Caliphate, Economy

Contracts in Islam

Wael b. Hallaq says, “In fiqh, contracts do not stand as a separate category, in the manner, say, American or French law articulates them in textbooks and treatises. Rather, Islamic conceptions of contract are implicit in juristic discussions pertaining to pecuniary and commercial transactions, among others. They are constituted by three essential elements (arkān; sing. rukn), namely:

(a) the parties;

(b) the form (ṣīgha) of offer and acceptance; and

(c) the object, or subject-matter.

(a) The contracting parties: A person qualified to enter into a contract on behalf of oneself or another must be of major age (bāligh) and have attained rushd, namely, the capacity to behave in a responsible and constructive manner (muṣliḥan), and without this capacity being subject to interdiction (ḥajr). Minors and the insane cannot enter into a contract without a guardian acting in their interest, except for discerning minors (mumayyiz) who can, inter alia, receive gifts and be the beneficiaries of a waqf.

(b) Offer and acceptance (ījāb and qabūl): The majority of jurists associate offer with the owner (mālik) of the object, and acceptance with the party to whom ownership or possession of that object (or usufruct) is transferred. The Hanafites placed greater importance on the order of occurrence, declaring the first proposition seeking to contract to be the offer, and the second in chronological order to be the acceptance. Key to any contract is the presence of rida wholehearted consent without any trace of coercion whatsoever…

(c) The locus [subject-matter] of the contract: It is largely because of the existence of a variety of contractual objectives and aims that several types of contract have come to be recognized. These range from objects to be sold and bought, to those gifted, pawned, loaned, hired or rented. As we shall see, in contracts of sale, not only must the object be in existence (with the single exception of the salam contract) but its characteristics must also be known with a great deal of specificity.” [1]

A Saheeh, Baatil or Faasid Contract

Islamic contracts can be classified as either Saheeh (correct), Baatil (invalid) or Faasid (defective).

A saheeh contract is one in which the Arkaan (pillars) and Shuroot (conditions) are correct. So a saheeh marriage contract (nikah) would be one with the choice and consent of the man and woman, both of who are Muslim, or the woman is from the people of the book, the correct number and type of witnesses, permission from the wali ul-amr (guardian) and a specified mahr (dowry).[2]

A baatil contract is one in which a rukn (pillar) was missing. Such a contract cannot be rectified and is null and void. So a baatil marriage contract is one in which a Muslim woman marries a non-Muslim man.

A faasid contract is one in which a condition does not violate the Arkaan of the contract, and this condition can be rectified. [3] So a faasid marriage contract is one in which the mahr was not specified. The amount of the mahr can be specified after the marriage, turning the contract from faasid to saheeh.

The Hanafis says: “The Aqd (contract) that is not Saheeh is divided into two categories: The Baatil and the Faasid. If the deficiency or violation occurred in the pillar (rukn) of the contract it would be Baatil and no effects will be built upon this invalid transaction as a consequence of it, like the sale of carrion (Al-Maitah) for example. That is because the ownership of the carrion does not result from it nor does the ownership of its price or value and there is no permissibility in respect to benefitting through the Maitah (carrion) or its price.

If, however, the flaw, violation or deficiency (Khalal) occurred in one of the conditions (shart) of the contract then the ‘Aqd would be Faasid and some effects would be consequential to it like the contraction of the marriage without the specification of the Mahr. That is because the consequences of the Saheeh (valid) marriage are built upon it whilst the Fasaad (corruption or corrupted element) is removed by specifying the Mahr.”[4]


[1] Wael b. Hallaq, ‘Sharia: Theory, Practice, Transformations,’ Cambridge University Press, 2009, p.239

[2] Taqiuddin an-Nabhani, ‘The Social System in Islam,’ 3rd Edition, 1990, Al-Khilafah Publications, p.127

[3] Muhammad Hussein Abdullah, ‘Al-Waadih Fee Usool ul-Fiqh,’ p.364

[4] Ibid, p.366