Under Islamic law, contractual obligations enjoy legal enforcement in conformity with human nature. Man is ordained to live in complete obedience to Allah, his creator. The general imposition of law compel a mere stipulation like a promise is seen in the success of divine guidance. The following verses of the holy Quran provides the basic framework for the embodiment of the law of contract under the Islamic law or sharia.
The holy prophet Muhammad has also said in one of his hadiths: “No faith for whoever lacks trust and no religion for whoever keeps no covenant”
From the above quotations, many terms have been used, this include contractual obligations, engagements or covenant, covenant or plighted words, oaths and trust. All these terms have to do with rights and obligations which arise from human interactions. Thus the shariah is dearly concerned with stable and just dealing between man and men as well as between man and his creator, Allah. It doesn’t their contract to the nature of their contract to the nature of their economic and social system. It must be noted however that although the determinant of legal duty and obligations in shariah is shariah itself there is a large room left to individuals to serve determination through contract. This can be proved by the market economy that this system encourages and support. Individuals are allowed to adjust their rights and duties during mutual ascent, with this, the institution of the law of contract has been allowed to develop and nourish throughout different epoch and eras within the visit of shariah’s permission. Even in legal system that provides for maximum freedom of contract, there are some agreements which do not form the basis of any legal obligation. This therefore necessitates the law of contract to distinguish between the law of contract to distinguish between agreements which are valid and enforceable and those which are not. This prescription has been embodied into the shariah system from the initial stage of its promulgation. For example, contracts are unenforceable if their performance would lead to…….. which is illegal before the shariah or if it is contrary to public interest. It must be noted that many of the above quoted verses of the holy Quran refer to what seems to the “gentleman’s bargains” though the notion of binding agreement …… all the transactions of the ………. Parties on agreement are bound to carry out in good faith the obligation assumed under it. The element of the actionability with the attendant legal remedy where one of the parties caused a breach of the agreement s presupposed. Furthermore, where the solemnity is accorded in an agreement the parties to the agreement are more obliged to abide by the terms. Note that, the enforcement of an agreement under the shariah doesn’t stand on the idea of the principle of reciprocity between the contracting partners. Whenever an agreement which the law recognises is established, the legal obligation …. Many contractual rights and obligations have enlarged from unilateral declarations. For example, inlaq or endowment. The important thing is the discovery of the parties, when this is settled, the obligations that the parties intend shall be legally binding on them. Should there be a breach of one of the conditions of the agreements, the contractual wrong emerges. The conditions may be stipulated in the term of the contract and even if it is implied by the custom or the nature of the people to the contract, the shariah will consider it.
“Al-agd” is the Arabic word for contract and it has many meanings which inspire the notion of time, rightness, consolidation, perfection, integration of two things etc. the juristic meaning of the term Al-agd is not far-fetched from the literal meaning. For example, if A, says to B, I hereby sell o you tis my book for N1million and B, replies, I agree. A, has by his statement obliged that the book belongs to B in exchange for N1million. The integration of the two obligations on the subject matter which is the exchange of the book for N1million in a special manner of making the second declaration an acceptance to the first declaration known as an offer as an offer without any split between the 2 declarations is known as Al-agd or contract. The first declaration in any bilateral agreement is called “Ijab” or “Offer” while the second declaration is known as “Qubul” or “Acceptance”. From the fore-going, the word contract or Al-agd under the Islamic law or shariah can be defined as “connection that exists between 2 statements or whatever replaces 2 statements on which consequence, a legal obligation emerges”
Contract in the shariah is defined as the connection between an offer initiated by the party of the first part and an acceptance which comes as a reply from the party of the second part in a way that their legal effect reflect upon the subject matter. This in essence means that no contract can be established except when there’s an offer and acceptance, the contracting parties and the subject matter.
The Muslim jurists agreed unanimously on this factor or element as the basis of every contract. Nevertheless we controverted on whether all of this factor or elements are essential for the creation of every contract or not. The Hanafi jurist had asserted that the essential element of a valid contract are only the offer and acceptance. According to them, the 2 contracting parties and the subject matter are merely requirements of offer and acceptance. Their argument is that the existence of an offer and acceptance warrants the existence of the necessitating factor and the necessary element which is consisted in the 2 contracting factors. Again, he maintained that when an offer and an acceptance are found to exist, they necessitate the existence of an object upon which their togetherness will reflect. They therefore concluded that the essential element of a contract are but the offer and acceptance. Other elements are the necessities of them. The majority of the Islamic schools of thought consisting of Maliki, Shafi and Hambali have disagreed with the Hanafi school of thought and agreed that all the four elements that is to say offer, acceptance, 2 contracting party and subject matter are essential and fundamental for the constitution of a contract under the shariah. They gave the example of the contract of sale and said that the vender and the purchaser, they are expressions the goods and the price constitute essential element of the contact of sale of goods. According to them, any element which if it is missed out of the contract and renders the contract incomplete is an essential element to the contract, therefore they did not differentiate between elements which are parts and parcel of the agreement and other elements which are strictly attached to the agreement but not part of it ab initio. Like the subject matter and the 2 contracting parties.
Al-Ijab is the declaration of the party of the first part while Al-Qubul is the response of the party of the second part. For example, if a person says, I hereby sell you my book for N1000 and another person replies, I accept – the first statement is the offer, while the reply is the acceptance. With these 2statements, a contract has been formed and eventually it has attained an outward existence by the connection between the offer and the acceptance. Nevertheless, there are certain conditions which the connection between the offer and the acceptance need to fulfil before a legal consideration can be accorded to the contract. The legal consequences will make the contract have a legal effect as a valid contract. The following are the conditions:
In the meeting place of the contract, the coincidence of the party’s intention through the connection of an offer and acceptance is a matter of consensus among the Muslim jurists. However, they had controverted on the immediacy of this connection. In the Shafi School of law, the declaration of acceptance must be immediately after an offer has been given or made. According to them, a declared offer is vanished or disappeared after its declaration and acceptance made after it do not coincide with it despite offer. Thus, a contract is not constituted, according to them, it is therefore considered as a necessity to retain the offer in law even though it doesn’t remain in fact. The essence of necessity in this regard implies immediacy. For this reason, it become necessary to declare the acceptance immediately the offer is made.
Other Schools of law like Hanafi and Maliki schools had argued that the necessity of retaining the offer in law does not implies immediacy. They supported their argument by maintaining that the offeree needs the chance or opportunity to assess the merit and demerits in the terms of the offer if he is denied this chance it will definitely means that he is asked to give an offhand acceptance. This under the Sharia could constitute a restriction and constraints. Nevertheless, these schools have also asserted that the offeree is not permitted to delay unnecessarily his response either to accept or reject the offer. His delays can also cause harm or injury to the offeror.
To reinstate, the cogent factor of a contract is the mutual assent of the contracting parties. This mutual assent is based on the desire and intention of the contracting parties. Nevertheless, there are cases in which contract which had been duly formed or constituted by competent parties may be vitiated by reason of existence of certain factors. These factors or elements are capable of rendering the contract either contrary to the law or making the consent of both parties or consent of one of the parties defective. Consequently, the contract become ineffective and also an anathema to the established legal norm. Examples of these defeating factors that can negate the intention of the parties and the bases of the contract under the Islamic jurisprudence are Mistake, Deception, Fraud and Duress.
The enforceability of a contract is based on the genuineness of the assent. This enforceability may be affected if a mistake is made by either or both of contracting parties. Nevertheless, the Islamic jurisprudence does not treat all mistake the same way. Some have no effect while others make the consent or assent voidable. The Muslims jurists have use the term Al-Dalaat to mean Mistake. It is defined as a state of mind that inspires an erroneous impression or unrealistic imagination. Al-Dalaat or mistake is one of the vitiating elements or factors of intentions. It has various types. Note however that we are concerned here with mistakes which has linkage with the subject matter of the contract. Mistake in the subject matter may be of different types. It may be in its kind or in its description. An example of a mistake in its kind of subject matter can be seen in the case of a person who has purchased a piece of plot which the court was made of wool but turned out to be made of ordinary cotton. An example of mistake in the description can be seen in the case of a person who has purchased cotton which he thought it’s from Egypt but later on realised that it is from Japan. Nevertheless, mistake in this perspective has been divided into two;
This division covers both mistake in the kind and description of subject matter.
Ordinarily, hidden mistake is a situation which remains in the mind of the contracting party and makes him to be imagining the subject matter not on its reality or on its real description. The mistake will remain hidden if the mistaken party has failed to alter in the construction of the contract what will indicate to his erroneous impression. For example, a person before whom a ring made of brass is placed and thinks that the ring is made of gold and purchased it as such without pronouncing what might indicate to his false imagination is a victim of hidden mistake. The Muslim Jurists unanimously agreed that hidden mistake cannot impair or affect the constitution of a contract or its validity. They argued that the prior consolation in the constitution of a contact is accorded to the statement. Hidden impression and intent which are not disclosed at all cannot be considered. Nevertheless, if the contract contains a clause that the contract shall be void, if the fact is not as believed or the mistake is known to or should be recognized by the other part in the first instance, the contract void. It may be set aside by the deceived party apparent mistake – an apparent mistake is also a situation of imagination that exists in the mind of a contracting party but disclosed explicitly or implicitly in the construction of the contract. For example, if a person offers to another by saying I hereby buy this diamond from you for N10,000 and the offeree replies, I accept but later on the subject matter turns out to be a piece of glass. The mistake of the offeror in this example is apparent for he has disclosed his erroneous impression of which the offeree is supposed to correct. Failure on the part of the offeree to do so renders the contract null and void. The Muslim jurists have agreed that if the apparent mistake is related to the kind of the subject matter the contract is void as is the case in the above example. But if the mistake is related to the description of the subject matter, the contract is voidable at the option of the mistaken party. The Muslim Jurists have developed a theory in the mistake which may occur in the subject matter as follows:
“Whereas the mistaken party has mentioned the correct name of the subject matter, if it happens that he has indicated to another kind of subject matter, the law shall give consideration and recognition to the mentioned subject matter rather than the indicated one. As such the contract is void. For example, a person says to another I’ll buy from you ‘this ring which is made of gold and poured at it. If the potted ring is made is made from brass, the contract is reconstituted. Where the mentioned subject matter and the one indicated at are of the same kind but of different description like the case of lactiferous cow, the law shall give consideration to the pointed subject matter. In this situation, the contract is constituted as executory. It only becomes executed by ratification at the instance of the mistaken party.
The Muslims jurists have argued in favour of this theory and said that the mistake that occurs in the kind of the subject matter renders the subject matter non-existence and since no contract can be established without a subject matter which is lacked here, the contract remains unconstituted. Note also that even where they mentioned and pointed subject matter are of the same kind but the difference occur in their description, if the difference between the two subject matters is too great to the extent that it cannot be condoned, the mistake should be considered as a mistake in the kind of subject matter. As such the contract becomes void, for example, where a man buys a house which he was thought was built with cement blocks but turns out to be built with mud blocks, the contract is void and not voidable because the difference is great and cannot be overlooked. Similarly, if a piece of cloth is bought as if it is made of wool material but it turns out to be made of cotton the contract is void.
In the case of Mistake in the description of the subject matter, the contract is considered voidable because the subject matter is in existence. This existence is enough for the constitution of a contract. The missing of the desired description however subject the contract to the ratification of the affected party who may nullify it at its discretion.
The rules which relate to the mistake in the description of the subject matter are only applicable to revocable contract like contract of sale. The rules are not applicable to irrevocable contract like marriage. These contracts are established in spite of the mistake therein and are not voidable, this is the opinion of the majority of Muslim jurists but Hambali jurist dissented from this view and opined that the rules are applicable to revocable and irrevocable contract equally. They gave the example of a person who has married a lady on the impression that she is a virgin but she later turned out to be deflowered or that she is a learned person but she later turned out to be uneducated. According to this school, the man is empowered to nullify the contract.
Al-Ghabn, is the Arabic word for deception and it means literarily deficit (An-naqs). Note however that the Muslims jurists have defined deception under Islamic jurisprudence as follows “a situation where one of the two considerations in commutative contract is unequal in value to another during the construction of the contract”. They gave the example of a man who sold a book for 100 naira when the actual market price was 200 naira, the vendor here is considered to be the deceived party likewise a man who has bought the book for 400 naira when it market price is 200 naira is considered the deceived party.
Al-Ghabn (deception) is divided into two kinds:
The insignificant deception is a kind that comes under the appraisal of the expert valuers. For example, if a person sells a cow for 500 naira and some expert valuers appraised it for 450 naira while other valuers appraised it for 500 naira. The Ghabn or deception here is considered insignificant. The Muslims jurists gave the reason that the reduction in the price is one of the possibilities which are unsettled. On the other hand, the significant deception is a kind which does not come on the appraisal of expert valuers. As in the above example of a cow. If it happens that the vendor had sold the cow for 700 naira, the Ghabn will be considered significant. The reason is because the price has not come under the appraisal of any of the expert valuer.
Note that there are others opinions on the interpretation of insignificant and significant Ghabn among the Muslim jurists. To some of them, an insignificant ghabn or deception is what is exactly 5% or less of the expert appraisal, anything more than that 5% is considered significant. Others opined that the significant ghabn is not the same in all situations. In the case of commercial commodities and landed properties, anything up to 5% and above is considered significant but in the case of animals 10% and above is considered significant.
If the ghabn is insignificant, it will not affect the contract, this means in essence that the contract will remain valid as constituted. The Muslim jurists had reasoned that the insignificant ghabn occurs more often than not and there can be no way to prevent it.
Additionally, people are used to insignificant deception to the extent of overlooking it whenever it occurs. Nevertheless, the jurists had exempted from this rule in a contract of sales, whose estimation of his debt has engulfed all his properties and he has been put under restrain. Any of its sale which contains every insignificant ghabn or deception is suspended until it can be rectified by his creditor or until the purchaser removes the insignificant ghabn or deception. They also exempted the sale of a sick person who happens to fall into a dying sickness and he is also indebted to the extent of making the debt to engulfed all his properties. His case is like that of the debtor but the suspensory effect will not come up on his contract of sale on till he dies in that sickness. For there can be no dying sickness except the one in which the sick person actually dies.
Note that this exemptionary rule has been made in cases of the debtor and the dying person for the protection of the interest of the creditors.
The Muslims jurists had controverted on the effect of the significant ghabn or deception on the contract. Some Hanafi and Hambali jurists are of the opinion that the significant ghabn is capable of impairing the contract. They opined that the contract though is constituted but the affected parties have the right to rescind them. They further argued that this ghabn or deception is an injury to the deceived party and according to Islamic jurisprudential principle, every injury should be removed. The removal of this injury is attainable by allowing the deceived party the right of rescission of the contract.
Other schools which comprise Shafi, some Hanafi and other jurists had disallowed the significant ghabn from having any effect from the contract. According to them, the contract is constituted validly in spite of the ghabn or deception and it is not susceptible to rescission. They argued that commutative contract upon which the ghabn might have encroached are established and executed ab initio. The granting to the affected party the right of rescission of the contract will impair it execution and affect the stability in commercial transactions.
Furthermore, the protection of contracting party from Ghabn or deception is attainable by his duty to take proper care and precaution, not by granting him a right of rescission. If he fails to take reasonable care and precaution and instead, he acts inadvertently, until he involves himself in ghabn, he is liable for his failure and as such, he only shall bear the consequence of his carelessness. Nevertheless, the Muslim jurists have exempted from this rule certain contract which are constituted on the property of the restrain people for the reason of minority, imbecility or insanity. Similarly, contract constituted on the state property or endowments property are also exempted. Any significant ghabn therefore occurring in contract made on this property from those who have authority over them will render the contract null and void.
Note that the basis of this exemption according to the Muslim jurists is that the actions of those that have authority of administration over these properties are susceptible to the interest of the restrained persons, in cases of minority, imbecility and insanity and the beneficiaries in cases of state property and endowment. If these actions of contract are allowed with the significant ghabn or deception they contained. They will without doubt inflict injuries on the restrain persons and the beneficiaries.
As a principle of Islamic jurisprudence, injury should always be removed. The removal of injury in this instance is to nullify the action or contracts of the authorized guardian. The reason is that the guardian generally has got no authority to transact injurious business on behalf of their wards.
The Arabic word for fraud is Al-Taghrir, which literally means “Trickery”. The victim of trickery is called Al-Maghrir. The Muslim jurists have however defined the term Al-Taghrir as follows
“the use of fraudulent means to induce a person to enter into a contract in which he has been made to believe that it will serve its interest but which in actual fact is detrimental”
Taghrir is also called Al-Tadilis in Islamic jurisprudence.
The fraudulent means may be made by any kind of communication. The representation may be made by conduct as well as by words. Based on this, fraud (or al-taghrir) is divided into two kinds namely:
Fraud by conduct can be attained by an act from one of the contracting parties with the intent of misguiding the other party, from the actual nature of the transaction within them in order to induce him from the constitution of the contract. For example, the dying of old vest in order for it to appear as a new one. Or the keeping of milk in fridge or freezer to look like a fresh milk. This conduct is an intentional misrepresentation of the subject matter to the other party and it is fraudulent. For the other party relies thereon and he can be harmed thereby.
On the other hand, fraud by words refer to a fraudulent statement made by one of the contracting parties or a third party if the statements are capable of misleading the other party and misleading him to the constitution of the contract.
The Taghrir will have the effect on the contract if it contains misleading statements and deceit of the contracting party. The misleading statement will be deemed to be available where a certain inducing description or information is attained in a contract so far it could be proved that if not for this description or information, the deceived party wouldn’t have entered into the contract. In this instance, the deceived party is given the right to rescind the contract.
Nevertheless, this right of rescission of the contract is subject to a condition. The condition is that, the inducing description or information is not manifest to onlookers and viewers to the extent that the people can detect its fraudulent nature and take proper care to avoid being deceived. If it is painted to this extent, the claim of taghrir (or fraud) by the deceived party is not allowed under the Sharia. Thus, his right of rescission to contract is negated. It must be noted that whenever the taghrir (fraud) and Ghabn (deception) are contained in a contract, the Muslim jurists had granted the injured party the right of rescission of the contract. This can be seen in an instance where a contracting party has suffered a significant ghabn as a result of taghrir from the other party or the third party who has worked in collaboration with this other party.
Note that some jurists have even given the injured party the right of rescission whenever taghrir and ghabn have been joined together in a contract whether the ghabn is significant or insignificant. A notable Shafi jurist by name Al-Ranli, had stated that:
“the right of option to ratify or to rescind a contract is established whenever the ghabn has connected with taghrir”
Note however that the majority of jurists gave no consideration to insignificant ghabn whether it connect with taghrir or not because it is customarily overlooked by the contracting parties. Nevertheless, since taghrir alone is capable of granting the right of option to the injured party, the difference of juristic opinion in this regard is superficial.
Al-Ikrah is the Arabic word for duress or coercion. Under the Islamic jurisprudence, Ikrah has been defined:
“as a situation which consist of the legal force or threat of violence to the inflicted on the other contracting party to do an act of which he has refrained from doing before the coercion”.
The person who has coerced the other persons (the coercer) is known as Al-mukrih. Al-mukrih or coercer in the technical term of Muslim jurist is a person who coerces another to do or to omit an act of which the later has refrained to do before the coercion. The psychological stress that the coercer created in the mind of his victim, (the coerced) and the high probability of executing the threat he made forced the later to comply. Nevertheless, a man will not be regarded as Mukrih unless he has forced his victim to constitute a contract or perform an act without any trace of satisfaction or inclination from the part of the coerced. For example, a person under duress to divorce his wife revocably but he has gone ahead to divorce her irrevocably can’t turn back and seek for the voidness of the act by reason of duress.
Before a claim of Ikrah can be considered it must contain certain conditions. These conditions are as follows:
Any Ikrah that fulfils these conditions, especially the agreed upon ones will entitled the affected contracting party to avoid the contract.
