Introduction

The most important and prevalent mode of acquisition of ownership and

possession of property is transfer by the act of the persons, having legal
title to another person. Such transfer is implemented by means of a mutual
liability called contract, which has a broader significance in Muhammadan
Law than in English Law.
Meaning

(a) Derivation
The corresponding Arabic term for “Contract is ‘aqd’.”
(b) Linguistic Meaning
Literally ‘aqd’ means ‘conjunction or tie.’
(c) Legal Meaning
As a term of Islamic jurisprudence ‘aqd’ means conjunctions of the
elements of disposition, namely, proposed (Aijab) and acceptance (qubool).
Definition

(a) Article 3 of “Al Mujallah”

The obligations and engagements of two contracting persons in respect of
particular matter. It expresses combination of offer and acceptance.
(b) Sir Abdul Rahim
A contract is “The conjunction of the elements of disposition namely offer
and acceptance.”
Contract in the Light of the Holy Quran
 “And keep the covenant, Lo! Of the covenant it will be
asked”. (BANI – ISRAIL:34)
 “O ye who believe fulfill your agreements”. (Al-Maidah:1)

Contract in the Light of Hadith

Prophet ( Peace Be Upon Him) said “The Muslims will fulfill their settled
contracts”.
Essentials of Contract
Islamic Law specifies following four essentials of a valid contract.
(i) Faa’lia (Parties)
This cause appertains to the persons making the contract. A valid contract
requires that there must be two parties involved.
(ii) Mad’dia (Proposal and Acceptance)
This appertains the essence, namely, Proposal and acceptance. It is
essential to constitute a valid contract that there must be two parties, one
parties, one party should make a proposal and the other should accept it.
(iii) Suaria (Agreement of Minds)
This cause related to the outward manifestation, that is the minds of parties
must agree and their declaration must related to the same matter.
Illustration
A owns two houses, one in Karachi and second in Hyderabad. B offers him
to buy one of his houses. B wants to buy the house in Karachi and
pursuance of the object he makes offer, but on the other hand. A accepts
his offer considering the house in Hyderabad as the subject matter of the
contract. The contract is not valid because their promises do not release to
the same matter.
(iv) Ghyia (Legal Relationship)
This cause relates to the result aimed at, i.e, the object of the contract must
be to produce a legal result. This is regarded as the dominant idea of a
contract in Muhammadan Law that it establishes a tie of legal relations
arising from the consent of the minds of two persons to deal with each
other in respect of certain rights.
Illustration
A sells or gives an object to B. the former consents to pass on his
proprietary rights therein to the latter who consent: to take the property with
whatever obligations might be incidental thereto, such as the liability to pay
taxes if the subject matte of the transaction be land, and to feed if the thing
sold or given be an animal and in the case of sale, also to pay the price. In
the case of a gift, on the other hand, there is the moral obligation of
gratitude on the part of the done towards the donor, and Muhammadan
Law does not ignore the moral aspect of a transaction.
Formation of Contract
Generally, Muhammadan Law does not require any formality such as
English law but the following requirements have to be fulfilled to form a
valid contract.
(i) Declaration of Consent
All that is required, as we have seen, is declaration of consent by each
party. The declaration which is first made is called proposal and the second
declaration is called acceptance. The two minds must be in agreement
otherwise there is not real consent.
(ii) Same Meeting (Majlis)
The proposal and acceptance must be made at the same meeting (Majlis),
either in fact or what the law considers as such.
Illustration
A man proposes face to face to another to sell his horse to him, if the
person addressed leaves the place without signifying his acceptance the
offer comes to an end, because there is no obligation on the owner of the
horse to keep his offer open.
But, if the offer is communicated by means of a messenger or a letter, the
meeting for the purpose of acceptance is held to be at the place and time
the message reaches the person for whom the offer was intended. If the
person then signifies his acceptance the contract is concluded.
(iii) Use of Words
The Books speak of certain words as being plain (Surech) and certain other
words as being allusive (Kinaya) in relation particular kind of disposition.
What is meant is that when a man has used plain language, there is not
need for inquiry as to what he meant, but such an inquiry becomes
necessary when he has used ambiguous language. It is not to be supposed
that so far as contracts and dispositions relating to property are concerned
that the mere utterance of certain words without the corresponding
intention as understood in Muhammadan Law, would effectuate a transfer
of property or create any obligation.
Conditions of a Contract
Following conditions are provided under Islamic Law for the validity of a
contract
(i) Legal capacity of Parties
The validity of a contract depends first of all on the legal fitness of the
person entering into it. If the persons making a contract or disposition have
not the necessary capacity, contract would be void altogether.
(ii) Fitness of Subject Mater
Another essential of a valid contract like that of any other juristic act is the
fitness of its subject matter (mahal); if the subject matter is not fit for he
purpose, the contract relating there to would be void altogether.
Illustration
If A and B enter into a contract for the sale of a horse and while they
discuss the sale price, the horse dies, there is no consent, as the subject of
the contract itself is extinct. Similarly, a marriage within prohibitory
relationship is void ab initio.
(iii) Free Consent
Consent is the essential of contract; where there is no consent there is no
agreement and the consent should be free.
Illustration
The contract of marriage must be based on the free consent of parties, if
the consent is not free the marriage is not valid under Islamic Law.
(iv) The consent without knowledge of the Articles
It is again necessary that a contract for an article which does not exist or
which is defective apparently or otherwise is ineffective is void.
(v) Consideration
This is an important factor but it can explained that in agreements where
price is a deciding factor, the consideration surely passes on to the other.
As regards agreement of gift though there is no exchange of consideration,
yet the done is morally obliged to the donor.
Final Analysis
Hence for final analysis, we can say that a contract is a biding agreement
between two parties which is legally enforceable. The Rules regarding
contract under Islamic law is very strict. Under Islamic law for a valid
contract there must be present four causes in the contract viz., faa’lia and
mad’dia and suria and ghayia. The first essential of valid contract is that
parties must have reached agreement. To constituents of an agreement
are Ijab and Qabul which forms it into a promise which is enforceable by
Law.