ISLAMIC LAW OF TRANSACTION

1. ISLAMIC LAW OF TRANSACTION QUESTION 2 CONCEPT OF MISTAKE AND ITS CATEGORIES

2. GROUP MEMBERS

3. IMPEDIMENTS TO CONSENT IN ISLAMIC CONTRACT

4. 4 Grounds of the impediments

5. Definition of Mistake (Ghalat)

7. Concept of mistake in islamic contract • 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.

8. 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.

9. Categories of Mistake

10. MISTAKE AS TO OBJECT

11. Mistake as to Object of the contract

12. MISTAKE AS TO MEANING (GHALAT AL-MAA'NA)

13. 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 abnitio. • 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)”.

14. Examples

15. 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.

16. 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.

17. Example of insubstantial mistake

18. MISTAKE AS TO PERSON

19. 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 contract.

20. 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

21. 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.

22. Mistake As To Person 2) Unilateral Contract of Gift. • The donee constitute a substantive aspect of the contract. • A mistake as to his person will give the donor the right to withdraw or demand the return of his gift.

23. 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.

24. 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 contracts.

25. 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.

26. MISTAKE AS TO LAW

27. 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.

28. 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.

29. 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.

30. 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.

31. Mistake As To Law • Here, the buyer mistakenly thinks that pre-emption may be allowed on moveable objects, which is mistake in law in Hanafischool. • This ignorance cannot be considered excusable because it encompasses negligence on the buyer’s behalf. • Therefore, he is not allowed to revoke the sale due to ignorance, and the contract is binding upon him.

32. MISTAKE WITH STIPULATION OF INTENTION Sanhuri 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

33. 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

34. Mistake with Stipulation of Interntion divides by three: • Manifest expression of intent • Deduction of intent from circumstances of the case • Deduction of intent from the nature of the things

35. 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 • Example? sales by catalogue Sanhuri If the nomination of an article differs from an indication given and thereby the true intention or will is different from the apparent intention Maliki 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 Hanafi 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 description

36. 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

37. Deduction of Intent from the Nature of the Things • 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

38. NON- DISCLOSURE OF THE WILL Khiyar al-Ru’ya

39. 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

40. MISTAKE AS TO VALUE (GHABN AL-FAHISH)

41. MISTAKE AS TO VALUE (GHABN AL-FAHISH) • Definition • The Majella : Excessive deception in the value of goods • What constitute Excessive deception? • Article 165 of the Majella • Article 356 • Article 357

42. CONDITIONS ATTACHED (OPINION OF THE JURISTS) • Hanafi, Shafi’i and Hanbali school: Ghabn must be accompanied by fraud or verbal deceit. • Shafi’I school: must be accompanied by flagrant misrepresentation. • I’badi school: diminution in value of the object.

43. Exception to condition

44. 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 absolute.

45. The effect of Mistake as to value(cont’d) • 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 conditions.

46. Application of doctrine of mistake as to value by modern statutes

47. THE CONCLUSION • 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 actionable. • 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.