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Principles of Islamic Contract Law

Published online by Cambridge University Press:  24 April 2015

Noor Mohammed
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Extract

Heightened awareness in the United States about Islam and Muslims presents an opportunity to explore issues in Islamic Law, and particularly to examine the concepts that underlie Islamic law. This study is an effort to present briefly the controlling principles of Islamic Contract Law. In view of the monumental growth of trade between the Western and the Muslim worlds and projected increase in the coming century, the subject should continue to be of particular interest.

The doctrinal basis of Islamic law is the point of departure for this study. A brief historical sketch reveals the doctrinally-based components that have evolved into Islamic law. Islamic belief begins with Prophet Muhammad, the Messenger of God (Allah). The Prophet's mission was to establish an order in this world based on divine revelations made to him by God (Allah). These divine revelations are recorded in the Quran, the sole scripture of the Muslims. The spiritual and secular practices of the Prophet came to be known as Sunna. These two sources constitute the main guidelines for spiritual as well as temporal Muslim conduct in this life as a preparation for the hereafter, and are called Sharia. The word Sharia means the highway to good life. Over a period of time two additional sources of Sharia came into existence. They are: 1) Qiyas, or analogical reasoning, and 2) Ijma, or consensus of the Islamic community on a point of law. According to Sharia, sovereignty vests in God (Allah), requiring the state to act within the limits of divine law, or Sharia. This sovereignty is recognized by incorporation of Sharia into the Islamic legal system and community. In this sense Sharia is the constitutional law of a Muslim society.

Type
Research Article
Information
Journal of Law and Religion , Volume 6 , Issue 1 , 1988 , pp. 115 - 130
Copyright
Copyright © Center for the Study of Law and Religion at Emory University 1988

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References

1. Readers unfamiliar with Islam will find useful a chapter by the author entitled In Introduction to Islamic Law, V Modern Legal Systems Cyclopedia 681–92 (Redden, ed. 1985)Google Scholar.

2. Rahman, F., Islam 100 (1979)Google Scholar.

3. Badr, , Islamic Law: Its Reaction to Other Legal Systems, 26 American Journal of Comparative Law 183 at 189Google Scholar.

4. Al-Quran, S 9:71.

5. Id., S V.1.

6. Ali, A.Y., The Holy Quran (1946), note 682Google Scholar. See also Amin, S.H., Remedies for Breach of Contract in Islamic & Iranian Law 11–12 (1984)Google Scholar; Doi, Abdur Rahman I., Shariah the Islamic Law 355–56 (1984)Google Scholar.

7. Atiyah, P.S., The Law of Contract 1–19 (1961)Google Scholar. See also Havinghurst, H.C., The Nature of Private Contract (1961)Google Scholar.

8. Makdisi, , Legal History of Islamic Law & English Common Law; Origins & Metamorphosis, 34 Clev. St. L. Rev. 3–18 (1985–1986)Google Scholar.

9. Rahman, F., Islam 14 (1979)Google Scholar.

10. Supra note 9, at 13. See also Sahih Al-Bukhari, XXXIV-Sales, chapters 24-26.

11. The Holy Quran S-ii, 274.

12. Supra note 6, A. Y.Ali, footnote 3552:

The term riba in the Arabic language connotes any increase or augmentation. In Islamic legal jurisprudence, it is often defined as the increase which has no consideration, as stipulated in loan transactions or in the exchange of goods of the same kind. Riba was commonly practiced in pre-Islamic Arabia mainly in the form of extension of loan repayment periods against the doubling of the principal amount of the loan. This particular form was prohibited first by the Quran (Surat Al-i-'Imran, III, Verse 130) before the general prohibition of all riba was established (Surat the Cow, II, Verses 278-281) and elaborated on in the Prophet's last address in his Farewell Pilgrimage. Subsequent jurisprudence distinguished between the loans' riba (known also as riba an-nassi'a and as the riba prohibited by the Koran) and the Sales' riba which takes the form of either the spot sale of one of six items (gold, silver, wheat, barley, dates and salt) against an item of its own kind but with an increase in amount or value (riba al-Fadhl) or the exchange of any goods with goods of the same kind or of another kind which serves the same purpose when the latter are delivered in the future in an augmented quantity or value (riba an-nassa)

See also Ibrahim F.I. Shihata, Legal Aspects of Islamic Bank, Concluding Remarks in International Conference of Islamic Banking & Finance, 26 September 1986. Dr. Shihata is Vice-President & General Counsel, World Bank, Washington, D.C. A copy of his remarks could be obtained upon request.

13. Irving, T.B., The Quran, the First American Version, Translation & Commentary 34 (1985)Google Scholar.

14. “Efficient-cause” is possibly the nearest English translation for “illa.”

15. Saleh, N.A., Unlawful Gain & Legitimate Profit in Islamic Law 12–13 (1986)Google Scholar. A common “illa” should connect together two elements of analogy, namely the object of the analogy and its subject, in order to produce the analogical reasoning. The following example will throw more light on this method of legal reasoning: drinking wine (khamr) is forbidden by Quranic injunctions; the drinking prohibition was extended to all kinds of alcoholic drink (nabidh) apparently by a hadith but also by analogy because of the common “illa” of wine and alcoholic drink, which is the capacity to produce intoxication.

16. Id. 13. The author gives what appears as a final breakdown of Riba:

riba: unlawful advantage by way of excess or deferment.

riba al-fadl: riba by way of excess of one of the exchanged countervalues.

riba al-nasi'a: riba by way of deferment of completion of an exchange.

riba al-jahiliyya: pre-Islamic riba.

mal ribawi: property susceptible of riba.

17. Id 14.

18. Id. 14-27, the author very ably collects the positions of all the different schools on the issue of present or deferred exchange of goods.

19. Id. at 28.

20. Id. at 29.

21. Naqvi, S.N.H., Ethics & Economics, an Islamic Synthesis (1981)Google Scholar.

22. M.N. Siddiqi, Muslim Economic Thinking, A Survey of Contemporary Literature (1981). See also by the same author, Issues In Islamic Banking (1983); S.H. Homoud, Islamic Banking (1985).

23. Z. Igbal & A. Mirakhor, International Monetary Fund, Islamic Banking (unpublished and undated research paper).

24. A. Y. Ali, supra note 6, at 86, footnote 241. See also supra note 13, at 18 and 60.

25. Supra note 15, at 49.

26. Id. 50.

27. Id. 50.

28. Id. 51.

29. Id. 51, Ibn Juzay's list is as follows:

(a) Difficulty in putting the buyer in possession of the subject-matter; such as the sale of a stray animal or the young still unborn when the mother is not part of the sale.

(b) Want of knowledge (jahl) with regard to the price or the subject-matter, such as the vendor saying to the potential buyer: “I sell you what is in my sleeve.”

(c) Want of knowledge with regard to the characteristics of the price or of the subject-matter, such as the vendor saying to the potential buyer: “I sell you a piece of cloth which is in my home’” or the sale of an article without the buyer inspecting or the seller describing it.

(d) Want of knowledge with regard to the quantum of the price or the quantity of the subject-matter, such as an offer to sell “at today's price” or “at the market price.”

(e) Want of knowledge with regard to the date of future performance, such as an offer to sell when a stated person enters the room or when a stated person dies.

(f) Two sales in one transaction, such as selling one article at two different prices, one for cash and one for credit, or selling two different articles at one price, one for immediate remittance and one for a deferred one.

(g) The sale of what is not expected to revive, such as the sale of a sick animal.

(h) Bay' al-hasah, which is a type of sale whose outcome is determined by the throwing of a stone.

(i) Bay' munabadha, which is a sale performed by the vendor throwing a cloth at the buyer and achieving the sale transaction without giving the buyer the opportunity for properly examining the object of the sale.

(j) Bay' mulamasa, where the bargain is struck by touching the object of the sale without examining it.

30. Id. 52.

31. Id. 53.

32. Id. 79-80.

33. Id. 52-78.

34. Amin, S.H., Remedies for Breach of Contract in Islamic Law and Iranian Law 11 (1984)Google Scholar.

35. Coulson, J.J., Commercial Law in the Gulf States 11 (1984)Google Scholar.

36. Id. 19-20.

37. Zysow, , The Problem of Offer & Acceptance: A study of Implied in fact Contracts in Islamic Law & the Common Law, 34 Cleveland St. L. Rev. 69 at 77Google Scholar.

38. Sahih-Al-Bukhari, Vol. 3, pp 243-250.

39. Supra note 15, at 61-62. See also supra note 35, at 21.

40. Esposito, J.L., Islam & Politics 3–15 (1984)Google Scholar.

41. Id. 15-19.

42. Id. 19-57.

43. Musa, , The Liberty of Individual in Contracts and Conditions According to Islamic Law, 2 Islamic Quarterly 70 (1955)Google Scholar.

44. Doi, A.R.I., Shari'ah, The Islamic Law 406 (1984)Google Scholar.

45. Supra note 43, at 263.

46. Id. 79-80, 251-263.

47. Amin, S.H., Remedies for Breach of Contract in Islamic & Iranian Law 12 (1984)Google Scholar.

48. Id. 13.

49. Id. 13.

50. Govt, of Bahrain, The Contract Law 1969, Section 12 at p 4.

51. Supra note 44, at 356-57.

52. Id. 357-358.

53. Id. 356-57.

54. Berman, , The Religious Sources of General Contract Law: A Historical Perspective, 4 J. Law & Relig. 103–124CrossRefGoogle Scholar.

55. Berman, H.J., Law & Revolution 41 (1983)Google Scholar.