There are two main types of contracts:
- Unilateral; and
A unilateral contract is gratuitous in character and does not require the consent of the recipient (qabool). Examples of a unilateral contract include gift (hadiah, hibah), off-set of the debt (ibra), will (wassiyyat) endowment (waqf) and loan (qard). Each of these transactions will be explained later in more detail.
A bilateral contract requires the consent of both parties and covers the remaining transactions in Islamic law. The scholars have traditionally divided bilateral contracts into six classifications:
- Contracts of exchange (mu’awadat);
- Contracts of security (tawthiqat);
- Contracts of partnership (shirkah);
- Contracts of safe custody (wadi’ah);
- Contracts pertaining to the utilization of usufruct (manfa’ah); and
- Contracts pertaining to do a work (e.g., wakalah and ju’alah).
These classifications and various contracts that come under these will form the basis of later discussion under contracts and transactions in Islamic law.
Source: “Contracts in Islamic Commercial and Their Application in Modern Islamic Financial System.” Iqtisad Al-Islamy. 2003. Islamic-World.Net. 16 January 2006. [http://islamic-world.net/economics/contract_01.htm].