Journal of Islamic Studies 13:3 (2002) pp.

257–297 # Oxford Centre for Islamic Studies 2002

CONTRACTS IN ISLAMIC LAW: THE PRINCIPLES OF COMMUTATIVE JUSTICE AND LIBERALITY
HUSSEIN HASSAN
Mansfield College, Oxford

I. INTRODUCTION: OBLIGATION AND CONTRACT
In the classic manuals of Islamic law the term [aqd (contract) is most frequently used for two-party transactions, concluded by offer on one side, acceptance on the other. However, it is also used for transactions (guarantees, gifts, bequests) concluded by an offer only. Again, for acts merely juristic in nature (divorce, release, manumission of debts), the term is still [aqd. In fact, the term covers obligation in every field: one’s religious obligations to God, the interpersonal obligations of marriage, the political obligations expressed in treaties, and the commercial obligations of the involved parties in a range of particular contracts.1 It would seem that [aqd is used in its etymological sense (‘tying up’, reflected, as it happens, also in the root of ‘obligation’) rather than as a technical term.2 The jurists did not attempt a formal definition of the term, nor an explicit general theory of contract.3 The presentation, by some of them, of sale as the archetype to which other contracts were expected to conform, did not provide enough premises for analogical generalization: there were so many other different contracts that exceptions were bound to overshadow the theory. Arguably, a general theory of contract might have been derived from the Qur]an: ‘You who believe, ¯ fulfil contracts (awfu bi-l-[uqud)’ (5. 1); ‘You who believe, be faithful ¯ ¯
N. Mohammed, ‘Principles of Islamic Contract Law’, Journal of Law and Religion 6 (1988), 115–16. 2 M. E. Hamid, ‘Islamic Law of Contract or Contracts’, Journal of Islamic and Comparative Law 3 (1969), 1–11, esp. 1. 3 Even as late as the Majalla—the ‘modernizing’ civil code introduced in the Ottoman empire between 1869 and 1876—the authors did not provide an explicit general theory governing contracts.
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to your contracts’ (4. 33); ‘Fulfil the covenant of God when you have entered into it, and break not your oaths after you have confirmed them’ (16. 91). These are moral injunctions of high generality and sanctity but they have never yet been made the basis of a system of legally binding, enforceable agreements. Instead, what the jurists did was to develop a law of contracts, each with its own distinctive rules, categorizing them into classes of nominate (more accurately, particularized) agreements (al-[uqd al-mu[ayyana), then supplemented by mechanisms—to be discussed below—for giving effect to innominate agreements.4 Arguing mainly from the existence of those mechanisms, some modern scholars5 have claimed that Islamic law does have a general theory of contract, i.e. general default rules that apply to all contracts. The claim is untenable. Ways of giving effect to innominate agreements developed in Islamic law precisely because of the absence of a general theory of contract. Further, the discussions among jurists relating to freedom of contract were concerned with whether and how to enforce the types of contract that fell outside the classes of nominate contracts established by earlier jurists, and not with the issue of enforcing questionable contractual terms consented to within a private agreement. In fact, the exceptions between the nominate contracts6 outnumber and outweigh the generalities by far. It is this that led scholars such as Coulson and Schacht7 to argue that Islamic law is a law of contracts (plural), rather than one of contract. A number of recent scholars have tried, in hindsight as it were, to abstract general rules from the series of specific contracts and their regulations formulated by the early
Such agreements are not in themselves enforceable: as the Roman law maxim (ex nudo pacto actio non nascitur) puts it, a bare agreement is not legally actionable. 5 e.g. S. H. Amin, Islamic Law in the Contemporary World (Glasgow, 1985), 40–3. 6 The classical manuals of Islamic law base the system of [uqud on four basic ¯ contracts: bay[ (sale), hiba (gift), ijara (hire), and [ariya (loan). More recently Abd ¯ ¯ al-Razzaq al-Sanhurı (al-Wasıt fı sharh al-qanun al-madanı (Cairo, n.d., Beirut, ¯ ¯ ¯ ¯ ¯ ¯ ¯ ¯ 1952), vol. IV, pt. I, p. 1) has ˙listed six˙ nominate contracts: bay[ (sale), hiba (gift), sharika (partnership), ijara (hire), muqawala (piecework), and wakala (agency). ¯ ¯ ¯ There are, of course, many other forms of contracts which do not fall into any of the above, and which are accorded separate treatment by the jurists under their respective titles in the texts. These, however, are the most commonly discussed and the contract of sale is the most commonly used by the jurists when they needed to draw analogies. The reason for that is the Qur’anic verse (2: 275): ‘God has made sale lawful and ¯ usury unlawful’. Thus sale became the archetype and usury the arch-antitype of contracts. 7 N. J. Coulson, Commercial Law in the Gulf States: the Islamic Legal Tradition (London, 1984), pp. 17, 27–31; J. Schacht, Introduction to Islamic Law (Oxford, 1964), 144.
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jurists.8 These rules have to do with issues such as impediments to consent and the classification of legal acts and their effects. In part, this effort seems to reflect the mistaken assumption that, if Islamic law is indeed a law of contracts, it follows that it does not recognize the principle of freedom of contract.9 However, this is a non sequitur. That principle has little to do with the issue of whether a contractual scheme is nominate or not. Legal systems limit the principle of freedom of contract for various reasons, independently of whether the system concerned has a law of contracts or contract. In the case of Islamic law the limitation is that the agreements people enter into must not fall foul of the Islamic prohibitions—such as those on riba ¯ (usury), gharar (uncertainty), and maysir (gambling)—that apply equally to nominate and innominate contracts, and which would apply even if Islamic law had an explicit law of contract. The absence of an explicit general theory of contract has been attributed, by Coulson and Shacht among others, to (a) conceptual ‘primitiveness’,10 or (b) mere ‘accident’—as just the way it was, with no further explanation offered. (a) The notion of inability or unwillingness on the part of the jurists to generalize or conceptualize does not fit with the achievements of those jurists in usul al-fiqh, one of whose main aims was ¯ ˙ to rationalize the positive law of God. Perhaps the scholars who put forward this notion were misled by their focus on the case-oriented approach of the jurists to the legal problems they encountered. That focus results in conclusions that cannot be sustained. Thus, Wakin states:
Apart from particulars concerning the subject matter, there is no great deal of difference among marriage contracts, agreements creating partnerships, claims for debts, or deeds of sale. Even instruments recording bilateral obligations seem very much like those concerning unilateral declarations.11

8 These authors have typically been not practitioners but academics teaching modern law in universities. Among others: S. Mahmassani, al-Nazariyyat al-[amma li¯ ¯ l-mujibat wa-l-[uqud (Beirut, 1948); [Abd al-Razzaq al-Sanhurı, ˙Masadir al-haqq fı l¯ ¯ ¯ ¯ ¯ ¯ ¯ ¯ ˙ ˙ fiqh al-Islamı (Cairo, 2nd edn 1954–9); and Y. Musa, al-Amwal wa-nazariyyat al-[aqd ¯ ¯ ¯ ¯ ˙ (Cairo, 1953).

This is the argument of Hamid, ‘Islamic Law of Contract or Contracts’. Coulson (Commercial Law in the Gulf, 17): ‘It would perhaps seem natural from the experience of Western legal systems that this stage of the development of Islamic legal doctrine would be followed by a further stage in which juristic analysis would derive from the various particular cases the general principles and would thus give birth to a general theory of Contract.’ 11 J. Wakin, The Function of Documents in Islamic Law: The Chapter on Sale from Tahawı’s Kitab al-Shurut al-Kabır (Albany, NY, 1972), 38. ¯ ¯ ¯ ¯ ¯
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True, the case-oriented approach leads to overlaps between various subject matters. However, an effort to look behind that approach yields conclusions quite different from those of Schacht and Coulson. Baber Johansen’s careful analysis of the legal compendia on commercial exchange in Hanafı fiqh12 shows that, while the jurists do not ¯ distinguish a form of˙ contracts that pertains uniquely to commercial exchange, and almost never use commercial exchange as a rubric or chapter head (no bab al-tijara), the definition of commercial exchange ¯ ¯ and its distinction from other legal subjects permeates the jurists’ discussion of legal relations. Within the framework of their caseoriented treatment of legal problems, the jurists take great pains to draw clear lines of demarcation between commercial exchange and, for example, the sphere of those social relations that are mediated through kinship, marriage, sexual relations, the affiliation to religious communities, and even neighbourhood residential quarters. (b) The second (mere ‘accident’) explanation is equally unhelpful. The treatment of contracts separately is not ‘just so’, but reflects the historical process through which the Islamic law evolved. In particular, it was a necessary consequence of scrutinizing and reforming (or rejecting) pre-Islamic custom and practice. A number of what we now know as Islamic contracts were in existence in pre-Islamic Arabia, among them bay[ (sale), salam (prepaid sale), mudaraba (trading venture), sharika (partnership), rahn (mortgage), ¯ ju[ala (job wages or reward), [umra (a type of gift) and ijara (hire). ¯˙ ¯ The form, incidents, and contents of these contracts were not necessarily the same as those of the contracts that came to be recognized in Islam by the same names—some were, some were not. The point is the existing contracts were scrutinized individually and elements contrary to the substance or intent of the new Islamic norms were removed. Some of those norms were general in nature and had consequences not only for every contract but also for different aspects (subject matter, price, etc.) of the same contract. Well-known and pervasive examples include the prohibitions, mentioned above, of riba and gharar in contracts. ¯ The concern of the jurists to minimize the risk of riba and gharar led ¯ them to focus on the concrete elements of the contract and its immediate implementation rather than on the obligation, if any, that arises from a contract. They thus focused on the subject matter and its counter-value, where such counter-value was present. As a consequence of this, Chehata has argued, contract in Islamic law is
B. Johansen, ‘Commercial Exchange and Social Order in Hanefite Law’, in C. Toll et al. (eds.), Law in the Islamic World: Past and Present (Copenhagen, 1995), 81–95.
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´ ´ ´ ´ 1969). not obligation itself. Masadir al-haqq fı l-fiqh al-Islamı. 2nd edn 1992).14 one does not find in Islamic law a single generic ‘denomination’ of the concept of obligation as understood in other systems of law. The scheme of nominate contracts in Islamic law drew upon preIslamic customs and practice. the Law (of course) did not expressly recognize unlimited freedom of contract. As Chehata himself realized elsewhere. Saleh. this is not entirely true. since violation of the Islamic prohibitions could never be valid. though well capable of abstraction and generalization. Chehata. the subject matter of the particular agreement. 2. Mechanisms were developed to validate and legally enable agreements that fell outside the scope of the nominate contracts. the action to be performed. 15 N. 3. The centre and focus of a contractual agreement was the object of obligation. (I am indebted to Amina Bashir for a trans.15 [Ayn is different again from those rights that derive from real estate. ¯ ¯ had held that contract in Islamic law was a generator of obligations. did not attempt an explicit definition of contract. the notion of an obligation is missing in any definition of consent. 1970). And: 5. Nazariyyat al-‘aqd (Cairo. Unlawful Gain and Legitimate Profit in Islamic Law (London. Nevertheless. ¯ ¯ ¯ ¯ 17 Sanhurı. nor an explicit formulation of a theory of contract.13 However. 135. ¯ ¯ ¯ ¯ ¯ ¯ ˙ ˙ ˙ . 103. When the object of the so-called obligation is a specific article determined in its individuality. 13 C. The concept varies in form and content depending on the object of obligation. Theorie generale de l’obligation en droit musulman hanefite (Paris. The classical jurists. Droit musulman: Application au Proche-Orient (Paris. 77.co n t r ac t s in i s l am i c l a w 261 linked to an object and is not intended to create obligations. 16 [Abd al-Razzaq al-Sanhurı. 4. 1.) 14 Chehata. Thus: ‘When what Western jurists call obligation relates to fungible articles or incorporeal property.16 but later realized and admitted that the centre of a contract was its subject matter and not an obligation. 1934). Sanhurı. Indeed. he went on to define a contract as being the connection of an offer with an acceptance. 63. that is called dayn by fiqh. not necessarily with the view of creating obligations but of bringing a change to the status of the subject matter. Indeed he argued that in the works of the classical jurists.17 At this point it will be worthwhile to review in summary form what has been said above. rigorously scrutinized and amended to conform to Islamic norms of what is lawful and what is prohibited. i. similarly. then it is called [ayn’. 169.

Dorrie. Junctas. eleventh ¯ ¯ century). Porphyre: Huit exposes suivis de discussions (Geneva. Ethical Theories In Islam (Leiden. and then by his most famous Western commentator. across the major schools of the Law. Distributive and commutative justice are still understood in broadly the terms in which they were explained by Aristotle. 23 See his Kitab al-sa[ada wa-l-is[ad (Tehran. 992) and al-Mubashshir ibn Fatik24 (d. The most famous and important of the Arabic commentaries on the Ethics was by al-Farabı (d. what held Islamic legal reasoning together? What conceptual resources enabled sufficient coherence and consistency in legal practice for the system to operate successfully and evolve a stable tradition? I would argue that—whether or not one chooses to recognize in this the potential to generate a formal theory of contract—Islamic legal reasoning and practice.262 h us se in h a s sa n Given the absence of an explicit definition or theory of contract. 1991). 1966) and his Fı Mahiyat al-[adl (Leiden.19 who is known exclusively from the Arabic sources to have written a twelve-part commentary on the Ethics.910). 1966). Walzer. 1957–8). 22 See Aristotelis opera cum Averrois commentariis: Venetiis. and litterateurs like Abu-l-Hasan ¯ ˙ ¯ al-[Amirı23 (d. For the central role played by Porphyry. Aristotle’s Nicomachean Ethics was translated into Arabic by Ishaq ibn ¯ ˙ Hunayn (d. see R. These commentaries cir¯ ¯ ¯ culated widely among a diverse group of intellectuals—Neoplatonist philosophers like al-Farabı himself20 and Miskawayh (d. 1968) and his Fusul ¯ ¯ ˙ ˙ al-muntaza[a (Beirut.21 ¯ ¯ ¯ Aristotelian philosophers like Ibn Rushd (Averroes). The influence of this work on ethicists and ˙ philosophers in the Islamic world was very considerable. 20 See his al-Jam[ bayna ra’yay al-hakımayn (Beirut. both widely recognized and familiar in Western legal reasoning and scholarship. ¯ ¯ ˙ M. 1980). Fakhry. Apud. Aquinas. ¨ ´ 275–99. 19 18 . 1030). ¯ ¯ ¯ ¯ 1964). 1971 edn).22 who was also an influential jurist. then used by Miskawayh. c. 950). 1962). 21 See his Tahdhıb al-akhlaq (Beirut.18 It was mediated to the Muslims through the work of Porphyry of Tyre. 1562-1574 (Frankfurt. referred consistently to two principles of justice that directed and stabilized commercial and other transactions in the Islamic world. 78. ‘Porphyry and the Arabic Tradition’ in H. ¯ ¯ ¯ 24 See his Mukhtar al-hikam wa-mahasi al-kalim (Beirut. The two principles are commutative justice and liberality.

2000). Both contract and tort can be considered as systems of corrective justice. Hereafter cited as Ethics. the parties have entered into a consensual exchange of resources such as in sale. Benson. in contract. Nicomachean Ethics V. Thus. 28 This is not to suggest that all of tort is about corrective justice. . For the approach adopted here. 1130b–1133b). ‘Professor Weinrib on Corrective Justice’. (Oxford. 131–2. 1995). ‘Equality in Exchange’. 25 Aristotle.). 26 The relationship between distributive and corrective justice is discussed below. 4th ser. Panagiotou (ed. in R. 1941). Law and Method in Plato and Aristotle (Edmonton. and W. 1587–9. ‘Tort Law in the Aristotelian Tradition’.co n t r ac t s in i s l am i c l a w 263 II. California Law Review 69 (1981). V. see P. and S. Owen (ed. 1132b–32b). is that justice which plays a rectifying part in transactions between man and man. where one deprives another of some resource without his consent or against his will. Aristotle holds. 2: 1131a1). 1987) 153. Iowa Law Review 77 (1992). Distributive justice is that which is ‘manifested in distributions of honour or money or the other things that fall to be divided among those who have a share in the constitution’ (V. J. 3: 1131b28) and corrective justice (diorthotikon dikaion.26 It requires and maintains equality27 so that after a transaction or dealings (synallagmata) either party is neither richer nor poorer than he was before the transaction. Where the transaction is involuntary—i. correction means to restore the damage in the amount of the initial allocation.e.e. 155. ‘On the Relationship between Corrective and Distributive Justice’. in D.) Justice.). such as trespass to land. ‘The Basis of Corrective Justice and its Relation to Distributive Justice’. 237. R.28 In tort. on the other hand. different societies will come up with principles in conformity with their own political arrangements. etc. Perry.) 27 See J. where the transaction is a voluntary one—i. see J. Philosophical Foundations of Tort Law (Oxford. pp. 529–49. Waluchow. Gordley. The Basic Works of Aristotle (New York. that corrective justice would have difficulty explaining. COMMUTATIVE JUSTICE It is in Book V of the Nicomachean Ethics25 that Aristotle makes his famous distinction between distributive justice (dianemetikon dikaion. Horder (ed. McKeon (ed. hire. for example by stealing from him—corrective justice requires the one who deprives to compensate the one deprived. For a different view of the relationship.).—corrective justice requires that there be equality between the value of what one gives and receives. Gordley. it means ensuring equal value in the performances exchanged by the parties (Ethics V. Oxford Essays in Jurisprudence. (My reasons for preferring the former view are given below. There is no single correct principle for determining the share each person ought to receive: on the contrary. 10–12. V. in J. there are areas. Corrective justice. 515. in S.

30 J. or when one keeps his side of an arrangement and the other does not. that distributive justice is meant to ensure that each citizen is allocated a share of whatever is being divided: it accordingly follows a geometrical proportion (Ethics V.32 In recognition of the difficulties with ‘corrective justice’. Finnis. with all the other qualifications that accompany right giving’ (Ethics IV. for he will give to the right people. he is either exercising the virtue 29 Thomas Aquinas. 1119b–20b).31 These problems are recognized by Thomas Aquinas. Aquinas too believes that when one transfers property to another or promises to do so at a later date. it is difficult to understand the notion of ‘correction’ without some prior determination of what is to count as a crime. Hereafter referred to as Summa. 1131b–32b).33 Commutative justice. nor to business or voluntary transactions. It covers the whole range of proper dealings between persons. This term is not limited merely to corrections. and at the right time. 33 Gordley. 1589. 178. the mathematics of dividing a pie. 3rd edn 1961) II-II. Aristotle makes clear that acts of voluntary commutative justice do not cover the whole range of voluntary transactions. the exchange should impose the same burden on the parties. q. These other voluntary transactions are covered by the virtue of ‘liberality’ that Aristotle defines as the ‘mean with regard to wealth’ that arises through spending and giving in a particular way. For Aristotle. on the other hand. 77 a 1. After all. . 1131a–31b). a tort or a contract. ‘Equality in Exchange’.e. It is. who uses instead the term ‘commutative justice’. 32 Ibid.30 It does not. Natural Law and Natural Rights (Oxford. the term ‘commutative justice’ will be used hereafter. the right amounts. 1587. It focuses on the correction of an inequality that arises when one injures another or takes from him.264 h us se in h a s sa n As Aquinas says. 179. spending and giving should express the virtue of liberality whereby one gives ‘for the sake of the noble and rightly.29 The term ‘corrective justice’ does not adequately capture the essence of the category of justice that Aristotle had in mind. 31 Ibid. explain all the issues of justice that can arise. One should nevertheless keep in mind the core of the Aristotelian definition. as Gordley says. is concerned with preserving a citizen’s share of the resources: it follows an arithmetic proportion (V. Summa Theologica (Madrid: Bibliotheca de autores cristianos. 1980). even when taken together with the concept of distributive justice. i.

J. 36 P.).37 argues that if the coherence of corrective justice is seen to depend on distributive justice. L. Indiana Law Journal 67 (1992). Panigiotou (ed. as in the case of gifts. 427–28) is that corrective justice protects a distribution of entitlements against distortion. Law and Method in Plato and Aristotle (Edmonton. but in terms of its structure. 349. it will lose the distinct identity that these theorists think it has. the act is one of liberality.36 and Perry. 1987). 39 See E. the common view is that it must also accept commutative justice: corrective justice requires a prior distribution of entitlements upon which to operate. 35 E.35 Benson. 237. and P. J.34 The less common view. associated mostly with tort theorists such as Weinrib. 237–8. 530. ‘Understanding Tort Law’. 3): When one voluntarily transfers his property to another it is a voluntary commutation. . The Relationship between Commutative and Distributive Justice Where a system accepts distributive justice. ‘On the Relationship between Corrective and Distributive Justice’. Perry. Where this transfer includes the notion of a debt it belongs to commutative justice. and _ its purpose or point is to maintain that distribution. Benson.1. 515. 530. 1971). concerns over ‘the distribution of wealth could sometimes trump claims based 34 S. ‘Tort Law and the Demands of Corrective Justice. Iowa Law Review 77 (1992). Weinrib. 488. R. associated with J. 485. J. 61 a. Oxford Essays in Jurisprudence. 10) and W. 156). Rawls (A Theory of Justice (Oxford. Coleman. Another. Iowa Law Review 77 (1992). Iowa Law Review 77 (1992). R. 2000). for that reason. Weinrib. in J.38 but the common theme in the most widely held of them—those of Weinrib and others—is that it is important to understand corrective justice not in terms of its goals or functions.co n t r ac t s in i s l am i c l a w 265 of commutative justice or of liberality.). Perry. argues that corrective justice presupposes a distribution of resources that is sufficiently fair to be worth preserving. ‘The Basis of Corrective Justice and its Relation to Distributive Justice’. Waluchow (‘Professor Weinrib on Corrective Justice’ in S. Justice.). 37 S. 4th ser. it is regarded as both conceptually and normatively ancillary to distributive justice. 420. Benson. ‘Corrective Justice’. (Oxford. There are other views than these. 515. 153. 357.39 They argue that if this is not done. II. 403. He explains the difference as follows (Summa II–II. q. It is not practicable here to comment on these views in any detail. and ‘The Mixed Conception of Corrective Justice’ (id. ‘The Basis of Corrective Justice and its Relation to Distributive Justice’. Horder (ed. ‘On the Relationship between Corrective and Distributive Justice’. 38 One such view (J. Where the recipient is not meant to incur a debt as a result of the transfer. Valparaiso University Law Review 23 (1989).

quoting Summa II-II. ‘Tort Law in the Aristotelian Tradition’ in D. 61 a. 42 See ibid. Owen (ed. In the Aristotelian account. To that extent they fail to establish an account of corrective justice whose normal operations are not ‘trumped’43 by distributive justice concerns. things (both as to their parts and their activities) are described or explained in terms of their ends. lect. 134. He argues that distributive justice is concerned with ‘what [is] due to an individual as a part of the whole [while] corrective justice govern[s] the relationship of one part to another’. In the Ethics (V.1. In Decem Libros Ethicorum Aristoteles Expositio (ed. In the Aristotelian tradition. lib. Taurini (Italy). 1934). and ‘a person who had less than his fair share could sometimes take something from someone who had more. 1130b). no. q.266 h us se in h a s sa n on corrective justice’. 131.42 Aquinas also concludes that a person in urgent need can take and use as his own another’s property. 40 J. Aquinas adopts a similar view of the relationship between corrective and distributive justice. Aristotle explains how the different human virtues. Indeed it is doubtful that anyone. 135. ii. one cannot analyse a virtue without consideration of how it might contribute to one’s leading a human life. i. The second is the order of means to an end. Angeli Pirotta. quoting Aquinas. 41 Ibid. He explains that things are governed by a twofold order. 1995). I.41 The relationship of parts and whole is to be understood teleologically. . 43 Ibid. this understanding differs from that of Aristotle. which is secondary. or want to remove altogether concerns for human welfare from the concept of corrective justice. which is the one applied in this article. 133. including distributive and commutative justice. The first. and it is primary because it is for the sake of the end that order exists in the parts. The fear that one who has less than his fair share could take from another who has more is not present in the Aristotelian account. would dispute this. even Weinrib and Benson.). 131. before I go on to discuss objections to the Aristotelian approach. is the order of parts to the whole. where it is not against justice for someone in severe need to take the property of another.’40 Whatever the merits of the desire to understand corrective justice in terms of its structure. enable one to lead the distinctly human life. Gordley. 131. one cannot reach an understanding of the structure of a thing independently of its function. 1. Thus. Distributive justice in Islam Those concerns are strongly emphasized in the Islamic legal tradition and. Philosophical Foundations of Tort Law (Oxford. and following from Aristotle’s view of the world generally.

and to free the captives. Kharaj. 1916). as a ¯ proportion of all agricultural produce payable to the treasury by every owner of land. Khums.d. 6–7). and the debtors. Khums means a fifth and refers to that portion of ghanıma (the spoils of war) that had to be ¯ distributed to the poor: ‘The remaining fifth belongs to Allah. and ¯ to the Messenger. This is in reality a part of zakah. ¯ . a fixed tax ¯ on the land. 41).e. The rightful recipients of [ushr are the same as for zakah ¯ (see Qur’an 6. and those whose hearts are to be reconciled. It was ordained in the second year of the Hijra after the battle of Badr. ¯ Mohammedan Theories of Finance (New York. Kharaj could either be fixed. 141).co n t r ac t s in i s l am i c l a w 267 it will be useful to give a brief account of that emphatic bent in Islam. ¯ . Zakah. a duty imposed by Allah. 757. and for the wayfarer. These include: . It was ordained in the fourth year after the Hijra: ‘That which Allah gives as spoils to His ¯ Messenger from the people of the township. it is for Allah and ¯ His Messenger and for the near kin and the orphan and the needy and the wayfarer. 46 For a detailed discussion of both [ushr and kharaj.). or proportional. and to the kinsman (who has need) and orphans and the needy and the wayfarer’ (Qur]an 8. at one-tenth (whence its name) for lands watered naturally. ¯ Ibid. ¯ 44 That zakah is not one among other sources of ¯ government revenue but a distributive mechanism is clear from the list of those entitled to receive the proceeds of zakah. Qur’an 9.’ ¯ ¯ The same is clear also from the fact that the state cannot mix zakah ¯ revenue with other public receipts. A tax on all lands conquered by force that were either left ¯ in the hands of the original owner(s) or allocated to non-Muslim settlers brought from elsewhere. and for the cause of Allah. 358–75. and half that for lands watered artificially. A number of institutions are meant to ensure the just and equitable circulation and distribution of wealth in Islamic society. see Nicholas Aghnides. Fay]. i. and not divided up as part of the spoils of war. unlike ¯ ghanıma. al-Qaradawi. This was distinguished from ghanıma as booty surrendered ¯ by the enemy without fighting.45 . that it become not a commodity between the rich among you’ (Qur]an 59. [Ushr. and those who collect [it]. This used to be an important source of wealth distribution in the early days of Islam. ¯ ¯ 60 specifies the heads of expenditure from zakah: ‘the poor. is left to the discretion of the head of state. n. and ¯ the needy. The allocation of fay]. ¯ 46 . 45 44 . Fiqh al-zakah (Beirut. ii. in the sense that it was imposed See generally Y. It is calculated.

are also designed to 48 achieve distributive justice. A will that bequeaths more than a third of one’s wealth to a single beneficiary is invalid. As with kharaj. nor children and women. In contrast to the condition for liability to zakah. as well as on his own ¯ behalf. on behalf of each of his dependents. 29) specifies those who are entitled to inherit from ¯ a deceased and the shares to which each is entitled. such as gifts. .268 h us se in h a s sa n proportionally as a share of the total agricultural produce of the land. were exempt from military service in the Islamic state that guaranteed the security of their persons and property. nor is primogeniture. the precise amount usually varied between twelve and forty-eight dirhams. nor beggars or poor persons unable to find work. Jizya (poll tax). and later on other nonMuslims. Christians and Jews. one may argue. there exist voluntary arrangements. Ibid. These contractual arrangements are 47 48 M. For those liable to the jizya. Business Ethics in Islam (Islamabad. Inheritance. 64–6. qard hasan (benevolent loan) and ˙ ˙ waqfs (endowments). 11) as ¯ an heir and whose share is allocated therein. This is the amount of wealth that the owner of a ¯ ˙ ˙ certain minimum (nisab) is required to pay to the poor and needy ¯ ¯ on the occasion of the feast of ‘Id al-fitr at the end of Ramadhan. After zakah. naming in a will any person defined by the Qur’anic provisions (4. However. . The Qur]an (9. Kharaj was first introduced after the battle of Khaybar when ¯ the Prophet allowed the Jews of that region to return to their lands subject to payment of an agreed proportion of their produce as kharaj. ˙ The owner of a nisab is also obliged to pay. contractual in nature. Sadaqat al-fitr. likewise.47 . the laws of inheritance are probably the ¯ most important of the wealth-distribution mechanisms in Islam. the wealth of a deceased goes to the treasury and is to be used for the general welfare of the society. 61. The tax was imposed on non-Muslim adult males who had the means to pay it. Apart from these institutions. and exempt from zakah. it is not necessary that the nisab ¯ ¯ should have been held for a year. which. . 29) ¯ ¯ to pay the jizya. Ahmad. depending on financial ability. all the revenue collected from ¯ jizya was to be spent on general welfare. they were required (Qur’an 9. Corporate or compact inheritance (taqsım murtakiz) is not recognized in the ¯ Law. The revenue from kharaj belongs to the Muslim ¯ ¯ community as a whole and is to be spent on general welfare. 1995). Where there are no heirs. Old men and monks (in any case exempt from military service) were not liable to pay it.

54 Hayek. 53 G. 51 F. Thus. A. 1974). Nozick. 50 49 . 232–46. ‘Second Treatise’. ed. Hayek51 and Nozick52 have argued that disparities in resources should be tolerated. 1968). Macpherson (Harmondsworth. The important point here is to bear in mind. This is a vigorous debate with strong arguments on both sides and attention turned to many different aspects of the issues. Fletcher. 1960). 223–4. 1996). 52 R. II. 85–102. The Constitution of Liberty (London. C. Criticisms of the Aristotelian Approach Two sorts of objections have been raised against the Aristotelian approach. access to education and other society-wide developmental experiences. Two Treatises of Government (Cambridge. or the institutional arrangements that would best achieve an appropriate distribution. Hobbes. Constitution of Liberty. On the one hand. naturally argue that inequalities T.2. 1960). Hayek. through the discussion that follows on commutative justice and liberality. with different emphases. 84. the home and family. the emphatic bent in the Islamic legal tradition in favour of the claims of distributive justice. in P. finally. Basic Concepts of Legal Thought (New York. The first objection: Distributive justice has no relevance for law Hobbes49 and Locke50 long ago disputed the notion that a society should seek to preserve a given distribution of wealth. the propriety or practicability of achieving commutative justice in the law of contracts. before entering into these matters. 55 Nozick. but question. one may question the principles upon which resources can be regarded as common and hence subject to distribution. Then. beginning from the talent–effort end. Leviathan. State and Utopia (Oxford. 149–64. Oxford. and the impact of doing so upon the autonomy of the contracting parties. Laslett (ed.). P. effort.53 Hayek54 and Nozick55 (among others). or the principles that should regulate such institutions.co n t r ac t s in i s l am i c l a w 269 better explained by the virtue of liberality and will be discussed more fully below. and. one needs to resolve the methodological hitch: from which end of the spectrum of goods do we approach the problem? The direction of approach leads to dramatically different results. Anarchy. Goods are commonly divided into material resources. Anarchy. On the other hand are those who might accept the idea in principle. inherited talents. State and Utopia. J. Locke. there are those who take issue with the very idea that the law has any proper business seeking to preserve a given distribution of wealth. More recently.

86): ‘The dimension of the person that counts is the abstract universal self. 58 It is against our intuition to believe that people have no natural right to the talents they were born with. 1982). as they perhaps are by most people in the West today. Also interesting is the criticism by G. As Fletcher says (Basic Concepts of Legal Thought. but what about family? Rawls would admit that it is unjust for people to get a head start merely because they were born into a good family.270 h us se in h a s sa n are simply given. 60. J. it is unlikely to challenge the idea that those who can afford it are entitled to better schools for their children. It is pointless to ask whether it is fair that people are born with different degrees of intelligence or drive—they just are. if those with more talent and drive produce and acquire more goods. Rawls argues that this sort of ‘injustice’58 is to be corrected by the more talented compensating Quoted by Fletcher. the issue is how to delineate its boundaries. is that the resources should be distributed equally. State and Utopia. better health. see Nozick. naturally again. A Theory of Justice (Oxford. Rawls. For the Communitarian criticism. and (b) attached to positions and offices open to all. To which of the common goods should it apply? Clearly resources and education. why should they apologize for having more opportunities? The argument thus begins by recognizing the fact of inequalities in talent and effort. For if society accepts inequalities from birth. But remember that Rawls is arguing from behind the ‘veil of ignorance’. As for differences in talent from birth. Therefore: ‘Social and economic inequalities are to be arranged so that they are both (a) reasonably expected to be to everyone’s advantage. In the real world some people do some things better than others and ought to be encouraged to make use of their talents for the collective interest. For the Libertarian criticism. 1971). and so on. which cannot be prevented.’ This notion of the abstract self has led to all sorts of debates and criticisms. Once these arguments are accepted. P. 57 56 . Fletcher in Loyalty: An Essay on the Morality of Relationships (New York. it is but a small step to the sentiment that disparities in resources are facts that one should not be too concerned by. 183–231. 1993). religious or atheist. Liberalism and the Limits of Justice (Cambridge. Rawls. see Michael Sandel. asks: ‘What would be the fairest division if none of us knew who would be able to make the most effective use of the available resources?’56 This time the answer. 85. beginning from the opposite end and applying the famous ‘veil of ignorance’. these cannot be pursued here. Anarchy. strong or weak. the rational impartial being that can make decisions without knowing whether he or she is patrician or plebeian. Basic Concepts of Legal Thought. The next step in the argument makes the point that society should not be unduly exercised by the inequalities that from birth give some people such a head start in life.’57 Once this so-called ‘difference’ principle is accepted. Then. talented or untalented.

‘Natural Advantages and Contractual Justice’. 281.62 59 A. 61 Lucy.’61 He argues that the notion of a voluntary exchange.59 that contract law is indeed concerned with distributive justice but not with commutative justice. Cambridge Law Journal 55 (1996). The Philosophy of Law: An Introduction to Jurisprudence (Totowa. but _ The core of this objection is that it is not the proper business of contract law either to preserve a given distribution of wealth or to correct one deemed unfair. Dare. ‘Kronman on Contract: A Study in the Relationship between Substance and Procedure in Normative and Legal Theory’. T. Wang. Kronman disputes that contracts have anything much to do with commutative justice. which is central to contract law. Canadian Journal of Law and Jurisprudence 7 (1994). and M. is strongly weighted in favour of distributive justice. Coleman. and that contract law may therefore. 472. disposition and temperament. Story.60 . Alexander and W. Murphy and J. The objection is sustained by a variety of arguments in two broad camps. Rawls has arrived at a conclusion different from Hayek and Nozick. (1) There are those who argue. Contracts have a role in distributive. be more useful than taxation in achieving distributive justice. 62 Kronman is primarily concerned with the Libertarian conception that considers voluntary exchange as one of only two questions relevant to contract adjudication. His . 60 J. see W. 337. 358. The second objection: Distributive justice is relevant. ‘Contract Law as a Mechanism for Distributive Justice’. L. by beginning at the opposite end of the goods spectrum. must be understood as a distributive notion. Then. (2) those who argue that contract law is not directly concerned with either distributive or commutative justice but only with implementation of the decisions of the parties. ‘Contract Law as a Mechanism for Distributive Justice’. not in commutative. T. as I have indicated above. 3rd edn 1920). Thus. Commentaries on Equity and Jurisprudence as Administered in England and America (London. 331. 169. 227. 132. Simmonds. Law and Philosophy 3 (1984). Oxford Journal of Legal Studies 9 (1989). R. Kramer and N. Lucy. conditioned by one’s broad political beliefs. N. J. NJ. whatever the effect of those decisions may be. Journal of Legal Studies 9 (1980). E. justice—Kronman. as one would expect. The Islamic tradition. 1984). in some situations. H. 132. Yale Law Journal 89 (1980).co n t r ac t s in i s l am i c l a w 271 the less talented. Kronman. and ‘Wealth Maximisation as a Normative Principle’. with Kronman. a view based inter alia on the belief that ‘contractual disputes do not provide an arena for the disputation of wider political and moral issues that are not necessarily of immediate concern to the parties in dispute. Can one argue that one strategy is better than the other? The answer is not at all self-evident and. ‘Getting the Rabbit Out of the Hat: A Critique of Anthony Kronman’s Theory of Contracts’. ‘Contract Law and Distributive Justice’. For critiques of Kronman.

480. education. This holds that advantage-taking is acceptable so long as the liberty of the other party has not been infringed. etc. Of such principles. It begs the question and is therefore useless.63 Involuntariness may be based on coercion. it would not be satisfactory even if it did try to determine what rights people have. and indeed. ‘Contract Law as a Mechanism for Distributive Justice’. 65 Kronman.66 The real issue then is to determine the principles by which one can decide which forms of advantage-taking are morally acceptable and therefore which contracts to enforce. Kronman says. Indeed. includes all those things one benefits from. Kronman names three as plausible for this purpose. deliberate misrepresentation or non-disclosure or other cognitive or volitional impairments. 480.). which is a necessary component of any promise that is truly voluntary and hence binding. both natural endowments (such as beauty and intelligence) and the outcomes of social factors (health. as Kronman uses it. does allowing him to do so amount to a deprivation of the other party’s freedom. 472. there is advantage-taking by both parties’. fraud and misrepresentation. 472. but it is necessary to answer the arguments that Kronman puts forward before one can offer to analyse contract law in terms of commutative justice. because it cannot tell us what rights people have. 66 Ibid. 132–3. This follows arguments are equally applicable to Liberalism and to any notion of contract that places importance on voluntariness. have a relationship to distributive justice has been shown by others (see in particular Lucy’s ‘Contract Law as a Mechanism for Distributive Justice’) to be unconvincing. ‘Contract Law and Distributive Justice’. In this sense of advantage.64 In such situations. It is not very helpful. His descriptive claim that the rules of contract law. (i) The liberty principle. 63 Kronman. wealth.65 Advantage-taking. there is advantagetaking in every contractual exchange. for example those relating to duress. undue influence.272 h us se in h a s sa n Kronman claims that voluntariness must be understood as a distributive concept because the questions raised in deciding whether a particular exchange was voluntary or not are similar to those raised in deciding which of various forms of advantagetaking are compatible with the concept of individual freedom. if one party exploits an advantage to the detriment of the other party. ‘in mutually advantageous exchanges. ‘Contract Law and Distributive Justice’. 64 Lucy. My focus is on Kronman’s normative claim that contract law should be understood in distributive terms. This article does not seek to defend either Libertarianism or Liberalism. .

but more formal formulations.69 However. Exchange and Auction: Philosophic Aspects of the Economic Approach to Law’. but also because it would lack the predictability of application of less individualistic. 68 This principle takes different forms—e. with this formulation that Kronman prefers. 69 Kronman. 283. 722–3. Southern California Law Review 47 (1974). 472. 71 Ibid. ‘Essentially Contested Concepts’.67 (ii) The utilitarian principle. Proceedings of the Aristotelian Society 56 (1956). and if the welfare of at least one person is enhanced. The rejected formulation rests on the 67 W. Law and Philosophy 3 (1984).g. Kronman uses the thesis to argue that theories of rights are vacuous and therefore unable to provide the distinction between acceptable and unacceptable forms of advantage-taking. . 472. California Law Review 68 (1980). he goes on to reject this formulation of it (meant to be applied as a test to the individual parties to a transaction70). 72 Ibid. Kronman seems to be trying to get away from the criticisms levelled against the law-andeconomics approach to contract law. ‘Natural Advantages and Contractual Justice’. however. and its conformity with Libertarian beliefs. By using the formulation of paretianism that he does. G. 281.72 There is. in part because the highly individualized assessments that it demands would mean that courts and legislatures could not cope. Kronman prefers an alternative formulation that allows advantage-taking when it increases the welfare of most people initially disadvantaged by it:71 in other words. rather than to individual ones.co n t r ac t s in i s l am i c l a w 273 from W. An allocation of resources (S1) is pareto-superior to another (S) where no one is made worse off in going from S to S1. See Ian MacNeil. 486–7. 281. Gallie’s thesis that certain concepts are ‘essentially contested’. ‘The Many Futures of Contract’. pareto-superiority and paretooptimality—of which Jules Coleman (‘Efficiency. For Kronman the plausibility of this principle derives from its egalitarian and individualistic emphasis. (iii) The paretian principle. Gallie. 485. Kronman rejects this principle on the grounds that it does not necessarily result in the protection of individual liberty or autonomy. On the other hand. resources are distributed as pareto-optimal if and only if any further allocation can make one person better off only at the expense of another.68 This principle (the one that Kronman really favours) allows advantage-taking if and only if the disadvantaged individual is better off in the long term than if advantage-taking is not allowed. ‘Contract Law and Distributive Justice’. 284. a serious problem. 167. which is unable to accommodate relational concerns. 70 Alexander and Wang. G. 691. This would justify those forms of advantage-taking that increase the total amount of some other good. it applies to classes of transactions. 221) has provided a very good analysis.

sellers of land with uranium. the remaining 49 per cent can be sacrificed irrespective of how little the 51 per cent gain or how much the 49 per cent lose. which is unacceptable. How. of the people initially disadvantaged. there is an element of arbitrariness in this formulation of paretianism. But then. but what about.274 h us se in h a s sa n idea that initial disadvantage is ‘voluntarily’ accepted to the extent that it benefits the disadvantaged individual in the long term. not all. In the preferred alternative. But then. 287. For that reason. why narrow the class by reference to mineral deposits? Equally one might plausibly narrow it by reference to a geographic or economic region. The example is superficially convincing but Kronman does not explain why the class of the disadvantaged should be sellers of land with undisclosed mineral deposits. Kronman claims that allowing purchasers (B) the advantage of deliberately acquired geological information should boost mineral exploration. or how much harm is caused to other members of society outside the class. or iron deposits? Perhaps lands with different mineral deposits could be governed by different rules of contract. or. for example. Why not a narrower or broader classification? Maybe sellers of land with hidden oil and natural gas would be better off in the long term. however. say. broaden it to all sellers to whom relevant material information is not disclosed.74 Even if there were such a rule. gold. The point is that one needs a rule by which to broaden the class or make it narrower. does one decide the relevant classes of transactions? One of Kronman’s examples involves a trained geologist (B) buying a piece of property without disclosing to the seller (A) that the land has a rich mineral deposit. there is the still more fundamental problem with this formulation of paretianism of moral arbitrariness. 73 74 Alexander and Wang. and there isn’t one: the problems of defining the relevant classes of transactions are unresolvable. how can one argue that the initial disadvantage is ‘voluntarily’ accepted by the individual if the long-term advantage accrues only to others in the class. conversely. 285. So long as a particular type of advantage-taking will be of long term benefit to 51 per cent of the initially disadvantaged class. and the prices of minerals and other commodities. Ibid. and not necessarily to that individual?73 Furthermore. . ‘Natural Advantages and Contractual Justice’. the long-term advantage accrues to most. making sellers (A) better off in the long run. 281. 281. purchasers should not be forced to make disclosure.

and how much the rest of society is worse off for disallowing it. ‘contracts redistribute wealth. However. and exclude quite arbitrarily. similarly if a particular form of advantage-taking results in the long term benefit to 49 per cent of the class. The argument in favour of the claim that contract law necessarily enforces some principle of distributive justice is that the issue to be decided in contracts is whether a party 75 J.76 This seems indisputable and in this sense contracts do necessarily involve distributive justice. If he did. one must still justify the focus on the particular class of transactors. that there are no problems with Kronman’s formulation of the paretian principle. for the sake of argument. if this is all that Kronman claims then it is an uninteresting claim.co n t r ac t s in i s l am i c l a w 275 The converse is. They therefore create and share ‘surplus’ understood as the gains resulting from trade. The Philosophy of Law: An Introduction to Jurisprudence. 76 Ibid. the gains from trade’. Murphy and J. It may also be possible to define the long-term gain to most people in a way that would include the whole class. it would still exclude. Let us allow. Does he succeed any way in explaining contract law in distributive justice terms? There are two distinct ways in which Kronman’s claim about the relationship between contract law and distributive justice may be understood. Coleman.75 Thus in every case. However. In this sense. . The first involves recognizing that when people contract with each other.77 It is most improbable that the extensive discussion that Kronman’s work has aroused is the result of this true but uninteresting claim. This Kronman does not attempt to do. 77 Ibid. G. The second way in which the relationship between contract law and distributive justice may be understood is concerned with the analysis of voluntariness and advantage-taking in distributive terms. 203. they engage in a transfer of their resources. even Fried’s conception of contract as promise is a redistributive principle for it would only be arguing that courts should allow the redistribution of wealth according to the desires of the parties as expressed through their promises. impacts on those not party to particular transactions. It may be possible to refine the principle of Paretianism that Kronman favours so as to disallow a small gain to the 51 per cent at the expense of a huge loss to the 49 per cent. it will be disallowed irrespective of how much the 49 per cent actually lose and how little the 51 per cent actually gain. L.

‘since decisions about the legitimacy of countless sorts of advantage-taking will collectively have an overwhelming effect on the distribution of wealth. and for the autonomy of the contracting parties. Kronman does not provide this sequence. 358. ‘Getting the Rabbit Out of the Hat’. while the choice of sequence is crucial. The other objection to the relationship between commutative justice and contract law asks whether it is right or even possible to affect distribution of wealth by interfering in the contract price. however it is defined. Bear in mind that Kronman would disallow advantage-taking unless and until it passes his paretian test. Allowing him to do so then redistributes wealth in his favour. It is important that the argument here is not misunderstood. He thus takes for granted a background of established norms and practices against which a paretian judgement about each specific kind of advantagetaking can be reached. for decisions about one lot of advantage-taking will have an impact upon the decisions about another lot. as Kramer and Simmonds have argued. 369. Rather. and so on.78 However.79 Even if it were possible to specify the distributional background. . one would need some clear sequence in which the various types of advantage-taking are looked at.276 h us se in h a s sa n should be allowed to take advantage of a particular resource or talent he has.e. Moreover. . The objection is in effect an argument against the concept of ‘just price’. Kronman does not succeed in establishing the normative relationship between contract law and distributive justice. In sum. which leads on to the argument that contract law should not in fact interfere with the wishes of the contracting parties. nor does he provide help in deciding how to choose one sequence over the many possible others. Ibid. has no distributive consequences. He disregards every mode of advantage-taking except the particular form of it with which he is concerned at a particular moment. it is also arbitrary. my argument is that the best existing analysis of the relationship between voluntariness and contract in distributive terms (i. Kronman’s) does not work. 78 79 Kramer and Simmonds. our initial decisions about advantagetaking will not have any clear distributional background against which to proceed’. Against ‘just price’. I do not wish to make the general argument that voluntariness. for autonomy of the contracting parties.

co n t r ac t s in i s l am i c l a w 277 Against ‘just price’. ¯ qımat al-[adl (fair price or fair measure) sometimes appears in the ¯ Gordley. ii. the argument for autonomy of contract follows as a corollary. Since value is subjective. and whether enabling contracts at this price is an infringement of the autonomy of the parties. 83 The relevant passage is found in F. ˙ 81 80 . to an argument advanced in the eighteenth and nineteenth centuries: ‘one could not meaningfully speak of equality in exchange and.84 Another term. 11. Ibid. It is reported that the Prophet characterized overcharging of a trusting customer as riba. pt. In order to answer these two apparently powerful objections.). 82 Ibid. pp. 4th edn 1885). That being so. 1598. k. not directly engaged in the transaction. I will now consider more closely what the concept of ‘just price’ meant in the Islamic tradition. 1587. other than the agreement of the concerned parties. and therefore the just value is that which they be contented with to give’. Principles of Contract (London. n. the eighteenth-century jurist Thomasius felt able to conclude that the distinction between distributive and commutative justice as put forward by Aristotle was wrong.). One man. Following this line of thinking.80 The argument that one cannot speak meaningfully of equality in exchange was based on the idea that value was not an intrinsic property of things but derived from the judgement of the contracting parties. where Gordley cites J. Sahıh. that even if one could. argued that ‘the value of all things contracted for is measured by the appetite of the contractors.d. But the market value is deemed irrelevant as it reflects the judgement of a third party. Pollock. Story. 14th edn 1918). n. Dissertatiorum Academicorum Varii Inprimis Iuridici Argumenti (1777). 1592. if not quite identical. 15. al-Buyu[ (Cairo. The idea that contracts ought to be concluded at a just price has a long history in Islam. The objection is similar. 84 Muslim.d. one has no measure. 339. relying in part on Hobbes. Musnad (Beirut. see also ¯ ¯ ˙ ˙ Ibn Hanbal. 1592 where Gordley discusses C. Commentaries on Equity Jurisprudence as Administered in England and America (Boston. Thomasius. 4. the terms of the exchange were a matter the contracting parties should be free to decide’. by which to evaluate the fairness of the exchange or ‘just price’. 212–13. 1587.’82 Pollock. ‘Equality in Exchange’. Joseph Story argued that the value of a thing ‘must be in its nature fluctuating and will depend upon ten thousand different circumstances. 43. in the disposal of his property may sell it for less than another would. The only determinant of value then left is the subjective view of the transacting parties themselves.81 In the nineteenth century.83 The value of a thing may also mean its market value. 156. al-[Itq and k. 172.

520. Majmu[ Fatawa (Riyadh. Thus. increase in demand). Islahi. for instance.86 The doctrine of just price plays a role in realizing justice rather than in determining price. 1988). thaman al-mithl is defined as ‘the rate at which people sell their goods and which is commonly accepted as equivalent for it and for similar goods at that particular place and time’. While the concept of just price has a long history. 1963). under the larger doctrine of just compensation ([iwad al-mithl). is specifically an issue in those situations where there is an actual sale.92 He concludes that just price is the market price of a commodity in a competitive market. 345.278 h us se in h a s sa n Traditions. He says that the measure is assessed by its equivalent and this is the essence of justice (nafs al-‘adl). then it is from Allah. v.88 [Iwad˙ al-mithl. he uses ‘just’ and ‘equivalent’ interchangeably. On the other hand. 327. for example. 75. ˙ A.’93 Much the same formulation is ¯ 85 It is relevant to note that the manumission of a slave is itself a contract in Islamic Ibn Hanbal. which may be read as either ‘just com˙ pensation’ or ‘compensation of the equivalent’. decrease in supply) or due to increase in population (i. Thus it may arise. arises as an issue in relation to the discharge of moral or legal obligations generally. although some believe that the two are distinct. or price of the equivalent. 521. 86 87 88 89 90 91 92 93 .91 Throughout an elaborate discussion. Economic Concepts of Ibn Taimiyah. in a Tradition about the case of a master who frees part of a slave. ¯ ¯ ¯ Ibid. He says. purchase. 81. 25. Ibid.90 It is therefore the market price. for example: ‘If people are dealing with their goods in the normal way without any injustice on their part and the price rises either due to shortage of the goods (i. Ibid. in Islamic law.e. Ibn Taymiyya. 1976). or exchange of goods. It is used. al-Hisba (Cairo. ˙ Law.e. xxix.87 The question of just price (thaman al-mithl) seems to come. it was Ibn Taymiyya who subjected it to detailed analysis—the formal distinction between [iwad al-mithl and thaman al-mithl is attributed to ˙ him. in relation to cases where an individual is held responsible for causing injury to the person or property or profit of another. A. 81.89 The Hanbalı jurist Ibn Taymiyya (d.85 who becomes a free man when the master is compensated for the remaining at qımat al-[adl (a fair ¯ price). 1328) says that it is ¯ ˙ also involved in those situations where a person is required to settle invalid contracts or valid contracts that have some defect. thaman al-mithl. Economic Concepts of Ibn Taimiyah (Leicester. Islahi. Ibn Taymiyya. Musnad.

the presumption is. In contrast to Aquinas who hardly touches on the question of just wage—except to say (Summa I. making detailed definitions of quantity and quality. He eventually concludes that the 94 J. X. J.e. the departure came with Ibn Taymiyya who extended and refined the discussion. A. Noonan. In fact the medieval scholars. 93 n. 144. 95 Schumpeter. i) that it is subject to the same rules as just price—Ibn Taymiyya describes it as the wage of the equivalent (ujra al-mithl) and links it to the price on the labour market. like Aquinas. Journal of Economic History 18 (1958). 82–8. ‘The Concept of the Just Price Theory and Economic Policy’. in as much as a man deceives his neighbour to his loss’ (Summa II. q. 418. Aquinas links unjust prices with fraud: ‘It is sinful to practise fraud for the express purpose of selling a thing for more than its just price. assuming a normal competitive price.95 Where there is a significant disparity between the price of the contract and that of the equivalent. The Scholastic Analysis of Usury (Cambridge. Some. q. see Islahi. de Roover. art. rather than with the other common definitions of the time. were more concerned with how to arrive at a just price than why prices ought to be just. ‘individual deviations are hardly possible except through fraudulent representations about the quantity and quality of goods’. II. art. in the absence of fraud. choosing to enrich the other party). Both the Muslim jurists and Aquinas are concerned to ensure that contracts are concluded at a just price that is. 2. that one party was practising the virtue of liberality (i. the market price. apart from Aquinas. for both. History of Economic Analysis. From this. seemed to equate it with the normal competitive price.96 While this debate is of interest. . q. 1957).94 Furthermore. History of Economic Analysis (London. 96 For a brief discussion of these different positions. There is an ongoing debate about what exactly the concept of just price meant in medieval times and how it was calculated. Among Muslim jurists. Schumpeter. 1972). 76–80. others thought that it was the price quoted beforehand and was determined by custom or communal estimate. so too Noonan and de Roover. 78. as the Muslim jurists do. Economic Concepts of Ibn Taimiyah. II. i). Gordley concludes that for Aquinas just price is the current market price established in the absence of fraud and monopolistic trading practices. 77. what matters here is that the definition and calculation used by the majority of Muslim jurists coincides with that of Aquinas. Both focus on fraud because.co n t r ac t s in i s l am i c l a w 279 found in Aquinas—Schumpeter explains Aquinas’s just price as the price of a commodity in a normally competitive market.

see also al-Masa’il al-Mardıniyya (Damascus. the final outcome will level out to equal. 86.102 One argument is (i) that an exchange conducted at the market price is not really unequal even if the seller does not recover his loss. Moreover. the risk of 97 Ibn Taymiyya. p. 299. how can just price preserve equality? There is an extensive discussion of the subject in Gordley’s article. Contracts are therefore best viewed as a series of ‘fair bets’. 1609–17.101 But the earlier scholars and writers who did this thinking did not raise the question that we are bound to raise: since the market price is by nature fluctuating. 37. 87. ‘Equality in Exchange’. 102 Gordley. just wages. 34. ‘Equality in Exchange’ (see n. 1587. xxv.280 h us se in h a s sa n wage of the equivalent is governed by the same rule as the price of the equivalent. especially where ¯ ˙ people are not aware of the normal conditions of the market (such a person is classified as being mustarsil—in fiqh the term is applied to one who fully trusts the other party to the contract). Economic Concepts of Ibn Taimiyah. within production costs. (i) It does not matter. the first argument goes. The argument can be made more sophisticated by including. just profit. 101 Ibid. What matters is that over a number of contracts. Equality is here understood in an actuarial sense. 99 ˙ ¯ Id. and related concepts indicates marked concern to maintain justice in commutative dealings. 98 Id.99 He is particularly concerned to ensure that needy persons are not exploited. p. Hereafter cited as ‘Gordley’. . the seller who (in one transaction) received something less than his production costs could (in principle) just as well have received more. The other is (ii) that such an exchange is unequal but this inequality is not one of concern to commutative justice (Gordley. i. It is the normal profit that is generally earned in that particular type of trade without harming others. 26 above).100 All the thinking about just price. Majmu[ Fatawa. ¯ ¯ ¯ ˙ 1964).97 Ibn Taymiyya also discusses just profit or the profit of the equivalent. 1610). 103. al-Hisba. ¯ ¯ 100 Islahi. al-Hisba. He of course sees nothing wrong with earning a normal profit98 but disapproves of abnormal or exploitative profit (ghabn fahish). 1610). the person who received more had the same chance of doing so as any of the other players (Gordley.e. that in any single transaction a seller fails to recover his costs. cited earlier. whose outcome. if the series is sufficiently long. will be equality.

where the parties do not contract at the market price.103 For autonomy of the contracting parties. Of course. Whatever the case. it is important to distinguish between the decision to enter into a contract and the decision about whether the price offered is the best available price (Gordley. for those of Aquinas. see Gordley. However. p. The principle of autonomy requires that the parties be free to enter a contract at a certain price. This is then coupled with the view that. 1611–17. The contracting parties enter into the contract in the expectation of advantage and assuming that they will be better off entering the contract than not. p. 1616).co n t r ac t s in i s l am i c l a w 281 price fluctuations as well as labour and other expenses. The fundamental idea remains that ‘a price can be fair. . Economic Concepts of Ibn Taimiyah. in part. but because. We can now discuss the argument that it is against the autonomy of the parties to a contract for a third party to interfere by judging the fairness of the exchange. as Gordley points out: ‘the court is merely putting them in the same 103 For the view of the Muslim jurists. 1611). In short. see Islahi. but does it require that they be free to determine the price absolutely? Requiring them to conclude the contract at ‘just price’ does not in fact infringe their autonomy because. 1611). if particular fluctuations are preventable. prices do and must fluctuate in response to supply and demand of particular commodities. p. there is no good reason for parties not to contract at the market price. However. there is a good reason for not allowing him to be disadvantaged (Gordley. or being prevented from using the market. they may be supposed to favour the second argument because they believed that there is a good reason why market prices fluctuate and ought to be allowed to do so. such as one party being unaware that he could get a better price in the market. what commutative justice demands is that avoidable inequalities be corrected. there is usually a bad reason. On the other hand. neither Aquinas nor the Muslim jurists make either of these arguments explicitly. apart from the virtue of liberality. (ii) The second argument is content with the possibility of particular transactions being unequal. they might also have recovered less’ (Gordley. 88–102. in the belief that it is not the task of commutative justice to rectify every inequality and that. it is up to the public authorities to attempt to set prices so that they apply equally to everybody. not that perfect equality be preserved. In other words. entering into the contract at certain terms is not better than entering into it on more favourable ones. and that. as they might have recovered more. not because sellers actuarially recovered the value of their labour and expenses.

Here again there is wisdom in the Aristotelian scheme: acts of voluntary commutative justice are voluntary because it is up to the parties to agree or not to enter into the contract at the price dictated by commutative justice. The jurists did not develop a general theory of contract—few general principles of contracts are found in their works—but concerned themselves with specific rules for sales. III. to be discussed below. the operative principle is that of liberality which has its own rationale. for leases. etc. where the parties know what the market price is and still choose to contract at a different price. Nominate Contracts and Compulsory Terms As I stated at the beginning of this article. the just price. To explain how this works it is necessary to go back to Aristotle and Aquinas. It is not infringing on any autonomy that either party would exercise under normal circumstances in a market’ (Gordley. However. there is a bridge between the rules applicable to specific contracts and a ‘theory’ of contract. i. p.e. . 1619). The argument that it is against the autonomy of the parties to require them to contract at the market price is unconvincing. the only presumption must be that one party intended to enrich the other party. It will be answered by illustrating the application of those principles by reference to a few examples. ISLAMIC CONTRACTS ANALYSED IN TERMS OF COMMUTATIVE JUSTICE Islamic law is concerned with promoting a just distribution of wealth and with ensuring that it is maintained. In this case. III. That bridge is found in the ‘essence’ attributed to each contract. and in the analysis of the terms that flow ‘naturally’ from it and govern its operation. The question here is whether its rules and doctrines are in line with the principles of commutative justice and liberality. On other hand. Holding the disadvantaged party to a contract entered into under these conditions cannot be in line with his autonomy.1. These parties will contract at a price other than the market price only if they are ignorant of that price or otherwise unable to use the market. Islamic contract law is a law of particular contracts.282 h us se in h a s sa n position as any two parties trading on a market with a definite price. rather than because the parties decide what price will be in accordance with commutative justice.

Nor does he claim that each transaction had a set of natural terms that flows from the definition or ‘essence’ of it. pledging. and that contracts should be generally defined. one may transfer his thing to receive it back again. is that it is only when the definition of 104 J. However. the ‘essence’ of an action is defined in terms of its end in the same way that the end of a man-made object is defined. 1131a). it is the end to which the parts of the contract are means just as the parts of a house are means to the end of giving shelter. purchase. that Aquinas defines the contracts. the transaction is called usufruct in things that bear fruit. certain terms would be appropriate and others inappropriate. If he transfers it simply so that the recipient incurs no debt. Aquinas makes the following classification (Summa II–II. or because of an obligation. 1990). and simply loan for consumption or loan for use in things that do not bear fruit such as money. 367. it is an act. one may transfer his thing to another so that the latter may have the use of it with the obligation of returning it to its owner. pottery. q. This may occur in three ways. . 3): Voluntary commutations take place when a man voluntarily transfers his thing to another.104 For the achievement of that end. and so forth. as in the case of a gift. 411. the end of a house corresponds to the immediate conscious purpose of the builder. as in deposit. Towards a General Law of Contract (Berlin. The reason. depositing and letting (Ethics V. so the end that defines a certain contract corresponds to the immediate conscious purpose of the parties who made it. If one grants the use of the thing gratuitously. It is Aquinas who does so. He does not tell us if and how these transactions can be distinguished according to some rational principle.co n t r ac t s in i s l am i c l a w 283 Aristotle claims that commutative justice encompasses transactions such as sale. A voluntary transfer belongs to justice in so far as it includes the notion of debt. not of justice but of liberality. in this philosophy. not so that it can be used but so that it can be kept safe. the end of a certain contract is more than the purpose in the minds of the parties. loan for consumption. as one obligates his thing by a pledge or stands surety for another. The different types of contracts are accordingly defined in terms of their ends. not even the use is granted gratis. Gordley. one may simply transfer his thing to another in exchange for another thing.). loan for use. ‘Natural Law Origins of the Common Law of Contract’. and the end of archery to that of the archer. the transaction is called lease and hire. Rather. In his discussion of commutative justice. 61 a. as happens in sale and purchase. If. therefore. Second. however. Third. Barton (ed. As Gordley says: just as. First. In Aristotelian and Thomist philosophy. in J.

the rules of the contract are generally mandatory. Thus ‘a party who desires the end also desires the means’. Muslim jurists often state that the system of [uqud [sic] rests upon a quartet of basic contracts _’. and its terms are means to that end. q. 19. any additional term agreed by the parties that modifies the nature of the contract is itself null and may even nullify the contract as a whole.284 h us se in h a s sa n a contract is known that one can decide the terms that would be appropriate and those that would not. Aquinas (Summa. The appropriate terms are ‘natural’ in the sense that they belong to the contract by reason of its essence or nature. the contracts he lists can be analysed either in terms of Coulson. 106 105 . ‘Natural Law Origins of the Common Law of Contract’. Suppl. For. he willed whatever obligations followed from the nature of the contract. in Thomist terms. Commercial Law in the Gulf States. 61. If either party intends that the other benefit at his expense. q. Given this approach. What furthers the ends of marriage is natural and therefore part of the obligations entailed by marriage. as with the Thomist approach. The jurists in Islamic law went to great lengths to define and classify contracts. ‘The System of Nullities in Muslim Law’. q. 50 a. Habachy. 1) uses the marriage contract as an analogy. 48 a.107 The terms that flow naturally from the type of contract that the parties entered into are not only in accordance with the will of the parties. What goes against those ends does not form part of marriage. It is interesting that in the four-fold classification that Coulson himself uses.105 This approach fails to see that the process of definition is an important prelude to other processes. 367. 107 Gordley. once again. of course. Most contemporary experts in the field have presumed that this activity is adequately explained as mere habit or temperament. See S. the jurists then proceed to identify the terms that govern each type of contract and flow naturally from it. This. Again as in the Thomist approach. The essence of a contract is defined in terms of its end. 2. American Journal of Comparative Law 13 (1964). even if he did not know precisely what those obligations were. Coulson states: ‘with their zeal for tidy and systematic classification. This is because the terms are meant to ensure equality in the value of what is exchanged between the parties. 418.106 The status of the will of the parties in Islamic law is best understood. If a party willed to enter into a certain type of contract. this indicates that the parties intend a gratuitous contract rather than an onerous one. only applies to what Aristotle calls onerous contracts. p. and the virtue of liberality is operative. they are also fair. 44.

109 ¯ ¯ ˙ Even more interesting. is ˙ the transfer of the corpus without a consideration (tamlık [ayn bi-la [iwad). [Umdat al-salik. the receipt of a performance in return for one’s own)108 or in terms of liberality: (i) bay[. The first rule is (i) that the property in the object of sale passes as soon as the contract is concluded. is that he cannot combine in his hands 108 Gordley. 29–30. ¯ principles whose weight is felt in every type of contract.110 III. and risk An essential element of the contract of sale in Islamic law is that there be an immediate transfer of ownership from the seller to the buyer. 109 Coulson. is the transfer of the corpus for a consideration (tamlık [ayn bi-[iwad). as well as the general structure. As for ¯ the principles. ¯ (ii) Hiba. 397. whether it is immovable or movable. 77. ‘L’Acte ¯ ¯ ¯ ˙ translatif de proprie ´ en droit musulman hane ´te ´fite’. . The Philosophical Origins of Modern Contract Doctrine (Oxford. 3). possession.e. or loan. upon offer and acceptance. Passing of property. indeed striking. passes from the seller to the buyer.co n t r ac t s in i s l am i c l a w 285 commutative justice (i. is the˙ transfer of the usufruct without a ¯ consideration (tamlık manfa[a bi-la [iwad). or hire. ¯ ¯ ˙ (iii) ijara. and also C. ¯ (iv) [ariya.2. Commercial Law in the Gulf States. or sale. or unfair exploitation. Revue al Qanoun wal Iqtisad 21 (1951). The second rule concerns (ii) the notion of istighlal. they are (iii) riba (usury) and (iv) gharar (uncertainty). is that the classification Coulson gives should mirror so closely that of Aquinas (Summa II–II. or gift. Chehata. 1991).111 As soon as the contract is validly concluded. is the transfer of the usufruct for a consideration ¯ (tamlık manfa[a bi-[iwad). This will be demonstrated through concrete examples of two rules and two principles.e. the property. 455. 111 Coulson. 19. Commutative justice through equality explains many of the rules and doctrines. Equality in Islamic Contracts Equality is the central theme of commutative justice. q. 110 See ibid. Commercial Law in the Gulf States. 112 See Ibn Naqıb al-Misrı. 20. The concern with preserving equality is clear from the fact that the reason why the buyer is obliged to pay when he is. i.112 It is this immediate passing of property that then gives rise to an obligation on the part of the buyer to pay the price to the seller. of Islamic contracts. 61 a.

397. ‘L’Acte translatif de proprie ´ en ´te ¯ ¯ ˙ droit musulman hane ´fite’. As Chehata said: ‘Not to pay the price is to break the equilibrium that each contract must assure. 116 See al-Kasanı. 1909–10). 67. It goes against the demands of commutative justice. and also Chehata. Similarly. Theorie generale de l’obligation en droit musulman hanefite: Les ´ ´ ´ ´ Sujets de l’Obligation. Property passes at that date.113 Since the price is the equivalent of the object. otherwise the contract is invalid. he is obliged to pay its price. However. Alternatively. the buyer no longer has a duty to pay the price.115 The equivalent of the price is no longer in existence and. Where the object is destroyed by the act(s) of a third party. 114 Ibid. ¯ ¯ ˙ . The concern with maintaining equality between the buyer and seller is evident. 210–15. The nature of the 113 Chehata. valid because the Prophet explicitly allowed it. he has a right to have the price he paid reimbursed. 400. The price must be paid as soon as the contract is concluded and during the contractual session (majlis al-[aqd). of gharar.’114 For the same reason. the buyer may pay the price to the seller in which case the third party becomes indebted to the buyer for the price. Where the buyer has destroyed the object. in which case the price of the object becomes a debt that the third party owes to the seller. to retain both the price and the object gives rise to an imbalance. ¯ ¯ ¯ ¯ ¯ ¯ ¯ ¯ 117 al-Misrı. v. 67–8. p. it is worth clarifying that the equality or equivalence at issue here is not equivalence in value between the price and the object—the just price discussed earlier—here it is the equivalence in performance that is the concern. However. [Umdat al-salik. If the buyer is dispossessed of the object by the seller. Bada[i al-sana[i fı tartıb al-shara[ı (Cairo. there is no imbalance. p. 115 For this and the following rules on possession and payment of the price see alMisrı. the seller is not under an obligation to deliver the object.286 h us se in h a s sa n both the object and its price.116 Salam is a forward purchase whereby goods are purchased and paid for immediately but for delivery at a specified future date. the dictates of ¯ commerce necessitated that it be accommodated. [Umdat al-salik. if the object is destroyed before delivery. the buyer has the choice of revoking the contract. An exception to the requirement that property passes immediately on conclusion of the contract occurs in the salam contract. This is because his destruction of the object is considered to be the equivalent of taking possession. more directly. 455.117 Now the salam contract falls foul of the prohibition of riba and. as the buyer does not combine in his possession both the object and the price. if the buyer has not conveyed the price to the seller.

the ¯ ¯ ¯ object must be described well enough ˙for the buyer to identify it. Again. and that the objects of the contract must be mithlı (i. It exists where there is ghubn ¯ (lesion). fungible). it must be described in full detail ¯ ¯ ¯ including colour.118 The rules relating to description of the object differ amongst the schools. a disproportion in the obligations assumed by the parties.’ The moral basis of istighlal is clearly equality. 119 118 .122 The question to be answered is why these schools require some form of ghubn (lesio. For the Hanafı and Malikı schools. 121 Ibid. 914–15. 254–7. i.e. Islamic contract law is at great pains to ensure that contracts are based on equality. 1991).119 Istighlal (unfair exploitation)120 and ghubn (lesion) ¯ Istighlal is an impediment to consent. waznı (i. Rayner.˙ country of origin. ¯ However. ‘Salam’ in the EI2 viii. Comair-Obeid. 122 Ibid. 30. The Law of Business Contracts in the Arab Middle East (London. Latham. however.e. and where there exists disproportion and misrepresentation. D. wrongdoing) for contracts to be set aside on the basis of istighlal. 120 S. ¯ ¯ measurable). That is why the rules relating to the various options See J. For the Shafi‘ı and Hanbalı schools.e. though there is general agreement concerning the basic rules: that the price and object of the contract of salam cannot both be currencies. If that happens. and also why the disproportion ¯ in these situations has to be gross. E. Thus for the Malikı and Hanafı ¯ ¯ ¯ schools. As Rayner says: ‘Istighlal is based on the principle of la darar: There ¯ ¯ ˙ must be a requisite balance between the rights and balances of the 121 contracting parties. The Theory of Contracts in Islamic Law (London. in actually applying the principle in practice.co n t r ac t s in i s l am i c l a w 287 accommodation differs between the schools of law. N. 254. the schools again come up with different rules. 1996). the disproportion has to be gross (laesio enormis) and accompanied by fraud. the underlying principle common to the different rulings is to minimize the risk that goods will be delivered that do not correspond to what was agreed. For the Shafi[ı and Hanbalı ¯ ¯ ¯ ˙ schools. each of which—in the effort to restrict the risk of riba and gharar as much as possible— ¯ has formulated its own detailed rules for salam. etc. the contract cannot be enforced as doing so favours ‘one contracting party to the disadvantage of the other through an imbalance of the benefits’. and any other characteristic that affects the price and use of the object. contracts will generally be set aside for istighlal ˙where ¯ the victims are inexperienced or innocent.

Riba and equality126 ¯ The basis of the prohibition of riba is clear from the relevant ¯ verses of the Qur]an. but fear God that you may [really] prosper. in EI2 (1995). And. E. N. see N. It is all very well to discuss unfair exploitation and disparity in value. in essence.123 The general effect of such options is that the parties have the right to avoid the transaction even after conclusion of the contract. Comair-Obeid. 116. in spite of all these measures. 126 See Saleh.125 It is in formulating the requirements that must be met to rebut the presumption of liberality that the different schools come up with their different requirements. Thus. these concepts lose much of their force. 491. while at the same time affirming the virtue of liberality. If. A. A. The Theory of Contracts in Islamic Law. Saleh. Unlawful Gain and Legitimate Profit in Islamic Law. has a helpful bibliography of both traditional and modern writing. but that which you lay out for charity. The prohibitions of riba and gharar add further layers of protection. 14. clear. the view of the ¯ jurists is that there are adequate precautionary measures to ensure that the contracting parties may avoid the transaction. The Law of Business Contracts in the Arab Middle East. Saleh. 123 . viii. seeking the countenance of God. as Aristotle and Aquinas said. 39) says: ‘That which ¯ you lay out for increase through the property of [other] people will have no increase with God. double and multiplied. liberality—in contrast to commutative justice—does not require equality. 125 See J. The core concern is. Rayner. Here again the concept of just price discussed above has its role.’ Al-Tabarı ¯ ˙ For a detailed discussion of these rights or options. however. Schacht’s article ‘Riba’. The most explicit verse (3.’ The prohibition is explicitly on the inequality of the benefits. 66–94. Unlawful Gain and Legitimate Profit in Islamic Law. S. The Philosophical Origins of Modern Contract Doctrine. Unlawful Gain and Legitimate Profit in Islamic Law (Cambridge. 1986). will increase. exercising the virtue of liberality. 305–50.288 h us se in h a s sa n (haqq al-khiyar) available to the contracting parties are so technical ¯ ˙ and so central to the validity of the contract. 61. Without some way of knowing what the appropriate value of a good or service is. The earliest verse (30. it is these who get a recompense multiplied. there is still disproportion then the presumption is that the party at disadvantage has willingly intended to benefit the other party at his own expense124 and is therefore. Gordley. 124 See N. devour not usury. 130) is the third revealed on the subject: ‘You who believe.

’129 This Tradition has led to differences in opinion between the different schools as to the extent of the prohibition of riba al-fadl. Ibn Rushd (Averroes).130 Those in this group argue that the basis of the prohibition of riba al-fadl is ¯ ˙ ‘the excess exchange value of the reciprocal benefits due to inequality 131 between objects of the same species and quantity’. ¯ ¯ ¯ See ˙Abu Zahra.’ If the debtor had the means. 233. silver for silver. If the articles are of a different nature. or you will have to pay more. the famous commentator on the Qur]an. in his exegesis of this verse: When payment of the debt was due. 130 Kasanı.128˙The Prophet said: ‘Gold for gold. salt for salt. barley for barley. ¯ ¯ ¯ ¯ The Hanafıs argue that any transaction where the conditions of ¯ similitude and equivalence are not applied is prohibited even if the transactions are of the same nature and of the same quantity. iv. al-Milkiyyat wa-nadhariyyat al-[aqd (Cairo. grant him time till it is easy for him to repay. clarifies how riba ¯ ¯ operated in the pre-Islamic period. from hand to hand. If there is a surplus. 188. v. wheat for wheat. But if you remit it by way of charity. n. ¯ ¯ 129 Quoted and explained by Saleh in Unlawful Gain and Legitimate Profit in Islamic Law. otherwise he would put off his creditor to the following year. in the second ¯ ¯ ˙ ˙ Shafi[ıs and Malikıs. Bada‘i al-sana‘i fı tartıb al-shara‘ı. p. 55. but from hand to hand. ‘Pay me what you owe me. 1939).co n t r ac t s in i s l am i c l a w 289 (d. When it was a question of a sum of money that the debtor could not pay off when due. date for date.’ It is in the Traditions of the Prophet that the jurists found most of their evidence for the extensive prohibition of riba. 923).127 The other important verse on riba (2. In the first group ˙are Hanafıs and Hanbalıs. that is best for you if only you knew. this is usury. The Shafi[ıs ¯ ¯ argue that riba al-fadl exists in the bartering of foodstuffs and in the ¯ ˙ exchange of gold and silver. the famous Malikı ¯ ¯ jurist. They are almost ¯ unanimous that riba al-fadl and riba al-nası’a are prohibited by way ¯ ¯ ¯ of Prophetic Tradition. 48. and the following year the double of this sum if he was still unable to pay. 34. Tafsır al-Qur‘an (Cairo.d. The diversity of views may be grouped ¯ into two. 280) distinguishes the sin of riba ¯ ¯ from the virtue of liberality: ‘And if the debtor is in a difficulty. sell as you please. ¯ ¯ ¯ ¯¯ ¯ ¯ ¯ 131 Comair-Obeid. and the equally famous Hanbalı jurist Ibn Qayyim al-Jawziyya. 128 127 . the creditor went to see his debtor and said. The Law of Business Contracts in the Arab Middle East. he would find himself the following year obliged to pay double. ¯ looked for an alternative basis˙ of riba in the attempt to justify their ¯ Al-Tabarı. of the same quantity and quality. he would pay his debt.).

137 See nn. 243–4. 2000).134 Other definitions are available. rejected this ¯ ¯ distinction. as are other rejections of them. 134 Sanhurı. 136 Al-Bukharı. 219: ‘They ask you concerning wine and Ibn Rushd. ¯ He made this distinction in ‘La The ´orie de l’usure en droit musulman’ in a paper presented in a seminar in Paris in 1951.290 h us se in h a s sa n argument that only riba al-nası’a is expressly prohibited whereas riba ¯ ¯ ¯ al-fadl one may allow if there is need. as evidenced by the general prohibition of ¯ hazardous games or games of chance. Bidayat al-Mujtahid (Cairo.135 What is important is that these definitions seem to ignore the main reason for the prohibition. 2166. is reported to ¯ have said: ‘The Prophet forbade anyone to go out to meet the caravans and forbade the townsman to sell to the Bedouin. ii. ¯ ¯ ¯ ¯ ¯ ¯ 135 ˙ ˙ A helpful way into the debate is Saleh’s Unlawful Gain and Legitimate Profit in Islamic Law. in al-Kutub al-Sitta (Damascus. Abu Hurayra. This prohibition was effected principally through 2. a Companion of the Prophet. Sahıh. 1981).132 Contemporary jurists are ˙ coming up with more ingenious bases for differentiation. Masadir al-haqq fı l-fiqh al-islamı. 102–3 above. the concern for protecting the weak and ill-informed from losing out in transactions was a reflection of the wider concern to protect human beings from their own folly. The same reasoning applies where a fungible good is to be delivered at a future date in exchange for another fungible good of the same genus delivered immediately. ¯ ¯ ¯ ¯ ¯ ˙ ˙ ˙ ˙ p. ahadıth no. and accompanying text. thus exploiting the tribesmen’s ignorance of the true value of their goods at market. Gharar and equality The origins of gharar go back to the Prophet’s prohibition of a transaction known as talaqi al-ruqban—the practice of townsmen ¯ ¯ going out of the marketplace in order to meet the tribesmen and buy their goods at a lower price than the market price of the time.137 In addition. 116–19. Doualibi has sought to distinguish between the riba of production and that ¯ of consumption. the eminent Egyptian jurist. One cannot consider that the benefits arising out of a contract are equivalent when the contract involves the exchange of goods belonging to the same genus but where one of the parties obtains a larger quantity than the other. This wider concern is one that the Qur]an treats seriously.’136 I have already discussed at some length the rationale for equating just price with prevailing market price which also applies here. 133 132 .133 Sanhurı. 168. namely the concern to ensure that equality is maintained in commutative dealings.

138 All that is clear is that one party will definitely gain while the other party may either gain or suffer a loss—an evident imbalance. The Law of Business Contracts in the Arab Middle East. or uncertain transactions. 1954–9). For example. The existence of such uncertainty means that one cannot know whether one is going to lose or gain from a particular transaction as the benefit or loss is a function of the uncertainty. 141 Sanhurı. but the sin is greater than the profit’’. Saleh lists these in his ¯ ¯˙ ¯ ˙ Unlawful Gain and Legitimate Profit in Islamic Law.141 Others preferred not to define gharar at all. 49. and some profit for men. Furthermore. 139 138 . ¯ ¯ ¯ ¯ ¯ ¯ 142 ˙ Ibn Juzayy. but to give examples of situations in which the transaction would fall foul of the prohibition of gharar. ¯ ¯ 140 See his al-Furuq (1344–6 ah). the transaction would not be upheld. To ensure that neither party loses out by entering into speculative. rules were drawn up to ensure that the parties had perfect knowledge of the countervalues they intended to exchange. iii. 51. al-Qarafı equated gharar with an ¯ ¯ uncontrolled subject matter. The famous Malikı jurist Ibn Juzay gave a list of ten such ¯ ¯ transactions. Similarly.139 Likewise mistaken are those who do not consider majhul (unknown) to be a factor in the ¯ prohibition of gharar.140 However.co n t r ac t s in i s l am i c l a w 291 gambling. Masadir al-haqq fı l-fiqh al-islamı (Cairo. there is gharar. 357–61. Say. 265. 282. Thus the concern was broadened so that it applied equally to both parties to the transaction because the effect of gharar is that the benefit of one of the parties is contingent upon some uncertain event. ‘‘In them is great sin. i. I[lam al-Muwaqqi‘ın (1970).’ That verse and verse 5. iii. In the absence of such knowledge. it would seem clear that those who say that the wrong in gharar lies in the nonexistence of the subject matter are mistaken: Ibn Qayyim al-Jawziyya argued in this way that existence or nonexistence is not the issue. risky. Sanhurı added jahl (want of ¯ ¯ knowledge) to this definition so that when it is not known whether the subject matter exists. Qawanın al-Ahkam al-Shar‘iyya (1973). thereby making it doubly reprehensible. Bearing that in mind. 55. or if it is not known whether an object in existence can be handed over to the buyer. Ibn Qayyim al-Jawziyya.142 By far the most comprehensive definition. 91 were used as the basis for the prohibition of gharar. it is an imbalance whose outcome depends on luck rather than on effort. where there is ignorance regarding the species or the genus to which the subject matter belongs there is gharar. which Comair-Obeid.

if their characteristics are known. qard (loan of fungibles). Saleh summarizes it as follows: Gharar in sale transactions causes the buyer to suffer damage (ghubn) and is the result of a want of knowledge (jahl) which affects either the price or the subject matter. . Other contracts seem to combine both elements of voluntary commutative justice and liberality. ˙ 143 144 145 Ibid. 1119b–1120b) Various contracts in Islamic law can be explained in terms of the virtue of liberality. ´ ´ ´ ´ Comair-Obeid. if any. Examples of such hybrid contracts are [ariya (loan for the ¯ use of property not consumed by their use). Gharar is averted if both the price and the subject matter are known to be in existence. 82. if the date of future performance. 52. which he defined as ‘the mean with regard to wealth’. after a similar analysis of gharar.292 h us se in h a s sa n captures the essence of gharar. The virtue of liberality is manifested in spending and giving of a certain kind. the description of which merits repeating: the one who give rightly gives for the sake of the noble and rightly. comes to the same understanding: ‘the concept of the balance of benefits so much desired by Islamic morality is the fundamental principle of gharar in Muslim law’. is defined. The Law of Business Contracts in the Arab Middle East. Chehata. for he will give to the right people. Inevitably. the different schools have differed on which transactions ought to be allowed under these exceptions and which must remain prohibited. with all the other qualifications that accompany right giving. and at the right time. the right amounts. concludes that the basis of the prohibition of gharar is the desire to ensure equivalence in commutative transactions. finally. (Ethics IV. was given by another Malikı jurist. CONTRACTS AND THE PRINCIPLE OF LIBERALITY Not all contracts are acts of voluntary commutative justice.143 Chehata. ¯ ¯ Ibn Rushd. if the parties have such control over them as to make sure that the exchange shall take place and. if their amount is determined.145 Commercial expediency has resulted in the creation of exceptions. in the light of these attempts to define gharar.144 Comair-Obeid. 58. Theorie generale de l’obligation en droit musulman hanefite. IV. Aristotle explained that other contracts expressed the virtue of liberality. A good example is hiba (gift).

For the immediate purposes of illustrating the concern with the virtue of liberality. M. 8. ˙ hadiyya. and how much it is appropriate to give: strangers may be more needy than relatives. 1966). Sa‘ada. because what is mandub (recommended) is to ¯ give first to one’s relatives and to do so with some measure of equality. sadaqa is always revocable and requires no offer and acceptance. EI2 (1986). 87–8. as a device to win favour (see F. to reflect this need for right giving. Tahdhıb (Beirut. 457–8. Minovi (Tehran. . It is not open to the semi-competent. which are restricted to the etymology of the terms. Hiba Hiba is a transaction whereby the ownership of an object is transferred to another without consideration. While generosity has always been acknowledged by the Arabs as a primary virtue both before and since the advent of Islam. ˙ third method is hadiyya. 342–3). 1957–8). which is a charitable ˙ donation. It is one way of giving. The jurists. on the other hand.146 the gift of a movable object.co n t r ac t s in i s l am i c l a w 293 etc. It is a A present and some accept the validity of it even in the absence of an acceptance by the donee. or the weak-minded. for a person of full capacity to transfer inter vivos the whole of his property to a total stranger by the contract of hiba. None of these definitions. [Umdat al-salik. iii. They defined hiba as a contract formed by offer and acceptance where there is an unconditional and absolute transfer of ownership. but morally reprehensible. ‘Hiba’. ¯ 149 al-Misrı. the prodigal. ¯ ¯ 150 ˙ Ibid.149 The contract of hiba is valid only if the donor is of full capacity. Rosenthal. and equal shares do not help equally—some have 146 Some restricted the use of the word hadiyya to transfers from a person of lower social rank to someone of higher social rank. was considered to transfer from a more highly placed person to one of lower standing. even if attended by a duly appointed guardian. is relevant to the expression of the virtue of liberality. It is permissible. I will discuss only hiba.150 The reason that this is not legally enforceable is that one cannot have precise measures as to when it is right to give. 147 ¯ Abu al-Hasan al-‘Amirı. for example by Abu l-Hasan al-‘Amirı in ¯ ¯ 147 148 ˙ that the virtue of his Sa‘ada and Miskawayh in his Tahdhıb. ed. Another way of giving is through sadaqa. etc. 457. drew up rules to govern hiba and to ensure that it remained separate from sadaqa. Because it is not an exercise of the virtue of liberality. ¯ ¯ ¯ 148 ˙ Miskawayh. it was ¯ long ago recognized. Hiba. ¯ ¯ generosity can only be complete where both the appropriate size of the gift and the deserving character of the recipient are taken into account.

for the Hanafı152 and Shafi[ı153 schools. in that once an offer for a gift has been accepted. 1935) and by the same author ‘Hiba’ in EI2 (1986). the contract is terminated. A third rule. this one peculiar to the Malikı school. therefore. [Umdat al-salik. if the offeree dies before this transfer is effected. Imran A. K. the offeree has the legal right to compel the delivery of the subject matter and thus the transfer of ownership. 1367 ah). 153 al-Misrı. is that a married woman. 1938). 152 Burhan al-Dın al-Marghınanı. cannot gift away more than one-third of her property. 397–404. the husband can contest it as excessive. 405ff. 457–8. an individual suffering from a fatal disease or at ¯ the point of death cannot gift away more than one-third of his property even if he is in full possession of his mental faculties. If she does so. The compromise that was reached allowed people to gift away as much as they wanted while imposing certain legally enforceable checks on top of the moral check that is contained by the declaration of what is mandub. ed. Thus. ¯ ¯ ˙ Nyazee (Reading. 1996). and the contract does not suffer from any other defect. A second common rule is that a bankrupt person cannot dispose of goods acquired before the sentence of interdiction. Only possession can effect the transfer of ownership and until this happens. Further. see generally Linant de Bellefonds. 1937). v. and Khayr al-Dın Ramlı. If. the donee in such a situation should not also be an heir. ¯ ¯ ¯ ˙ the fact that there has been an acceptance of the offer of a gift neither transfers ownership to the offeree nor imposes any legal obligations on the offeror. 155 Ibn Qudama. ownership of the subject matter is transferred to the offeree. 350. The exception relates to objects that are subject to measurement either by For these rules.151 The schools also come up with different rules to regulate other aspects of the contract. Bidayat al-mujtahid wa-nihayat al-muqtasid. ¯ ¯ though considered fully competent. Des donations en droit musulman (Cairo. Hidaya: Sharh Bidayat al-mubtadi]. trans. 591ff. the offeror dies before the transfer takes place. Kitab al-Mughnı (Cairo. Nihayat al-muhtaj ¯ ¯ ¯ ¯ ¯ ¯ ˙ ila sharh al-minhaj (Cairo. Halabi ¯ ¯ ¯ ¯ ¯ ¯ ¯ ˙ (Cairo. his right to compel the transfer passes on to his heirs. The Malikı school154 gives more weight to the fact of ¯ ¯ acceptance. ¯ ¯ 154 ˙ Ibn Rushd. ¯ ¯ ¯ 151 .294 h us se in h a s sa n heavier burdens than others and so justifiably need more. the offeree cannot even compel the offeror to transfer the ownership or the possession of the subject matter. ii. If an individual makes a gift in such a situation. iii. v. the gift is considered to be a bequest and then subject to the strict rules governing bequests. Consequently. The Hanbalı school155 has given greatest weight ¯ ˙ to the acceptance so that immediately the offer has been validly accepted. 16ff. Thus.

There are a number of sub-categories within hiba. .e. for it automatically leads to particular rules that are meant to ensure that the demands of commutative justice or liberality are fulfilled in that particular context. i. most of the schools treat such a transaction as a normal sale or barter and so subject to the rules of sale. ¯ ˙ allows revocation of gifts by the offeror unless there is a particular relation between him and the offeree. For the Malikı. which is the virtue of liberality. The Hanafı school. 350. One of the more interesting sub-categories is the hiba bi-shart al-[iwad. CONCLUSION The theory of commutative justice and its nominate scheme of contracts bypasses the shortcomings of the other theories in its ability to accommodate both discrete and relational contracts. These include [umra (where the transfer of ownership is for a limited period. The major differences amongst the schools relate to the degree to which revocation is permissible. the life of the offeree) and ruqba (where the transfer of ownership is conditional on the offeror passing away before the offeree). it becomes subject to the demands of commutative justice at the moment the offeree takes possession. I hope what is clear from the few discussed above is that the rules are concerned to ensure right giving (not mere giving). it is invalid. There are many more rules that could be mentioned. the gift is revocable. treats this as a mixed contract. The Malikıs say that every gift is irrevocable unless it is made by either ¯ ¯ parent. At the same 156 Linant de Bellefonds. In this scheme the context is important.156 Thus such a gift is never revocable. whereas the Shafi[ı view is that a gift is irrevocable unless it is ¯ ¯ made by a male descendant. Thus. It is interesting to note that these rules do not apply to sadaqa ˙ where revocation is always allowed. a gift ˙ ˙ whereby the offeree undertakes to compensate the offeror. ‘Hiba’. unless the offeree is the spouse of the offeror or belongs to the category of persons that the offeree is forbidden from marrying. The process of formation is viewed as an act of liberality. and Hanbalı ¯ ¯ ¯ ¯ ¯ ˙ schools where revocation may harm the creditors of the offeree. held by the Hanafı school. V. ¯ ˙ exceptionally. One view. Because there is an exchange of obligations and thus a requirement of equilibrium.co n t r ac t s in i s l am i c l a w 295 weight or volume in which case there is no transfer until the offeree is put in possession. 351. The Hanbalı ¯ ˙ view is that every gift is irrevocable unless it is made by a father. Shafi[ı.

by looking into how the jurists were doing their reasoning. or French law) by taking these other legal systems as paradigms against which Islamic law is then compared. common law. and therefore came up with similar approaches. is nevertheless of some importance in the sense that the parties are free to decide whether or not to enter into a certain type of contract. which for the moment I intend to be tentative and to fill out the details in subsequent publications. In analysing legal systems—especially legal systems based on differing foundations—many of the great Western experts on Islamic law have compared Islamic law with other legal systems (whether Roman law. while not given as prominent a place as it is in common law. Some of the non-Western experts on Islamic law have fallen into the same trap as 157 See e.296 h us se in h a s sa n time. While there seems little doubt about the importance of commutative justice and liberality in Islamic contracts law. is of course relevant. further wide-ranging research is needed before any confident claims are made regarding the deliberate or direct and explicit usage of Aristotelian concepts in the Law. What is probable is that the Muslim jurists had similar concerns to Aristotle and Aquinas. and one hopes that this trend will take hold. his Contingency in a Sacred Law: Legal and Ethical Norms in the Muslim Fiqh (Leiden. the rules governing the particular contract follow as a matter of course. There is a wider point. and ultimately more accurate. the will of the parties. This is a consequence of the desire to ensure that the exchange is fair and that either equality is preserved or that the virtue of liberality is properly exercised. Islamic law is and will be different from these other legal systems. it is perhaps worth clarifying that I am not arguing that the Muslim jurists were deliberately drawing up rules and doctrines of contract law with the relevant chapters from Aristotle’s Nichomachean Ethics or Aquinas’s Summa Theologica before them. and aware also of his solutions. . one gets a clear sense of their attachment to commutative justice and liberality as the appropriate principles for the regulation of voluntary dealings between people. However. That the Muslim jurists were aware of Aristotle’s approach to these concerns. Some recent scholarship (such as Baber Johansen’s)157 has begun moving away from this trend by focusing on an understanding of Islamic law in its own right. What is certain is that. Once they have made this decision. Inevitably. 1999). The conclusions already coming out of this new approach are far more interesting.g. and these differences are then taken as evidence of Islamic law’s primitiveness or underdevelopment.

In doing this they also take these same legal systems as paradigms. etc.co n t r ac t s in i s l am i c l a w 297 the previously mentioned Western experts. never mind if in the process we distort some important principles of Islamic law. is taken as evidence of the sophistication of Islamic law. Few pause to ask the question why we should take these other legal systems as paradigms in the first place. Proving that Islamic law has a general theory of contract or a principle of freedom of contract. . In their desire to show the viability of Islamic law and its maturity they have attempted to prove that Islamic law has a theory of this or that.