CONDITIONS OF CORRECT SALE CONTRACT

For a correct sale contract there are seven conditions:

First: It should be concluded willingly and with mutual consent according to the
Qur’an statement that trade should be done with mutual consent. A contract of sale is not
valid if it is concluded with coercion, unless the coercion was done in justice and fairness like
in the case where a ruler forces a debtor to sell some of his property to pay back a debt. All
transactions, in order to be valid and enforceable, must be based on free mutual consent of the
parties. Practices like Ghaban-e-Fahish (charging exorbitant price while giving the impression
that the normal market price has been charged), and concealing any material defect in the
goods or any value related information in trust sales like Murabaha have been strictly
prohibited so that the parties can decide with free will and confidence.

Sura An-Nisa: 29 stated that:

“O ye who believe! Eat not up your property among yourselves in vanities: But let
there amongst you traffic and trade by mutual good-will”.

Second: Each one of the two parties should have the capacity to conduct such a sale,
like being sane, of age and discerning. Thus a sale is not valid if it is conducted by an insane
person, a child, a drunken person or a sleeping person. In the Hanafi School, a boy’s sale
contract is valid if he is discerning on the condition that his guardian permits it. However in
the Shafe’i school, a boy cannot enter into a contract sale until he is of age. The Hanbali
scholars consider valid a discerning boy’s sale contract, and they provide as proof of this the
Qur’anic statement which stipulates that guardians of orphan children should put them to the
test, and if they find them with good reasoning, they should give them their money.

Sura An-Nisa: 6 stated that:

“Test the orphans till they reach the marriageable age; then, if ye find them of sound
judgment, deliver over them their fortune; and devour it not by squandering and in haste lest
they should grow up. Whoso (of the guardians) is rich, let him abstain generously (from
taking of the property of orphans); and whoso is poor let him take thereof in reason (for his
guardianship). And when ye deliver up their fortune unto orphans, have (the transaction)
witnessed in their presence. Allah sufficeth as a Reckoner”.
 This is done by giving them freedom of action in selling and buying to test their
abilities in doing this. If they prove to be competent, then they should be given the authority
to conduct sales with the permission of their guardians.

Third: The object of sale should be proper or a kind of money which carries a legal
benefit and which not needed by the seller.

Fourth: The object of sale should be owned by the seller or he should have
permission by the owner to sell it. If he sells something owned by somebody else without
opinion, such a sale would be valid if the owner gave his belated consent; if he did not, the
sale would be void. This is the opinion of Malek and Ishaq. Abu Hanifa said this would be
correct in sales; however, in purchases the buyer has the right to do it and take the benefit in
any case. They provide as proof the hadith narrated by ‘Orwah ibn al Ja’d al Bariqi in which
he reports that the Prophet (PBUH) gave him a dinar to buy a sheep; he bought two sheep
with it, and then on his way back, he sold one of the sheep for one dinar. He came back to the
Prophet (PBUH) said, “May God blesses the deal of your hand”. This hadith was narrated by
ibn Majah.

Fifth: The object of sale should be capable of being delivered or handed over. If the
seller cannot do that, the sale is nugatory. Thus it is invalid to sell a fugitive slave, or a bird in
the sky or fish in the water. An extorted or usurped property could be bought from the usurper
or from someone who can extract it from him. If fish were isolated in specified water and the
seller could lay hand on them, the sale is correct.

Sixth: The object of sale should be made known to the purchaser by sight or by
description. The sale is invalid if the sold object is not seen by the buyer or if it was not
described to him; also, it is incorrect if he sees the object but does not know its reality, or if
the description was not sufficient in salam (delayed) sales. Another opinion is that it would be
valid, and the buyer has the option of breaking the contract after seeing the object. This
condition aims to protect the buyer and safeguard his interests and prevent the seller from
cheating and commuting fraud.
 Seventh: The price should be made known to the two parties. By analogy to the
capital of delayed selling, if the price of the merchandise was unknown to both parties or
either one of them, the sale would be invalid due to (gharar) ignorance. Thus anything
leading to ignorance and deceit in sales renders the sale nugatory. This is to safeguard the
interest of both parties from falling into conflict and dispute.
 OFFER AND ACCEPTANCE
(IJAB DAN QABUL)

• Definition of Offer (Ijab)

Article 101 of the Majallah

 Offer (ijab) is the word first spoken, for making a disposition of property and
the disposition is proved by it.

Shorter Encyclopedia of Islam

 Offer in commercial transaction is the sole declaration that the offer is

irrevocable.

Joseph Schacht

 An offer can always be withdrawn before it has been accepted, but once it is
accepted the contract is final and enforceable.

• Definition of Acceptance (Qabul)

Article 102 of the Majallah

 Qabul (acceptance) is the spoken words by the second party when forming the
disposition of property and, with it, the agreement become complete.
• Form of the contract

1. Al-Ahliyyah (Capacity)

Ahliyyah means absolute fitness or ability. A person is capable of doing something

or of undertaking some work; it implies that he has the ability to do so. Some jurist
defines Ahliyyah as the ability or fitness to acquire rights and exercise them and to
accept duties and perform them.

 Contract of sale of the Mumaiyiz

According to Mazhab Syafi’I, the contract is invalid because the child is

incapacity. The conditions of the contracting parties, the seller or buyer are
someone of matured age. They imply only some rights and no obligations to
impose on it.

Sura An-Nisa: 5 stated that:

“And give not unto the foolish your property which Allah has made a means of
support for you, but feed and clothe them therewith, and speak to them words of
kindness and justice”.
 According to Mazhab Hanafi, Maliki and Hanbali, the contract of sale done by
mumaiyiz is valid when allowed by their godparent (wali). It associates with
the management and permission given by the wali. A child possesses a
complete capacity for acquisition of rights and obligation but until a child
attains the age of legal puberty, he lacks the capacity for execution.

 Contract of sale under coercion

Islamic law of transactions may nullify an agreement if a party has used

coercion to induce another party to enter into a contract. The majority of the
Ulama other than Hanafis have maintained that if duress affects the disposition
of a person then it nullifies it.

According to Mazhab Hanafi, contract of sale done under coercion whether

avoidable or not is invalid contract (fāsid). The coercion will eliminate the valid
conditions of the contract.

Sura An-Nisa: 29 stated that:

“O ye who believe! Eat not up your property among yourselves in vanities: But let
there amongst you traffic and trade by mutual good-will”.

According to Mazhab Syafi’i dan Hanbali, the conditions of contracting parties

is they must stand their own choices in selling their own property. Contracting
parties under coercion without legal rights is invalid.
Coercion is allowed in contracts when the persuasion to sell land due to pay debt
or to sustains life of his families.

Sura An-Nisa: 29 stated that:

“… But let there amongst you traffic and trade by mutual good-will..”.
2. Acceptance must be consistent with offer

The form offer and acceptance (sighah) is the procedure or the means by which a
contract is made. Juristic rules require that the offer should be in clear language
and unconditional. There should be conformity of the offer and acceptance on the
subject matter and the consideration and issuance of the offer and its acceptance
should be in the same session.

Contract Act of 1872 in English Law states that “When one person signifies to
another his willingness to do or to abstain from doing anything with a view to
obtaining the assent of that other person to such an act or abstinence, he is said to
make a Proposal”.

Nominal sentence is suitable for contract like when one party says, “I am selling
you this (commodity) for that (sum of money)” and the other says, “I accept”.

For example:

- If A told B, “I sold to you two clothes at RM1000. Then B said, “I accept the
clothes”, and then A just delivered 1 cloth to B, the contract is invalid.

- When A told B, “I sold the house including the furniture at RM1000. Then B
said “I accept the offer, but not included the furniture,” hence the contract is
invalid because the authority to separate the goods only owned by the seller.
 SALES KNOWN IN PRE-ISLAMIC TIMES IN ARABIA WHICH
PROHIBITED IN ISLAM

 Sale of munabadha (shedding):

This occurs in the two persons’ shedding their garments in exchange, and sale is confined
in that.

 Sale of hasa (pebbles):

This occurs when one of the persons throws a pebble which he has hand and wherever it
falls, sale is confined for that amount only.

 Sale of mulamasah (touch):

This occurs when one of the persons stipulates thst if he touches the garment, the sale is
confirmed, even if he is not fully aware of its qualities.

 Sale of water:

Most jurisprudents agree that sale of water is permitted if it is privately owned. Like the
water of a privately owned fountain or well. However, Dhaheri scholars state that sale of
water is prohibited in the absolute. Moreover, there is unanimity among all scholars that
sale of common public water is prohibited. This is because it (along with herbage and salt)
is public property.

 Sale of ‘inah (postponed payment):

This occurs when a person refuses to sell some goods except for postponed payment. This
is Imam Ahmad’s definition of this kind of sale. This sale is prohibited unless the goods
are sold partly for credit.
 Sale of grapes to a wine-maker:

In spite of the fact that this sale is correct in appearance, as it has all the legal conditions
and pillars of a sale, it is not encouraged according to Hanafi’s and Shafie’is as it is
motivated by a bad intention. On the other hand, the Malekis and the Hanbalis state that it
is nugatory and cnnot be considered valid in order to block the way to corruption. The
same ruling applies to sales of weapons in times of sedition and sales of weapons to
brigands.

 Sale with a handsel payment:

This kind of sale is prohibited in Islam according to most jurisprudents because it was
interdicted in sunnah. The Malekis and the Shafie’is state that itis nugatory if the seller
makes the provision not to return handsel money to the buyer in case the sale was not
concluded. If such a condition is not made, then the sale is correct. Hanbali scholars state
that this kind of sale is permitted by the Prophet (PBUH).

 Overbidding in other people’s sales:

This practice is interdicted in sunnah as the Prophet (PBUH) says, “one of you should not
make offers over his brother’s transaction...’ Some jurisprudents gave an example of how
this is done: While the transaction is in the stage of choice, a third person comes and says
to the buyer “Cancel this sale and I will get you the same merchandise for a lower or
better price;” or he would say to the seller, “Cancel this sale and I will buy your
merchandise at a higher and better price;” or the seller and the buyer might agree on a
specific price but the sale has not been concluded yet, and a third persons comes and
outbids the buyer.

 It is Illegal to bring together in a single contract transactions:

Such as bai’(sale) and jualah(commission), sharekah (partnership) and sarf(exchanging)

and nekah(marriage), mosaqat(agricultural partnership) and mudarabah(trade-labor
partnership). Such a contract is corrupt according to Malekis, but it is correct according to
the Shafie’is and Hanafis; it is also considered by Ashhab and ibn Jozai’. Malekis permit
joining sale and rent in one contract. Hanafis consider the sale in such contract invalid;
and shafie’is and Hanbalis consider it nugatory.
 CONCLUSIONS

Sale according to Islam is legal and has been urge to implements the practices of sale
accordance to Shariah law and by mutual consent. The term “contract of sale” signifies the
“delivery of a definite object which possesses legal value in exchange for something
equivalent in value called the price”.

Any contracts must be made as explicit as possible in order to avoid Gharar and
injustice to any of the parties. A clause in the contract allowing a change in liability beyond
the control of the liable party would be unjust, e.g. the client in Murabaha agrees that the bank
can chance his liability whenever the latter likes, or the client agrees to automatic
compensation for the bank in case of his failure to meet the liability. A valid contract must
comprise the following intrinsic elements:

• The form, i.e. offer and acceptance, which can be conveyed by spoken words,
in writing or through indication and conduct. The acceptance should conform
to the offer in all its details.

• The contracting parties, who must have the capacity for execution.

• The subject matter, which must be lawful, in actual existence at the time of the
contract and should be capable of being delivered and precisely determined
either by description or by inspection or examination.

Generally, Islam prohibits all transactions that depend just on chance and speculation,
those in which the rights of the contracting parties are not clearly defined and those that
enable some to amass wealth at the expense of others and which could result in litigation. In
every instance of prohibited business conduct one can discern an element of injustice, either
to one of the contracting parties or to the general public. In order to nip evil in the bud, Islam
seeks to block all those channels that eventually lead to injustice.