(Assignment no.

1)

A comparison of essentials of Contract under the Contract Act 1872

and Shariah Law

Course: Contract Act 1872

Instructor: Ms. Zainab Iqbal

Name: Hira Bibi

Roll no: 2020-LLB (SS)-027)

Semester: LLB-III

Session: Fall, 2021

Date of Submission: Dec 22, 2021

Department of Law

Fatima Jinnah Women University, Rawalpindi

1
Contents
Introduction......................................................................................................................................1

1. ESSENTIALS OF CONTRACT UNDER THE SHARIAH LAW.............................................1

1.1 Sighah....................................................................................................................................2

1.1.1 Offer (Ijab) and Acceptance (qabul)...............................................................................2

1.1.2 Conditions of Sighah......................................................................................................3

1.2 Capacity/ Competent to the contract (aqidan).......................................................................3

1.2.1 Types of legal capacity in Shariah law...........................................................................4

1.3 Consideration (Iwad or sabab)...............................................................................................5

1.4 Subject matter of the contract (Mahal al-Aqd)......................................................................5

1.5 Communication......................................................................................................................6

2 ESSENTIALS OF CONTRACT UNDER THE CONTRACT ACT 1872..................................7

2.1 Offer and acceptance.............................................................................................................7

2.3 Free consent...........................................................................................................................7

2.4 Capacity of parties to contract...............................................................................................8

2.5 Lawful consideration.............................................................................................................9

2.6 Lawful object.......................................................................................................................10

2.8 Agreements not expressly declared void.............................................................................10

3 COMPARISON BETWEEN ESSENTIALS SHARIAH LAW AND CONTRAC ACT 1872.10

Conclusion.....................................................................................................................................11

2
A comparison of essentials of Contract under the Contract Act 1872
and Shariah Law

Introduction

There are various necessary essential requirements that are needed for the establishment of a
contract. Not only have that to form a contract such essential elements had to fulfill certain
required conditions. The fulfillment of conditions is important to determine the validity of
contract and its legal effects. Civil affairs in Islamic law are known as Islamic Law of
transactions or Fiqh al muamalat. It is also referred as Islamic Law of contracts. Arabic term
muamalat inter alia means transaction. Transactions are the Shariah rules which pertains to a
person’s life. So transactions are the agreements or simply contracts. In Islamic Law certain
components are required for a valid transaction. Muslim jurists have named these components or
essential as arkan or rukn.

1. ESSENTIALS OF CONTRACT UNDER THE SHARIAH LAW

Shariah explain certain requirements for a contract to be valid and lawful. Any contract which
fulfills the prescribed requirements of Shariah is supposed valid and lawful. . If a contract was
found contradictory to fundamental rules of Shariah then it was prohibited. And if a contract was
not in line with Shariah rules but it was modifiable then it was modified and filtered from the
prohibited elements. The establishment of a contract according to Muhammadan law does not
generally speaking, require any formality. All that is required is declaration of consent by each
party. The declaration that is first made is called proposal (Ijab) and the second is called
acceptance (Qabul). The proposal and acceptance must be made at the same meeting (majlis). 1

Following are the essentials (Jumhur) of contract under Islamic law.

1. Sighah
i. Offer (Ijab)
ii. Acceptance (Qabul)
2. Consideration (Iwad or sabab)

1
SITI SALWANI RAZALI, ISLAMIC LAW OF CONTRACT, Pg. 33-37, (2010)

1
 3. Capacity (aqidan)
4. Subject matter (Mahal al-aqd)2

1.1 Sighah

Ijab is the statement in an agreement that issues forth from one of the parties to the contract, and
Qabul is the statement that is made by the second party in response to the Ijab.

1.1.1 Offer (Ijab) and Acceptance (qabul)

In order to make a contract person has to make a proposal to the other person to obtain his
consent to the act or abstinence. This is known as an offer (Ijab). In the Islamic law of contract
acceptance is known as qabul. When an offer is accepted by the offeree it is said that an
acceptance has been made. When there is an effective acceptance an agreement is made between
the parties which become legally binding for them. There are three kinds of offer or acceptance
in the Islamic law of contract.

 Verbal offer or acceptance (kalam)

 Offer or acceptance by conduct (amal)
 Offer or acceptance in writing (kitabah)3

 Verbal offer and acceptance (kalam)

An offer or acceptance which is expressed in words to sell something to someone else and is
not written down is known as verbal offer (kalam) or verbal acceptance (qabul). A verbal
offer is acceptable in Islam from which an acceptance is good for a direct sale. Islamic jurist
said that the verbal words for an offer or acceptance should be in the past or the present tense
but not in the future tense because the offer should have an immediate effect to the offeree.
 Offer and acceptance by conduct (amal)
An offer or acceptance which has made by conduct without any verbal words or gestures
being exchanged or expressed is known as offer or acceptance by amal in Shariah law.
 Offer or acceptance in writing (kitabah)

2
HAQQI, ABDULRAHMAN RADEN AJI, THE PHILOSOPHY OF ISLAMIC LAW OF TRANSACTIONS, pg-30,(2009)
3
Jalil, M.D & Khalilur Rahman M, ‘Islamic Law of Contract is getting momentum, Vol. 1 , INTERNATIONAL
JOURNAL OF BUSINESS AND SOCIAL SCIENCE, Pg 175-78,November 2010,

2
 When the offer and acceptance will take place in a future time it is suggested that the terms
of the offer and the acceptance should be written down in a word so that no disagreement can
arise later due to ambiguity. It is the best way of making a contract.4

1.1.2 Conditions of Sighah

According to the Jurists following are the conditions of Sighah,

 Clarity of Sighah
In order to perform the contract an offer and acceptance shall be in clear and definite
words which expressly showing the intention of the parties making it. Though there is no
specified words or phrases because law give importance to intention rather words.
 Conformity of offer and acceptance
It is necessary that the acceptance shall be in conformity with the offer. An acceptance
shall be of the original offer, acceptance shall not add or subtract something in the offer
and in that case it will not result in any contract. An acceptance or offer shall be absolute
and unconditional. Acceptance shall be in conformity of all details irrespective it is
expressed or implied.
 One Majlis (Same Session)
In order to be valid contract offer shall be accepted in the same seating or session in
which it is communicated to the offeree and if the same is not accepted it will be invalid
contract.5

1.2 Capacity/ Competent to the contract (aqidan)

The Arabic word for legal capacity is ahliyyah. The other meanings of ahliyyah are fitness
(salahiyyah)) and deservingness (istihqaq). We say for example that a person is ahl to do this
work meaning that he is fit to do it. The contracting parties are the parties who exercise the
Sighah of Ijab and qabul. In order to conclude a valid contract the contracting parties must have
legal capacity. The competence to transact in Islamic law is measured largely by two aspects,
4
Dr. Md. Abdul Jalil, Islamic Law of Contract is Getting Momentum, Vol. 1, INTERNATIONAL JOURNAL OF
BUSINESS AND SOCIAL SCIENCE, (November 2010)
5
Amir Badshah, Taysir al-Tahrir, DAR AL-FIKR, Vol 2, Pg. 447-449

3
namely prudence and puberty. Not every person can make a legal contract such as a minor, an
insane person and any person incapable of making a decision due to physical and mental defect
etc..6

1.2.1 Types of legal capacity in Shariah law

There are two main categories of legal capacity that is receptive legal capacity (ahliyyat al-
wujub) and active legal capacity (ahliyyat al- add). AI- Zarqa defines it as the fitness of a person
to exercise activities which are dependent on reason (aql) to be legally valid. These two can be
further divided into incomplete (naqisah) and complete (kimilah).

1. Incomplete receptive legal capacity (ahliyyat al-wujub al- naqisah) has been defined as
the fitness of human beings to acquire rights but not to undertake duties or
responsibilities. In other word incomplete receptive legal capacity only possesses a
positive aspect called indebtedness (da-iniyyah). This kind of legal capacity is associated
with the fetus (janin) before delivery.
2. Complete receptive legal capacity (ahliyyat al- wujub al-kamilah) is the fitness of a
person for receiving rights and taking responsibilities. This type of legal capacity has
both the positive and the negative aspect. In other words a person possessing this capacity
can be both debtor and creditor.
3. Incomplete active legal capacity (ahliyyat al-wujub al -naqisah) is the fitness of a person
to conduct certain actions only. The cause for this capacity is discernment (tamyiz) thus a
discerning child is only entitled to conduct some transactions.
4. With regard to complete active legal capacity (ahliyyat al-wujub' al-kamilah) it is the
highest degree of legal capacity when a person is fit to conduct action without any
limitation. Under the Islamic contract law the age of majority is fifteen years. This is
known as bulugh (puberty) of a man or woman. At this age he/she understands things
better however, taking into account of legal consequences of a contract. This is achieved
by reaching the age of majority with no mental deficiency.
5. In addition to these two kinds of legal capacity a person could be lacking both types of
active legal capacity as in the case of the insane. He is a person whose actions cannot be
said to be his own and are humanly abnormal and irrational. He is prohibited from
6
AI- RAZI, MUBARNMAD BIN BAKR, MUKHTAR AL- SIHHAH, 1993, Pg. 56, (1993)

4
 dealing with his property and entering into a contractual relationship. His guardian must
act on behalf of him.
6. Intoxication refers to loss of mental capacity due to taking liquor or any intoxicated
things causing the intoxicant becomes unawares of his action that he made during his
state of intoxication. Effects of his transaction/contract depend on whether his
intoxication is due to legitimated or illegitimated reason. If the intoxication is due to
legitimated reasons such as taking liquor due to necessity, duress, mistake or taking
medicine, his transaction becomes invalid according to all Muslim jurists. If the
intoxication is due to illegitimated reasons, his transaction becomes valid and effective
according to majority of Muslim jurists.7

1.3 Consideration (Iwad or sabab)

Under the Islamic law of contract there must be a consideration in a contract. If there is no
consideration the agreement will not be valid as it is not enforceable by law. A consideration
needs not be adequate as an inadequate consideration is enough to validate a contract as long as
the parties give consent freely to the agreement upon which they are satisfied. If a contract is not
caused by a misrepresentation, fraud, coercion, undue influence and other attendant legal
ambiguities then the contract is valid even though its consideration is not adequate. 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. For example if the subject matter
of a contract is haram (prohibited) in Islam then the contract will be illegal and not enforceable
by law due to the nature of the spirit of the contract which may be against the grain of judicial
prudence and justice.8

1.4 Subject matter of the contract (Mahal al-Aqd)

Under Islamic law subject matter (Mahal al-Aqd) refers to the object of the contract upon which
the legal obligations are established. It can be a good or property of sale contract or promised
object in a pledge contract. If the subject matter does not exist when the contract is made the
element of gharar (uncertainty) may occur and can invalidate the contract. Islamic law focused

7
AI-Zarqa, AL-MADKHAL vol 2 p. 741-749
8
Zahu , Atunad al-Najdi , Usul al-Fiqh al-IsIami, vol 1, DIR AL THAQAFAT AL ARABIJYAH, , pg. 164-166,(1986)

5
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 general requirements for subject matter are
following.

 The Subject matter must not be a forbidden item in Shariah.

 It should be in the ownership of the seller.
 It should be available at the time of conclusion of the contract.
 It must be identified and clearly known to the contracting parties.
 The delivery of subject matter must be confirmed and certain at the time of contract. 9

1.5 Communication

The necessity for the communication of the offer and the acceptance appears to have played a
very little part in the Islamic Law scheme of contracting. Most of the texts are silent as to
whether such a communication is essential for the formation of the contract. The Hanafi texts on
the assumption that the parties are contracting verbally and in the presence of each other make it
a condition for the conclusion of the contract that the offeree must hear the offer and offeror
must hear the acceptance. The juristic basis for the necessity of this mutual hearing is not clear.

According to the Shafi it is not necessary that the offeree shall hear the offer or the offeror shall
hear the acceptance, provided that both the offer and the acceptance are made in a voice loud
enough that it will normally be heard by those present in the meeting place.

It is not clear from the texts of the Hanbali and Maliki schools whether it is necessary that the
offer and acceptance should be communicated?10

9
MANSOORI, MUHAMAMD TAHIR, LAW OF ISLAMIC LAW OF CONTRACTS AND BUSINESS TRANSACTIONS ,Pg. 20-
26(2015)
10
LIAQUAT ALI KHAN NIAZI, ISLAMIC LAW OF CONTRACT, Pg. 74-77, (1990)

6
2 ESSENTIALS OF CONTRACT UNDER THE CONTRACT ACT 1872

Section 10 of the Contract Act 1872 signifies the ingredients of contract in Pakistan, the section
states. “All agreements are contracts if they are made by the free consent of parties competent to
contract, for a lawful consideration and with a lawful object, and are not hereby expressly
declared to be void. Nothing herein contained shall affect any law in force in Bangladesh, and
not hereby expressly repealed, by which any contract is required to be made in writing or in the
presence of witnesses, or any law relating to the registration of documents.” 11 So we can
conclude that following are the essential ingredients

1. Offer and acceptance

2. Free consent
3. Competency of parties
4. Lawful Consideration
5. Lawful Object
6. Not declared to be void
7. Legal Formalities12

2.1 Offer and acceptance

Offer and Acceptance form the basis of a contract. There can be no contract unless there is an
offer and such an offer must be accepted. An Offer once accepted becomes a Promise Agreement
is necessary to constitute a contract. Offer and acceptance together make a contract. Any
agreement made by two parties will be legally enforced unless it is declared void by law. 13

2.3 Free consent

According to section 14 of the Indian Contract Act, consent is said to be free when it is not
caused by14

11
K.B. ABBAS, THE CONTRACT ACT, Pg. 36, (2019)
12
THE CONTRACT ACT 1872, Section 10
13
TREITEL, GH. THE LAW OF CONTRACT, Pg. 8, (December 22, 1999)
14
THE CONTRACT ACT 1872, Section 14

7
  When a person commits or threatens another person to commit an act that is forbidden by
law. The agreements made under coercion are voidable, which can be declared void by an
option of any of the parties to the contract.15
 Undue Influence state that when a contract is made because of the dominant position of
one party and due to this dominant position the other person cannot deny that contract.16
 According to Section 17 of the Contract Act when a party contracts with the other party
with the intention to deceive, it amounts to fraud by misleading the facts.17
 It is called misrepresentation when a contract is made by false representation of facts or
when a party misleads the other by showing false things and making them look genuine.18
 Mistake (Section 20 to 22) an agreement will be considered void if both the parties to an
agreement are under a mistake of fact. An agreement will not be considered void if there
will be a mistake of fact by only one party. Mistake of law will not be considered a
voidable if a mistake is caused against any law force in Pakistan.19

2.4 Capacity of parties to contract

Section 11 of the Contract Act 1872 states that a minor, lunatic, idiot and a drunken person
cannot enter into a valid contract. Thus a minor or a person with an unsound mind is not
competent to contract or if such person has been barred from contraction by laws to which he is
subjected. In such a case the contract is void.20

 A contract entered into with or by a minor is void-ab-initio that is no obligation shall

arise since its inception. A contract during the minority age of a party cannot be
subsequently ratified after attaining the age of majority this is because every contract
needs separate consideration. However, if a contract is made for the benefit of a minor
then it is a valid contract.
 According to section 12 a person is said to be of sound mind if at the time of the making
of the contract he is capable of understanding its terms and is capable of forming a
15
THE CONTRACT ACT 1872, Section 15
16
THE CONTRACT ACT 1872, Section 16
17
THE CONTRACT ACT 1872, Section 17
18
THE CONTRACT ACT 1872, Section 18
19
THE CONTRACT ACT 1872, Section 20 to 22
20
THE CONTRACT ACT 1872, Section 11

8
 rational opinion about the effects thereof upon his interests. A person need not be lunatic,
he should be simply incapable of understanding the consequences of the contract. Thus a
person who does not understand a particular trade or business and despite that enters into
a contract relating to the business in such cases the court will hold the person to be of
unsound mind.21
 Disqualified to contract means a person not permitted to enter into a contract. For
example alien enemy, convicts of a crime, an insolvent person.22

2.5 Lawful consideration

Consideration means a reasonably equivalent or corresponding benefit passed on by the promisor

to the promisee. It is something that has value in the eyes of the law. It has to be at the desire of
the promisor, which means that it should originate from the promisor out of his own accord and
not at the instance of a third party. Consideration must be lawful that is it must not be forbidden
by law or not be fraudulent or must not involve or imply injury to the person or property of
another. Moreover it must not be immoral or opposed to public policy. Consideration could be,

 Past Consideration, when the promisor has received consideration before the date of the
performance of the contract by any party. For example advance money paid.
 Present Consideration, when consideration is provided immediately when the contract is
made or executed. Thus it is also called executed consideration.
 Future Consideration, when consideration is paid after making of the contract.23

2.6 Lawful object

According to section 10, consideration and object of the contract should be lawful and is an
essential element of a contract. Unlawful object is one which is either forbidden by law. Section
23 of the Contract Act states that the object of contract will not be lawful if it is

 Illegal.

21
THE CONTRACT ACT 1872, Section 12
22
IMRAN AHSAN KHAN NYAZEE, LAW OF CONTRACT, Pg. 122- 123, (2014)
23
IMRAN AHSAN KHAN NYAZEE, LAW OF CONTRACT, Pg. 109, (2014)

9
  Defeats the provisions of law.
 Fraudulent.
 Immoral or opposed to public policy.
 Causes harm to a person or property.24

2.8 Agreements not expressly declared void

The agreements which are not enforceable by the court of law will be declared void. They
include

 Agreement with unlawful consideration and object.

 Agreement having no consideration.
 Agreement in restraint of trade, marriage, legal proceedings.
 Agreement without certain meaning.
 Wagering agreements25

3 COMPARISON BETWEEN ESSENTIALS SHARIAH LAW AND

CONTRAC ACT 1872

The fundamental difference between the English legal system and the Islamic legal system in
framing the law is that in Muslim countries the Parliament can make laws for the benefit of the
society but it must not be contradictory or inconsistent with the Islamic law principles. In the
English law contract is an agreement enforceable by law. In the Islamic law contract is known as
(aqd) which means tie or bond. It means a contract that binds the parties together. The concept of
Sighah is identical to the concept of agreement but major difference is the free consent. The
elements of contract include only Ijab & Qabul. Some other matters are not considered as
elements of a contract. However their existence is necessary. Sighah includes free consent of the
parties but in the Contract Act 1872 the free consent is treated as an independent ingredient of

24
THE CONTRACT ACT 1872, Section 10
25
THE CONTRACT ACT 1872, Section 2(g)

10
contract. To make a contract in the Islamic law there must be an agreement between two
parties.26 The agreement must be based on a free consent of the parties. Islamic Law required that
an offer shall be narrated in the past tense but there is no such requirement of narration in
Contract Act 1872. To effect a valid contract the parties must have the intention to create a
legally binding relationship. Islam emphasizes on fulfilling contractual obligations. Allah says in
the Quran: ‘O ye who believe, fulfill all of your obligations’.27

Conclusion

Offer and acceptance shall only result in contract if these are uttered in same session, a session
end when parties are parted from the subject, and with free consent, if consent is effected by any
manner whatsoever it will not result into a valid transaction. Agreement is simply offer and its
acceptance. Secondly free consent is a separate essential of the contract. Consent of the parties
shall be free from undue influence, fraud, misrepresentation etc. The Sighah is Ijab or Qabul with
free consent of the parties but the agreement is simply the offer and acceptance though free
consent is not wiped out by the contract act. The contract Act has separately considered free
consent as an essential of contract. Islamic law has put specific stance upon the past tense of the
offer but common law has not put bar upon tense of the offer narration. One session is a
condition precedent for Sighah yet the Contract Act, do not ask for one Majlis. In Islamic Law, if
the Majlis expires, the offer expires but in case of The Contract Act, 1872 there is no such
concept but the communication of offer and acceptance is necessary to the contrary.

26
MANSOORI, MUHAMAMD TAHIR, LAW OF ISLAMIC LAW OF CONTRACTS AND BUSINESS TRANSACTIONS ,Pg. 20-
26(2015)
27
K.B. ABBAS, THE CONTRACT ACT, Pg. 36-38, (2019)

11