What Is Law of Contract in Islam
Some contracts are binding, Lazim, once they are concluded, they can only be revoked by mutual agreement of both parties. Some are optional, Jaiez, which can be revoked by any party and in some cases by a particular party. Sharia includes certain ready-to-use treatises derived from the Qur`an, sunnah and Ijma. These are essentially sales rent, agency, guarantee, donation, partnership and Mudarabah. Sharia restrictions on certain financial and commercial transactions are the raison d`être of the emergence of Islamic banking. It is therefore important that every student of Islamic banking understands the basic elements of Islamic contract law. Musharakah and mudarabah are long-term equity financing agreements. Often described as the « real and ideal financing instruments » in Islamic jurisprudence. They are based on the sharing of profits and losses between the parties. The parties involved in a transaction who share the risk are at the heart of Islamic jurisprudence so as not to create unequal justice and unnecessary suffering for one party compared to another. However, Islamic Sharia has its own theory of contracts and therefore allows treaty agreements not to fall into the categories of recognized appointment treaties because they are within the parameters of Sharia law.
A new contract may not be entirely new, but the merger of a series of appointment contracts. The modern Treaty of Murabaha can be considered an example. Unlike the common law, Saudi law requires acceptance to take place before the parties attempt to physically separate. [22] To enter into a valid contract, certain conditions must be met. Six elements must be met: (i) the bidder and the target recipient; (ii) offer and acceptance; and (iii) purpose and review. To have the legal capacity to enter into a contract, the parties must have reasonable judgment and be at the age of puberty. Therefore, physical and intellectual maturity is of great importance in determining ability. Contracts may be concluded orally, in writing or by the conduct of the parties, through the exercise of the contract. What distinguishes Islamic treaties from their Western counterparts is that they insist on the reunion of the treaty (Majlis al-`aqd). The offer and acceptance take place simultaneously at the same time and at the same place.
This avoids ambiguities and disagreements. As technology has evolved, there is now a certain degree of flexibility in the treaty session, flexibility introduced by tertiary sources of Islamic jurisprudence. Saudi courts also exclude indirect damages based on expected profits. [45] Therefore, contracts relating to relationships over time, such as. B the continued supply of goods, do not become fully liable if they are terminated unfairly. [45] The courts would only award damages for direct harm. [45] Contract law in Saudi Arabia is governed by the conservative Hanbali school of Sharia law, which adopts a fundamentalist and literal interpretation of the Qur`an. [2] Any contract that is not expressly prohibited by Sharia law is legally binding, without discrimination against foreigners or non-Muslims. In a mudarabah contract, or joint venture agreement, the financier (rabb-ul-mal) provides the capital and the working partner (mudarib) exclusively carries out the project and its management. The Qur`an and the Hadith established the contractual maxims that form the basis of Islamic treaties. The Qur`an mentions a number of commercial contracts in more than 40 verses. The Hanafi school of Islamic jurisprudence, followed by about a third of the world`s Muslims, was the first school to formulate contractual rules for commercial transactions and payment of goods for future deliveries.
Certain conditions must also be specified for a Saudi treaty to be enforceable. These include: the items involved, the quantity, the price, the parts and how the payment is made. [23] The application of a treaty consists of three main phases: Commercial law in Islam, fiqh al-mu`amalat, is governed by Islamic jurisprudence, based on the principles of natural justice. The basis of any commercial activity is the formation of contracts; For Muslims, it is no different. Contract law is relevant for the improvement of business activities. As the availability of Islamic financial products becomes readily available worldwide, it is important to understand the fundamental principles of Islamic commercial contract law. Not all contractual agreements are tolerated in Sharia law. Unless a term is positively approved by revelation (« in the book of God »), it is invalid. [25] In a Musharakah contract, the parties participate in the profit or loss of business activity that is consistent with their share of the capital or otherwise specified in the contract. The basic legal decrees of the Qur`an and the hadiths give us guidance on how to write treaties within the limits of Islamic jurisprudence and Sharia law. Some principles of validity of Islamic treaties are not very different from Western treaties.
Then there are principles of ethics and natural justice that are generally not seen in the Western economic sphere. The tertiary sources of law, especially the past and present work of Islamic jurists, provide us with the advice and innovations needed to create treaties appropriate to the global economy. Islamic finance was created not only for the purposes of microfinance and charitable work, but also for the complexity of macrofinance, innovation and various business needs, since « God allowed trade and forbade interest [usury]. » Classical Sharia rarely deals with the idea of contractual freedom outside of standard types of contracts. [26] Rather, it provides for a situation in which model contracts can be amended or combined. There are specific prohibitions imposed by other hadiths, some important ones that prohibit a loan and a sale, two sales in one and a sale of what you do not have. [27] The applicant turns to an enforcement office or a private bailiff to apply for an enforceable title. The defendant is asked to voluntarily comply with the verdict. For contractually agreed debts, the judge requires a public auction of the property, which must be sold after the seizure of the defendant`s movable property. The proceeds of the public auction will be distributed to various creditors according to the priority rules. [1] The Qur`an prohibits the consumption of alcohol, pork, gambling and anything that interferes with public order or is immoral, such as pornography. The price must be set in advance so as not to lead to uncertainty.
As the only exception to the rules, the price of some contracts may be paid in the future. A purchase contract (bay`) can be concluded for the exchange of anything that is considered a commodity or property (evil). [12] However, there are certain things that are not considered bad under Sharia law and therefore cannot be sold. [13] These include pigs, alcohol and animals that have not been ritually slaughtered. According to the Qur`an, there are two exceptions to the conclusion of contracts: the acceptance of interest (riba) and the use of speculative contracts. [14] A contract is correct if it is valid, effective and enforceable. A contract is considered corrupt (sighted) if it is not one of the above points and is considered invalid. Some contracts can be backed up if they become corrupt. For example, if the reason for the damage is an inadmissible condition in the contract, the deletion of this condition will correct it. .