What makes a contract Shari’ah compliant?

Question:

What are the requirements for a valid contract to be Shari’ah compliant and valid?

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

 

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In essence, there are 6 fundamental requirements for any contract to be Shari’ah compliant and valid:

1)     Consensus

Consensus refers to the parties being in agreement, also expressed as the meeting of the minds.

It means the parties must agree as to the fact that they are contracting, as to the type of contract, as well as the fundamental details of the contract.

The offer and acceptance is the outer dimension or manifestation of such an agreement of the minds. However, it is not the only form an agreement can be deduced. As in the case of a contract by conduct or an implied contract, there is no formal offer and acceptance, yet an agreement can be deduced.

If each party had a different understanding then we have dissensus, which is the opposite of consensus. In that case a contract does not come about. For example, Zaid had the impression that he was purchasing the car, but Bakr had the intention of only leasing out the car, we have dissensus. Similarly, if Zaid has the impression that he is purchasing a VW Golf, while Bakr has the impression that he is selling a BMW, we have dissensus.

2)     Capacity

The person transacting must qualify to be able to enter in a contract.  A very young child and an insane individual do not have the capacity to transact.  There transactions will be invalid.

3)     Performance from both sides must be possible

The Fuqaha use the term مقدور التسليم (deliverable).  If one cannot perform the duty he has to the contact, a contract cannot exist. For example, one cannot sell fish from a river as he is not in the position to deliver it upon sale.  In contrast, it is permissible to sell a fish in a tank as he has the article of trade (fish) within his grasp and hence it is deliverable.

4)     The performance and the objective of the contract must be lawful

A contract with the performance of dealing in interest will be unlawful.  In a similar fashion, a contract to hire an assassin to murder someone will be unlawful as the objective of contract is impermissible.

5)     The presence of the constitutional elements

A valid offer and acceptance must be established either verbally, in script or by way of indication.  The practice today in the supermarkets is of effecting an offer and acceptance by way of indication.  The customer simply places his item on the checkout counter and the sales assistant scans the item without engaging in any discussion with the customer.

In addition, all the elements of the contract in question must be present.  In a sale, the laws relating to the article of trade and purchase price must be present.  In a pre-paid (salam) transaction, the laws pertaining to this form of transaction must be established.  In a lease agreement, the necessary requirements must be present.

6)     The performance must be ascertained or reasonably ascertainable

Everything in the contract has to be reasonably ascertainable.  In secular law, a contract is deemed valid if the subject of the contract is ascertainable sometime in the future.  In Islamic Law, a contract will formulate as long as there is a mechanism to ascertain the performance.  For example, an identical sample of the article of trade can be used to sell the actual commodity.  In this example, although the exact commodity is not being sold, but a sample is identical to the actual item, therefore specifications of the time are ascertainable.

If the above requirements are present in a contract, the contract will be valid.  However, due to the sensitivity and delicate nature of a contract, it is always advisable to sit with a Mufti and check the Shari’ah compliancy of the contract.  One term in the contract which is non-Shari’ah compliant can jeopardise the entire contract.

 

And Allah Ta’āla Knows Best

Maulana Faraz ibn Adam al-Mahmudi,
www.darulfiqh.com

 

 


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