Scholars describe a valid contract as a contract that is sound in both is pillars and characterists. That means, it does not contain anything that is prohibited by Shari’ah.
An invalid contract, thus, would be one which is not sound in either its pillars or its characteristics, or both. According to the Hanafi scholars there is a this type, a corrupt contract, that is sound in its pillars but not in its characteristics. We will currently ignore the corrupt contract.
Kharofa divides the conditions as below:
Conditions of Confirmation (en’eqad)
- The existence of two contracting parties;
- The format and the subject; and
- Particular conditions for certain contracts to be valid (e.g., presence of two witnesses in a marriage contact without which the contract is nugatory).
Conditions of Execution (nafath)
- The contractor should be in possession of the subject, or at least should be able to hand it over if it is not in his possession; and
- There should be no claim from other parties to the subject of the contract.
Conditions of Obligation (lozum)
- The contract should not contain an element of choice or option; and
- The subject matter of the contract should be free from defects (that are not disclosed to the contacting party).
Conditions of Correctness (Sehah)
- The contract must have met each of the three pillars.
Source: Kharofa, Ala’ Eddin. Transactions in Islamic Law. 2nd ed. Kuala Lumpur: A.S. Noordeen, 2000. 28-30.