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THE ISSUE OF MISTAKES AND DURESS IN ISLAMIC CONTRACT

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Farid A. Razak

on 24 November 2014

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Transcript of THE ISSUE OF MISTAKES AND DURESS IN ISLAMIC CONTRACT

Term use
- Ghalat,which applies to both to calculated and material error.

I
n Maliki texts

jahl (ignorance) is found to replace ghalat.

Considered the consent is impaired and invalid – no an actual agreement

THE ISSUE OF MISTAKE AND DURESS IN ISLAMIC CONTRACT
design by Dóri Sirály for Prezi
The jurists determined that any consent which is impeded is consent conditional upon the cause of contract

IMPEDIMENTS TO CONSENT 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
THE CONCEPT OF MISTAKES IN ISLAMIC CONTRACT
GROUNDS OF THE IMPEDIMENTS
DEFINITION OF MISTAKES (GHALAT)
The muslim theories of obligation - detailed as to object of contract.

*It seem to preclude most area of mistake prior to the conclusion of the contract.

CONCEPT OF MISTAKES (GHALAT)
Eg : victim of mistake, fraud or deceit – the contract become voidable and burden of proof lies in establishing that the consent had been induced by misleading factors.

FRAUD
DURESS
EFFECTIVE CONSTRAINTS
MISTAKES
Oxford law dictionary

define mistake as a misunderstanding or erroneous belief about a matter of fact or a matter of law.

*Example : the object must not only exist but in the condition to be taken possession of, precisely determined in its substance, class, quality and value, and must also be identified.

*Any defect -will renders the contract void ab nitio.

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.

CATEGORIES OF MISTAKES
Mistake as to object of the contract

Mistake as to meaning

Mistake with stipulation intention

Mistake of non-disclosure of the will

Mistake as to person

Mistake as to law

Mistake as to value

Mistake as to Object of the contract
- It is the most important category of mistake.
- It consist of 2 types of mistake:
1) substantive mistake
2) mistake as to insubstantial qualities of the object.
- It deals with the controversy between continuing commercial relations and the maintenance of due respect for real consent. It includes 3 different options

1 . Option of defect

2 . Option of description

3. Option of inspection

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 ab nitio.
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)”.

Examples:
A sold B a stone as sapphire which is subsequently realized to be a mere glass.

A made a contract to sell wheat to B but then it turn out to be flour or bread.

Both mistake is substantive and real, as for second example, despite the fact that flour, wheat and bread are actually are different stages of process of the same substance.

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.

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.

Example of insubstantial mistake:
if a seller represents the stone as refer to a sapphire, and it is later deemed to be a ruby.

the sale is valid as it is not mistake as to substance of the object and is not deemed to have affected the usufruct intended by the purchaser and the true sale.

MISTAKE WITH STIPULATION OF INTENTION
Manifest expression of intent
Deduction of intent from the nature of the things

Manifest Expression of Intent
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

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.

Deduction of Intent from the Nature of the Things
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.

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

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.

MISTAKE AS TO PERSON
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.

1) Marriage Contract.
The person of the spouse is generally of prime consideration in the contract.

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.

3) 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.

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.
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.

MISTAKE AS TO VALUE
(GHABN AL-FAHISH)
Definition
 
The Islamic Law only recognizes mistake to value as one of the impediment to contract if it is regarded as Ghabn al-fahish (Flagrant misrepresentation).
 
The Majelle in its glossary has defined Ghabn al-fahish as “Excessive deception in the value of goods”

The Articles of the Majelle further elaborate to what extent shall a deception be considered excessive and enable a contract to be vitiated
Article 165 states that excessive deception means:-
not less than 1/20 of the total price in respect of goods,
not less than 1/10 of the total price in respect of animals;
not less than 1/5 of the total price in respect of real estate unless it is accompanied by verbal deception (Taghrir) or fraud (Tadlis)
 

CONDITIONS ATTACHED (OPINION OF THE JURISTS)
According to Hanafi, Shafi’i and Hanbali school: Ghabn must be accompanied by fraud or verbal deceit.
 
The Shafi’i school further added that Ghabn must be accompanied by flagrant misrepresentation. A mistake accompanied by Ghabn alone does not give rise to rescission unless accompanied by taghrir.
Conclusion
From the discussions mentioned above we can conclude that the Islamic Law does not allow a mistake by itself to form an impediment to the contract or to affect the validity of the contract.
 
There must be an element of fraud or deceit exist in the transaction to enable the contracting party to plead that there is a mistake in the contract and subsequently demand that the contract be void or voidable.
 
by the existence of the element of fraud or deceit, it affected the consent of the parties whereby in the event if the party who is so deceived has the knowledge of the deception than he would not have entered into the contract.

However for the purpose of preserving public interest the only contract that can be avoided on the grounds of mistake even though there is no element of fraud or deceit is the contract involving the property of the minor, waqf donor or treasury.

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