Contractual Provisions11 min read

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Contractual Provisions

Contractual Provisions

(25) It is a requirement for a contract to be valid that both parties entering into the contract are of sound mind and have reached the age of maturity.

(26) The sale of property to a mentally unsound or immature child is not permissible.

(27) The sale of property to an immature child who is of sound mind will be subject to the permission of their guardian, whether obtained before or after the contract is made. The permission can be general or specific, and it will be restricted to the particular type (or item) for which permission has been granted. If permission has not been granted for a specific type, then it will not be considered valid.

(28) The validity of a sale does not depend on the religious affiliation or freedom of the contracting parties, nor does it require the physical well-being of the parties involved. However, it is not permissible for a Muslim to sell a copy of the Quran to a non-Muslim if there is a concern that it may be desecrated.

(29) For a sale to be valid, it is necessary that the agreement is concluded through the offer of one party and the acceptance of the other party. One person cannot be the owner of both sides of the contract. Therefore, if someone appoints an agent to sell their belongings, the agent cannot purchase those belongings for themselves. Similarly, if someone appoints an agent to buy something, the agent cannot buy it for themselves. In the first case, if the agent purchases the item for themselves or in the second case, if they buy their own property for the principal, it will be subject to the permission of the principal, and if permission is granted, it will be considered acceptance from their side.

(30) The rule mentioned in point 29 has an exception: if a father buys his minor child’s property or purchases something for them from his own wealth, it will be valid. The condition is that the price should be equivalent or with an acceptable variance as determined by customary standards. However, it is not permissible for a guardian to sell the property of an orphan or buy their own property for the orphan, except in cases where it is clearly beneficial for the orphan.

(31) If a buyer intends to engage in sinful activities after purchasing the goods, the ruling in the following cases will apply:

– If the seller’s intention is to assist the buyer in the sinful act, for example, when the buyer intends to use the purchased item for sinful activities, such as selling grapes with the intention of making wine, or if the sale involves something specifically meant for sinful activities, then the contract will be considered unlawful, null, and void, and the seller will be sinful.

– If the seller’s intention is not to assist in the sinful act, but the sale becomes a cause for it, then the contract will not be unlawful. However, if the sale becomes an incentive for the sinful act, then the contract will also be unlawful. If there is no incentive but rather a near cause, meaning that the item is commonly used for sinful activities in its current state and does not require any modifications by the buyer, then the sale will be reprehensible but not forbidden. Otherwise, it will be highly discouraged.

(32) The consent of the contracting parties is a requirement for a valid sale.

(33) The sale by force (coercion) of a reluctant person will be void, and it will remain subject to the permission of the coerced person after the coercion ceases. If the reluctant person willingly confirms the sale after the coercion ends, then it will become effective. Otherwise, it will be invalid, and the actions of the coercer will also be void.

(34) Coercion in a sale refers to using intimidation or threats to harm someone’s life or limb, or causing a calamity that results in the loss of their consent. Thus, coercion includes threats against the person, their children, parents, spouse, or close relatives, whether these threats are physical harm, financial loss, or handing them over to an oppressor.

(35) Undue influence is less severe than coercion. It means taking advantage of someone’s position to obtain their consent. In contracts, this occurs when a person enters into a contract with someone of a lower status while using their apparent position, rank, or moral greatness. For example, a son before his father, a student before his teacher, or a disciple before his spiritual guide. In such cases, when the lower-ranking party enters into the contract under pressure, the higher-ranking party cannot impose their conditions, and even if the lower-ranking party is dissatisfied, the contract will still be considered valid. However, if the contract is not made under coercion, compulsion, or deception, it will be enforceable.

(36) In the case of necessity, the ruling for a sale made under compulsion is as follows:

(a) Compulsion is caused by coercion from the other party. This situation falls under the category of a void sale, as mentioned in point 33.

(b) If a person is compelled to buy or sell something due to dire circumstances, where they have no alternative but to make the sale, and it is solely to alleviate their own or their family’s hunger, then such a sale is valid if it is at an equitable price. If it involves gross deception, the sale is invalid. However, in such circumstances, if the purchased food is meant to satisfy their basic needs, then it will be permissible to consume, and the price should be equitable.

(c) If a person is forced to sell due to poverty, need, or the demands of creditors, the sale will be valid. This situation is not considered as compulsion, so the sale will be valid, even if it involves gross deception. However, in such a case, it is disliked for the other party involved in the transaction to cause hardship for the person in need.

(37) Taghayyur (misrepresentation) occurs when one party (to entice the other) makes a statement that leads the other party to consent to the contract, but later the truth becomes known against that statement. The following are the scenarios for such misrepresentation:

(1) If a mistake is made in describing the nature of the sold item, for example, a jewelry seller states that it is gold jewelry, but it turns out to be silver jewelry coated with gold, then the sale is invalid.

(2) If incorrect information is used in describing the item for sale, such as a car seller claiming it to be a new car or made in a specific country, but it is later discovered to be false, then the rules of rescission (khiyar al-wasf) apply. The details of rescission will be explained in the relevant sections.

(3) If the market value of the sold item is misrepresented, such as the seller stating that its price is one thousand, but it is discovered that the market rate is five hundred, or if a customer tells the seller that a particular item is available in the market for five hundred and purchases it from the seller at that price, but later the seller finds out that the item is being sold for one thousand in the market, then the rules of rescission due to loss apply. The details of these rules will be explained in the relevant sections.

(38) Fraud or deception occurs when the seller engages in actions that give the appearance of a quality or characteristic that does not actually exist in the sold item. For example, dyeing old clothes in a way that makes them appear new. The ruling in such cases depends on the types of false statements or deception used. If this deception constitutes fraud or involves a significant misrepresentation, or if it renders the description of the item desirable but false, then the customer is entitled to rescission. In some cases, the customer may have the right to claim compensation or seek restitution for the damages suffered, specifically by demanding the difference between the price of a defective or incomplete sale and a complete sale from the seller. The details of these rules will be explained in the relevant sections.

(39) Error in the contract occurs when one or both parties make a mistake due to a misunderstanding. The following situations can arise:

(a) Mistaking the existence of the sold item: If the seller sells an item assuming it to be present when it is not, such as selling a specified type of vegetables that were present in their warehouse but later turned out to be spoiled or stolen before the sale, then the sale is invalid.
(b) Mistaking ownership of the buyer: If the buyer mistakenly assumes that they own the purchased item, such as buying a piece of land from Zaid, assuming that Omar and not Zaid is the owner, and later discovering that the land belongs to Zaid and was not inherited from someone else, but the buyer was unaware of this fact at the time of purchase, then the sale is invalid due to the seller’s lack of ownership.

(3) Entitlement: This occurs when someone purchases something from Zaid, believing that Omar is the actual owner, but it is proven through witnesses that Khalid is the true owner, not Omar. In this case, the sale will not be automatically voided; rather, it will remain contingent upon the permission of the entitled (true owner). However, if the purchaser takes possession of the sold item and pays the price to the seller, the sale will be voided. And if the true owner validates the sale, the ownership of the item will remain with the purchaser, and the true owner will receive the price from the seller. However, if the true owner does not validate the sale, it will be voided, and the entitled person will have the right to take back the item from the purchaser and the purchaser will have to retrieve their price from the seller.

(4) Error in the recognition of the sale: This occurs when there is an error or mistake in the nature, essential characteristic, or quantity of the sold item. For example, assuming during the purchase that the item being bought is gold, but later finding out it is silver. Or when the type of item is the same, but there is a significant difference in the desired qualities between the seller and the buyer. If such an error occurs from both sides and both parties agree that the contract was entered into due to the mistake, then the contract will be deemed void. However, if the error is made by one party only, and there was no alteration or deception from the other party, then the ruling will depend on the nature of the contract. The party responsible for the error will be liable for the estimated damages caused by the error or deception. This contract can be separate from the original contract, and the judge will decide based on the principles of fairness and justice according to their own discretion.

(40) Artificial Sale (Benami Contracts): This refers to a situation where the actual purchaser buys an item in someone else’s name, other than the true owner, for the purpose of registering the name of that person in official records. This may happen due to some interest. The actual purchaser is the one who bears the burden. In such a case, the actual owner will also be considered the person who pays the price. However, it must be proven that the actual purchaser is the same person, and the inclusion of another person’s name is only for display.

(41) Condition of the Consent of the Parties: The following situations are exempted from the condition of consent:

(a) If, in view of the general public interest, the government is compelled to purchase land that is necessary for public use but cannot be fulfilled, the government is allowed to purchase the land from the owner in exchange for the market value of the day of payment. The government must not take possession of the land without paying the price.
(b) If traders hoard the belongings of the people, the government can sell them, even if the traders are not willing.
(c) If, according to legal and just conditions set by the government, prices are determined, traders should not be forced to pay more than the specified price, even if they are not willing.
(d) The “Shafi” (Intermediary) has the right to receive the non-movable sold item (property). The right of “Shafi” is first for the partner in the same sale, then for the partner in the right of sale, and then for the adjoining neighbor.

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Talha Siddiq

Talha Siddiq

I am an Islamic Scholar. I have expertise in Ahadith, Fiqh, Logics, and the Arabic language. I have a specialty in Islamic finance and Islamic study. To get started with me, Book Now one-to-one Session, or let us know what do you like in the contact form.

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