Options to Revoke Contracts Due to Incomplete Performance - Appendix B (The Shariah Basis for the Standard)

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1. Shari ’ah Standard No. (51): Options to Revoke Contracts Due to Incomplete Performance Appendix (B) The Shari’ah Basis for the Standard Option to Reconsider Due to Defect ■ The basis for permissibility of the option to reconsider due to defect is the Hadith narrated by ’A`ishah (may Allah be pleased with her) that a man purchased a young serf, and then set him to work, then he found him to be “flawed” or “defective”, so he returned him back (to the seller) on the grounds of the defect. Thereupon, the Prophet (peace be upon him) said: “No yield without risk taking” and in another narration: “No gain without risk taking”.(2) Also, there is the Hadith on a sheep whose udder is tied up in order to look like a one full with milk. If the defect, lack of milk, is unveiled, then the buyer shall have the option either to keep it or to return it along with a Sa’ of dates. All Schools of Fiqh (Madhahib) embraced this option, and that the key principle in the contracts of sale is freedom from defects. ■ The basis for the stipulation of freedom from defects is what the companions (may Allah be pleased with them all) used to practice, and Othman (may Allah be pleased with him) issued a rule in favor of using this option in presence of the companions.(3) ■ The basis for the effect of the option either to return the subject matter or keep the entire price –which is the standpoint of Hanafis and Shafis- is that the buyer has the right to return the subject-matter due to defect and the absence of intactness as generally dictated by the contract. The basis for non-entitlement to compensation (Arsh) in the case where the buyer keeps the subject-matter is that descriptions (features) are not considered to form part of the price in this case, and because the buyer did not consent that the sold item was transferred for a less than its stated price. The Han(2) Related by Abu Dawud and Al-Tirmidhi. (3) Related by Malik in “Al-Muwatta` “Al-Muwatta`”; ”; and Al-Bayhaqi in “Al-Sunan Al-Kubra” and he rendered it as an authenticate: “Jami` Al-`Usul” [2: 34]. 1210
2. Shari ’ah Standard No. (51): Options to Revoke Contracts Due to Incomplete Performance balis were of the opinions that in case of return, the buyer shall have the right to request Arsh, corresponding to the inferiority caused by the defect. Option of Deal Fragmentation ■ The basis for permissibility of deal fragmentation is that it is a type of defect (some Fiqh references categorized it under the option to reconsider due to defect) and it becomes binding upon returning of a part of the object of sale.(4) ■ The basis for the stipulation that the buyer shall not harbor prior knowledge about the deal coming into a point of defragmentation is that his knowledge is viewed as evidence to consent, and that the defect is not hidden or concealed. ■ The basis for the effect of the option of defragmentation being either termination or holding into the remainder of his share in the price is that discounting an amount from the price for the whole deal in lieu of the missing part of the deal represents compensation, and no more than it, because the price (compensation) is for the two parts and is divided between them both. Option of Breach of Description ■ The permissibility of this option is the opinion of the majority of Fuqaha, while other Fuqaha categorized this option under option of deception (Khiyar Khiyar al-Tadlis al-Tadlis). ). ■ The basis for the establishment of compensation due to incorrect description is that it is practically similar to the option of freedom from defect, in the case of objection to return the object of sale. And in the case where the buyer accepts to keep the object of sale, then he will possess it for the entire price -without application of Arsh- because what is missing here is a description, and descriptions do not have their corresponding part of the price in this instance. ■ The basis for transferability of this option upon death to heirs, whether general or special, is that it falls in the category of physical asset (’Ayn) ownership.(5) (4) “Al-Fatawa Al-Hindiyyah” [3: 83]. (5) “Fath Al-Qadir” [5: 1345]; and “Al-Bahr Al-Ra`iq” [6: 19]. 1211