ISLAMIC LAW OF OPTIONS

(KHIYARAT)

Introduction
Muslim jurists have suggested many devices to
safeguard contracting parties against hasty
undertaking. These devices are called khayarat,
i.e., options in Islamic law. These devices give a
party an option to revoke the contract.
The purpose of these devices is to maintain
balance in transactions and to protect a weaker
party from being harmed.

The meaning of khiyar is

that a contractor has right
to ratify the contract or to
annul within the period of
option.

Kinds of Options
Khiyar al-Sharat (option of condition)
Khiyar al-Tayin (option of determination)
Khiyar al-Ayb (option of defect)
khiyar al-Ruyah(opion of inspection)
Khiyar al-wasf (option of description)

 Option of defect and Option of inspection has

been granted by Shariah.

Option of stipulation , Option of determination

and Option of description are established by

agreement.

1-Khiyar al-Shart
(Option of condition)
Definition
It is that option through which one party or both of
them stipulate for themselves or for someone else
the right to revoke the contract within a
determined period.

Example
the purchaser says to the seller I purchased this
thing from you but I have right to return it within
three days

The result of this option is that

contract which is binding initially
becomes non-binding with the
stipulation of this option.

Legality
It is reported that Holy Prophet(P.B.U.H) granted

this option to Hibban Ibn Manzir who

complained that he was defrauded each time he
made a purchase. He was directed by Holy
Prophet (P.B.U.H) to say whenever he made a
purchase
No cheating and I reserve option for three
days.

 According to Imam Shafi and Imam Ahmad it

should be stipulated at the time of the contract.

Other jurists allow it even after the contract has
been concluded, as long as the parties are in the
same session.
Khiyar al-Shart is permitted in those contracts
which accept revocation like sale, hire etc..
It cannot be stipulated in those contracts which do
not accept revocation such as divorce etc.

 The option can be stipulated by one of the

parties for :
Himself
or
For a third party (the third party then becomes
wakil of the party for purpose of exercising the
option) but it does not prevent a party from
exercising this right himself.
There is agreement among the jurists that khayar
al-Shart can be stipulated for a period of three
days or less.

 The jurists disagree as regard any period over

three days.
Imam Abu Hanifa and Shafi do not allow it for
more than three days.
According to Malikis the period varies from case
to case.

Termination of the Option

The option ceases to be applicable in the following
cases:
Death of one in whose favor the option was
operating
The exercise of option is a personal right and
cannot pass to the heirs. Option becomes extinct
and the contract is now binding on heirs.
According to Shafis and Malikis it is right which
can be inherited and heirs can exercise the right
of Option within the stipulated period.

 Termination of the period

On termination of period contract becomes binding

and irrevocable.
Destruction of the subject matter

In this case contract also becomes binding.

2-Khiyar al-Tayin
(Option of determination)
Meaning
It is the right of buyer to choose, designate or
determine within a pre-stated time one object
out of two or more which are proposed to him.
The basic rule is that the subject matter must be
known at the time of contract.

Example
One buying a car out of three vehicles offered

for fixed price, gets opportunity through this

option to have cars examined by a specialist
and choose one of them.
The reserving of the right to ascertain the
bought item later is known as the
khiyar al-tayin.

Effects Of the Option

o Shafis and the Hanbalis do not permit the

stipulation of the determination because their

opinion is based on the general rule which is that
the goods being purchased must be ascertained
at the time of the contract.
o The Hanafis and Mallikis allow this option on
the basis of need because one may be in need of
consulting other or purchaser is the agent of
someone and wants to refer the matter to his
principal..etc.

 So, this option is allowed as an

exception through Istihsan (Juristic

preference).
Its operation is very narrow permitted
mainly in the contract of sale.
It is permitted to the buyer as the
necessity .
This option cannot be used by the seller
according to the majority of the Hanafis .

Duration of khiyar al-tayin

Maximum period to exercise this khiyar is

three days according to Imam Abu Hanifah.

According to Imam Yusuf and Muhammand
time period is unlimited.
Some Jurists consider khiyar al-tayin , a kind
of khiyar al-shart and grant the same period
for it as stipulated for the khiyar al-shart.

Conditions
The number of unascertained items should not

exceed three, out of which one has to be

ascertained.
There should be a difference in value between
the three items and price of each must be
known.
The period of the option should be determined
and not more than three days.

Effects of the Khiyar al-tayin

A contract with this option is binding for the seller

and non-binding for the buyer.

It is possible for the buyer to revoke the purchase
in all three items.
According to Hanafis on the termination of period
the contract becomes binding it is now necessary
for the buyer to select one of them.
According to Malikis on termination of the period,
the sale is void in all items. So this option must be
exercised within the period.

Termination
Following factors terminate this option:
1. Exercise of the option
2. Destruction of one of the items in possession
of buyer:
The goods destroyed become ascertained and
the buyer is liable for the price.
3. Destruction of one of the items in possession
of the seller:
Buyer has a choice to accept what remains or to
revoke the contract.

3. Death of one who possessed the option. The

contract becomes binding for the heirs and the
heirs must ascertain one item.

3-Khiyar al-Ruyah
(Option of Examination)
Definition
It is the right given to a person; buying or brings
anything not yet present at the time of the
signature of the contract, to confirm or revoke
the said contract after inspecting the goods or
commodity.

 Knowledge of subject matter at the time of

contract is an essential condition.

Such knowledge is possible through an
examination of subject matter at the time of
contract or by description in a manner which
removes all kinds of Jahalah.

Opinions Of Fuqaha
There are two opinions relating to the khiyar alruyah:

Opinion # 1
The Shafis are of the view that the contract

in which subject matter has not been

examined is not valid.
They reject the validity of this option.

They argue on the basis of this Hadith:

Do not sell what you do not have
The Malikis agree with the Shafis in general but

they allow sale by minute description when:

When examination at time of contract becomes
impossible or
It is likely to result in grave loss.
In such case the buyer may exercise option of
examination and reject the good if it does not
conform to description.

 The Hanbalis agree with Shafis and Malikis.

They reject khiyar al-ruyah also.

Opinion #2
The Hanafis having difference of opinion with the
other schools.
According to Hanafis the contract in which the
buyer has not seen the goods is a valid and
enforceable contract but it is non-binding and the
buyer has the option to revoke it upon
examination.

The buyer can reject the goods under this option

even if the goods were described minutely and
are found to conform to the description upon
examination.
Hanafiss Arguments
They argue that the tradition Do not sell what
you do not have applies to one who does not
own the goods and has not capacity to deliver.
It does not apply to the goods, which cannot
be seen at the time of contract.
They quote in support a tradition to the effect
that:

 He who buys a thing which he has not seen has

an option upon seeing it
They also base its legality on a judgment
against Hazrat Usman (r.a.t.a) who has sold
land to Hazrat Talhah. Either had not seen the
land . Jubayr ibn Mutam arbitrated the dispute
and allowed Talhah right of option.

Conditions
The buyer must not have seen the goods.
The contract must be property, which is

specified like houses, land, horses..etc.

Facts terminating the option

The option ends with the examination of the

subject matter. There is no fixed period for

this.
Destruction of subject matter makes the
contract irrevocable.
The death of the buyer makes the contract
binding for the heirs of the buyer.
If the buyer examines the property and
transfers it to other person , the contract
becomes irrevocable.

4-Khiyar al-Ayb
(Option of defect)
Definition
It is right given to purchaser in a sale to cancel
the contract if he discovers that the good
acquired has in it some defect diminishing its
value.
The option has been imposed by law itself and
the parties do not have to stipulate it.

 The goods are liable to be rejected if

undeclared defects are discovered.

If the seller specifically states that he is not
responsible for any defects then the buyer acts
at his own risk and goods cannot be rejected.

Legality of this Option

This option is based on the traditions:
He

who defrauds another is not from

amongst us
It is not permitted for seller to sell
things which are defective unless he
points it out to him

Conditions for exercising option of

defect
The defect should be such which causes

decrease in the value of property.

Defect may be obvious/apparent or hidden.
The defect should be existed prior to the
contract.
The defect should continue after delivering till
the time of the exercise of the option.
The buyer should have no knowledge of the
defect at the time of contract or at the time of
delivering.

 There should not be any agreement of non-

guarantee. If the purchaser by the agreement

of non-guarantee expressly excludes the seller
from any responsibility for defect in the sold
good, then he cannot avail this option in
future.

Effect of Option of defect

The contract with option of defect is

revocable.
The purchaser of an object with defect has an
option to confirm the sale or to reject it.

Factors terminating the Option

Acceptance of object with defect by the buyer.
Destruction of good/object in the hands of

buyer.
The death of buyer does not terminate the
option. The right in such case is inherited by
the heirs.