Presentation 1 - LAW 737 Islamic Law of Transaction

Nur Arfah Bt Abdul Sabian
Arsidah Bt. Arhan
Amir Nur Ikhwan B. Amernudin
Jaslina Bt. Kassim
The jurists determined
that any consent which
is impeded is consent
conditional upon the
cause of contract
Considered the consent
is impaired and invalid
– no an actual
Eg : victim of mistake,
fraud or deceit – the
contract become
voidable and burden of
proof lies in
establishing that the
consent had been
induced by misleading
4 Grounds of the impediments
Definition of Mistake (Ghalat)
Term use - Ghalat,which applies to both to
calculated and material error.
In Maliki texts – jahl (ignorance) is found to
replace ghalat.
Oxford law dictionary – define mistake as a
misunderstanding or erroneous belief about a
matter of fact or a matter of law.
According to Rayner in his book ‘the theory of
contracts in Islamic law’, mistake can be defined as
a false or inexact representation of reality, may be
regard to different elements of a contract.
*The muslim theories of obligation detailed as to object of contract.
*It seem to preclude most area of
mistake prior to the conclusion of the
*Example :
the object must not only exist but in
the condition to be taken possession of,
precisely determined in its substance,
class, quality and value, and must also
be identified.
*Any defect -will renders the contract
void ab nitio.
Concept of Mistake
Mistake is given the least consideration
among the impediments of consent
despite the fact that it is the most
conducive to be dispute.
Prof. Coulson
Reducing the degree of mistake to
degree of ignorance (jahl) on the part of
contracting parties which renders the
contract not binding. .
Concept of mistake in islamic
 Islamic law conceives of mistake as a substantive or
intrinsic element which capable of occurring only
during the formation of contractual agreement.
 Mistake could arise from an assumption as to the
existence, quality or quantity of the contractual object
or to the nature or existence of the contract itself.
 The provisions concerning mistake are
scattered and usually are to be found in the
books of fiqh among the discussion in option
of description, defect or sight.
 The Islamic concept of mistake is inextricably
bound to the notion of consent in contract.
 The law lacks in formulated theory because
the provision of mistake are in actuality,
mostly preclusions or safeguards designed to
prevent its very incidence.
Categories of Mistake
1) Mistake as to object of the contract
2) Mistake as to meaning
3) Mistake with stipulation intention
4) Mistake of non-disclosure of the will
5) Mistake as to value
6) Mistake as to person
7) Mistake as to law
Mistake as to Object of the contract
- It is the most important
category of mistake.
- It consist of 2 types of mistake:
Option of
1) substantive mistake
2) mistake as to insubstantial
qualities of the object.
- It deals with the controversy
between continuing commercial
relations and the maintenance of
due respect for real consent. It
includes 3 different options
Mistake as to meaning
(Ghalat al-Maa’na)
 According to classical jurists, a mistake with regard to
the substance (Jins) of the object will constitutes the
contract void ab nitio.
 It considered as substantive mistake.
 Based on Art. 208 of Al-Majella:
“If the object is declared in kind (Jins) and the object
proves to be another kind, the sale is invalid (batil)”.
A sold B a stone as
sapphire which is
subsequently realized
to be a mere glass.
A made a contract to sell
wheat to B but then it turn
out to be flour or bread.
Both mistake is substantive and
as for second example, despite
the fact that flour, wheat and
bread are actually are different
stages of process of the same
 In this case, the mistake as to meaning is also
actionable under the option of description.
 This shows that the Islamic doctrine of mistake
takes on noticeably wider ambit that mistake in
common law.
Mistake as to desired quality
(insubstantial) of the object
 Insubtantial quality (Wasf) of a contract refer to the object
being in the same substance as contracted for, but different
in its quality.
 It is regarded as valid but not binding - the remedy is
sought under Islamic law is not under mistake (ghalat) but
either under the option of defect or description.
Example of insubstantial mistake
if a seller represents
the stone as refer to a
sapphire, and it is
later deemed to be a
the sale is valid as it
is not mistake as to
substance of the
object and is not
deemed to have
affected the usufruct
intended by the
purchaser and the
true sale.
Mistake As To Person
 Not explicitly formulated by the classical jurist.
 Resolution may be adopted to form general
outline of a doctrine.
 Not affect the contract unless the persona of the
contractor, or a substantive quality thereof, which
give rise to a mistake, is a legal cause to the
Mistake As To Person
 Specific contract in which a mistake as to person
of the co-contractor has become importance.
 Party who suffers is given the right to annul the
contract following the French Civil Law concept.
 Contrasted with English Common Law where
Mistake as to Person falls into the category of
Mistake which negate consent
Mistake As To Person
1) Marriage Contract.
 The person of the spouse is generally of prime
consideration in the contract.
 Sanhuri, a modern author, distinguish between qualities
generally, and essential qualities of the person.
 Mistake as to essential qualities of the person in Sanhuri’s
opinion will invalidates the marriage contract.
Mistake As To Person
2) Unilateral Contract of Gift.
 The donee constitute a substantive aspect of the
 A mistake as to his person will give the donor the
right to withdraw or demand the return of his gift.
Mistake As To Person
3) Unilateral Contract of Bequest
The legatee is regarded as a cause of the contract.
Al-Kasani states that among the important
condition of a contract is a consent (Rida) of the
testator because it is connected with the property.
Therefore, a bequest made in jest or by compulsion
or mistake is invalid.
Mistake As To Person
 4) Contract of Pre-emption and Agency.
 In the contract of agency, Mistake pertains not so much to
the identity of the person as to his substantive qualities.
 For example, a minor purporting to be an agent lacks
capacity so to act.
 If the third party dealing with the agent believes the latter
has proper capacity to contract, this is a mistake in the
substantial quality of the agent, that is his capacity to the
Mistake As To Person
 Thus the third party who deals unwittingly with
such an agent may avoid the contract on the
ground of Mistake.
 Abu Yusuf states that if the buyer is aware of the
status of the agent minor, he is not allowed to
avoid, whereas if he is mistaken wittingly, he may
be given the option to annul or perform.
Mistake As To Law
 General principle of the civil law that Mistake as
to Law, like a mistake as to fact, may vitiate the
consent of the contracting party.
 Bellafonds states that the Shariah, as formulated
by the classical jurist, rarely distinguishes
between the concept of Mistake as to Law and
that of ignorance of the law.
Mistake As To Law
 Modern exposes of the principle of contract, there
is a distinction made between Mistake and
ignorance of the law.
 The general maxim that “ignorance of the law is
no excuse” with regard to Mistake is not always
applicable is Islamic law.
Mistake As To Law
 Compendiums on Usul al-Fiqh, the principle is that
ignorance of the law is a valid excuse as long as it is
not accompanied by negligence (Taqsir).
 Whoever is ignorant of the law and is negligent, is
held answerable to this ignorance and will not be
considered a Mistake in Law.
 Whoever is ignorance of the law and is not negligent
in that ignorance is excused his ignorance and it may
be regarded as a Mistake as to Law.
Mistake As To Law
 The primary assumption of Islamic Fiqh is that Mistake as to law is
not excusable except if the special surrounding condition can be
established to rebut the charge of the assumed negligence regarding
the ignorance as to the law.
 The Hanafi author, al-Kasani states, in the sale of moveable
property, if a neighbour asks for a right of pre-emption to that
property, and the buyer, thinking that his neighbour may legally have
per-emption over it, submits that right of pre-emption to him, when
later one of the two want to revoke the contract without the other’s
consent, he will not able to because when the submission is made, it
became a contract between them.
Mistake As To Law
 Here, the buyer mistakenly thinks that pre-emption
may be allowed on moveable objects, which is mistake
in law in Hanafi school.
 This ignorance cannot be considered excusable
because it encompasses negligence on the buyer’s
 Therefore, he is not allowed to revoke the sale due to
ignorance, and the contract is binding upon him.
contrast two situations:
1) a seller sells a sapphire but calls it a stone without knowing
that it is a sapphire. This will not considered as mistake, as the seller
does not reveal his intention to the buyer, indeed it is has no different
from his implied intention to sell the stone due to his ignorance of its
true essence.
2) the purchaser request a piece of Mervian cloth valued at one
Dinar, the seller produces a piece of cloth worth four Dinars. Here the
mistake is discoverable and the seller is permitted to avoid the contract.
Then result would have been the same if the seller were to produce a
piece of cloth for half a Dinar
 Hanafi :
do not distinguish between an object of
superior or inferior value to that stipulated.
 Shafii :
solution is diametrically opposed to that of
the Hanafi’s.
 Shirazi :
when the object is discovered to be superior
to that stipulated, the buyer has no option to
rescind the contract for mistake
Mistake with Stipulation of
Interntion divides by three:
1) Manifest expression of intent
2) Deduction
circumstances of the case
3) Deduction of intent from the nature of
the things
Manifest Expression of Intent
What is about ?
Expression of intents formula are al- Tasmiya (nominator) and al- Inshara (indication)
 Explanation?
Nomination represents the real will of the contracting party
Indication represents the apparent will A
sales by catalogue
If the nomination of an article differs from an indication given and thereby the true intention
or will is different from the apparent intention
Sale by catalogue and arrive at the same solution. If the delivered article fails to fit its
catalogue description, the buyer has an option to rescind the contract for misdescription
No differences in the use to which the object is put, the contract is formed on the basis of the
indicated object even if the buyers has given a description of a desired be in an option of
Deduction of Intent from
Circumstances of the case
 Explanation?
Not necessary for manifestation of a contracting party’s will to be express.
The other party may reasonably assume to have tacitly understood or
deduced his co-contractor’s will from his accompanying circumstances or
origin and be expected to recognised a mistake
 Example?
selling stone in a market for a precious jewel may reasonably be assumed
to be that category of value.
 When mistake have been establish, the contractor is deemed to have the
right of option of defect (Khiyar al- Ayb), but the burden of proof does lie
with the holder of that option
Deduction of Intent from the Nature of the
What is about?
The option of defect
 Explanation?
Established option with an implied condition for there is an implied condition of guarantees
concerning the soundness of the object.
Unless, contractor expressly inserts a condition of waivers against defects in the contracts.
 Example?
Anything which appreciably diminishes the value of an object of ordinary commerce is
regarded as a defect giving rise to an option.
 Al- Kasani states in this context that the will of the buyer is that the object is sound and that his will
is a valid condition of the contract. Therefore, if the object is discovered to contain a defect, this
condition of the buyer’s will is lacking and the validity of the contract is affected, giving rise to the
right of opinion
Khiyar al-Ru’ya
What is about?
• General Rule in Islamic jurisprudence:
If a contractor agrees to buy an object without having seen it, he
is allowed an Option of Inspection, which gives him a right to
ratify or rescind the contract.
• In this doctrine:
A contract formed by the will of two parties cannot be valid when
the will of one of those parties has been breach by mistake as to
the intended object.
 This doctrine, like the option of defect in mistake has its
foundations in the role of the will of contracting parties. A
contract formed by the will of two parties cannot be valid when
the will of one of those parties has been breached by mistake as
to the intended object
 Definition
 The Majella : Excessive deception in the value of
What constitute Excessive deception?
Article 165 of the Majella
Article 356
Article 357
 Hanafi, Shafi’i and Hanbali school: Ghabn must
be accompanied by fraud or verbal deceit.
 Shafi’I school: must be accompanied by flagrant
 I’badi school: diminution in value of the object.
Exception to condition
Contracts relates to :Property of minor
A waqf donor
The treasury
The effect of Mistake as to value
 Ibn Al-Hamam :- Buyer has the right to return the
property to the seller
 Ibn A’bidin : 1. the sale is valid but maybe rescinded absolutely;
 2. rescission is not absolute
 3. if deceit has also occurred rescission is
The effect of Mistake as to value
 Shafi’i school: Ghabn accompanied by taghrir
maybe rescinded at the option of the buyer
 Hanbali school: allow option to rescind on 3
grounds and must be accompanied by taghrir
 Maliki school: rescission is permissible on 3
Application of doctrine of mistake as to
value by modern statutes
The Iraqi Civil Code
The UAE Civil Code
The Kuwaiti Civil Code
The Bahrain Contract Law
The Malaysian Contracts Act
 MISTAKE is not a question of ignorance or a wrong decision but a
doctrine which seeks to identify the underlying cause of the error.
 The error must have motivated the decision to contract to be
 where such motivation or consent has been induced by deceit,
misrepresentation or fraud the Muslim jurist assign primary
attention to the consent of the contracting parties.
 The remedies are always deduced in the light of effect of the
mistake and its cause on the consent of the contracting parties.

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