Combination of Contracts - Appendix B (The Shariah Basis for the Standard)

Transcription

1. Shari ’ah Standard No. (25): Combination of Contracts Appendix (B) The Shari’ah Basis for the Standard ■ It is permissible to combine more than one contract in a single transaction as long as each of these contracts is permissible on its own. This is so because freedom of contracting and honoring commitments is acknowledged in principle by the general teachings and directives of Shari’ah, unless such contracts and commitments lead to violation of Shari’ah rulings.(2) Ibn Al-Qayyim said, “It is permissible in principle to form up contracts and conditions, except for what has been prohibited by Shari’ah.”(3) ■ According to the majority of the Hanafi, Shafi’i and Hanbali Fuqaha, the set of combined contracts can always be judged in the light of its individual components. Therefore, if the transaction comprises a number of contracts that each of them individually satisfies permissibility requirements, the combined set of such contracts is also permissible. (4) ■ Based on the above fact the Hanbali and Shafi’i Fuqaha, as widely reported, indicate permissibility of combing two contracts, for the same contract value, even if the two contracts differ with regard to Shari’ah status and rulings.(5) Ibn Taymiyyah indicated permissibility of combining two contracts having two separate values.(6) ■ Prohibition of combining contracts in specific cases on exceptional basis, as indicated by Al-Shatibi, stems from the fact that the act of combining (2) “Majmu’ Fatawa Ibn Taymiyyah” [29: 132]; and “Al-Qawa’id Al-Nuraniyyah Al-Fiqhiyyah” Al-Fiqhiyyah”,, (P. 188). (3) “I’lam Al-Muwaqi’in” [1: 344]; and “Jami’ Al-Rasa`il” by Ibn Taymiyyah [2: 317]. (4) “Kashshaf Al-Qina’” [3: 478]; “Al-Bayan” by Al-Umrani [5: 148]; “Al-Majmu’ Sharh Al- Muhadhdhab” [9: 388]; “Tabyin Al-Haqa`iq” [4: 174], “Al-Bada`i’” [6: 58]; and “I’lam Al- Muwaqi’in” [3: 354]; “Al-Mubdi’” [5: 43]. (5) “Al-Mughni” [6: 39 and 355]; “Al Majmu’” [9: 388]; “Sharh Al-Sunnah” by Al-Baghawi [8: 67]. (6) “Nazariyyat Al-’Aqd” by Ibn Taymiyyah (P. 191); and “Al-Ikhtiyarat Al-Fiqhiyyah Min Fatawa Ibn Taymiyyah” (P. 122). 661
2. Shari ’ah Standard No. (25): Combination of Contracts could sometimes generate Shari’ah restrictions that do not hold true when the combined acts are taken up individually. Examples of acts that become prohibited when combined, though they are individually permissible, include combining sale and lending, marrying two sisters, or marrying a woman and her aunt.(7) ■ The absence of any exceptional Shari’ah restriction in the particular case of combining constitutes the first control on contracts’ combining due to the directives of the Prophet (Peace be upon Him) who has been quoted to have prohibited combining sale with lending,(8) or combining two sales in one deal,(9) or two transaction in one transaction.(10) ■ The second control, which prohibits using Contracts’ Combining as a trick for practicing Riba is based on the directives of the prophet (peace be upon him) which indicate prohibition of Bay’ al-’Inah(11) and Riba alFadl.. As regards Riba al-Fadl, Fadl al-Fadl, it has been reported that the Prophet (Peace be upon Him) instructed one of his employees to sell his low-quality dates first and then buy the high-quality dates he wanted, instead of resorting to exchange of more quantity of low-quality dates for less quantity of highquality dates.(12) Ibn Al-Qayyim said, “This indicates that the employee was directed to commence the process of purchasing the high-quality dates after the complete finalization of the former transaction; i.e., selling his low-quality dates. If, instead, he agreed beforehand with another party (7) “Al- Muwafaqat” [3: 192]. (8) Al-Tirmidhi said: “This is a good authentic Hadith”: “Al-Muwatta’ ““[2: [2: 657]; “Mukhtasar Sunan Abu Dawud” by Al-Munziri [5: 144]; “Musnad Al-Imam Ahmad” [2: 178]; “’Aridat Al-Ahwazi” [5: 249]; “Sunan Al-Nasa`i” [7: 295]; and “Nayl Al-Awtar” [5: 152]. (9) Ibn Al-Arabi confirmed that these has been the directives of the Prophet (peace be upon Him): “Al-Qabas” [2: 842]; “Mukhtasar Sunan Abu Dawud” by Al-Munziri [5: 98]; “AlMuwatta`” [2: 663]; “’Aridat Al-Ahwazi” [5: 239]; “Sunan Al-Nasa`i” [7: 295]; and “Nayl Al-Awtar” [5: 152]. (10) “Musnad Al-Imam Ahmad” [1: 198]; “Nayl Al-Awtar” [5: 152]; “Fath Al-Qadir” [6: 81]. Al-Haythami said: “Ahmad always reports from reliable sources”: “Majma’ Al-Zawa`id” [4: 84]. (11) “Musnad Al-Imam Ahmad” [2: 42, 48]; “Al-Sunan Al-Kubra” by Al-Bayhaqi [5: 316]; “Subul Al-Salam” [3: 14]; “Mukhtasar Sunan Abu Dawud” by Al-Munziri; and “Tahdhib Al-Sunan” by Ibn Al-Qayyim [5: 99, 104]. (12) Related by Al-Bukhari, Muslim, Al-Tirmidhi, Al-Nasa`i and Malik: “Sahih Al-Bukhari” [3: 97]; “Sahih Muslim” [3: 1208]; “’Aridat Al-Ahwadhi” [5: 249]; “Al Muwatta`” [2: 632]; and “Sunan Al-Nasa`i” [7: 244]. 662
3. Shari ’ah Standard No. (25): Combination of Contracts to conduct the two deals successively, the second contract will not become an independent contract, because it is a mere completion of the first one. The directives of the Prophet (Peace be upon Him), apparently necessitate two separate contracts that neither of them is related to or based on the other”.(13) ■ The third control, that prohibits using combined contracts as an excuse for dealing in Riba, is based on the directives of the Prophet (Peace be upon Him) which forbid combining lending with selling.(14) In this regard, the Fuqaha unanimously agree that when the two parties stipulate in the loan contract that the borrower should reward the lender by offering him free accommodation, or grant him a present, or the borrower should make excessive repayment in terms of quantity or quality, the contract becomes null and void. In other words, any loan arrangement that comprises a prior condition on a benefit to be rendered to the lender by the borrower is considered Riba.(15) ■ The fourth control, which indicates that the contracts to be combined should not be contradicting with each other in terms of purpose or Shari’ah rulings, stems from the fact that contracts, as indicted by Al-Qarafi, are devices for using appropriate means to achieve specific objectives. Obviously, the same contracting requirement cannot always fit at the same time two contradicting positions(16). Therefore, contracts that contradict each other in their rulings and effects cannot be combined together in the same transaction. ■ The Shari’ah concessions sanctioned to subsidiary and implicit contracts are based on several statements in “Al-Qawa’id Al-Fiqhiyyah” Al-Fiqhiyyah”,, including the following: – What can be forgiven in a subsidiary contract cannot be forgiven in other contracts.(17) (13) “I’lam Al-Muwaqi’in” [3: 238]; and “Ighathat Al-Lahfan” [2: 103]. (14) Related by Abu Dawud, Al-Tirmidhi, Al-Nasa`i, Ibn Majah, Ahmad, Al-Shafi’i and Malik. [See footnote No. (3) in Shari’ah Standard No. (19): Loan (Qard)]. (15) “Al-Mughni” [6: 436]; “Al-Sharh Al-Kabir ’Ala Al-Muqni’” [12: 432]; “Al-Zakhirah” [5: 289]; “Al-kafi” by Ibn Qudamah [2: 93]; “Al-Mubdi’” [4: 209]; and “Majmu’ AlFatawa” by Ibn Taymiyyah [29: 334]. (16) “Al-Furuq” [3: 142]. (17) Article (54) of “Majallat Al-Ahkam Al-Fiqhiyyah” Al-Fiqhiyyah”;; and “Al-Ashbah Wa Al-Naza`ir” Al-Naza`ir”,, (P. 120). 663
4. Shari ’ah Standard No. (25): Combination of Contracts – What can be forgiven in implicit contracts cannot be forgiven in independent contracts.(18) – Concessions that can be sanctioned to implicit provisions cannot be sanctioned to ordinary provisions.(19) – Provisions in ordinary contracts entail more validity requirements than provisions in implicit and subsidiary contract.(20) – Implicit contracts are relieved of what independent contracts cannot be relieved of.(21) – Provisions that hold true in implicit contracts may not hold true in ordinary contracts.(22) ■ Shortcomings like Gharar, which affect financial transactions such as sale contracts and the like, may be forgiven when the contract subject matter or the contract itself is subsidiary. The Prophet (peace be upon him) said: “When somebody purchases a palm tree, that has not yet been pollinated, the fruits of the tree should belong to the seller unless the buyer stipulates in the contract that he should be entitled to the fruits”.(23) This Hadith indicates that the reason for ignoring the gharar involved in the act of the buyer who stipulates in the contract that the anticipated fruits of the palm tree should belong to him, is the fact that getting the fruits is an implicit aspect of the contract. As is the case with gharar, excessive Jahalah is also forgivable in subsidiary and implicit contracts. ■ Ignoring sale-based Riba and non-fulfillment of the Shari’ah requirements of currency exchange in subsidiary contracts is based on the Hadith of the Prophet (peace be upon Him) which states: “When somebody buys a slave who has money, the slave’s money should go to the seller, unless the buyer (18) (19) (20) (21) (22) (23) “Fatawa Al-Ramli” [2: 115]. “Bada`i’ Al-Fawa’id” by Ibn Al-Qayyim [4: 27]. “Bada`i’ Al-Sana`i’” [5: 58]. “Al-Manthur Fi Al-Qawa’id” by Al-Zarkashi [3: 378]. “Radd Al-Muhtar” [4: 170]. “Sahih Al-Bukhari” with “Fath Al-Bari” [5: 49]; “Sahih Muslim” with Al-Nawawi elaborations [10: 191]; “Sunan Abu Dawud” [2: 240]; “Sunan Al-Nasa`i” [2: 260]; “Sunan Ibn Majah” [2: 745]; “Muwatta` Al-Imam Malik” [2: 617]; “Musnad Al-Imam Ahmad” [2: 6, 9, 54, 63, 78, 102 and 150]; and “’Aridat Al-Ahwazi” [5: 253]. 664
5. Shari ’ah Standard No. (25): Combination of Contracts stipulates in the contract that he should get the money.(24) The justification for this is that the buyer may have taken into consideration (at the time of making his offer) the amount of money the slave could have, be it big or small, and explicitly determined a portion of the price for it, though he did not declare such portion independently. Hence, it becomes clear from this Hadith that it is permissible to buy a slave along with his money without observing the Shari’ah requirements of currency exchange, and regardless of whether the amount of money that the slave has is big or small, known or unknown.(25) ■ Permissibility of Bay’ al-Kali` Bil-Kali` (selling a debt for another debt) in subsidiary and implicit contracts although it is prohibited in original and independent contracts, is based on the previous Hadith about purchasing a slave along with the money he has. In this respect, Imam Malik indicated in ““Al-Muwatta` Al-Muwatta`”” the permissibility of selling a slave and providing in the contract for the status of the money he owns, even if that money is a debt owed to the slave by a third party and the slave is himself sold on deferred payment. That is to say, Malik seems to have based his opinion on the apparent and general meaning of the Hadith and the ruling practice in Al-Madinah.(26) ■ Permissibility of relieving, upon need or probable interest, subsidiary and implicit contracts from some of the bases and conditions of contracts’ validity, can be derived from a statement by Al-Sayuti in “Al-Ashbah Wa Al-Naza`ir” Al-Naza`ir”.. In that statement, Al-Sayuti indicates permissibility of abandoning offer and acceptance (the form) in case of implicit sale, or accepting deferred, instead of spot, delivery/payment in such sales. Such rulings in fact come as further ramifications of the Fiqh principle that “Subsidiary contracts can be relieved from what other contracts cannot be relieved from”(27) (24) “Sahih Al-Bukhari” with “Fath Al-Bari” [5: 49], “Sahih Muslim” [3: 1173]; “Sunan Abu Dawud” [2: 240]; “Sunan Al-Nasa`i” [7: 261]; “Sunan Ibn Majah” [2: 746]; “Muwatta` Al-Imam Malik” [2: 611]; “Musnad Al-Imam Ahmad” [2: 9 and 78]; and “’Aridat AlAhwazi” [5: 252]. (25) “Al-Qabas” by Ibn Al-’Arabi [2: 805]; “Al-Mughni” by Ibn Qudamah [6: 96]; and ““AlAlZurqani ’Ala Al-Muwtta`” [3: 253]. (26) “Al-Zurqani ’Ala Al-Muwtta`” [3: 253]. (27) “Al-Ashbah Wa Al-Naza`ir” by Al-Sayuti (pp. 120 and 377). 665
6. Shari ’ah Standard No. (25): Combination of Contracts ■ Muwata`ah for combining contracts is considered as an enforceable condition that precedes the signing of the contract, because Muwata`ah, traditionally as well as in fiqh terminology, is an agreement between the two parties to sign contracts and honor pledges in the future. Therefore Ibn Taymiyyah said, “When the two parties agree beforehand to do specific things, and then sign a general contract, the contract should honor that prior agreement”.(28) ■ A condition that precedes the contract should be regarded as binding and enforceable as a one that comes in the text of the contract, because traditionally there is no difference between the conditions stated in the contract and those agreed upon beforehand, even if such prior conditions are not mentioned at the time of signing the contract. This is only natural since these conditions form the bases of the contract, which the two parties have agreed to observe. This viewpoint is supported by a number of traditionally accepted norms such as: – A condition, which the two parties agree to observe, resembles a one explicitly mentioned in the contract. – Traditionally acceptable conditions resemble explicitly stated conditions. – Intentions in contracts deserve observation. Moreover, enforceability of prior conditions was the ruling practice in Al-Madinah and the predominant opinion in Al-Imam Ahmad’s School.(29) ■ Prohibition of Muwata`ah for devising Riba tricks is because Muwata`ah in this case is a means used for practicing Riba. Consequently, since the end objective (which is Riba) is prohibited, the means used for achieving it must also be prohibited. As indicated in “Al-Qawa’id Al-Fiqhiyyah”, “means are discarded on discarding of objectives”(30) (28) “Nazariyyat Al-’Aqd” by Ibn Taymiyyah (p. 204). (29) “I’lam Al-Muwaqqi’in” [3: 105, 145, 212 and 241]; “Kashshaf Al-Qina’” [5: 98]; “Bayan Al-Dalil ’Ala Butlan Al-Tahlil” (P. 533); “Majmu’ Al-Fatawa” by Ibn Taymiyyah [29: 336]; “Al-Fatawa Al-Kubra” by Ibn Taymiyyah [4: 108]; “Al-Madkhal Al-Fiqhi Al-’Aam” by Al-Zarqa [1: 487]; and “Al-’Uqud Wa Al-Shurut Wa Al-Khiyarat” by Ahmad Ibrahim (P. 711). (30) “Al-Furuq” by Al Qarafi [2: 33]; and “Al-Qawa’id Al-Kubra” by Al-’Izz Ibn AbdulSalam [1: 161 and 168]. 666
7. Shari ’ah Standard No. (25): Combination of Contracts ■ Prohibition of Muwata`ah as an excuse for Riba, originates from the application of the principle of Sadd al-Zara`i’ al-Zara`i’.. This principle aims to prohibit permissible practices that could be used as a means for accomplishing Shari’ah-banned objectives.(31) ■ However, application of the principle of Sadd al-Zara`i’ should be based on two requirements as indicated by the Maliki Fuqaha. The first requirement is that resort to the Zari’ah (excuse) should be very frequent and excessive in view of normal practice, and the second requirement is the presence of a strong accusation that rules out the possibility of any good intention behind using the excuse(32). Application of the principle of Sadd al-Zara`i’ should also observe the non-existence of any need or lawful interest for using the Zari’ah h,, as has been emphasized by several fiqh principles such as: – Prohibition for the sake of blocking the way to excuses is less forceful than prohibition per se”.(33) – Practices that originate from the need for devising acceptable Shari’ah exits deserve more Shari’ah concessions than other practices.(34) – Acts that are prohibited for the sake of blocking the way to excuses become permissible in case of need or desire to achieve a lawful interest.(35) ■ Permissibility of Muwata`ah for devising acceptable Shari’ah exits can be derived from the statements of several Fuqaha who indicate that using Shari’ah accepted means to achieve permissible objectives is permissible. According to those Fuqaha practicing acceptable Shari’ah exits and helping others to devise them is a permissible and reward-worthy practice as long as it abides by the directives of Allah, Exalted be He, leads to avoidance of sins, and facilitates achievement of lawful interests.(36) (31) “Sharh Tanqih Al-Fusul” (P. 449); “Al-Furuq” by Al-Qarafi [2: 32]; and “Al-Qabas” [2: 876]. (32) “Al-Muwafaqat” [4: 198]; “Al-Ma’unah” by Al-Qadi Abdul-Wahhab [2: 996]; and “’Iqd Al-Jawahir Al-Thaminah” [2: 441]. (33) “I’lam Al-Muwaqqi’in” [2: 140]. (34) “Al-Ashbah Wa Al-Naza`ir” by Al-Sayuti (P. 158). (35) “Zad Al-Ma’ad” [4: 78]; “Tafsir Ayat Ashkalat” by Ibn Taymiyyah [2: 682]; “Majmu’ AlFatawa” by Ibn Taimaih [23: 214-215], [32: 228-229]; and “I’lam Al-Muwaqqi’in” [2: 142]. (36) “Ighathat Al-Lahfan” [1: 339, 383 and 385] and [2: 86]. 667
8. Shari ’ah Standard No. (25): Combination of Contracts ■ Prohibition of Muwata`ah for combining contracts that contradict each other in rulings and objectives is because Muwata`ah in this case is used as a means of doing an unacceptable act. According to Shari’ah, means always follow ends with regard to permissibility and prohibition(37). It has been indicated in ““Al-Qawa’id Al-Qawa’id Al-Fiqhiyyah Al-Fiqhiyyah”” that: “Disregarding the ends leads to disregard of the means”.(38) ■ Recognition of Muwata`ah when it precedes contemporary transactions, that comprise a set of successive and inseparable contracts forming up a single transaction, is the present day commercial and banking tradition that considers Muwata`ah in this case as binding to the two parties. In fact, Muwata`ah in this sense is part of a whole system that tends to completely collapse when any of its individual components looses balance. Violating Muwata`ah in this case will jeopardize the fulfillment of the objectives of the contracting parties, and may cause them serious injuries. ■ The pledges that relate to an agreement are binding to the two parties since, according to its nature and Fiqh status, and as perceived by most of the Fuqaha, such pledges are similar to the conditions stipulated in the agreement. Enforceability of such pledges also stems from the fact that they constitute the basis for the transaction. It is well known that Shari’ahaccepted conditions stipulated in a contract are binding from both the fiqhi as well as the legal viewpoints. Moreover, in present day commercial and banking traditions, such pledges are also considered as binding. Otherwise, it will not be possible for the two parties to form up a definite perception about the purpose and objectives of the contract, and hence they will not be able to sign it. (37) “Al-Muafaqat” [2: 212]. (38) “Al-Qawa’id” by Al-Muqri [1: 329]. 668