Course Instructor: Saba Alam SOL| School of Law

Subject: Islamic Jurisprudence LL.B-III (5 Years)

CONTRACT UNDER ISLAMIC LAW

1. INTRODUCTION

The most important and prevalent mode of acquisition of ownership and possession of
property is transfer by the act of the persons, having legal title to another person. Such transfer
is implemented by means of a mutual liability called contract, which has a broader significance
in Muhammadan Law than in English Law.

2. MEANING
 Derivation:

The corresponding Arabic term for “Contract is ‘aqd’”

 Linguistic Meaning:

Literally ‘aqd’ means ‘conjunction or tie.’

 Legal Meaning:

As a term of Islamic jurisprudence ‘aqd’ means conjunctions of the elements of disposition,

3. DEFINITION

i. “Al Mujallah”

The obligations and engagements of two contracting persons in respect of particular matter. It
expresses combination of offer and acceptance.

ii. Sir Abdul Rahim

A contract is “The conjunction of the elements of disposition namely offer and acceptance.”

4. CONTRACT IN THE LIGHT OF THE HOLY QURAN

 “And keep the covenant, Lo! Of the covenant it will be asked”. (BANI – ISRAIL:34)
 “O ye who believe fulfill your agreements”. (Al-Maidah:1)

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Course Instructor: Saba Alam SOL| School of Law
Subject: Islamic Jurisprudence LL.B-III (5 Years)

5. CONTRACT IN THE LIGHT OF HADITH

Prophet (Peace Be Upon Him) said “The Muslims will fulfill their settled contracts”.

6. ESSENTIALS OF CONTRACT IN ISLAMIC LAW

Islamic Law specifies following four essentials of a valid contract.

i. Faa’lia (Parties)

The pertains to the person who is making the contract. A valid contract requires that there
must be two parties involved.

ii. Mad’dia (Proposal and Acceptance)

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 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

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Course Instructor: Saba Alam SOL| School of Law
Subject: Islamic Jurisprudence LL.B-III (5 Years)

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 matter 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.

7. 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.

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Course Instructor: Saba Alam SOL| School of Law
Subject: Islamic Jurisprudence LL.B-III (5 Years)

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.

8. 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 the purpose, the contract relating thereto
would be void altogether.

Illustration

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Course Instructor: Saba Alam SOL| School of Law
Subject: Islamic Jurisprudence LL.B-III (5 Years)

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 explain 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.

9. CONCLUSION:

Hence for final analysis, we can say that a contract is a binding 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., faa’lia and
mad’dia 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.

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