GENERAL THEORY IN

CONTRACT
GE 20603
FIQH MUAMALAT
INTRODUCTION:
1) Preliminary: Definitions of Contract
2) Contract in the Quran and Hadith
3) Elements of Contract
(i) Sighah al- Aqd (Offer and
Acceptance and the consent of parties)
(ii) The Subject Matter
(iii) Contracting Parties
4) Termination of Contract

Preliminary: Definitions of Contract
Lughah= to tie, to fasten, to link together (ex:
to tie the rope- aqd al-habl)*
Istilah= the obligation which is the result of an
offer given by one party and the
acceptance given by the other party, in a
way where its legal effect is expressed on the
thing contracted upon
The majority of Muslim jurists refer the term
aqd to cover two meanings:
1) The connection of the words of one party to
the words of the other party which
constitutes legal implication on the subject
matter.
2) A form which binds two intentions expressed
through words or otherwise and produces
obligation on the two parties.

Contract in the Quran and Hadith
Quran:
1) O ye who believe! Fulfill ali obligation*
2) Nor sell the covenant of Allah for a
miserable price: for with Allah is a (prize)
far better for you if you only knew**
*Surah al-Maidah 5:1
**Surah al-Nahl 16:95
Also refer to: Surah al-Nahl 16:92&94, Surah al-Taubah 9:4, Surah
al-Baqarah 2:282.

Hadith:
1) Muslims are bound by their conditions*
- A limitation of this general principle (stated
in another Hadith) is that Muslims are not
bound by conditions which make lawful
what is unlawful or make unlawful what is
lawful.
*Bukhari, al. Sahih (1934). Kitab al-Shurut. Al-Matbaah al-Masriyah,
p.289.

Pillar of contract
1)Sighah (offer & acceptence)
2)Contracting parties
3)Subject matter
Elements of Contract /Pillar of contract
1) Sighah al- Aqd (Offer and Acceptance and
the consent of parties)
a) The arrangement of sighah al- aqd
- Sighah
- Contracting with act
- Contracting with gesture/sign
- Contracting with statement/writing

b) The meeting place as a juristic concept
- It thus becomes possible for the offer and
the acceptance to be contemporaneous
- It is held that the offeree has to accept in
the meeting place
- This is done by holding that the offer exists
constructively as long as the meeting
continues, unless it is withdrawn

2) The Subject Matter
a) The subject matter must exist
b) The subject matter can be delivered
c) The subject matter can be ascertained
d) Suitability of the subject matter

3) Contracting Parties

Who Perform the offer and acceptance-The
must be at age of puberty and sane

a) Legal capacity (ahliyyah)- the eligibility of a
person to establish right for and obligation
upon himself
b) The level of legal capacity
- foetus ( al janin)
- childhood/pre dicernment/pre mumayyiz
- the age of reasons Mumaiyyiz (year 7 to
puberty)
- Puberty
- Mature

c) Impediments to legal capacity
- insanity (junun)
- imbecility (atah)
- insensible
- sleep
- drunk
- Safih
- insolvency (iflas)
- death illness (marad al-maut)
- pledgor
- prodigality

Termination of Contract
1) Termination by cancellation
Cancellation by the invalidity of the
contract
Cancellation by option
Cancellation by iqalah or mutual consent of
all the contracting parties
Cancellation due to the frustration- fails to
fulfill the terms of the contract
Cancellation due to the completion of the
period of the contract

2) Cancellation by the death of the parties
a) Hire
b) Pledge and surety
c) Contracts of share-cropping and irrigation

Transaction Contract :sales
contract
Definition of Sale (P-5)
An exchange of one item for another, the
exchange of property for property, transfer of
corpus for a consideration (tamlik al-ayn bi
iwad)
Arabic term bay refers both to the activities
of buying & selling- derived from the term ba
(for arm) because one extends ones arm to
give or take.


Hanafis:Exchange for own commodity
(mal) for another in specific manner
Hanafi also defined Commodity as mal

Nawawi: The exchange of an owned
commodity for another with exchange of
ownership




(c) Ijma
Muslim have agreed that sales are
permissible & this only stands to good
sense as it allows each individual to
meet his needs in cooperation with
others trying to meet their own.
Therefore, the general rule in sales
(al-buyu) are permissibility

Ethics Of sales
Ethics of Sales:
(a) The avoidance of excessive profits- Malikis =
not more than 1/3 or 30%
(b) Truthful and complete disclosure of
information
(c) Ease of conduct
(d) Avoidance of swearing, even if truthful
(e) Frequent paying of charity
(f) Documentation & witnessing of all debts
(g) (Quran 2:282)

Cornerstone of sales contract
Cornerstones (rukn) of Sale Contracts
(ijma ulama) (p-8)
1) Parties to the contract (The seller & The
buyer
2) The language of the contract
3) The object of contract (Price)

Primary rukn (cornerstone) for hanafi is the
offer and acceptence
Hanafi view offer as action of one of the
two parties indicating willingness to
engage in a transaction
Acceptance:indicated by second party

Condition of sale (P-13)
1) contractor
2)contract itself
3)Palce of the contract
4)Object of the contract
Condition of sale
1)Contractor must satisfy:
Must be sane and able to run his own
affairs
No contract conclude by insane
person(tidak waras) and child not

Multiplicity (more one party except
father,qadi & wasi)
Condition of sale
2)contract itself
The contract involve sane contractors.
Offer and acceptance contract must unity of
safaqah
Safaqah price,goods and parties
Different good- sales not conclude
Different parties- sales not conclude
Different price
If acceptance > Offer sales conclude
acceptance < offer sales may not conclude

Condition of sale
3)Palce of the contract
Offer and acceptence (aqad) in the
same session where both parties present
Session (majlis) based on uruf
The Sales is not conclude if other party left
the session (majlis)

Condition of sale
4)Object of the contract (p-15)
Object of sales must exist (except
istisna,salam)
Object of sales must be currently owned
and temporarily non perishable
Private own
Must be deliver at the point of sales
(conclusion of sales)


Condition for the executability
of sales
There are two condition:
1)Ownership or Guardship (wilaya)
2)No third parties should have the right
over the object of sales

Condition for the executability
of sales
1)Ownership or Guardship (wilaya)
No legal constrain

For guardship-

Condition of validity of sales
General condition:
1)ignorance
2) Coercion
3)Timing
4)Deception and Gharar
5)Harmful sales
6)Corruption sales

Condition of validity of sales
Specific:
1)receipt of movable goods
2)Knowing the initial pricein trust sales
3)Exchange object and price prior to
parting in money exchange transaction
(sarf)
4) Satisfacton of forward sale
5)Equality compensation
6) Receipts of Debt on the parties
Condition for bindingness
(luzum)
The condition of sales to be binding come
into consideration after condition of
conclusion and executability
The contract also must be devoid of all
options that allow one parties to void the
contract (khiyar)