Requirement For Valid Contract To Shariah Law
This is somewhat similar to
The definition of contract in Islamic point of view is an expression of the
matching between a positive proposal made by one of the contractors and
the acceptance of the other contractor in a way which has an impact on the
subject of the contract. Shariah commercial law in islamic legal term known
as fiqh muammalat, constitutes an important branch of law dealing with
issue of contract and the legal effects arising from a contract that can be
valid, void, or avoidable contract. For a valid contact in shariah law, certain
conditions are to be met. It can be appears as a valid contract bases on
several elements of valid contract which are offeror and offeree, offer and
acceptance, and the subject matter and the consideration. As for the parties
to a contract, they must be legally capacity to enter the contract. The
capability to transact in Islamic law is measured by two aspects, namely
prudence and puberty.
The first element of valid contact in shariah law is offeror and offeree. As for
the parties to a contract, they must be legally competent to enter into a
contract. The competence to transact in Islamic law is measured largely by
two aspects, namely prudence and puberty as revealed in surah al-Nisa
verse 6 "Observe the orphans through testing their abilities until they reach
the age of marriage; then if you find them capable of sound judgement, hand
over to them their property ". The most important part of each party is the
possess capacity. It has been describe with capacity (ahliyyah) according to
Shariah Islamiyyah. Therefore, the Islamic scholar defined the capacity as a
quality, which makes a person qualified for acquiring rights and undertaking
duties and responsibilities.
The second element of valid contact in shariah law is offer (ijab) and
acceptance (qabul). Offer means a specific action that reflects consent or
willingness of its maker that presumed from the word first uttered by one of
the contracting parties. Offer may be verbal or in writing. Under shariah law,
word qabul (acceptance) is used to represent a statement uttered indicating
assent to the ijab(offer). Muslim Jurist takes two different approaches
interpreting qabul. The majority view is that qabul is made by the buyer or
the person to whom the subject matter of the contract is addressed
regardless as to whether this comes first or later. Whereas the Hanafi school
holds a more flexible approach when qabul is defined as the word uttered
later corresponding to the terms of a subsisting later. And it may be
expressed by either the seller or the buyer.
common law. Offer and acceptance also may be concluded by means of
representatives or modern communication systems such as the telephone,
telex, fax, e-mail and letter.
The third element contract in the shariah law is subject matter (mahal
al-aqd). Mahal al-aqd must be mal (property or wealth) mal is defined as
something which can be secured for use at the time of need. The term mal
here is generally translate as property and the word property is applicable
only to objects which have a perceptible existence in the outside world that
is to say things sold which is a thing fixed and individually perceptible as
designated at the sale. A contract has to have a place or reference (mahal
al-aqd) which is the subject matter of the contract. The place of reference in
contract is its subject matter which is the place of application of its rule and
which does not go against its purpose. Islamic law focused on the
lawfulness, existence, deliverability and precise determination. Lawfulness
requires that the object must be lawful, that is something, which is
permissible to trade and must be of legal value that is, its subject matter and
the underlying cause sabab" must be lawful. The parties to a contract must
legally own the object qabd". The issues of existence presuppose that the
object of a contract must be in existence at the time of contract. The object
must be capable of certain delivery and it must be determined precisely as to
its essence, its quantity and its value. According to
Islamic jurisprudence, the subject matter of a contract could be corporeal
property as in granting sale and mortgage and benefit as in rent. In case the
subjects nature was not of the kind that admits this kind of transaction, then
the transaction and the contract are nullified. Thus, a contract involves sale
of endowed property is nugatory, albeit a contract involving rent of such
property is correct and acceptable. There are several conditions for subject
matter; (i) the subject matter must exist, (ii) the subject matter can be
delivered, (iii) the subject can be ascertained, (iv) suitability of the subject
matter.
As for the consideration of price, Islamic law does not restrict it to a
monetary price, but it may be in the form of another commodity. The Islamic
prohibition against uncertainty requires that the price must be in existence
and determined at the time of the contract and cannot be fixed at a later date
with reference to the market price, nor can it be left subject to determination
by a third party.
The fourth element of valid contract in syariah law is legal capacity
(ahliyyah). Capacity is one of the elements of a contract for the purpose of
acquiring legal rights and mutual benefits and to facilitate the imposition of
the obligations on the parties. The right to contract and the obligations can
only exist where there is capacity to contract. In syariah law, no person can
validly conclude a legal transaction without first having attained physical and
intellectual maturity that being the equivalent of majority to enjoy full
capacity, a person, should attain physical puberty and enjoy sound judgment
known also as prudence in his or her judgment.
Based on the requirements for a valid contract that had stated earlier, there
are some examples of cases that related to sharia law.
Nash V Inman (1908) 2 KB 1
Facts
Nash is a tailor who had entered into a contract to supply Inman who is a
Cambridge undergraduate student with among other things, 11 fancy
waistcoats and he was a minor. Unfortunately for the tailor, however, it was
further decided that they were not necessary, as he already had sufficient
clothing that from his father. When Nash claimed the cost of these clothes
Inman wanted to rely on lack of capacity and succeeded at first instance.
Minors are only under a legal obligation to pay for things necessary for their
maintenance although even then they will only be required to pay a
reasonable price for any necessaries purchased. So, no contract was
enforceable.
Held (Fletcher-Moulton LJ)
An Infant, Like A Lunatic, Is Incapable Of Making A Contract Of Purchase In
The Strict Sense Of The Words; But If A Man Satisfies The Needs Of The
Infant Or Lunatic By Supplying To Him Necessaries, The Law Will Imply An
Obligation To Repay Him For The Services So Rendered, And Will Enforce
That Obligation Against The Estate Of The Infant Or Lunatic.
The Defendants Father Proved The Infancy, And Then Proved That The
Defendant Had An Adequate Supply Of Clothes, And Stated What They
Were. That Evidence Was Un-Contradicted. Not Only Was It Not
Contradicted By Any Other Evidence, But There Was No Cross-Examination
Tending To Shake The Credit Of Contradicted Evidence The Judge Came To
The Conclusion."
[(Julie Clarke). (2010). Retrieved From.
Http://Www.Australiancontractlaw.Com/Cases /Nash.Html ]
Bell V Lever Brothers Ltd [1932] AC 161 December 15 1931
Facts
This case is about the mistakes that have done by Lever Brothers Ltd. Bell
was managing director of a Nigerian subsidiary of Lever Brothers. The
company was engaged in a restructuring of its subsidiaries and wished to
terminate Bells employment. Bell agreed to resign in return for a golden
handshake of 30,000. The payment was in part recognition of the past
services rendered by Bell.
After His Resignation, Lever Brothers Discovered That Bell Had Been
Unlawfully Engaged In Speculative Activities On His Own Account, Which
Would Have Entitled Lever Brothers To Dismiss Him Without Compensation.
As A Result, Lever Brothers Ltd Is Being Sued By Bell For The Return Of
The 30,000.
Lord Atkin Stated:
... The Rules Of Law Dealing With The Effect Of Mistake On Contract
Appear To Be Established With Reasonable Clearness. If Mistake Operates
At All It Operates So As To Negative Or In Some Cases To Nullify Consent.
The Parties May Be Mistaken In The Identity Of The Contracting Parties, Or
In The Existence Of The Subject-Matter Of The Contract At The Date Of The
Contract, Or In The Quality Of The Subject-Matter Of The Contract. These
Mistakes May Be By One Party, Or By Both, And The Legal Effect May
Depend Upon The Class Of Mistake Above Mentioned. Thus A Mistaken
Belief By A. That He Is Contracting With B., Whereas In Fact He Is
Contracting With C., Will Negative Consent Where It Is Clear That The
Intention Of A. Was To Contract Only With B. So The Agreement Of A. And
B. To Purchase A Specific Article Is Void If In Fact The Article Had Perished Definition
Before The Date Of Sale."

[(Igor Sterzhantov). (2007 2011). Retrieved From

Http://Www.Caselaw4maritimeterms.Lawandsea.Net/M/Mistake.Html]. (a) Article 3 of Al Mujallah

Mohri Bibee Vs. Dharmodas Ghose I.L.R Cal. 539 The obligations and engagements of two contracting persons in respect of
particular matter. It expresses combination of offer and acceptance.
Facts
(b) Sir Abdul Rahim
In this case, a minor Dharmodas mortgaged his house in favour of Brahm
Dutt, husband of Mohri for a loan of Rs. 20,000, out of which the mortgagee A contract is The conjunction of the elements of disposition namely offer
(money-lender) paid the minor a sum of Rs. 8,000. Subsequently, and acceptance.
Dharmodas sued for setting asode the mortgage, stating that he was
underage when he executed the mortgage. The Privy Council held that the Contract in the Light of the Holy Quran
mortgage was void and, therefore, it was cancelled.
And keep the covenant, Lo! Of the covenant it will be
Held (Privy Council) asked. (BANI ISRAIL:34)

The court also did not accept the moneylenders request for the repayment O ye who believe fulfill your agreements. (Al-Maidah:1)
of the amount advanced to the minor as part of the consideration for
mortgage. The defendant claimed that Dharmodas had declared to be a
major when the contract was made, and if the declaration was false, he (the
defendant) was entitled under sections 64 and 65 to receive back the money
he had advanced to Dharmodas, but the Privy Council set aside that plea Contract in the Light of Hadith
and observed that Section 64 and 65 are not enforceable in cases where no
Prophet ( Peace Be Upon Him) said The Muslims will fulfill their settled
contract exists, and a contract did not exist since it was made with a minor.
contracts.
Define Contract under Islamic Law and its Essentials
Essentials of Contract
Contract is aqd.
Islamic Law specifies following four essentials of a valid contract.
(b) Linguistic Meaning
(i) Faalia (Parties)
Literally aqd means conjunction or tie.
This cause appertains to the persons making the contract. A valid contract
requires that there must be two parties involved.
(c) Legal Meaning
(ii) Maddia (Proposal and Acceptance)
As a term of Islamic jurisprudence aqd means conjunctions of the elements
of disposition, namely, proposed (Aijab) and acceptance (qubool).
This appertains the essence, namely, Proposal and acceptance. It is
essential to constitute a valid contract that there must be two parties, one
parties, one party should make a proposal and the other should accept it.
(iii) Suaria (Agreement of Minds)
This cause related to the outward manifestation, that is the minds of parties
must agree and their declaration must related to the same matter.
Illustration
A owns two houses, one in Karachi and second in Hyderabad. B offers him
to buy one of his houses. B wants to buy the house in Karachi and
pursuance of the object he makes offer, but on the other hand. A accepts his
offer considering the house in Hyderabad as the subject matter of the
contract. The contract is not valid because their promises do not release to
the same matter.
(iv) Ghyia (Legal Relationship)
This cause relates to the result aimed at, i.e, the object of the contract must
be to produce a legal result. This is regarded as the dominant idea of a
contract in Muhammadan Law that it establishes a tie of legal relations
arising from the consent of the minds of two persons to deal with each other
in respect of certain rights.
Illustration
A sells or gives an object to B. the former consents to pass on his proprietary
rights therein to the latter who consent: to take the property with whatever
obligations might be incidental thereto, such as the liability to pay taxes if the
subject matte of the transaction be land, and to feed if the thing sold or given
be an animal and in the case of sale, also to pay the price. In the case of a
gift, on the other hand, there is the moral obligation of gratitude on the part
of the done towards the donor, and Muhammadan Law does not ignore the
moral aspect of a transaction.
Formation of Contract
Generally, Muhammadan Law does not require any formality such as
English law but the following requirements have to be fulfilled to form a valid
contract.
(i) Declaration of Consent
All that is required, as we have seen, is declaration of consent by each party.
The declaration which is first made is called proposal and the second
declaration is called acceptance. The two minds must be in agreement
otherwise there is not real consent.
(ii) Same Meeting (Majlis)
The proposal and acceptance must be made at the same meeting (Majlis),
either in fact or what the law considers as such.
Illustration
A man proposes face to face to another to sell his horse to him, if the person
addressed leaves the place without signifying his acceptance the offer
comes to an end, because there is no obligation on the owner of the horse to
keep his offer open.
But, if the offer is communicated by means of a messenger or a letter, the
meeting for the purpose of acceptance is held to be at the place and time the
message reaches the person for whom the offer was intended. If the person
then signifies his acceptance the contract is concluded.
(iii) Use of Words
The Books speak of certain words as being plain (Surech) and
certain other words as being allusive (Kinaya) in relation particular
kind of disposition. What is meant is that when a man has used plain
language, there is not need for inquiry as to what he meant, but such
an inquiry becomes necessary when he has used ambiguous
language. It is not to be supposed that so far as contracts and
dispositions relating to property are concerned that the mere
utterance of certain words without the corresponding intention as
understood in Muhammadan Law, would effectuate a transfer of
property or create any obligation.
Conditions of a Contract
Following conditions are provided under Islamic Law for the validity
of a contract
(i) Legal capacity of Parties
The validity of a contract depends first of all on the legal fitness of
the person entering into it. If the persons making a contract or
disposition have not the necessary capacity, contract would be void
altogether.
(ii) Fitness of Subject Mater
Another essential of a valid contract like that of any other juristic act
is the fitness of its subject matter (mahal); if the subject matter is not
fit for he purpose, the contract relating there to would be void
altogether.
Illustration
If A and B enter into a contract for the sale of a horse and while they
discuss the sale price, the horse dies, there is no consent, as the
subject of the contract itself is extinct. Similarly, a marriage within
prohibitory relationship is void ab initio.
(iii) Free Consent
Consent is the essential of contract; where there is no consent there
is no agreement and the consent should be free.
Illustration
The contract of marriage must be based on the free consent of
parties, if the consent is not free the marriage is not valid under
Islamic Law.
(iv) The consent without knowledge of the Articles
It is again necessary that a contract for an article which does not
exist or which is defective apparently or otherwise is ineffective is
void.
(v) Consideration
This is an important factor but it can explained that in agreements
where price is a deciding factor, the consideration surely passes on
to the other. As regards agreement of gift though there is no
exchange of consideration, yet the done is morally obliged to the
donor.
Final Analysis
Hence for final analysis, we can say that a contract is a biding
agreement between two parties which is legally enforceable. The
Rules regarding contract under Islamic law is very strict. Under
Islamic law for a valid contract there must be present four causes in
the contract viz., faalia and maddia and suria and ghayia. The first
essential of valid contract is that parties must have reached
agreement. To constituents of an agreement are Ijab and Qabul
which forms it into a promise which is enforceable by Law.