The contract (aqd): elements, offer and acceptance, and its kinds

In the lexicon, aqd is tying, binding, guarantee and covenant. In the specific sense used here, it is what arises from two wills so that its legal effect appears in the object ^{1 2}.

Most jurists count three pillars: the contracting parties, the formula (offer and acceptance) and the object. The Hanafis count only the formula ³.

The formula may be spoken, written, signalled or given by exchange, according to the school. The Shafi'is and Hanbalis require a marriage contract to use the word for marriage; the Hanafis and Malikis do not, and some cases follow the purpose over the wording ^{4 5 6}.

The acceptance must match the offer and be joined to it in one session. According to the majority the offerer may retract before acceptance, and they do not require immediate acceptance ^{7 9 10 11}.

The parties need capacity, authority and consent. The object must exist or be capable of the effect, be known and be deliverable, with exceptions for gifts ^{12 13 14}.

Contracts are divided into financial and non-financial, binding and revocable, exchange and gratuitous, valid, void and defective, effective and suspended, and fixed-term and open-ended ^{15 16}.

A contract ends by rescission, by agreement, at the end of its term, by destruction of the object, by the death of a party, by usurpation, or by a successful claim of a third party ^{17 18}.

Particular contracts are treated under their own headings; the contract of protection under «aqd al-dhimma», and the suspended contract under «aqd mawquf» ¹⁸.

In Muslim law the 'akd is properly any legal act, whether it concerns a contract or a simple unilateral declaration such as a will. More especially it denotes a legal act that involves a bilateral declaration: the offer (ijab) and the acceptance (qabul). In Hanafi law the offer by itself has no binding character, though the Maliki school differs on this point; the 'akd is formally constituted at the moment the acceptance is given. ¹⁹

The 'akd must be distinguished from simple promises (wu'ud) and from permissions (ibahat), which do not create a contract. It is more than a statement of agreement. Every 'akd requires a sigha, a form in which the wishes of each party are expressed. In principle these wishes are expressed verbally, unless one of the parties is mute; writing can be used when the parties are not present together. There is no rigid formalism: any mode of expression is valid if it gives the required meaning. But a formula in the future tense cannot validly express the will to contract; a formula in the present tense binds the speaker only if the will to contract is established independently, and a formula in the past tense needs no separate proof of intention (niyya). ¹⁹

The 'akd is meant to reflect a mutual understanding that has already been reached, so that its legal effects follow. Thus the effect of a contract of sale is the immediate transfer of ownership of the object to the buyer, and that transfer cannot be deferred. The 'akd is less an act that gives rise to obligations than a legal act that creates a new legal situation or modifies an existing one. The seller must deliver the object and the buyer must pay the price, but these obligations are not counted as effects (hukm) of the contract; they are its contractual rights (huquq al-'akd). If both parties discharge their obligations as soon as they agree, no 'akd has been made, only a mu'ata, a mutual exchange of goods and price. This exchange is valid for trifling goods, and for valuable goods in some doctrines once one party has effectively fulfilled the contract. In principle, though, the 'akd requires a sigha that creates a new situation in law. In certain contracts the material delivery of the object is itself a condition of the contract's completion: this holds for loans of fungible and non-fungible things, for pledge and for gift, which in Muslim law are equivalent to "real" contracts. ¹⁹

The 'akd must satisfy a condition of unity in time and place. It is an indivisible whole: the offer cannot be accepted in part, even when it concerns two distinct things, and it cannot be accepted by one of its recipients to the exclusion of the other. The contract is null and void if one of its objects proves to be an asset outside commerce. The 'akd must also be concluded at one sitting, the contractual meeting (madjlis al-'akd), in which the parties are together in one place. This is the contract's three unities. Any clause added to a contract is therefore inoperative unless the nature of the contract implies it, so that it fits into the contract's structure; such implied clauses are called essentialia and naturalia, and all other clauses (accidentalia) are considered invalid. An inalienability clause added to a sale, for example, is void. ¹⁹

Does this mean that contracts in Muslim law are fixed forms, so that the parties cannot agree on what the Law has not anticipated? The usual answer is that Muslims are bound by their stipulations (shurut, see SHURUT), but each type of contract is judged on its merits on the basis of the Qur'an, the hadith or the consensus of the community. The conditions for forming a contract are in effect prescriptions of an authoritative kind, and the regulations jurists lay down for contracts carry the sanction of nullity, which considerably limits the area of freedom. The Muslim social order in contracts rests on two main principles: the struggle against usury and any suspicion of usury (riba and shubhat al-riba), and the exclusion of all risk (gharar) from transactions. ¹⁹

Once an 'akd is drawn up with the requisite conditions, it cannot in principle be vitiated by a fault in the agreement, unless there is constraint (ikrah), which is usually treated in a separate chapter of the works of fiqh. A party that has suffered constraint may revoke its obligations. In the case of fraud, the contract can be challenged only if the fraudulent acts caused the deceived party excessive loss (ghabn fahish). Errors in the agreement pass almost unnoticed. A party deceived about the quality of the object can withdraw only if that quality was made the subject of a special stipulation in the contract; the contract is then cancelled not on account of the error but on the basis of the resolutory clause. CITE

An 'akd that does not meet the required conditions is in principle ineffective and is termed null and void (batil). Hanafi doctrine, however, distinguishes between a null contract and an irregular (fasid) one. A contract is null only if one of the conditions regulating its conclusion is unfulfilled; in every other case it is merely irregular. The irregular contract, like an invalid one, is an act without legal consequences, but only where the protection of a third party is not involved. A person who acquires property under an irregular contract can therefore validly alienate it to a third party, provided he has already taken possession of it. The alienation arises from one who is not the owner, but it is held valid because the third party, who acquired from the owner, may have been unaware of the defect in that owner's title. This measure of protection underlies the theory of irregular contracts in Hanafi law. CITE

Some contracts are neither valid nor invalid but belong to a third category, in which the 'akd is said to be mawquf (suspended). Examples are a contract concluded by a minor who has some powers of discernment without the authority of his guardian. Unless the transaction is gratuitous, a transaction by such a minor is not null and void: it is non-effective, and the guardian's ratification (ijaza) gives it full and absolute effect. Similarly, a contract agreed by a person who is not the owner is non-effective until the true owner ratifies it. In the meantime it has no legal effect whatever; it is in suspense between the parties and as regards any third party. CITE

If an 'akd is to take effect on persons other than the contracting parties, representation is required. In Hanafi law the agent (wakil) does not in principle represent his client. For the contract to take effect directly on the client, the agent must act in the client's name, and then he is a messenger or spokesman pure and simple (rasul). If he acts in his own name (proprio nomine), which is the usual role of an agent, the contract still takes effect on the client, but the obligations arising from it bind the agent alone: the agent pays the price himself, while the property goes directly to the client. The distinction between the effects of the contract (ahkam) and the rights arising from it (huquq al-'akd) is clearly illustrated here. CITE

An effective 'akd is in principle binding (lazim). There are exceptions. Agency, gratuitous loan, pledge, partnership, suretyship, security and gift are among the contracts that are essentially revocable, so that one party may withdraw by a simple unilateral declaration (for a gift a judicial decree is necessary). Leases can always be rescinded if one party pleads an excuse ('udhr) on any grounds. A special clause may also be inserted in any contract to give one party, or both equally, a right to withdraw; in Muslim law this right is called khiyar al-shart. CITE

Finally, mutual agreement between the parties can always end a contract. This is termed iqala (mutual dissent) and is discussed at length in the works of fiqh. But an 'akd cannot in principle be cancelled on the ground of non-fulfilment: in default of a special clause, a vendor cannot demand rescission of a sale because the purchaser has not paid the agreed price. [See also SHURUT.] CITE

The bibliography lists the Hanafi doctrinal sources, which the article discusses directly: Muhammad b. al-Hasan al-Shaybani's al-Asl (Kitab al-buyu' wal-salam, ed. Shafiq Shibata, Cairo 1954), al-Sarakhsi's al-Mabsut (30 vols., Cairo 1906), and al-Kasani's Bada'i al-sana'i fi tartib al-shara'i (7 vols., Cairo 1910). It also lists D. Santillana's Istituzioni di diritto musulmano malichita (Rome 1938), the modern studies on contract and obligation in Arabic by 'Ali al-Khafif, Muhammad Abu Zahra, Subhi Mahmasani and Mustafa Ahmad al-Zarka, and 'Abd al-Razzaq al-Sanhuri's Masadir al-haqq fi l-fiqh al-islami, i (Cairo 1954). CITE