the essential elements of contracts

a. aqid - 2 parties of the contract

b. sighah - form of the contract (offer and acceptance)

c. maaqud alaih - subject matter and price

d. maqsad - purpose or effect of the contract

• Al ‘Aqd literally means tying tightly, as tying a rope

• Al ‘Aqd carries the meanings of covenant and fulfillment, as we read in the Quran,

surah al maidah verse 1:

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.

• The plural of word 'uqud above is mentioned in commanding the faithful to keep their covenants. God the Most High also commands the faithful to keep their promises and covenants in Al Quran surah Al Isra' verse 34:

• 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:

* 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.

*Husein al Nuri defined, as the expression of exchange between two confirming wills in an aim to have a legal impact of a financial nature.

*The act of selling is a contract between the seller and the purchaser in which the seller takes it upon himself to transfer to the buyer the ownership of something or some other financial right in return for a monetary price.

*The important thing is that there should be a legal impact ensuing from the contract transaction. Inviting a friend to a meal, giving him help or promising him a reward are convention and not contract, as they do not have a legal effect.

The word aqad or contract in Arabic language means tying tightly, as in tying a rope. The word aqad carries the meanings of COVENANT and FULFILLMENT.

Covenant refers to formal agreement that is legally binding.

Fulfilment related to completion between both parties satisfactions.

Al-Aqad (concluded bargain) is the two parties taking upon

themselves and undertaking to do something. It is composed of the combination of an offer (Al-Ijab) and an acceptance (Al-Qabul).

Al-Aqad (concluded bargain) is the two parties taking upon

themselves and undertaking to do something. It is composed of the combination of an offer (Al-Ijab) and an acceptance (Al-Qabul).

(The making of Al-Aqad) is connecting, in a legal manner,

one’s offer and acceptance with the other, in a way which will be clear evidence of being mutually

connected

(The making of Al-Aqad) is connecting, in a legal manner,

one’s offer and acceptance with the other, in a way which will be clear evidence of being mutually

connected

i. Ownership (al-Tamlikat)a) Exchange (Uqud Al-Mua’awadhat)b) Charity (Uqud Al-Tabarru’at)

ii. Security (al-Tauthiqat)iii. Partnership (Al-Ishtirak)iv. Safe Custody (Al Hifz)v. Release (Al-Isqatat)vi. Permission (Al-Itlaqat)vii. Restriction (Al-Taqyidat)

1.OWNERSHIP (AL-TAMLIKAT)

The purpose of this aqad is to acquire ownership or right to benefit of a property. Can be divided into two:

*Exchange (Uqud Al-Mu’awadhat)

If the acquiring of ownership is by exchange such as sale, hire, money changing, compromise, partition, sale by order and the like, where there is an exchange between the two parties.

*Charity (Uqud Al-Tabarru’at)

If ownership of a property is acquired without an exchange such as gift, endowment, benevolent loan (Al-Qard Hasan) and assignment of debt. Sometimes a contract can be a contract of charity at the beginning and then the receiving party is required to give an exchange. Examples of such a contract are guaranty requested by the debtor and gift with the condition of an exchange.

2.SECURITY (AL-THAUTIQAT)

These contracts are meant to secure debts for their owners and guarantee creditors of debts owing to them. These are guaranty, assignment of debt and mortgage.

3.PARTNERSHIP (AL-ISHTIRAK)

These aqad meant for sharing in projects and profits. Among them is Al-Mudharabah.

4.SAFE CUSTODY (AL-HIFZ)

The purpose of the aqad is for keeping a property safe and having some form of an agency.

5.RELEASE (AL-ISQATAT)

These relate to the dropping of rights against others with or without exchange. If the release is without compensation from the other party then the release is absolute release such as repudiation, release from debt and withdrawal from the right to pre-emption. If the release is with compensation from the other party then it is release with exchange.

6.PERMISSION (AL-ITLIQAT)

These are for giving free hands to persons in their work such as agency, appointment of governors and judges, giving a person who is dispossessed of the power of administration permission to administer his property or giving permission to a minor to carry on trade and appointment of a nominee to take care of one’s children after his death.

7.RESTRICTION (AL-TAQDIYAT)

Contracts in this group are those preventing the performance of certain functions. Examples of this aqad are dismissal of governors, judges and supervisors or endowment, termination of the appointment of nominees and agents and dispossession of administration of property because of insanity, mental disorder, prodigality and infancy.

The elements of contracts are:

a) aqid - 2 parties of contract

b) Sighah – form of the contract (offer and acceptance)

c) maaqud alaih –subject matter and price

d) maqsad – purpose or effect of the contract

The contract (Al-Aqad) in 4 general pillars; these are:

*Tharafayil 'Aqdi (Agents of Contract)

*Maudu'il 'Aqdi (Objective of Contract)

*Mahalul 'Aqdi (Object of Contract/Subject matter)

*Ijab & Qabul (Offer and Acceptance)

Rukn means pillar or supporter of something.

In Rukn of Aqad there are;

The person who making Qabul or accepting

AQIDAN (AL-BA’I)-SELLER

AQIDAN (AL-MUSHTARI)-BUYER

The person who making Ijab or offering

♫CAPACITY (AHLIYYAH); oAhliyyah al-Wujub (capacity for acquisition of rights)

oAhliyyah al-Ada’ (capacity for execution of rights)

♫IMPEDIMENTS TO CAPACITY (MAWANI’ AL-AHLIYYAH);oSamawiyyah (Natural causes of impediments)

oMuktasabah (Acquired causes of impediments)

THE CONDITIONS OF AL-BA’I & AL-MUSHTARI (AQIDAN)

THE CONDITIONS OF AL-BA’I & AL-MUSHTARI (AQIDAN)

Ahliyyah al-Wujub al-Kamilah, or complete capacity for acquisition, is found in a

human being after his birth and before the age of puberty. This makes one

eligible for the acquisition of all kinds of rights and obligations. In other words, a

child possess complete capacity for acquisition of rights and obligation but until

a child attains the age of legal puberty, he lacks the capacity for execution.

Though he cannot meet them personally due to the absence of the capacity for

execution, the lawgiver allows his guardian (Wali) to stand in his place and

represent him. The child is also liable for any damage caused to other’s property.

Ahliyyah al-Wujub al-Kamilah

It is established for a fetus (Janin). Deficient capacity implies that only

some rights are established for the fetus and no obligations are imposed

on it. The reason is that fetus is considered part of the mother in some

respect.

By virtue of this deficient capacity, the fetus acquires certain

rights; freedom from slavery, inheritance, bequest and parentage. On

the other hand, the fetus cannot be held liable for the satisfaction of

rights owed to others. Thus, obligations and duties are not established

against fetus, because there is no question of its performance.

Ahliyyah al-Wujub al-Naqisah

Complete capacity is established for a human being when he/she attains full mental development and

acquires the ability to judge. This state is associated with the external standard of puberty. The physical

signs indicating the attainment of puberty are the commencement of wet-dreams in a male, and

menstruation in a female. In the absence of this sign, puberty is presumed at the age of fifteen in both

male and female according to Abu Hanifah.

In addition to puberty, the possession of Rushd (discretion, maturity of action) is stipulated

as well. The Qur’anic sanction, to this effect, is as follows:

“Make trial of orphans until they reach the age of marriage; if then you find sound judgment

in them, release their property to them; but consume it not wastefully.” (4:6)

Ahliyyah al-Ada’ al-Kamilah

Ahliyyah al-Ada al-Naqisah is assigned to a child who possess some

discretion or to a Ma’tuh who has attained puberty, but yet lacks

complete mental development. The person who possesses deficient

capacity cannot be held criminally liable.

Hanafi School of law categories deficient capacity for execution into

three categories;

1.Purely beneficial transactions

*The transactions falling under this category are the acceptance of a gift of Sadaqah (charity). These are allowed for a person who has attained puberty but who can discriminate and has been permitted by his guardian (Wali) to exercise such acceptance.

2.Purely harmful transactions

*The granting of divorce, manummising (‘Itq), charity (Sadaqah), loan (Qard) and gift (Hibah) as well as making a trust (Waqf) and bequest (Wasiyyah) are considered transactions resulting in pure financial loss.

3.Transaction vacillating between profit and loss

*Sale, hire partnership and other such commercial transactions are considered valid provided that the transactions are ratified by the guardian and also produce a significant result for the parties concerned.

Minority (Sighar)

Insanity (Junun)

Idiocy (‘Atah)

Sleep and Fainting Fits

Forgetfulness

Death Illness (Marad al-Maut)

Samawiyyah (Natural causes of impediments)

Minority (Sighar)

*It is the stage of a human being after the birth and before the age of puberty. A minor follows his parents or one of them in the matters of Islam. Islamic jurists maintain that a minor is liable for compensation for property destroyed by him, for goods and services bought, for maintenance of relatives and also for zakat according to some.

*Hanafi School of Thought makes an exception in the case of a Sabi Mumayyiz and it is a matter of controversy whether the Khitab of Targhih or recommendations is addressed to him. He is not liable for punishments, but financial transactions undertaken by him are valid in certain cases.

Insanity (Junun)

*Junun has no effect on Ahliyyah al Wujub, because rights and obligation are established for and against an insane person, who is deemed liable for Itlaf (destruction of property), payment of Diyyah and the like.

*The rationale (Manat) for attribution of such capacity is humanity (Insaniyyah) and the insane is a human being.

*Insanity, however, completely negates the Ahliyyah al-Ada because of lack of reason and intellect. An insane person, therefore, has no liability for worship, or punishment, and all his transactions are void.

Idiocy (‘Atah)

*It is a condition in which a person at times speaks like a sane and normal person while at others he is like a mad man. It is also described as a state in which a grown-up has the mind of a child. The capacity of an idiot is deemed equivalent to that of a Sabi Mumayyiz who can be permitted by his guardian to undertake some transactions.

Sleep and Fainting Fits

*Sleep and fainting fits have relevancy for the purpose of ‘Ibadah (worship) as well as for crimes and torts. They do not affect Ahliyyah al-Wujub , because the human attribute is intact. The person’s capacity to understand things is temporarily affected thus prevented from normal functioning.

*There is no liability for punishments and transactions against the person in a sleep or fainting fit. If a person while sleeping falls on a child and kills it no liability will be imposed against him except compensation under the law of tort according to the governing principle of Qatil be al-Sabah.

Forgetfulness

*A person is not very careful about things though he has full knowledge of them, as distinguished from sleep and fainting fits in which such knowledge is lacking. Forgetfulness does not affect Ahliyyah al-Wujub nor does it affect the capacity for execution.

*The legal communication (Khitab), however, becomes operative as soon as the person remembers. Transactions undertaken by such a person are valid and enforceable against him.

Death Illness (Marad al-Maut)

*Maradul Maut has no effect on the capacity for acquisition or on the capacity for execution and it is, in fact, a condition of Taklif, because it is the capacity to perform and act that is affected here and not the capacity to understand it.

Muktasabah or acquired causes are those that are created by man in which human will and choice is affected. Islamic jurists categorized these causes into several types, all of which have effect on the capacity for acquisition and execution. Causes of Muktasabah;

*1. Interdiction

*2. Jest (Hazl)

*3. Folly (Safah)

*4. Duress (Ikrah)

*The condition of compensation or price; the price must be an existing legitimate privately owned item.

*The price is known beyond dispute.

*The value of an object is its market price.

*In debt; may come into agreement, coercion, bail, security deposit, borrowing, etc.

MAAQUDALAIH (AL-THAMAN)-PRICE

1. Specification of the price and object of sale

2. Rulings related to the price and object of sale

*In the most common usage, the object of the sale becomes uniquely identified by specification, while the price is most often not uniquely identified by specification in a contract. This is the general rule for those two items, but it can change under specific circumstances.

*For example, items that cannot be uniquely identified may become objects of sale, such as those in a forward sale, and items that can be uniquely identified can become a price such as the price in such a forward contract, if it is a uniquely identifiable object.

*A condition for the conclusion of sale is that the object of sale be a valued good with legitimate uses. This condition does not apply to the price.

*A condition for the executability of a sale is that the object of sale be in the possession of the seller.

*It is not valid to defer the delivery of the price in forward sales, while the deferment of the object of sale is necessary.

*The cost of delivery of the price is borne by the buyer, and the cost of delivery of the object of sale is borne by the seller.

*A sale without naming the price is defective invalid (fasid); whereas not naming the object of sale, as in saying: “I sold you for ten coins”, voids the contract that is thus not concluded.

*If the object of sale perishes after the exchange of object and price, the sale may not be reversed. However, the perishing of the price after the exchange does not prevent the sale from being reversed.

*If the object of sale perishes prior to delivery, the sale is void. However, if the price perishes prior to delivery, the sale is not void.

*The buyer may not re-sell movable merchandise before receiving it, whereas the seller may use or sell the price before he receives it.

*The buyer must deliver the price before he has a right to receive the object of sale, unless seller accepts otherwise.

Subject matter known as mahal al aqad or al-mabi’.

According to Islamic Jurisprudence, the subject matter of a contract could be corporeal property, as in granting, sale and mortgage, privilege or benefit, as in rent or a human being as in the marriage contract which has as its subject the woman herself.

MAAQUDALAIH (AL-MABI’)-SUBJECT MATTER

THE CONDITIONS FOR THE SUBJECT MATTER

Ijab is the word first spoken and confirmation.

Qabul means consent and acceptance.

IJAB QABUL SIGHAH

The contract is comfirmed by the coming together of statements of two person.

SIGHAH-AQAD CONTRACT

*The reason of having “akad” is to clarify & produce willingness between both party who is in contract & knowing it’s implication.

*The pillars of a contract are expression of the matching between positive proposal (ijab/confirmation) made by one contractor and the acceptance of the other contractor (qabul).

The other conditions which are necessary for it to be legally acceptable and impactful, these conditions are:

1. The existence of two properly and aptly qualified contractors. It is a condition of a valid contract that the parties possess capacity. These capacities are;

a. Wujub (rights)

b. 'Ada (performance, action)

2. A format (sighat).

The utterances expressing the wills of the two parties, showing the purpose of contract and bringing it into existence after it had been a hidden and unknown thing or intention.

3. Subject matter.

*In principle, be something legal otherwise the contract is nugatory,

*It has to be specified and defined in way prevent ambiguity, and

*It has to be existent.

• The valid contract is endorsable by shari'ah, which has an impact on life situations

in accordance with its strength, its pillars and characteristics are both sound and

free of defects and which does not contain any item which is prohibited by shari'ah.

• Hanafi scholars define the correct contract as one which is legal in both its pillars

and its characteristics and also state that incorrect contract is of two divisions:

nugatory (which is illegal in both its origin and its characteristics) and corrupt

(which is legal in its origin but not in its characteristics).

• The conditions which have to be met in a contract, namely conditions of en 'eqad

(confirmation), conditions of nafat (execution), conditions of lozum (obligation)

and conditions of sehah (correctness).

1. Conditions of confirmation

- have to be met in a contract in order for it to be legal and correct. They are of two kinds:

• General conditions: which have to be met in each and every contract, and they include: the existence of two contracting parties, the format and the subject in addition to secondary related conditions.

• Particular conditions: which have to be met in certain situations but not in all.

2. Conditions of execution

• The contractor should be in possession of the subject or at least able to hand it over.

• There should be no claim from (no right to) other people to the subject of contract. The person who sells something which is the property of someone else has to obtain the owned.

3. Conditions of obligation

• The contract should be void of the element of choice or option. The subject matter should be free from defects.

* Conditions of correctness - are the general conditions which have to be met in each and every one of the three pillars of contract.

• If one of these conditions is not met, the contract is considered nugatory according to the majority of scholars, and corrupt according to Hanafi jurisprudents.

Shariah requirements in the sighah (offer and acceptance) :

a. written

b. verbal

c. action/signals

d. recording

*The formalities of Ijab are;

Modes of offer (namat al-ijab)

Tense of offer (sighah al-ijab)

Counter offer (ard al-muqabil)

Revocation of an offer (rujuan al-ijab)

Termination of an offer (butlan al-ijab)

Modes of offer (namat al-ijab)

An offer can be made in any of the following ways;

a) by words/oral; An offer can be made by words used for concluding a sale (Bai’) by the common usage and the custom of the place. Must expressed and understood in the language of local people.

b) by writing; an offer could also be made by writing or deed which will have equal legal effect as the one made verbally.

c) by gesture; an offer by gesture is valid if it is made by a person who is incapable of making it either verbally or in writing. For examples, an offer made by a handicapped, dumb, or deaf person.

d) by post, telegram, telex, fax, e-mail, etc; all these instruments convey offers made by words and writings.

Tense of Offer (sighah al-ijab)

An offer is generally made using past tense, but in some situations, an offer could also be made in other tenses and manners.

An offer may be made by the aorist tense in which if it indicates a present tense then the sale is valid but if it indicates a future tense then the sale is invalid.

In other words, an offer is valid and has a legal effect if it is not made by using the future or imperative tense. A sale is not concluded by words in the future tense.

Counter Offer (ard al-muqabil)

In order to create a building agreement, the offer and acceptance must match.

The offeree must accept all the terms of the offer.

If in his reply to an offer, the offeree introduces or poses a new term(s) of the offer, then that reply cannot amount to an acceptance. Instead, the reply is treated as an offer itself, which can be accepted or rejected.

Revocation of offer

According to the Hanafi and Hanbali, the offeror has the right to revoke the offer at any time before the acceptance is made. Although this right theoretically exists also in the Shafie. It is doubtful whether the offeror has the time to exercise it. This is because the Shafie is requiring the acceptance to be made immediately after the offer is made, otherwise the offer will cease to exist.

According to the Maliki, the offeror is bound by his offer until the meeting breaks up. Thus if he revoked his offer and the offeree afterwards accepts before the meeting breaks up, the contract would be concluded.

In the Hanafi, there are two views on the matter. According to one view, the revocation is not effective until it is communicated. Thus if the seller say, “I have sold to you this for so much”, and added, “I have revoked my offer” and the buyer without hearing the revocation says, “I have bought”, the sale is concluded.

According to the other view, the offeror can revoke his offer whether or not the other party knew about the revocation.

Termination of an offer (butlan al-ijab)

An offer could be terminated and will not have any legal effect under the following circumstances;

Revocation

Rejection by the offeree

Counter offer

Absence of acceptance

Death

Lapse of time

*The formalities of qabul are;

Modes of acceptance (namat al Qabul)

Tense of acceptance (sighah al-Qabul)

Communication of offer and acceptance (Ittisal)

Modes of acceptance (namat al Qabul)An acceptance can be made in any of the following ways;

oral acceptanceby writingby gestureby deliveryby paymentby performance or conductletter of postby telex, e-mail, telegrams, phone and fax

Tense of acceptance (sighah al-qabul)

For a valid contract, an acceptance must either be in the past or present tense. In no situation, can an acceptance generally uses past tense.

Communication of Offer and Acceptance (Ittisal)

The Fiqh under the Hanafi School of Thought, on the assumption that the parties are contracting orally and in the presence of each other, makes it a condition for the conclusion of the contract that the offeree must hear the offer and the offeror must hear the acceptance.

The juristic basis for the necessity of this mutual hearing is not clear. According to one of the Fiqh, there can be no consent without such mutual hearing. Some of the school of Fiqh maintain that, the necessary connection between the offer

and the acceptance will not take place unless each party hears what was said by the others. It has even been suggested that if the parties did not hear each other there will be no unity of the meeting place.

The Shafie maintains that it is not necessary that the offeree shall hear the offer or the offeror shall hear the acceptance provided that both the offer and Qabul are made in a voice loud enough that it will normally be heard by those present in the meeting place.

It is not clear from the text of the Fiqh of the Hanbali and Maliki, whether the offer and acceptance should be communicated.

the types of khiyar :

a. Khiyar Majlis

b. Khiyar Syarat

c. Khiyar ‘Aib

d. Khiyar Rukyah

e. Khiyar Ta’ayin

f. Khiyar Naqdi

A place where both party performing sighah.Is a muamalat contract between two or more party perform in a

contract or in a place where the contract is valid4 condition in fulfilling the contract ceremony:

Both party must be at the ceremony The tenor must be indicated clearly (written contract)Not to have a party who show unwillingness during contractThe 1st party must not withdraw the agreement before the 2nd

party accept the offer.

Khiyar ; Option in aqad between seller and buyer whether to accept or reject the aqad.Khiyar ; Option in aqad between seller and buyer whether to accept or reject the aqad.

DEFINE KHIYARDEFINE KHIYAR

*A khiyar (option) that constitutes a condition stipulated in the contract. This option confers on the parties to the contract the right to proceed with contract by confirming it OR to cancel it, all within a pre-agreed period of time.

*In other words, the parties have the option of studying their respective positions in the contract in order to come out with a final decision of either confirming or rejecting it.

*This option can be attached to any commutative contract. A contract that involves the exchange of counter values, and which is cancellable at any later date.

*In general, the option duration can vary in length according to the agreement and designation of the two contracting parties at the contract date.

*During the option duration the buyer has the right to effectuate the deal by paying the price and taking delivery of the underlying object of sale.

*There are two reason of important Khiyar. Firstly, to make sure the parties of contract are willing to proceed or not the contract. Secondly, to protect the benefit for both parties.

A term used to express an option within a certain period after the conclusion of a bargain during which either of the parties may cancel it

a. Khiyar Majlis b. Khiyar Syaratc. Khiyar ‘Aib d. Khiyar Rukyah e. Khiyar Ta’ayin f. Khiyar Naqdi

Option during the meetingThat each one of the parties has the right

to confirm or cancel the contract in the negotiation stage of the contracy, as long as the two parties are still there and have not left.

Alternatively, one of the two parties gives the other the right of choice, and he chooses to confirm the contract. Thus the option of the meeting does not make the contract binding until the two parties leave or to give up the right of choice.

*The option of the meeting is confirmed in every mo’awadah (mutual commitment) contact like sale, postponed payment grant and reconciliation where mutual commitment is involved.

*Thus it is evident that the option of the meeting is not applicable in contracts which do not involve mutual commitment like donation, usefulness and non-committing contracts and contracts which involves forced acquisition and licensing contracts.

*The option of the meeting does not apply also in the following contracts: nikah (marriage), khul’ (divorce agreement where the wife exempts the husband from paying alimony and other expenses or giving their additional payment), hibah, shirkah, rahn, mosaqat (agricultural partnership), and Al-Qard.

Ibn Omar reports that the Prophet (PBUH) said, “If two men conduct a sale, each one of them has the right of choice until they part or until one of them gives the choice to the other if one of them gives the right of choice to the other and they conclude the sale, the sale is then confirmed.” This hadith is narrated by al-Bokhari and Muslim

Amr ibn Sho’aib reports from his father’s report of his grandfather that the Prophet (PBUH) said, “The two parties have the choice until they part.” The hadith is narrated by Hasan (approved).

The option of conditionBoth or one of the parties or another person has

the choice of either confirming or cancelling the contract during a set period of time.

An example of this is when a buyer says to the seller “I bought this merchandise from you on condition that I have the choice for one day, or three days.” This contract includes sale and condition.

Applicable to binding, necessary and committing contract which are cancellable even it was committing to one party e.g. sale, rent partnership, warranty.

The condition of option here is confirmed contrary to the tradition of the Prophet (PBUH) who interdicted joining sale and condition in one contract; however, jurisprudents admitted such a sale on the basis of approval for two reasons;

FIRST;

The Prophet (PBUH) himself had accepted and sanctioned it. It is reported that Habban ibn Monqidh ibn Amr was a feeble man who had been injured badly in the head. The Prophet (PBUH) gave him the choice in purchase for three days. And as he found difficulty in speaking, the Prophet (PBUH) told him to say in conducting a sale.

SECOND;

Some people may not be clever in trading and may need to seek advice from an expert by using the condition of option. This is to make it possible for him to cancel the contract if he think it fit to do so. The option of condition is also called the option of tarawwi (deliberation or reflection) because it involves thinking over things and consulting others.

Option of defect.The option a party has when he discovers in the

subject something which reduces its natural value or which makes it fall short of requirements.

It makes clear that if anything appears in the subject of the contract which does not match its original use and which decreases its market value or makes it unfit to meet the requirements expected of it, then the party has the option to defect.

Another name for Khiyar al-aib is Khiyar al-naqisah (option of fault or reduction).

If anything appears in the subject of the contract which does not match its original use or decreases its conventional market value, or makes it unfit to meet requirements expected of it, then the buyer have the right to exercise option of defect, as freedom from defects is the right of the buyer given in any commercial transactions.

Applicability of the right of Khiyar ‘Aib; are contract of sale, contract of Ijarah (hire), contract of exchange of currency, Mahr payment, and Sulh (reconciliation) involving agreement or setting blood money, that is all contracts whose purpose is the exchange of counter values.

1. The defect have existed in the subject matter prior to the time of sale or it occurs before the delivery and while it is still in the hands of the seller.

2. The defect which existed in the subject matter decreases its value or renders it unfit for the purpose to which it is intended.

3. The buyer must be unaware of the defect at the time of contracting and taking the subject matter into his possession. If the seller indicates that the defect is so manifestly obvious so as not to escape defection and the buyer accepted it without protest, he is considered to have waived his right.

4. The absence of stipulation for waiving or releasing the seller from liability for the defect in the subject matter

1. When the buyer, after he has known the defect in the subject matter, insists or continues on buying the thing.

2. When the buyer knew the defect in the subject matter but transfers or gives it to other persons as a gift or as a selling thing. He loses his right of option of defect.

3. When the seller sells a thing with a condition that he shall not be made liable for any defect in the subject matter and the buyer agreed upon that condition. The buyer loss his right of option of defect.

4. If the defect is slight and if it does not reduce the value of the object, and if it is conventional to overlook it, then the party cannot use it as a pretext to return the sold object

5. If the new defect occurs in the subject matter while it is in the possession of the buyer and he discovers that the object had an old defect while it was in the possession of the seller, then the buyer can claim the reduction of the value but he cannot return the object.

The option of viewing.A person who enters into a contract dealing

with a certain object – which he has not seen – has the right of cancelling or confirming the contract upon selling the object.

This implies that a party has the option of viewing based on two conditions: FIRST; The subject of the contract should be a specified thing like a house or a car.SECOND; The party should not have seen the thing before. If he has, then he does not have the option.

*To avoid injustice that may lead to ignorance and dispute among parties.

*To protect the interest (istihsan) of Muslim and to prevent any disputes among them.

*To avoid unfairness when they have no experience or ability to market place to buy things they have not seen.

Option of determination or selection.The parties have the option to choose the object of sale

out of multiple varieties of a given article. The purpose of this Khiyar is to give wide choice to the

buyer to choose and the seller to stipulate the subject matter of the contract.

For example the parties may purchase one out of three varieties of commodities of different qualities (excellent, average and poor) without specifying which particular varieties would be purchased on the condition that those the subject matter from the same class but different qualities and different price.

This option only applicable to the parties of the contract only in a stipulated time.

*This option cannot be stipulated by the third parties.

*However, some scholar in the opinion that this option only applicable to the buyer only. Duration of this option according to the nature of the transaction.

*Imam Abu Hanifa maintain that the period of this khiyar At-Ta’yin same as khiyar al syakk which is 3 days. However duration of option must be precisely defined by contracting parties.

Khiyar that stated the condition on when the buyer will not pay the full payment of the total price in certain time period. Within 3 days, the agreement will be forfeit.

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