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ESSENTIAL ELEMENTS OF A

CONTRACT

2. SUBJECT-MATTER
The second essential of a contract after sighah is its subjectmatter.
Meaning of subject-matter
The term subject-matter applies to commodity,
consideration, performance and object of contract.

CONDITIONS OF SUBJECTMATTER
Islamic law has laid down the following conditions
for the subject-matter.
1. Legality of subject-matter
Subject-matter of contract must be legal or halal. It
is forbidden for a Muslim to acquire or transfer
through contract any thing that Shariah has
declared haram. Like wine, pig, blood or animals
which have died naturally or have not been
slaughtered according to Islamic teachings,
intoxicants and prostitution.

Adultery, obscenity and immorality are prohibited by Islam


and any contract or transaction that promotes them in any
way is also forbidden. Articles of public property are also
forbidden. Thus, a mosque cannot become a subjectmatter of sale among parties.
The legality of subject-matter requires that the commodity
should be owned by some one. Public property is
excluded and cannot become subject matter of contract.
Legality of subject matter also requires that there should
be no encumbrance or right attached to it. Like sale of
mortgaged property to which the rights of the creditor are
attached.

2. Existence of subject matter


The subject matter should either be
In actual existence at the time of contract
Or it should be capable of being acquired and delivered to
a prospective buyer in the future.
Transactions which involve an element of uncertainty and
risk with regard to the existence and acquisition of the
subject matter are forbidden in Islamic law.

Examples of such transactions are as under:


Fruits on tree at the beginning of the season when their
quality is yet to be established
Sale of fish still in water.
Milk in the udders of an animal
Sale of standing crops( which can be spoiled)
Fetus yet in the mothers womb.

Muslim jurists in general, hold the view that the sale of nonexistent object is invalid. They based their opinion on the
tradition of Holly Prophet(P.B.U.H):
Sell not what you do not have
The only exception to this rule is Salam Sale. Where the
purchaser pays the price in advance while delivery of the
subject matter is postponed to a specified future date. The
commodity of salam sale must be those things which can
be determined in terms of quality and quantity.

THUS, IT MAY BE CONCLUDED


THAT FUTURE GOODS ARE NOT
SALEABLE OR CANNOT BECOME
SUBJECT MATTER OF A VALID
SALE IN ORDINARY SALE.

3. Certainty of Delivery
The ability or capacity to deliver the subject matter of the
contract at the time of entering into the contract, is an
essential condition to make a valid contract. If such
capacity is lacking then the contract is void. This
condition is applicable to contract of sale, mortgages and
pledges. Thus, in a contract of sale the purpose is that the
buyer should be able to exercise the authority and benefits
of an owner. If such a capacity is missing the purpose of
contract fails. Therefore, the Muslim jurists prohibit the
sale of fish which is still in the water or bird in the air.

4. Precise description and determination of subject


matter
The subject matter must be precisely determined at the time
of the contract as regards its
Essence
Value
Quantity
Indetermination related to genus, specie, quality, price and
value rendered the contract invalid under Islamic law.

Example of indetermination related to genus


If a seller says that I am selling you a dress from this
bundle. Such sale is irregular(fasid) because particular
dress has not been indicated by the seller.
If price of an item is not fixed at the time of entering into
the contract. This indetermination of price renders the
contract fasid.
The subject matter must be ascertained and known to the
contracting parties in order to avoid future disputes.

The

subject matter becomes known and specified when


parties to the contract see and examine it at the time of
contract. If subject matter is present at the time of contract
then its examination is necessary and failure to examine
the subject matter while it is present, invalidates the
contract.
Another method of determination of subject matter is sale
by description. It is description of subject matter e.g.,
highlighting its specification or characteristics. Seller has
to describe genus, kind and quantity of goods.

This method is applicable where goods are not present at the


time of contract. Majority of jurists allow it.
But Shafis do not allow it and stipulate actual examination
as a necessary condition, at the time of contract.
Some jurists allow a sale even if the goods have not been
examined or described. But in this case the buyer will
have an option of sight or examination after the contract.
The buyer can reject the goods on examination if those
goods do not conform to the given descriptions.

5. Legality of object
A valid contract requires that the object and underlying
cause must be legal. Any agreement for commission of
illegal activity or which promotes immorality or is against
public policy or harmful to a person or property or which
is forbidden by law, is also illegal or unlawful and deemed
void and of no legal effect. Such as
A contract for the use of property in commission of an
offence.
Selling a weapon with the knowledge that the buyer will
use it for killing innocent people.
Sale of grapes to a person, who will extract wine from
them. Such contract of sale is invalid because the intention
and motivating cause is unlawful.

A contract of marriage to facilitate re-marriage between


divorced couple is invalid, because such a contract does
not intend to bear the consequences of marriage.
A contract to sell something on credit say for example
Rs.10, and buy it back for Rs.8/- with immediate
payment. This kind of sale is invalid because the purpose
of the parties is to conclude a usurious transaction which
is prohibited in Islam.

When a contract is declared invalid on account of its


illegality. Islamic law stipulate that both parties to the
contract must have knowledge of such illegality. Thus,
ignorance of such a fact on the part of either of the
contracting parties would not render the contract invalid.
In such case innocent or aggrieved party will get
compensation.

3.THE CONTRACTING PARTIES


CONTRACTUAL CAPACITY OF
CONTRACTING PARTIES
The basic qualification or capacity which is required for
concluding a contract is termed in Islamic law as capacity
for execution or ahliyyay al-ada.

CAPACITY OF EXECUTION OR
AHLIYYAT AL-ADA
Definition
The capacity for execution is capacity of a human being for
the issuance of words and performance of deeds to which
the lawgiver has assigned certain legal effects.
There are three kinds of capacity of execution.

Capacity for Khitab Jinai


This means that capacity of punishment. Whoever possesses
such capacity can acquire through his words and deeds a
liability for punishment.
2. Capacity for Khitab of Ibadat
It is the capacity requires for fulfillment of ones obligation
in the world .
1.

3. Capacity for the Khitab of Muamlat


This is the capacity for the exercise of rights and fulfillment
of obligations for contracts and other transactions. It may
be called the capacity for transactions.
Complete and Deficient capacities of execution

DEFICIENT CAPACITY OF
EXECUTION
Deficient capacity is assigned
To a non-pubert who possesses some discretion, and
To the lunatic, who has attained puberty but lacks
complete mental development.
A person who possesses a deficient capacity is not subject to
kitab al-jinai. He cannot be held criminally liable.

Purely beneficial transactions like the acceptance of gift


or sadaqah are allowed to a non-pubert, who can
discriminate and has been permitted to do so by his
guardian.
Purely harmful transactions like granting sadaqah, qard,
gift, waqf, wasiyyah etc, are not to be entered into by the
sabi mumayyaz(minor possessed with discretion).
Transactions equally likely to result in profit or in loss
like sale, hire, partnership etc. such transactions are valid
by sabi mumayyaz, according to Hanafis, if permission of
guardian is granted

COMPLETE CAPACITY
Complete capacity is established for a human being
when he attains full mental development and
acquires the ability to discriminate.
The requirement of this capacity is
Reason (aql)
Discretion (rushd)
Such a capacity has been associated with an external
standard of puberty.

In the absence of signs of puberty. It presumed to have


occurred, according to the majority of jurists by the age of
15 in both male and female.
At the age of 18 for a male and 17 for a female according
to Imam Abu Hanifa (in the absence of signs of puberty).

only puberty is not sufficient for complete capacity but


in addition to puberty possession of aql and
rushd(maturity of action) is also deemed necessary.

CIRCUMSTANCES WHICH
AFFECT THE LEGAL
CAPACITY OF A PERSON
There are certain factors, which impairs legal capacity of a
person and prevent him from concluding contracts and
making dispositions in his property.
1. Junun (Insanity)
Junun is the mental derangement, prevents a person from
entering into transactions .

Insanity eliminates the legal capacity of an individual


because legal capacity is based on intelligence and
discrimination and insane is destitute of that.

Transactions of insane do not produce any legal effect. He


is like a minor without discretion(sabi ghayr mumayyaz).
Islamic law puts an insane person under a guardian who
look after his affairs.

2. Atah ( lunacy or partial insanity)


Matuh is partial or temporary insane person who act
sometimes like a sane person and some other times like
an insane person.

Matuh is treated like a minor possessed with discretion


(sabi mumayyaz).

He is not allowed to enter in those contracts, which are


disadvantageous for him.

He can conclude beneficial contracts.

Transactions equally results in benefit and loss, his


transactions will be considered valid subject to
verification by his guardian.

3. Forgetfulness
Forgetfulness is defined as a circumstance that befalls a
man without his volition causing loss of remembrance of
something.
According to majority of jurists a contract concluded by
mistake or forgetfulness is not a contract at all. According
to the Hadith of Prophet (PBUH):
My Ummah is forgiven for that which they have done
through mistake or forgetfulness or under coercion.

The Hanafis oppose the majority and declare that


statements made by mistake or forgetfulness are valid for
the formation of contracts.
4. Safah (Prodigality and weakness of intellect)
Safah has been defined as:
Safah is that weakness of intellect which urges a person to
act with respect to his property contrary to the dictates of
intellect with the non-existence of mental disorder.

Safah is opposite of the word rushd. Rashid is a person


who can identify avenues of profit as well as loss and act
accordingly to preserve his wealth.
The safih may validly make waqf or bequest if the court
authorizes him to do so.
The court has the power to give him absolute or limited
authorization to handle his affairs whether wholly or in
part.
The court may also restrain or withdraw his authorization
if it sees just grounds for doing so.

5. Death-illness (marad al-mawt)


Definition
Death-illness is that form of illness from which
death is to be apprehended in most cases, and
illness which disables the patient from looking
after affairs outside his house if he is a male, and
affairs within her home if she is female, provided
the patient dies in such condition before a year
has passed.

Transactions of Marid marad al-mawt


Transactions undertaken by a person on his deathbed are
of two types:
a) Transactions without consideration
A person seized with a death illness is prohibited from
disposing of his property without any return within
the limit of two thirds to protect the interest of heirs,
because his dispositions without any return such as
donation, waqf, alms are considered a bequest, which
is permissible to the extend of one-third of the
property only.

If he is in debt, he is prohibited to donate his property


for it is needed to pay his debt.
b) Transactions for consideration
If his disposition are for consideration and are not in
favour to any one as, like it is a sale at a fair price,
such disposition will be valid and effective in the life
time of a sick person. The creditor and heirs will have
no right to nullify it after his death. Because right of
sick person have priority over their rights.

Abu Hanifah having the opinion that if the disposition


is made for any of the heir, the other have right to ask
for nullification, even if it were at a fair price because
rights of heirs are attached to it.
Other dispositions of Marid marad al-Mawt
Acknowledgement of debt by a person with death
illness is valid and effective, irrespective of the fact
that it is in favour of heir or a stranger. According to
Hanafi jurists if it is favour of any heir then it will be
enforceable after its ratification by the other heirs.

Marriage during death illness is valid provided the


dower money paid by him does not exceed the
amount of fair dower. If it exceeds the fair amount of
dower then excess amount will be treated as donation
in the meaning of will and which will be enforced by
the permission of heirs within the limit of one-third
of his estate.
The divorce of marid marad al-mawt is valid and
enforceable. If the husband dies before the expiry of
her iddat she is entitled to inherit from him.

A person on deathbed can enter into the contract of


Musharakah and Mudarabah. Because they related
to profit. The partnership comes to an end with the
death of this person so it is no way harmful for the
heirs.

6. Intoxication
Intoxication is a condition which overtakes a man on
account of taking an intoxicant and along with it his
intelligence remains suspended, being neither lost nor
diminished.
The drunken person is one who is in a state of
intoxication due to the consumption of liquor and
does not know what he is saying.
According to majority of jurists a contract is
established by a drunken person is valid and give rise
to all kinds of rights and duties because he became
intoxicated out of his own choice and he knew that
drinking is prohibited .

According to Hanabali jurists, the statements of an


intoxicated person is not to be taken into account at all
as he does not intend what he is saying. He is just like
insane person.
Some jurists distinguish between self-induced
intoxication and one caused against his will.

7. Taflis (Bankruptcy)
A person is considered bankrupt when his debt exceed
his assets, and court on the demand of his creditors
passes a prohibitory order restraining all alienation by
him, and direct the sale of his property for the benefit
of his creditors.
The purpose of al-hajr is to restrict al-muflis (bankrupt)
in the right of disposal of his property, is to safeguard
and protect the right of creditors and to prevent him
from caring out transactions detrimental to his
creditors.

8. Coercion/Use of power
Coercion is to compel a person, without having such a
right, to do a thing without his consent or through
fear.
Contracts made under coercion are not valid
according to majority of jurists.
According to Hanafis, contract under coercion is valid
but is suspended, on the extinction of coercion.
Mukrah (coerced person) has right to ratify it or to
revoke it.