in cases of right to no such contract.118 transferownership, such as where the unauthorisedagent (fuduli)does not have full power to contract,such as in contractsof pledge or hire;and where capacityis affectedand awaitsratificationby a guardian.Becauseof their effects, the mawquf contractsare categorisedas voidable(fasid).However,the Shafi'i juristsrejectthe categorisationof mawqufcontractsas fasid and treat them as void (batil). They consider that the elements of right to transferownership and capacity are the essential elements of the contractitself and not elementsof its enforceability.The contractsare invalid(ghyru Hanafi jurists,on the other hand,hold that the mawquf the categoriesof batil and between is somewhere this and category placed sahih) the contract which in Sanhuri the situations may be suspended categorises fasid.119 of effects into two categories:lackof capacityand lackof object.The first category covers contracts of rational (mumayyiz)minor, rationallunatic (m'atuh),stupid (safih), inadvertent(dhughaflah), servant and, in the opinion of Zufar, also the person under duress, etc. The second category covers the unauthorisedagent (fuduli),the vendorwho sells the commoditya secondtime withoutthe approvalof the purchaser, usurper (ghasib), representative(na'ib) and the agent of the representative when the representativetransgresses the customary limits of the owner of a mortgagedobject or hired object, etc.120 representativeness,

117

Sanhuri, n. 4, supra, Vol. 4, p. 137. 4, supra, Sanhuri, Ibid., p. 194.

11s Mahmassani, n. 7, supra, p. 489. 119 137ff. n.

120

358

ARAB LAW QUARTERLY

Termination for breach The generalprinciple is that all valid contractsmust be performedspecifically. The contractingparties should oblige each other to perform the contractual obligation by force through judicial order (qada').Thus, under the traditional Islamic law, it is contended, specific performanceand/or the equivalent in monetary compensation(damages),were the only two remedies available for failureto performa valid contract.Therefore,the generalprincipleof termination as a consequenceof breach,as recognisedtoday, was not offered by the Islamic legal tradition.The FederalCourtof the United ArabEmirates(UAE) observed that, "the fundamental principleof classicalIslamiclaw is that contractsare to be andthe Courtmust enforcetheirterms.Islamiclaw did not performed specifically; allowtermination for breach.The aggrieved partyhadno optionbut to requestfor of a valid contractis the specific performance.12' However, while performance generalrule and while the essence(asi) of agreedupon obligationsis the substance of such performance, there remain exceptional circumstancesin which the is excusedand alternative recourseis resortedto in compliance with performance the legal maxim, "whenthe generalrule is cancelled,recourseshould be made to
an alternative rule (idha batala al-asl yusaru ila' al-badl)". Furthermore, it is a

of his partof the corollary right of a contracting partyto abstainfromperformance of his part.'22 obligationin abstentionof the otherpartyfromperformance Thus, if one party breaches his contractualpromise, the aggrievedparty is entitled to terminate the dishonoured contract.The termination of a contractin this contextis as one failure to form of for regarded remedy perform('adamal-tanfidh).'2This has been emphasisedby the Arab courts.The EgyptianCourt of Cassation,for example,referringto Article 147 of the EgyptianCivil Code, indicatedthat "this Article provides for the principle of terminationas a remedy for breach of a synallagmatic contract,a principlewhich this Courtupholds. The right to effect - is somethinginherentin everycontractwhich and hence termination discharge creates reciprocalobligations, even in the absence of an agreed term to that effect".'24The Arab courts have used the terms "fault", "breach"and "nonperformance" ('adamal-tanfidh)interchangeably. Moreover,it emergesthat the terms "breach"and "non-performance" are used more often than "fault".'25 Adnan Amkhan observes that contractualfault is the failure of one of the partiesto performhis contractual contracting obligation,whateverthe reasonfor such failure;and contractual liabilitycannotbe negatedby disprovingfault.Thus, non-performanceof a contractualobligation and contractualfault is synonymous.'26
Adnan Amkhan, n. 13, supra, 17, at 17-18. Mahmassani, n. 7, supra, p. 492. 123 Adnan Amkhan, n. 13, supra, p. 18ff. 124 See Case No. 1919, 22/12/1980, reproduced in Mahkamat al-Naqd (1980), Vol. 2, p. 2082 at p. 2087. 125 Adnan Amkhan, "The Concept of Fault in the Arab Law of Contract" [1994] ALQ 171, at 177. 126 Ibid., p. 175.
122

121

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

359

While the right to terminatethe contract arises when one of the contracting parties fails to perform his contractualobligation, the nature and scope of nonperformanceor breach depends largely upon the type of contractualobligations involved. These fall into two differentcategories127 which will now be looked at.
1. Obligations requiring the achievement of a specific result or goal

In this kind of contractualobligation,an aim prescribedin the contractmust be fulfilled. Failureto achievethe saidgoal in itself constitutesbreach.For example,a seller'sobligationis to transferthe sold goods to the buyer.This obligationwill not be fulfilled unless the goods have been delivered.'12 The defendantcannotnegate his breachby claimingthat he has done his utmost to fulfil his obligationor that he has committedno fault.
2. Obligations requiring adoption of a particular standard of care

In this categoryof contract,if the obligormanagesto exercisethe standardof care which is requiredof him as a reasonableman, he will have fulfilled his obligation irrespectiveof whether the ultimate aim of the contracthas been achieved. The general rule of obligation to employ a standard of reasonablecare has been mentionedexpresslyin Arabcivil codes. For example,Articles211, 214, 212, 290, UAE, 358, 351, 172 and 107 of the Egyptian,Libyan, Syrian,Kuwaiti,Jordanian, Yemeni, Algerian and Qatari Civil Codes respectivelyprovide for this principle and they read as follows: "an obligor who is requiredto preservea thing, or to manage it, or to act with prudence in performanceof his obligation, fulfils his thereofthe careof a normalperson, even obligationif he bringsto the performance if the intendedobject is not achieved.This will apply in the absenceof agreement or law to the contrary". Thus, breachof a contractcan take two differentforms:eitheran objectiveor a subjectiveone. In the former,a breachwill occurif the aim behindthe contracthas not been achieved;in the latter, it will occur if the obligorhas not taken the care of whetherthe subjectmatter requiredof a normalreasonableperson,irrespective of the contracthas been fulfilled.129 Before the right to the remedy of terminationfor breach can be invoked by a contractingparty, the following prerequisitesmust be present.130
The contract must be of a synallagmatic nature. The remedy of termination for

breach is only applicableto synallagmatic contracts,in other words, to contracts which give rise to reciprocaland interdependent obligations,such as contractsof
Ibid., 177ff. See The Syrian Court of CassationJudgment:Case No. 231/964, 4/3/1964, reproducedin Ma 'allatal-Qanun,Vols. 3-5, p. 428. AdnanAmkhan,n. 125, supra,at p. 178. 19a 130 See Sanhuri,n. 4, supra,Vol. 6, pp. 260-261;AdnanAmkhan,n. 13, supra,20ff.
128

127

360

ARAB LAW QUARTERLY

The reasonfor limitingthe applicationof the sale, partnership,hire and lease.131 contractsis that it is only in the contextof of to termination remedy synallagmatic such contracts that terminationwill serve one of its main purposes: that is, releasing the aggrieved party from his obligation following the other party's breach. In unilateral contracts, on the contrary,the obligee will not gain any benefit from demandingtermination for the obligor'sfailureto perform;ratherit would normally be in his interest to insist on the contract being duly performed.132 There must be a real breach.The most importantrequirementof all for the of the remedyis that a breachof contractmust haveoccurred.Neither availability unlessthe otherpartyhas failedto of the contracting partiescan claimtermination - whethercomplete,or carryout his obligations.The degreeof non-performance partialor defective,or in the formof delay- wouldnot affectthe aggrieved party's The breachshouldbe, however,broughtto initial right to invoke termination.'33 the notice of the partyin default.The SyrianCourtof Cassation held to the effect as a breachunlesssuch failurehas that "the failureto performwill not be regarded been brought to the attention of the defendant,otherwisethe plaintiff will be consideredas having toleratedsuch a failure and having sustainedno loss".'34 Notification is, however, not alwaysnecessary.For instance,if one contracting party had already expressed his unwillingness to perform or to continue performinghis obligation,notifyinghim wouldnot be necessary.135
Theparty seeking terminationmustnot himselfbe in default. A contracting party who

invokestermination for the failureof the otherpartyto performshouldnot himself be in breachof his obligation.The EgyptianCourtof Cassation ruledthat:"to rule on terminationit is not enough that the contractis reciprocalin natureand the is attributedto one of the contracting non-performance parties;it is importantas well, that the party demandingterminationis ready to performhis side of the obligation.Thus, if the claimantis himself in breach,he should not be granted terminationfor the other party'sfailureto perform".'36
Ability to restore the status quo ante. Some writers and courts have added that the

party invokingterminationshould be able to restorethe statusquoante.137

131 Sanhuri, Al-Wasitfi Sharh al-Qanun al-Madani, n.d., n.p., Vol. 1, pp. 698-699.
132 133

Adnan Amkhan, n. 13, supra, p. 21. Zaki, Mahmud Jamal al-Din, Al-Wajiz fi al-Nazariyyat al-'Ammah li'l-Iltizamar, n.p., 1978,

Muhamun, 1982, No. 6, p. 702 at 703.

pp. 404-405. 'm See Case No. 197, 20/3/1980, reproduced in Majallat al-Qanun, Nos. 1-4, 1980, pp. 10-11. 135 See Case No. 392, 31/5/1956 of the Egyptian Court of Cassation Judgment, reproduced in Mawsu'ah al-Thahablyyah fi Qada'Mahkamat al-Naqd, Vol. 7, p. 810. 136 Case No. 148, 8/4/1969, ibid., p. 823. Case No. 47/1975, reproduced in alDivision) Judgment; 137 Kuwaiti High Court (Commercial

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

361

DISSOLUTION

FOR IMPOSSIBILITY
PERFORMANCE

OF CONTRACTUAL

The central idea of impossibility of contractual performance which generallyaffect the legal Muslim juristshave categorisedthe circumstances capacityof a person, or interferewith the properlegal effect of a man's actions in particularcases, into two classes: (1) Samawi or circumstanceswhich are the work of Providence,that is, those which are beyond the control of man; and that is, those which are createdby man.138 (2) Maksubah, At this juncture,we are concernedonly with the first category,i.e., the work of Providence, which is used in differentterms by differentjurists, and in different legal systems. This category of situation leads to a fundamental change of circumstance, which in turn renders the performance of a contract totally impossible, for although the equilibriumof performancewas maintainedat the time of entering into it, it was completely destroyed later on by such changed whichgives rise to dissolution circumstances. Generally gharar(riskor uncertainty of contract)is consideredto be built at the inceptionstage of the contract.In the notion of changedcircumstances, however,gharararisesafterthe formationof the whichrendersthe performance contract.The notion of "changein circumstances" of a contractimpossible,is defined in Islamiclaw "as a right to dissolvea contract when unforeseen changes of circumstancemade the contractualobligation more burdensome and difficult than expected at the time of the formation of a 139 contract". in the common law There is a similarconcept to the doctrineof "frustration" a which in is used to situation "which indicate a contracting party,through system outside his control,finds the circumstances the arisingof novel and unanticipated performanceof his contractualobligationseither to be impossibleor to entail an unforeseenburdenin the way of extraworkor expenditure".140 Coulsoncontends of traditional texts that there is not to be found in the authoritative Shari'alaw any is unrealisticas contention This exposition of a generaldoctrineof frustration.'41 the Islamic notion of impossibility of performance(istihalahal-tanfidh) due to changed circumstancesis as wide as the common law doctrine of frustrationis subsumed in it simply as a single rule. Adnan Amkhanmaintains, "it is worth noting that traditionalIslamiclaw recogniseda rule which is verymuch akinto the common law concept of frustration of purpose".142 Thus, Article 443 of the
138 'Abdur Rahim, Sir, The Principles of MuhammadanJurisprudence (Lahore, All Pakistan Legal

Decision, 1977),219.
139 140

in Arab ContractLaw" 142 Adnan Amkhan, "Force Majeure and Impossibilityof Performance [1991] ALQ 297, at 299.

Shimizu, n. 18, supra, pp. 77-78. Coulson, n. 2, supra, p. 82. 141 Ibid., p. 83.

362

ARAB LAW QUARTERLY

Mejelle provides that: "if any events occurred whereby the underlying reason for the conclusion of the contract disappears so that the contract cannot be performed, such contract is rescinded". Similarly, Article 478 reads: "if the benefit to be obtained from the thing hired is entirely lost no rent is payable". Hideyuki Shimizu shares the view that the Islamic law concept is much more extensive than that of the modem common law, that is, a contract can be rescinded in Islamic law even because of a change in personal circumstances." 43This is best illustrated with reference to a specific case in Hedaya: If a personlet to hire a houseor shop, andafterwards became poorandinvolvedin debtto a degreewhich he is unableto dischargebut by the price of the house or shop, the Kazee of hire,andsell the placefor payment of the debt;because (judge)must dissolvethe contract in the endurance of the contractthe lessorsustainsa superinduced injurynot incurredby the contract,... whichsuperinduced injury,in this instance,is thatthe Kazeewill otherwise seize and imprisonhim on accountof the debt.144 This notion of Islamic law is never embraced by the theory of frustration in the modem common law, and it is clearly outside the realm of the modem concept.'45 Mahmassani uses the term "Misfortune from Heaven" ('afat samawiyah)for the causes rendering the performance of contractual obligations impossible. He maintains that, when an agreement for the sale of a fruit crop has been reached, delivery may subsequently be rendered impossible by "misfortune" which destroys the crop, such as rain, cold, drought or wind. Such a "misfortune" is generally restricted to natural phenomena which are not the result of any human activity, although some jurists included in the definition civil disorders, trespass, theft and suchlike.14 The "Misfortune from Heaven" is also called in the common law "Act of God" which has been defined by Lord Westbury LC as: "Circumstances which no human foresight can provide against and which human prudence is not bound to recognise the possibility"."14 Sanhuri picks up the broad term "foreign cause" (sababajnabi) under which he brings all the categories of events which allow a defendant to claim to be exonerated from liability on the ground that the failure to perform is not attributed to him but rather to some external factors.'48 "Foreign cause" denotes a circumstance or an occurrence which breaks the causal link between breach and loss and it has been defined as an event which is not within the power of the contracting parties to control.149Under this broad title he brings the discussion of "quwah qahirah" and "'afat samawiyah". The term quwah qahirah or quwah alqanun is also used by Rayner who maintains that the Islamic law concept of quwah
143
145
146 147

Shimizu, n. 18, supra, p. 89.

Shimizu, n. 18, supra, pp. 89-90. Mahmassani, n. 7, supra, pp. 498-499; ibid., pp. 83-84. See Tennet v. Earl of Glasgow (1864) 2M. (H.1.) 22. 148 Sanhuri, n. 4, supra, p. 191. 149 Hamzah, Mahmud Jalal, "Hal Y'ani Thubut al-Sabab al-Ajnabi In'idam al-Khata' fi Janb alMudda' 'alaihi", Al-Muhamun (1985), No. 5, p. 606 at 611.

144 Hamilton, Charles, The Hedaya (Lahore, Premier Book House, 1982), p. 511.

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

363

and it is somewhatwider than the qahirahcorrespondsto the termforce majeure is a well-rooted Western concept of frustration.150 In fact the termforce majeure doctrine in the civil law system. Rayner contends that the Shari'a recognises basicallyany "Act of God", or unforeseenconditionas comingunderthe ambitof force majeure (quwah qahirah), and this includes any unforeseen changes in circumstanceswhich are outside the controlof the obligor,and which throughno fault of the obligor,may constituteunfairloss or harmto the affectedparty.Thus, a "MisfortunefromHeaven"such as rainor cold or droughtwhich destroysa crop and therefore renders delivery of it impossible is regardedas force majeure.151 Thus, for example,a contractorin a Muslim jurisdictionhired undera contractof service to dig a well may rescind the contractshould he strikerock after the first few feet of digging. Similarly,the lessor may terminatea lease to his propertyat any time should there occur any change in his financialposition which requires him to sell the property;or any change to his circumstances,for instance, if he caused by the intervening needs to migrate.152 In Islamic law, the force majeure impossibility renders the contract invalid for, however, only as long as that impossibility exists. When the force majeureceases, the contract redeems its validity and may be enforced.153 There is yet another doctrine prevailingin modem Arab contract law called "nazariyyah al-hawadith al-tari'ah" or "nazariyyat al-zuruf al-istithna'iyyah" (hereinafter referred to as the doctrine of intervening contingencies), which signifies occurrences which radically disturb the equilibrium of a contractual obligation,makingthe performance excessivelyonerousfor one of the contracting parties.'54However, major differences do exist between force majeureand the principle of intervening contingencies, although they share certain common features.The following distinctionsbetween the two principlescan be drawn:55s (1) For an event to qualify as an interveningcontingencyit should affect (at least in the contextof privatelaw contracts)a numberof people (i.e., it must be generalin character), can be particular in nature,in whereas forcemajeure other words, it can affect a single contractingparty; (2) Force majeure makes the performance of the contractual obligation impossible, whereasinterveningcontingencieslead only to severehardship if performanceis allowed to continue in its originalform; if proven, will terminateor suspend the contract,whereas (3) Force majeure, will basically makeit possiblefor the courtto modify intervening contingencies the onerouscontractual is not ruledout); suspension obligation(although
Rayner, n. 71, supra, p. 259. Ibid., 259-260; Mahmassani, n. 7, supra, pp. 498-499; Coulson, n. 2, supra,pp. 83-84; El-Hassan, 'Abd El-Wahab Ahmed, "Freedom of Contract, The Doctrine of Frustration, and Sanctity of Contracts in Sudan Law and Islamic Law" (1985) 1 ALQ, p. 51, at 58. 152 Id., p. 260; Coulson, ibid., pp. 85-86, 91; Sloane, "The Status of Islamic Law in the Commercial World", International Lawyer (Fall, 1988) 22(3), p. 747. 153 Amin, Islamic Law in the Contemporary World (Glasgow, 1985), p. 51. 154 Adnan Amkhan, n. 16, supra, p. 258. 155 Adnan Amkhan, n. 142, supra, 308.
150 151

364

ARAB LAW QUARTERLY

does not fall within the domainof public order as does the (4) Forcemajeure principleof interveningcontingencies. From the above discussionit is evident that even though there are differences betweenforcemajeure and the principleof intervening nevertheless, contingencies, of performance". both are coveredunderthe umbrellaof "impossibility It is also to adherence different doctrines with to note that little pertinent notwithstanding or no variation in different legal systems such as the doctrines of changed frustration,Act of God, Misfortunefrom Heaven, foreign cause, circumstances, and interveningcontingencies; force majeure they all share,to a certainextent,the same effect of prematureterminationof the contractand thus are all subsumed of performance". under the broaderlegal doctrineof "impossibility
Specific causes of impossibility Some modem legal writers classify the specific causes of impossibility of performing a contract generally under the Islamic law theory of al-darurah alshar'iyyah (legal necessity). However, the theory of necessity applies principally in the field of ritual religious obligations; therefore, it is pragmatically expected to deal with the specific causes, instead of inferring a general rule; more specifically with their practical application in the circumstances that may affect the performance of contracts. Samir A. Saleh gives an account of three such specific causes156which will be looked at below. Al-'udhr (excuse) The traditional Islamic law doctrine of al-'udhr was mainly recognised by the Hanafi school and subsequently applied in the Mejelle exclusively to contracts of lease and services. Al-'udhr may be invoked in case of a contingency which renders the continuing performance of a contract harmful for one of the contracting parties. There are three types of 'udhr:the first arises on the part of the lessee, e.g., his bankruptcy or change of profession; the second is that which might affect the lessor, e.g., incurring debts forcing him to sell the leased property to free himself; the third is that which might affect the leased object.57 For example, Article 443 of the Mejelle provides that: "If any event happens whereby the reason for the conclusion of the contract disappears, so that the contract cannot be performed, such a contract is terminated". In addition to the above provision, the Mejelle provides the following examples: (i) when a cook is hired for a wedding party, if one of the spouse's dies, the contract of hire is terminated; and (ii) if a man suffering from toothache makes a contract with a dentist to remove his tooth for a certain fee, and afterwards the pain ceases, the contract of hire is terminated.
156 Saleh, Samir A., "Some Aspects of Frustrated Performance of Contracts Under Middle Eastern Law", International and ComparativeLaw Quarterly, 1984, Vol. 33, p. 1046 at 1047ff. '57 A1-Zuhaili, n. 25, supra, p. 302.

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

365

The rationale behind the application of the principle of al'udhr has been explainedthus: "if a contract,in the event of 'udhr,was still consideredbinding, unwarranted harm,which was not envisagedin the contract,would be inflictedon one of its parties".158 As far as the legal effect of al-'udhris concerned,al-Kasani explains: "First and foremost, the potential effect of al-'udhr is first to be examined; if it leads to legal impossibility of performance(by rendering the continuationof performance unlawful)the lease is terminatedipsofacto; however, if it only resultsin the inflictionof harmwhich was not envisagedin the contract,a judicial ruling or agreement of the parties is needed in order to effect the 59 termination".
Al-jawa'ih (natural disaster)

The Malikis and Hanbalisrecognisethe relevanceof "naturaldisaster"orjawa'ih (pl. ofja'ihah) to contractsfor the sale of cropsand fruits on trees. The Hanafiand Shafi'i schools do not recognise such a doctrine since they do not recognisethe validity of the sale of crops and fruits on trees. Accordingto the Maliki school, aljawa'ih is an irresistibleoccurrence,such as cold, drought,plant diseaseand locust swarms,which reducesor destroysthe value of the sold crops or fruits beforethey The Maliki jurists, however, differed with regard to whether are harvested.160 human acts such as war might qualify as jawa'ih; and the prevalentview of the majority is that they could. Likewise, the Hanbalis defined al-jawa'ih as an epidemicbeyond humancontrol,e.g., high winds, droughtand other Acts of God. Both schools acceptedthat if all crops were destroyed,the sale contractwould be terminated.161
Currencyfluctuation

Currencyfluctuationis anotherspecific cause of impossibilityof performanceto be found in contracts of sale, loan and lease. In none of the schools does a to be made fluctuationin the value of gold and silvercurrencyallowan adjustment to the price. Wherethe value of a currencyother than gold and silver stipulatedin to the contracthas been changed,the Hanafischool does not allow any adjustment of the value the allow writers made. some be recent Hanafi currencyin However, of the conclusion date at the value the relationto gold to be adjustedaccordingto contract of sale will be a of the contract. Where the currencyfalls into disuse, without any possibility of rescinded, but a contract of loan will remain valid adjustment.The Hanbali school, however, strikesa distinctionbetween currency
158 Al-Kasani, n. 31, supra, Vol. 4, pp. 197-201; Adnan Amkhan, n. 16, supra, p. 260. 159 Ibid. 160 Al-Dardir, Abul Barakat Ahmad bin Muhammad bin Ahmad, Al-Sharh al-Saghir 'ala Aqrab almasalik 'ila Madhhab al-Imam Malik (1974 edn), Vol. 4, pp. 241-247. 161 Ibn Qudamah, Muwaffaq al-Din, Kitab al-Mughni (Egypt, Matba'ah al-Manar, 1972 edn), Vol. 4, p. 216.

366

ARAB LAW QUARTERLY

devalued by the act of the ruler and currency whose value drops as a result of an economic condition. In the first case, the party at detriment can claim the value of the currency in gold calculated at the date of the conclusion of the contract; however, in the second case, where the drop in value is the result of economic circumstances regardless of the ruler's intervention, no adjustment can be made.162

Constituent elements of the doctrine of impossibility

The principle of supervening legal or factual impossibility cannot be applied unconditionally. The legal writers have worked out a number of constitutive elements which qualify an event as supervening to render performance of a contract impossible. These elements are also adopted by Arab civil codes and applied by the courts. The constituent elements will be discussed below.163 (i) The event must be exceptional. An event is held to be exceptional when its occurrence is infrequent, irregular or rare.'" The Arab civil codes give no example of an event which might fall into this category. This is because the question whether an event is of an exceptional nature can only be determined according to the circumstances of each case. The Explanatory Memorandum of the Egyptian Civil Code, however, mentions certain events which may be regarded as exceptional such as an earthquake, war, an unexpected strike, or a sharp rise in the price of certain commodities. Thus, for example, it was held that high winds, thunder and heavy rain in Damascus during the second half of the month of April, leading to the destruction of crops, qualified as an exceptional event.165 (ii) The event must be unforeseeable.The event must not have been anticipated or foreseen at the time the contract was made. An event is unforeseeable if at the time of the conclusion of a contract there are no immediate signs or particular circumstances which make it reasonably likely. Thus the Syrian Court of Cassation, for example, held that, in order to consider heavy rain as a supervening circumstance it must be established that the amount of rain in question was unforeseeable. 66To affirm this line of interpretation, the test which determines the element of absolute unforeseeability has been held to be that of a reasonable and diligent man. That is to say, the event must not have been foreseeable by the contracting parties, or by a reasonable and diligent person who might have been in the contracting parties' position.'67
Saleh, n. 156, supra, p. 1048. See Adnan Amkhan, n. 142, supra, 301ff.; n. 16, supra, 263ff. 164 See Kuwaiti Court of Cassation Judgment: Case No. 1265/1970 (Commercial), 10/12/1970, reproduced in Majallat al-Qada'wa'l-Qanun, 1970, No. 1, Year 3, p. 53. 165 See the Syrian Court of Cassation Judgment: Case No. 581, 9/4/1979, reproduced in Tu'mah alal-Madani al-Surif (1990), Vol. 1, pp. 636-637. Taqnin 6 See Case No. 116/1983, 4/6/1983, reproduced in al-Muhamun, (1983), No. 11, p. 1246. 167 Mamun, 'Abd al-Rashid, "'Ilaqat al-Sababiyyah fi al-Mas'uliyyah al-Madaniyyah", Majallat alQanun wa'l-Iqrisad (1979), Nos. 3-4, p. 581 at 675.
163

162

DISSOLUTION

OF CONTRACT

IN ISLAMIC

LAW

367

(iii) The event must be unavoidable. The unforeseeable event must also be unavoidable in the sense that it must not have been possible for a party claiming a supervening circumstance to have avoided or prevented the occurrence of the event or its consequences by taking all necessary steps to stop the event from occurring or to prevent its consequences. The Kuwaiti Appeal Court (Administrative and Commercial Division) adjudicated in a case where goods belonging to the defendant were destroyed by fire while still in the possession of the customs department. The latter contended that it was not liable to damages because the fire in question was an event of force majeure.This claim was rejected, however, by the Court on the ground that the said fire could have been avoided by the customs department if appropriate precautions and preventive steps had been taken. The Court concluded that a cigarette stub left near the goods started the fire, and that this could have been avoided. Therefore, the said fire was not a supervening event of force majeure.168 (iv) The event must occur duringperformance.Article 198 of the Kuwaiti Civil Code explicitly provides that the supervening event should occur while the contract is still being performed. There is no such express provision in other Arab civil codes. However, the requirement is, according to legal writers and courts, an inherent logical factor in other Arab jurisdictions. For example, the Egyptian Court of Cassation stated that Article 147(2) of the Civil Code covers the whole range of contracts where a period of time exists between their conclusion and execution.'69 (v) The event must renderperformanceimpossible.An essential element of an event to be considered as supervening is that it must make the performance of the affected contract impossible. The Jordanian Court of Cassation ruled that, "the increase in commodity prices because of war and disturbances is not to be considered force majeure, unless such events make the performance of the contract impossible.170 (vi) The event must be general in character. The supervening event should also be general in character, that is to say, it should affect not only the contracting parties but also a wide spectrum of people. Thus, for example, the Kuwaiti Court of Cassation held that: "what is meant by general is that the exceptional event should not only affect one of the parties to a contract, but also a number of people, or a certain category of people such as farmers, or the producers of certain products or their traders".171

168 Case No. 188/1982, 22/3/1982, reproduced in Majallat Idarat al-Fatwa al-Tashri'i (1983), No. 3, p. 307 at 310. 169 Mausu'ah al-Thahabiyyah fi Qada' Mahkamah al-Naqd, Vol. 3, pp. 110-111. 170 Case No. 357/78, 28/11/1978, reproduced in Majallat al-Muhama (1979), No. 3, p. 411 at 419. 171 Case No. 1265/1970 (Commercial), 10/12/1970, reproduced in Majallat al-Qada' wa'l-Qanun (1970), No. 1, p. 53.

368

ARAB LAW QUARTERLY

Summary on the fulfilmentof contractual Islamiclaw lays the utmostimportance obligations as a generalrule in compliancewith the principleof sanctityof contractwhich is deeply rootedin the revealedsourcesof Islamiclaw. Along with this generalrule, Islamic law also simultaneously providesfor variousways to removecontractual obligationsin situationsof inevitabledifficultiesandnecessities.Thus, the concept of its performance is not aliento of dissolutionof contractdue to the impossibility Islamic law as sometimesalleged. The legal principlesand rules recognisingthe impossibility doctrine in Islamic law vary, as have been seen accordingto the in which,they areto apply. natureof the contractto which, and the circumstances It has been made clear from the above examinationof various circumstances underthe Islamiclaw and performance leadingto the impossibilityof contractual from the comparablelegal doctrinesin common law that Muslim jurists have formulated according to the philosophy of their own great system of law a doctrinewhichhas its own specialoriginsin the revealedsourcesof comprehensive Islamic law. It is, therefore,my conclusionthat the doctrineof impossibilityof in Islamiclaw effectivelyserves the very purposeof its contractual performance transactions. of cause for the existence; justiceand fairnessin contractual