Options to Terminate Due to Breach of Trust (Trust-Based Options) - Appendix B (The Shariah Basis for the Standard)

Transcription

1. Shari ’ah Standard No (48): Options to Terminate Due to Breach of Trust Trust-Based Options Appendix (B) The Shari’ah Basis for the Standard ■ Options to revoke sales on grounds of breach of trust are either permissible in Shari’ah by default or by stipulation in the contract. ■ The basis for permissibility is that sale contracts should by default be free from defect. ■ If then it is discovered that this was not the case and there was deception, verbally or by conduct or there was price gouging, the buyer has the right to revoke the contract. ■ The basis for the permissibility for the option to revoke on the grounds of verbal deception because it contradicts the basic pillar of valid contracts in Shari’ah, which is mutual consent. That is because, without the verbal deception, the buyer would not have proceeded with the purchase. The same basis applies for deceptive conduct being a ground for revocation. ■ The basis for the permissibility of revoking contracts on the grounds of price gouging with a trusting buyer is the Hadith stating: “Overcharging a trusting buyer (Mustarsil) is forbidden”.(2) A variant narration states: “Overcharging a trusting buyer is Riba (usury)”.(3) ■ The basis for the lapsing of the option to revoke due to the disposal of the sale item by the buyer after having discovered the deception, verbally or by conduct, is that this disposal is equivalent to an explicit consent to waive this option. (2) Related by Al-Tabarani (H: 3410) (3) Related by Al-Bayhaqi (H: 10924 and 10925) 1158