Islamic Contract3-21 MA’QUD ALAYHI: SUBJECT-MATTER OF CONTRACT Prof. Dr. Zainal Azam Abd. Rahman.
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Transcript of Islamic Contract3-21 MA’QUD ALAYHI: SUBJECT-MATTER OF CONTRACT Prof. Dr. Zainal Azam Abd. Rahman.
Islamic Contract3-2 1
MA’QUD ALAYHI: SUBJECT-MATTER OF CONTRACT
Prof. Dr. Zainal Azam Abd. Rahman
THE CONCEPT OF SUBJECT MATTER: MA’QUD ‘ALAYHI In barter trading both assets exchanged can be
considered subject-matters of the contract Depends on whose perspective the assets are
looked at In an economy where there is money as medium
of exchange, money not considered as subject matter but price in sale contracts
Contract needs subject-matter to be valid
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CLASS OF SUBJECT-MATTER OR MA’QUD ALAYHI
Tangible assets Usufruct of assetWork/labour of individualDebt or receivablesRights and privileges
TANGIBLE/REAL ASSETS
Moveable and non moveable Qimiyy and Mithliyy Ma’sum and ghayr ma’sum Present or absent Ordinary goods/commodity or
money
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RIBAWI SUBJECT MATTERS
CHARACTERISTICS OF RIBAWI ITEMS– Money/medium of exchange– Foodstuff– Items having standard weight, measures, units
The rule of parity for exchanging ribawi items
The cash/spot rule Contemporary issues
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USUFRUCT OF ASSET
Usufruct is similar to real/tangible asset if it is valuable can be considered mal/property according to the Majority
Why usufruct is treated differently ( not as mal) by the Hanafi– -element of control– -element of durability– -ownership/tradability– -exception to general rule
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WORK/LABOUR OF INDIVIDUAL/ANIMAL Human being is not saleable except with regards
to slaves Human parts are also not saleable The use of labour or works as subject matter in
ijarah, jualah, istisna’, musharakah, mudarabah, muzaraah
Nature of services that can be secured– -as employeee (ajir khas)– -as independant contractor (ajir mushtarak)
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DEBT OR RECEIVABLES
possible situations that can impact hukm:– Selling to the debtor
– Selling to third parties
– Debt can be either monetary sum or certain goods to be delivered
– In exchange for another debt or sum of money
– The price is paid in cash or deferred term (debt)
– Or in exchange for tangible asset/goods
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DEBT…
– Whether debt is confirmed/certain or prospective/potential
– Whether payment to buyer is certain or doubtful/gharar/uncertainty
– Whether (if ribawi in nature) sold at par or not/issue or riba
– Whether debt sold or to be sold is due or not
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DEBT NOT DUE SOLD TO DEBTOR FOR DEFERRED (DEBT) OR CASH PRICE
Not permissible according to four schools Gives rise to al-kali’ bil kali’: debt for debt if
payment is also deferred If payment is in cash still the relevant issues are not
addressed– -selling something not in one’s possession– -as such doubtful as to capability of delivery/payment to purchaser– -debtor not party to the sale contract– -time of delivery not due yet– -if sold at discount leads to giving value to mere time in ribawi
transaction if the debt is a sum of money
I/paymentslamic Contract3-2 10
DUE DEBT SOLD TO DEBTOR FOR DEFERRED PRICE (DEBT) Not permissible as in the above situation View of Ibn Taymiyyah and Ibn Qayyim
regarding al-Kali’ bil Kali’ in relation to sale by description for future delivery where the price is not paid in cash: whether it is prohibited
and the issue of selling salam object for cash before taking delivery for a profit margin
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DUE DEBT SOLD TO DEBTOR FOR CASH PRICE Permissible according to the four schools Hadith Ibn Umar regarding sale of camels
and collecting payment in different currency
Not permissible in two situations– In sarf or currency excahnge– In paying for advance purchase price in salam
contract
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DEBT NOT DUE SOLD TO A THIRD PARTY FOR DEFERRED PRICE (DEBT)
Ijma’: not permissible as it leads to al-kali’ bil kali’- debt for debt
– -sale is for a transfer of ownership
– -it is a sale from Shariah perspective
– -selling something not in possession
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DUE DEBT SOLD TO THIRD PARTY FOR DEFERRED PRICE (DEBT)
MAJORITY/FOUR SCHOOLS: not permissible due to 1. selling something not in one’s possession 2. selling something not capable of delivery 3. full of uncertainty: denial by debtor 4. very close to debt for debt NOTES: AYN IS READY ASSET THAT IS PRESENT
IN FRONT OF THE PARTIES WHEREAS DEBT/DAYN IS SOMETHING NOT THERE IN PHYSICAL SENSE
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DUE DEBT SOLD TO THIRD PARTY FOR CASH PRICE VIEW ONE (Hanafi, Hanbali and the most obvious (azhar) among Shafi’I views): not permissible due to
uncertainty/gharar of delivery like selling run away animals VIEW TWO (one view in Shafi’I school, a view attributed to Imam Ahmad that are said to be the correct view by Ibn
Taymiyyah and Ibn al-Qayyim: it is permissible VIEW THREE (Maliki school): 1. debt of salam if not in the form foodstuff (to be delivered by the salam seller to the
purchaser) for whatever price 2) other kind of debts are saleable with 8 conditions:
– -cash price
– -debt in the form of something allowable to be sold prior to taking delivery
– -not involving exchange of money for money @sarf
– -to be sold for other than its genus that needs to in the form of goods/real asset not money
– -debtor is known (solvency/status) and residing in the jurisdiction
– -debtor has admitted being indebted/no denial
– -no enmity between purchaser of debt and the debtor
– -the purported sale is not to cause problems to the debtor
VIEW FOUR (Shafi’i school as held by many of its jurists): allowable to self debt of whatever nature if due on conditions:
– -debtor had admitted his indebtedness
– -debtor is solvant
– -the debt is dayn mustaqirr/confirmed or established debt
– -the price is paid in goods or reals assets
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GENERAL CLASS DISCUSSION Conventional finance and commercialization of
credit/lending Debt market and risk by own design Financial crisis as a result of market distortion Due to interference with the law of supply and
demand because of such commercialization of lending
The peril of riba finance is obvious to see THE QUESTION: IS ISLAMIC FINANCE
EQUALLY INVOLVED??
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NATURE OF RIGHTS Rights of Allah, Rights of Man, Combined rights Right granted by Shariah to avoid hardship or injustice to
the person concerned, cannot be exchanged with price or tanazul for a fee
Right granted by Shariah not for the above reason specifically
– -cannot be sold
– -cannot be inherited
– -cannot be given for free/hiba
– -can only be exchanged in sulh or tanazul for a fee
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RIGHTS AND ITS CLASSIFICATION
Rights can be looked at as:
– Right of ownership (complete and incomplete)
– Right to acquire ownership (ownership will materialize at a later time when that right is eventually exercised
– Right of ownership compared to right to make use (haqq al-intifa’)
– Rights personal to the holder only not transferable freely
– Rights allowed to be sold for a price
– Rights not allowed to be sold but can be subject of sulh/tanazul
– -full complete right of ownership (al-milk al-tamm) compared incomplete right of ownership (al-milk al-naqis)
– al-milk al-tamm compared to beneficial right and haqq al-intifa’
• -al-milk al-tamm give to holder full power of disposal and control and assumption of risk and gain of the asset
• -haqq al-intifa’ only gives right to use not power of disposal
• -beneficial right gives incomplete power of disposal and control to the holder
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PRIORITY CAN NOT BE SOLD Priority in ihya’ al-mawat case by tahjir Concession/alienation by government/iqta’ By being first to control abundant
items/mubah By being the first to occupy open market
space By being the first to be in the first raw in the
mosque or other public spaces open for all
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HUQUQ MA’NAWIYYAH: INCORPERIAL RIGHTS Intellectual property rights
– -copyright– -patent– -license– -trademarks– goodwill
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GENERAL CONDITIONS GOVERNING DEALING IN RIGHTS The right must be fully established at that material time;
not potential right It is granted not specifically for a particular holder for the
purpose of avoiding injustice or harm to him personally Such a right is transferable to other person not personal to
the holder It is possible to define the boundary or nature/attribute of
the right such that intolerable uncertainty/gharar can be avoided
That right is generally accepted based on customary practices/uruf
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SPECIFICATION OF THE SUBJECT MATTER Jins/genus Naw’/category Sifah/attributes Quantity Specifications needed to avoid possible dispute
between parties If subject-matter is present, buyer has right of
inspection Contemporary issues
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DELIVERABILITY OF SUBJECT-MATTER Must be in seller’s ownership and possession Meaning of ownership: complete and partial Implication of possession Possession of movable and non-movable asset The rationale for the ruling: uncertainty and issue
of risk and avoidance of dispute The issue of frustration of contract when asset is
destroyed before delivery to the other party Contemporary issues
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EXISTANCE OF SUBJECT-MATTER Non-existent can not be contracted as a
general rule Ability to deliver is questionable The Hanbali view on this is peculiar to this
mazhab Exception in the case of salam and istisna’
where sales are based on description Contemporary issues
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PERMISSIBILITY/HALALNESS or LEGALITY OF SUBJECT-MATTER
Halal for Muslims to posses or acquire Recognised for non-Muslim to possess but not Muslims Impure things can not be acquired Permissible works Permissible employment of asset in ijarah Dealing with individuals whose assets are essentially of
haram origin Dealing with non-Muslims Selling of goods likely to be used for illegal purposes Contemporary issues
SUITABILITY OF SUBJECT MATTER Durability of the subject matter for rahn Life span of asset in ijarah/;leasing Asset that can be properly described in
salam Specific object or an object fully described
in some contracts Purpose of the contract and the likelihood
of used of the subject-matters
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