INTERNATIONAL ISLAMIC

UNIVERSITY ISLAMABAD

SUBMITTED TO:
Sir Akbar Khan

SUBMITTED BY:
USMAN ALI

DUE DATE:
CONTENTS:
CONTRACT (Aqd)
ELEMENTS OF ‘AQD
What is SIGHAH?
What is CONTRACTING PARTIES?
What is SUBJECT MATTER?
Subject matter and its effect of contracts
 CONTRACT (Aqd)

• Literally, the word “al-’Aqd” means to tie (between two

Ends), to fasten, to link together.
• In legal view, it has two interpretations either general
Interpretation or specific interpretation.
• In general term, it means anything that is intended by a
Person to do/perform; either based on his own will, e.g.
Endowment (waqaf), divorce (talaq); or depended on wills
Of at least two [arties, e.g., sale (al-bay’), marriage (nikah)
•Specifically ‘Aqd means a connection of the words of one
Party (ijab) to the words of the other party (qabul) which
Constitutes legal implication on the subject matter.

Aqd literally means to bind. In the general sense, Aqd is applied to

every act which is undertaken in earnestness and with firm
determination regardless of whether it emerges from a unilateral
intention (iradah) Aqd literally means tying tightly, as tying a rope.
'Aqd carries the meanings of covenant and fulfillment, as we
read in the Quran surah Al Maidah:

O ye who believe! Fulfill (all) obligations. Lawful unto you (for food) are all
four-footed animals, with the exceptions named: but animals of the chase
are forbidden while ye are in the Sacred Precincts or in pilgrim grab: for
Allah doth command according to His Will and Plan. 1

In another verse of Quran (An Nahl verse 91), we read Allah's

command to the faithful to keep the obligations, which He had
imposed on them when they embraced belief:

Fulfill the Covenant of Allah when ye have entered into it, and break not
your oaths after ye have confirmed them: indeed ye have made Allah your
surety; for Allah know all that you do.2

In Hadith ibn 'Abbas, commenting on a Quranic verse, we read that 'aqd

means covenant, agreement and faith. In Arabic usage, we read that a
man cannot tie ('aqd) a rope to mean he is too poor and feeble to do
anything.
Contract also means an engagement and agreement between two
persons in a legally accepted, impactful and binding manner such a
proposal made by one parties and accepted by other party in a way
which has an impact on the subject matter of the contract.

Among the legal authority that show the recognition of ’aqd in Islamic
Law as follow:
Similarly in surah al-Taubah: it states that
“… So fulfil your engagements with them to the end of their term, for
Allah loves the righteous.” 3
1
surah Al Maidah verse 1:
2
(An Nahl verse 91)
3
surah al-Taubah 9:4
From the hadith, the Prophet (PBUH) expressly stated that :
“Muslims are bound by their conditions (Narrated by Al-Bukhari), …
except condition to make lawful what is unlawful and to make unlawful
what is lawful (narrated as the continuance to the first hadith by al-
Asqalani)

ELEMENTS OF Contracts (AQD)

According to Hanafi, the elements of ‘Aqd include anything that
manifests the meeting of two intentions either through conduct,
gesture or writing.
Therefore the elements of contract include only Ijab & Qabul. Some
other matters are not considered as elements of a contract however
their existence is necessary. For example it is necessary that there
must be contracting parties in order to have ijab & qabul. Similarly
there must be the subject matter upon which the parties have the
agreement to indicate that there is the meeting of two intentions.

According to Hanafi jurists.

Elements of ‘Aqd is:
Sighah (Ijab &Qabul)
Majority of the jurists.
Elements of ‘Aqd is:
Sighah (Ijab &Qabul)
Contracting Parties (aqidan)
Subject Matter (ma’qud alayh)
According to Sanhuri.

Sanhuri an eminent contemporary Muslim jurist has cited seven

component elements in a contract these are:
1. The concurrence of offer and acceptance
2. Unity of the majilis of the contract.
 3. Plurality of contracting parties
4. Reason aqul or the power of distinction tameez of the contracting
parties.
5. That the subject mahal is susceptible to delivery.
6. The subject mahal defined and,
7. The beneficial nature of the subject in that it is permitted for
trade in. We have however, followed here this scheme of the
earliest jurists.

What is SIGHAH?
Mutual consent of parties is the basis for formation of a contract.
Sighah is a method to manifest the intention to contract. It consists
of Ijab & Qabul.
Sighah is defined as the utterances that indicate the between the
contracting parties.

What is CONTRACTING PARTIES?

The contracting parties are the parties who exercise the Sighah of
ijab & qabul. In order to conclude a valid contract, the contracting
parties must have legal capacity.

What is SUBJECT MATTER?

Subject matter and its effect of contracts

The second essential element is its subject matter, which includes a

number of things: namely, commodity, performance, consideration and
subject of the contract.
The term “subject matter “is applied the all of things. Islamic law does
not hold consideration as independent elements of contract. The
reason is that the contractual obligation of one party according to
Islamic law is consideration for the contractual obligation of the party.
In contract of sale, for instance, the commodity is the consideration
for the purchaser and price is the consideration for the seller. The
subject of the contract is also covered under subject matter.
Muslim jurists had laid down four conditions for the subject matter:

1. It must be in existence at the time of the contract

2. It can be delivered
3. It can be ascertained
4. It must be suitable for transactions according to Shari’ah.
5. Legality of object and underlying cause

1. The subject matter must exist.

The subject matter should either been actual existence at the time of
contract or it should be capable of being accrued and delivered to a
prospective buyer in the future. Transactions which involved an
element of uncertainty and risk with regard to the existence and
acquisition of the subject matter forbidden in Islamic law.

• Islamic law requires that subject matter must be in existence at the

time when an ‘Aqd is concluded. Otherwise an ‘Aqd is void, even if the
subject matter would exist in the future.
• Therefore the sale of the animal fetus yet to be born while it is still
in the mother’s womb is void if the mother is not part of the sale.
• Exception is given to bay al-salam (ale by advance payment for the
future delivery), bay al-istisna (contract of manufacture), iradah
(contract of hire) and musaqat (contract of irrigation) based on
necessity and customs.
For instance:
 1. Fruits on tree at the beginning of the season when their quality is
yet to be established:
2. Sale of fish still in water:
3. Milk in the udders of an animal.
4. Sale of standing crops (which are not free from getting spoiled)
and:
5. Feotes yet in the mother’s womb.

Commenting of the practice of selling fruits tree’s before they begin

blossom. Anwar iqbal qureshi writes.
“It is unfortunately a custom with us that fruit trees are sold before
they begin to have blossom’s upon them. This is known as spring sale.
This spring sale, for instance, of mangoes is affected before trees
begin to have blossoms. The natural consequence of this is definite loss
to one of the party of the transaction. what happens usually in such
transaction is that people make a general estimate of the fruits in
produced, but no one can be aware of the unknown in which case this
amount of a form of gambling
The Holy prophet Muhammad (s.a.w.w) says:
“Sell not what you do not have”

Wahbah zuhayli explains the view of the fuqaha on this issue in the
following words.
“The object of contract must be present during the contracts session
contracting over a non-existence object is invalid, like selling crops
before it is visible, on the assumption that the crops might not
appeared equally prohibited involving what is known as the fear of non-
existence khaddar al-Adam like the assumption of that fetus might not
survive upon birth. This requirement is mandatory in the hanafi & Shafi
School, regardless of whether the transactions involved commutative
m’uawadat or gratuitous tabarraut contract.
Any transaction involving madum is void whether the case is sale-bay
gift hiba or pledge rahn. This view is based on a tradition of the
prophet (s.a.w.w) where he is reported to have prohibited the sale of
fetus of an animal bay-habal al hablah as well as the sale of embryo al
madamn and sperm al amalaqih .he is also report to have prohibited
people from dealing in transaction where the seller did not possess the
subject. This is because subject was treated as ma’dum during the
contract. they have establish an exception to this general rule,i.e.,the
prohibition o0f bay ‘ al-ma ‘dam in cases pertaining to sale by advance
(salam ), contract of manufacturing ( istisna ).these transactions are
approved, despite the absence of the object of contract, by way of
istisna ( juristic preference ) in order to cater for the needs of
mankind”.

2. The subject matter can be delivered.

The ability or capacity to deliver the subject matter of the contract at

the time of conclusion of a contract is an essential condition to make a
valid contract. If such a capacity is lacking, the contract is void and
this position is not altered by the fact that the seller was able to
deliver the goods after the time of contract. This condition is
applicable to contracts of sale as well as mortgages and pledges. The
condition is dictated by the nature of the contract and the purpose,
which such contract is supposed to serve. The Muslim jurists
therefore, prohibit the sale of stray animal, whose whereabouts are
not known, or fish in the sea or birds in the air.

• Islamic law requires that subject matter must be able to be delivered

to the contracting parties. Otherwise an ‘Aqd is void. Furthermore the
delivery must be possible without causing any damage to the subject
matter, otherwise the ‘Aqd becomes voidable.
If the parties tolerate the damage, then the contract is valid.
• Hence, it is void to sell a bird on the sky, fish in the sea or runaway
horse.

3. The subject matter must be ascertainable.

The general principle in Islamic law is that the subject matter must be
precisely determined as regards its essence, quantity and value.
Similarly, if the subject matter is an obligation or performance, it must
be precisely determined at the time of the contract otherwise the
contract will be invalid. An example of indetermination with regard to
genus is where a seller was to sale “I m selling you an ewe from this
flock or a dress from this bundle”
Such sale is irregular (fasid), because the particular ewe or dress has
not been indicated. The subject matter is ascertained by the
acquisition of the knowledge that does away with all uncertainty and
vagueness likely to lead to dispute among contracting parties.
Some jurist allows a sale even if the goods have not been examined or
described; this is achieved by granting to the buyer to the option of
the site or examination after their contract.
• Islamic law requires that subject matter must be ascertainable and
known to contracting parties. Sufficient knowledge about the subject
matter is necessary to avoid future disputes.
• If the subject matter of the ‘Aqd is of different kinds or articles, it
is necessary to determine individually. But if it is of similar articles, it
is sufficient to determine one to here article in order to attain
knowledge of the subject matter.

4. The subject matter must be legal.

The commodity service or performance must not include things

prohibited by the Shari’ah like wine, pork, intoxicants and prostitution.
It is forbidden for a Muslim to acquire or transfer through contract
ant thing that the Shari’ah has declared haram. Since adultery,
obscenity and immorality are prohibited by the Shari’ah any contract
or transaction that entails these evils or promotes them in any way is
also forbidden. From this it is established that the subject matter of a
contract must be such in which transactions are legally permissible.
The list of things prohibited by the Shari’ah has been affirmed the
Quran and the Sunnah.This includes wine, flesh of swine, blood or
animals, which have died naturally or have not been slaughtered
according to Islamic teachings.
The legality of subject matter further requires that the commodity
should be owned by someone. Thus, public property is excluded and
cannot be the subject matter of a contract. The same applies to the
other things, which are yet to be owned like fish in the sea etc. As
regards public property, however, the state in nowadays considered
similar to person capable of owning property.
Legality of subject matter also requires that there should be no
encumbrance or right attached to it. An example in this regard is sale
of mortgaged or right attached to it. An example in this regard is sale
of mortgaged property to which the rights of the creditor/mortgagee
are linked.

• Islamic law requires that subject matter must be of commercial

value, otherwise an ‘Aqd is void.
• Therefore the sale of the wine, blood, pork is void even if these
articles are of value to others or according to civil law.
• Similarly, the sale of items that can be acquired gratuitously without
purchase, such as fish in the sea, bird in the air, etc, but once
acquired, it can become the subject matter of transaction.

5. Legality of object and

underlying cause
The validity of the contract requires that the object and the
underlying cause must be legal, thus a contract made for a use of
property in commission of an offense, when the parties know this fact
is unlawful. Similarly, selling weapon at a person who will kill an innocent
man with it is illegal, if the seller has inn knowledge of this fact.

It means that the intended objectives if the contract should not

oppose the will and intention of the law giver.

In this regard the eminent jurist Imam Ibn AL Qayyim writes.

“The proves and rules of the shari’ah indicates that intentions are
taken into accounts in contract that affect their validity and invalidity,
and lawfulness and unlawfulness of a contract, but more seriously that
it effects the action which is not a contract with respect to making it
lawful and unlawful the same items becomes lawful sometime is and
unlawful at other times depending on variation of intention and
intended objectives.

CONCLUSION:
We can conclude that the subject matter, i.e., commodity or performance or
service should be lawful.
The object of contract should be deliverable. The subject matter should be
precisely determined at the time of contract.
 Bibliography:
http://islamic-world.net/economics/contract.htm

http://alqalam.org.uk/

http://www.scribd.com/

www.islamicbanker.com/islamic-contract-law.html

Islamic law of contract and business transaction

By Dr. Tahir Mansuri