1. Importance of Contract in
Islam and its legal
importance
Muhammad
Zeeshan Baloch
Multan
Institute of Southern
Punjab Multan
11/6/2012

2. A contract is an agreement enforceable by law.
Legal importance of Contract:
You can assess the importance of contract by his definition. If two persons are making agreement
then both should fulfill all the essentials of valid agreement so that when one party does something
for which assent was not given then he can claim in the court.
So we come to know that without valid agreement we cannot sue other person that is cause of your
loss.
Contract creates a legal relationship of rights and duties on the parties and if these obligations in the
contract are not fulfilled then stringent action could be taken by the court on the party. There are
three key elements for the conception of a contract. These are offer, acceptance, consideration and
an intention to create legal relations. Contracts can be written, oral, or implied also. Generally the
parties to a written contract comprehend that they have entered into a binding agreement, but they
do not always grasp this point when making an oral or implied contract. It is always difficult to prove
the terms of an oral or implied contract than those of a written one.
The business environment is full of agreements between businesses and individuals. While oral
agreements can be used, most businesses use formal written contracts when engaging in
operations. Written contracts provide individuals and businesses with a legal document stating the
expectations of both parties and how negative situations will be resolved. Contracts also are legally
enforceable in a court of law. Contracts often represent a tool that companies use to safeguard their
resources.
Essentials of a contract agreement:
• A detailed description of the duties and obligations of the parties should be stated to avoid
ambiguity at a later stage.
• Representations concerning warranties should be present in the contract
• Confidentiality clauses should be present to ensure that the parties keep any information which
comes into the possession, due to the contract, confidential.
• The force majeure clause which generally provides that no party will be liable for non-performance
arising out of an event of force majeure i.e. war, aggression, epidemic should also be present.
• The term should also be specified in the agreement.
• The events on the occurrence of which the contract will be terminated should also be specified.
This clause also describes the methods of giving notice, and whether the breaching party must be
given a chance to cure the breach.
• The relief available to the other party on the breach by one party should also be stated. This would
also include liquidated damages.
• An arbitration clause should also be inserted to settle the disputes through arbitration rather than
court litigation.
• In international contracts, it is important to state the jurisdiction and the applicable law governing
the contract.

3. Conclusion for legal importance of contract:
The whole discussion shows that contract should be valid then it will be legal and enforceable and
then if problem arises they can be solved. Implied contract are also legally force able but some
contracts must be in written form for avoiding fraud. For example, an unwritten contract would be
unenforceable if for the sale of land.
In Islamic law what things makes an agreement a contract (Importance of contract):
Like the common law, offer and acceptance are among the vital ingredients of a contract in Islamic
law. In accordance with Islamic law, remedies for contract are restricted to direct and actual
damages.
In Islamic law Al-aqd is used for contract. It means to tie, to link together.
There are two interpretation of Al-aqd
1. General
2. Specific
General:
Anything that is intended by a person to do; either based on his will. For example
endowment, talaq.
Specifically:
A connection of the words of one party to the words of other party which constitutes legal
implication on the subject matter.
According to Islamic law a promise cannot be legally enforced although it is strongly recommended
by religious and moral values to be fulfilled.
Elements of Al-aqd:
1. Ijab
2. Qabul
3. Subject
Ijab (Definitions):
1. Party who first manifest his willingness.
2. Ijab is the utterance that manifests the consent of the owner of the property either it
comes first or later.
Qabul:
Consent to accept the offer made by the other party is termed as qabul.

4. Sighah:
Mutual consent of the parties is basis for the formation of a contract.
The prophet S.A.W is reported to have said:
It is unlawful to take the property of a Muslim except by his consent.
Consent must be give in form of words that indicates the definite intention to contract.
Islamic importance of contract:
Islam also emphasis on contract validity. If we see the history of Islam then it is shown by the action
of our Holy Prophet S.A.W that when Muhammad S.A.W made an agreement it had been written. For
example Sulah-Hudabia.
In Quran ALLAH Says:
Whenever you make an agreement you must write it.
In Islam for valid contract (Aqd) may contain following things:
1. Halal object
2. Agreement
3. Consideration is not necessary
4. Mutual consent
5. Terms should positively allowed by revelation
6. Subject matter (Exist at the time of al-aqd concluded, delivered, ascertained, suitable
for transaction according to Sharia)
7. Written form may and may not be there
Islamic-derived law stresses that the subject of the contract must not relate to prohibited items
(such as alcohol, tobacco, or gambling equipment), must be legally owned by one party in the
contract and in existence at the time of the contract agreement (i.e., items yet to be built may not to
be the subject of a standard contract), and must be physically deliverable.
1. Dealing in Prohibited (Haram) Items or illegal:
The Prophet (S.A.W) is also reported to have said:
Allah and His Messenger made illegal the trade of
alcoholic liquors, dead animals, pigs and idols.
(Bukhari, No: 2082)
The Prophet (S.A.W) made the person knowingly buying a stolen commodity a partner to the crime.
He said:

5. The one, who knowingly purchases a stolen good, is a partner to the act of sin and the
shame. (Kanz Al-‘Ammal, No: 9258)
The Prophet (S.A.W) is reported to have said:
A sale is a sale only if it is made through mutual consent. (Ibn Majah, No: 2176)
2. Importance of contract fulfillment:
Islam attaches great importance to the fulfillment of contract and promises.
O you who believe! Fulfil [your] obligations. (5:1)
A tradition of the Prophet (S.A.W) states thus:
The Muslims are bound by their stipulations. (Abu Da’ud, No: 3120)
Another tradition condemns promise-breaking as the hallmark or trait of a hypocrite:
If he makes a promise, he breaks it, and if he makes a compact, he acts treacherously. (Bukhari,
No: 32)
3. Trustworthiness in Business Transactions:
Says the Holy Qur’an:
O you believers! Do not betray Allah and the Messenger, nor knowingly,
betray your trusts. (8:27)
4. Trade through Mutual Consent:
Mutual consent between the parties is a necessary condition for the validity of a business
transaction. It, therefore, follows that a sale under coercion is not acceptable in Islam. A sale
transaction is to be regarded as legal only if it is made through the mutual consent of the parties
concerned. Taking advantage of someone’s plight and charging high price is also a form of pecuniary
exploitation and as such forbidden in Islam. The Holy Qur’an says:
O you who believe! Eat not up your property among yourselves in vanities: but let there be amongst
you traffic and trade by mutual goodwill: nor kill [or destroy] yourselves: for verily Allah has been to
you Most Merciful (4:29)
Thus two key elements of general theory of contract are endorsed emphatically in these verses:
mutual consent and gainful exchange. One can also find importance of mutual consent for legality of
a business deal. The Prophet (S.A.W) is reported to have said: A sale is a sale only if it is made
through mutual consent. (Ibn Majah, No: 2176)
Conclusion for Islamic importance for contract:
In Islam an agreement is contract when it will be according to Islamic Sharia. So a
contract must be in a written form as in Quran said, for Halal object. The obligations must be
fulfilled in the contract because in Quran Allah says:
Must fulfill the promise you will be held responsible for it.

6. From the Hadith:
He who dose not fulfill his promise he has no religion.