concept of contract

1) Preface

•Generally contract forms when one person offers and another person accepts it. Contract is

basically a Legal agreement between the parties and a valid contract is enforceable by the law

according to rules prevail. As safety of property or ownership is a legal right of the peoples and

state plays his pivotal role in order to prevent transaction among people in shape of contract

2) Definition

•An agreement which is creating an Obligation and enforceable by law. The basic element of an

agreement is a mutual consent of the parties

3) Literal and legal meaning meaning

•Literally it means “Tie” and “Knot”. Legally it means any statement which legally binds

the parties to fulfill an obligation to do something or not to do something in legal way

4) Importance of contract according to Quran and Sunnah

Following verse of the Holy Quran shows the importance of the contract. Verse is as under

As Quran Says:


As Hadith Says:


5) Formation of Contract

•Contract is a branch of the civil law. ... A contract arises when all the parties are agree

that there is an agreement. Formation of a contract generally requires an offer,

acceptance, consideration, and a mutual consent to be bound

6) Essentials of contract in Muhammadan Law

Following are the essentials of contract

1) Plurality of Parties

•Contract requires two parties at least because it is not possible without two parties

One person can’t create a valid contract

2) Capacity to enter into the contract

•Parties must have the capacity to enter into the contact

•They must be Sane,

•Must be Major,

•Must not lunatic etc.

3) Legal relation

•Contract must be establish legal relations between the parties. Contract must be

legally bounds the parties to fulfill their agreement conditions

4) Legal Contract

•Contract must be legal or lawful it should not not contrary to Islamic legal law as well

should not contrary to public policy

5) Free Consent

•Consent of the parties must be genuine it has not been taken by undue influence or

fraud or illegal pressure etc

6) Offer and acceptance

•Offer and acceptance are the major things of contract

•One party makes a contract and other party accepts it


A offer to Sell his car to B

B accepts his offer. It is a contract

i. Conditions for offer and acceptance

Following are conditions for offer and acceptance

a) Conformity of proposal and acceptance

•If there will be any conflict between offer and acceptance in this case it would not

be valid contract


A says to B. I have sold this car to you for 100. B replies I have accepted it for

8000. This is not a valid acceptance. There is not contract

b) Must be in same session

•Offer and acceptance should be in same time. Otherwise contract can’t be made


A says to B,I want to sell my house to you. B says nothing and leaves the place.

Offer comes to and ends, B can’t accept it later

c) Acceptance before the termination of offer

•Acceptance should be ,before the termination of offer. Otherwise contract

can’t be made

7) Mahall al Aqd (Subject matter of Contract)

•Mahall Al Aqd is the thing for which agreement has been made. It is same as the term

Consideration in English Law

Conditions of Mahall Al Aqd(Thing)

Following are the conditions of Mahall al Aqd

1) Thing must be available at the time of contract

2) Thing must be deliverable at the time of contract

3) Must be in notice of the parties

8) Fitness of Mahall

•If subject matter is not fit according to the prescription in this case contract will be

cancelled altogether

7) Preclude Fact

•Law of contract is more or less similar to Western law. The major factor is to establish a legal

relation between the parties. It is the most frequent mode of acquisition of ownership