Definition of Contract

Much of Islamic economics and finance is based on contracts between two or more parties. Whether it is a contract to purchase goods or a contract to make a loan, one needs to understand the concept of contract in Islam and how/if it differs from the one we see in the man-made law.

Definition of Contract in Islam

According to Kharofa, the word ‘aqd (contract) in Arabic language means tying tightly, as in tying a rope. Arabs used the word to speak about firm belief or determination. They used to say ‘aqd al ‘ahd to mean ‘make a covenant’ and ‘aqd al yamin to mean ‘give an oath’. Along the same line is ‘adqat al nikah meaning a marriage contract.

The word ‘aqd also carries the meaning of obligations, as used in the first verse of Surah al-Maida. O ye who believe! Fulfil your obligations.

In Islamic jurisprudence the word contract is used to mean an engagement and agreement between two persons in a legally accepted, impactful and binding manner.

Definition of Contract in Man-Made Laws

The definition of a contract according to the French Civil Law in article 1101 is ‘an agreement which commits a person or a group of persons to give something, do something or refrain from something to another person or group of persons.’

The Distinction

The definition of a contract in both Islamic jurisprudence and the civil law are fairly similar. Kharofa states that the Islamic definition is stronger, however, I personally believe the difference is nothing more than artificial.

Source: Kharofa, Ala’ Eddin. Transactions in Islamic Law. 2nd ed. Kuala Lumpur: A.S. Noordeen, 2000. 1-7.

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7 Comments

Filed under Basics and Definitions, Contracts and Transactions

7 responses to “Definition of Contract

  1. Dr Samir Radwan

    Dear brothers
    your great effort is undeniable and appreciated,May God guide you and reward you .But I noticed that you have fallen in a mistake and itis a serious one while explaining forbidden sales titled ” sale of something before receiving the price “. In reality it is not the price that must be received but the subject matter ” the sold article ” that must be owned and in your possession at time of contract . It is permitted to delay the price and not the priced thing

  2. abid

    excellent work

  3. Salaam,

    This site is very beneficial.

  4. I want you to send me latest note in respect of islamic law of contract.

  5. This article is really helpful for getting a general knowledge about Islamic Economics. However, you can read this one for more information about;

    http://islam-economy.org/islamic-banking/what-is-islamic-banking/

  6. Abdussalam ambazhathingal

    Very good site indeed!.
    Would appreciate if u could send me docs on ‘contracts and their application in modern islamic financial system’ under islamic economics’ to ambaza123@gmail.com
    Thanks and regards

  7. need notes on remedies for breach of contract in islamic law.. will u plz send me some link or notes..

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