TRANSACTION IN ISLAMIC

LAW
•DEFINITION
•THE PILLARS OF A CONTRACT
•DISSOLUTION OF A
CONTRACT
•COMPARISON ISLAMIC LAW
OF CONTRACT AND
MALAYSIAN LAW OF
CONTRACT
 DEFINITION
• In Arabic language refers to ‘aqd
• Originally means tying tighly, as in tying
a rope.
• Also means make a covenant “aqad al
‘ahd’”
• “aqd al yamin” to mean give an oath
• It also carries the meanings of covenant
and fulfillment
• In Islamic jurisprudence usage means an
engagement and agreement between
two persons in a legally accepted,
impactful and binding manner.
 The pillars of a Contract
a) Ijab (positive proposal) and Qabul
(acceptance)
b) The existence of two properly and
aptly qualified contractors
c) A format (sighat)
d) Subject matter
 a)Ijab and qabul

Is confirmation
The offer made by the first party to
a contract
It gives and confirms the freedom of
acceptance to the second party
If the second party agrees, then his
statement is called qabul.
The coming together of ijab and
qabul makes up the contract
 b) The existence of two properly and
aptly qualified contractors.

It refers to the parties to the

contract
It is a condition of a valid contract
that the parties possess capacity
According to jurisprudents, it is
quality which makes a person
qualified for acquiring rights and
undertaking duties and
responsibilities.
 Continue…
These capacities are
 a). Wujub (rights) that a person is entitled to all
his legal duties;
b). 'Ada (performance, action) that a person is
qualified to take action which is legally valid. It is
doesn't exist before a person acquires proper
mental awareness and become discerning and
reaches age of maturity.
 c) A format (sighat)
Means the the utterances expressing
the wills of the two parties, showing the
purpose of contract and bringing it into
existence after it had been a hidden
and unknown thing or intention.
Jurist agree on that contract is
concluded by using the past tense of
the verb by the two parties, like when
the first party says "I sold" and the
second says "I bought" or "I am selling
you this (commodity) for that (sum of
money), " and other says, "I accept"
 d)Subject matter

The place of reference in contract is its

subject matter which is the place of
application of its rules and does not go
against its purpose
It should:
1) In principle be something legal otherwise
the contract is nugatory,
2) it has to be specified and defined in way
prevent ambiguity, and
3) it has to be existent.
 DISSOLUTION OF A CONTRACT
Dissolution is breaking
"INHILAL
The theory of dissolution FASKH"
in Western jurisprudence
 The theory of dissolution passed through different phases in
Western jurisprudence before it became an established theory
relied upon by law. Roman law, in the beginning, did not
recognize dissolution of contracts at all. It stipulated that each
party in a contract had to abide by it and execute its
obligations, separately from the obligations of the other party.
None of the parties had the right to dissolve the contract on his
own part; he could only demand that the other party execute
his (the other party's) obligations. Nevertheless, Roman legists
had to permit dissolution of a sale contract after this became
based on mutual agreement and after they modified. It and
included in it a condition which allows the seller to dissolve the
contract if the purchaser did not pay the price.
 This was adopted by the ancient French which
permitted dissolution of contract in such a case. It
went a step further and stated that a seller can
dissolve a sales contract if the buyer did not pay the
price even if this was not stipulated in the contract
originally. However, dissolution in this case could not
be done except by a court order Dr AI-Sanhuri
remarks that "When French civil legislation copied the
principle of dissolution from the Romans, it was
influenced by the Roman composition. In article 1184,
it stated that the dissolution condition is implied in the
contracts of mutual commitment in the case where
one of the parties did not perform his contract
obligations. This states nothing more than the rule
which permits dissolution in situations where the
debtor did not pay his debts.
The theory of dissolution in
Islamic jurisprudence
Islamic Shari'ah views a contract as a commitment
which should be adhered to
dissolving a contract is a very serious matter which
should not be permitted except in the narrowest
sense and the most serious of cases
Islamic Shari 'ah did not open the door for
dissolution of contracts for trivial reasons. The aim
behind that was to preserve stability of transactions
and dealings among people, and to teach them how
to respect and keep their commitments and
obligations. The Quran commands the believers to
keep their contracts and their commitments
The principle of non-dissolution of contracts in Islamic Shari'
ah is not a general comprehensive rule to be applied in all
cases and on all contracts.
Islamic jurisprudence views the commitment of each party as
independent from that of the other. The buyer is committed
to paying the price and the seller is committed to handing
over the sold subject and transferring ownership. If one of
the two parties fails to keep his side of the contract, the
other party has the right to demand that the other party
execute his obligations, but he does not have the right to
demand the dissolution of the contract. This is a general rule.
However, there is an exception to this rule which permits
dissolution of the contract that is in the case of the
destruction of the sold subject while it is still in the
possession of the seller. Likewise, the destruction of a rented
object renders the rent contract dissolved as we have seen in
our discussion of the theory of contingencies.
1. theTo sum up:
contract mustfor dissolution
be of to be
mutual commitment,
effective several
that is binding conditions
for both parties, must exist:
2. one of the parties fail his commitment,
3. the other party must have the ability to fulfill
his commitment and to bring things back to
their contractual state after the dissolution, and
4. The party demanding dissolution should warn
the other party of his intentions first.
"A" reached an agreement with "B" that "B" build a house
for "A" Example:
after "B" receives an initial payment of $ 50,000 from "A".
Then, before paying this money to "B", "B" filed a case
against "B" demanding dissolution of the contract. In this
case, "B" is not right in suing "B"; rather, he has to do his
part by paying the money to "B" first, and then demand
that "B" fulfill his commitment.
Giving ample warning to the second party is a
prerequisite before demanding dissolution. This is a good
measure which helps the judge in considering the case
and in responding to the demand of dissolution; it also
makes him nearer to taking a decision concerning
damages besides dissolution.