BAHRIA UNIVERSITY

LAW SCHOOL
ISLAMABAD

NAME: MIR SYED MOHAMMAD

CLASS: LLB 4-A
ENROLLMENT NO:01-177221-031
ASSIGNMENT: ISLAMIC JURISPRUDENCE
SUBMITTED TO:MA’AM ERFA KAYYANI
1. Discuss the third party rights in contract under Islamic law and
English law?
Third-Party Rights in Contract: A Comparative Analysis of Islamic Law and
English Law
The complexities of third-party rights in contracts under English and Islamic law
will be covered in detail in this extensive conversation. We will examine the
salient features of each of these legal systems, which provide unique means and
guidelines controlling the participation of third parties in contractual arrangements.
I. Introduction
In every civilization, contracts serve as the cornerstone of business and legal relations. They are
essential in establishing parties' rights and responsibilities as well as in promoting trade and
business links. Although the offeror and the offeree are the two main parties in a contract, both
Islamic and English law acknowledge circumstances in which third parties may be impacted by
or have rights under a contractual agreement. But these two legal systems' methodologies and
guiding ideas on third-party rights are very different from one another.

II. Third-Party Rights in Contract: Islamic Law

A. Agency Contracts (Wakala)

The idea of agency, or "wakala," is a key device in Islamic law for including third persons in
contracts. A person acting on behalf of another party, called the principal, is referred to as the
agent, or "wakil," in this arrangement. While the principle essentially becomes a third party with
rights under the contract, the agent deals directly with the other contracting party. Wakala is
frequently used to help with negotiations and agreements on behalf of the principle in a variety
of business transactions, including trade treaties.

B. Gift Contracts (Hiba)

A further way that third parties may enter into contracts under Islamic law is through gift
contracts, or "hiba." Giving something to someone without expecting anything in return is the
basis of a gift contract. Although this seems to be a two-party transaction, there are times when
these contracts are advantageous to third parties as well. One way to involve a third party in a
contractual agreement is to form a gift contract, wherein someone gives a valuable item to
another with the understanding that the recipient will use it for a specified purpose or benefit
someone else.

C. Assignment of Debt (Hawala)

The notion of "hawala," which permits the transfer of debt from one party to another, is recognised by
Islamic law. The party taking up the debt in a hawala contract essentially becomes a third party with the
rights and responsibilities outlined in the original agreement. This technique is especially important for
trade and financial operations because complicated commercial dealings may involve the transfer of debt.

D. Beneficiary Consideration
What each party in a contract is giving or receiving is referred to as "consideration," and this is something
that Islamic contract law also takes into account. A third party may be acknowledged as having rights
under the contract in situations where it is evident that the contract's parties intended for the third party to
benefit. Viewed in this light, it serves as a means of guaranteeing equity and safeguarding the interests of
non-contracting parties.
It is noteworthy that Islamic law lays great emphasis on the principles of justice, equity, and fairness.
Third-party rights may be applied differently based on the particular situation and the interpretation of
Islamic legal scholars. In the context of Islamic finance and business, Islamic law can adjust to a variety
of circumstances and transactions thanks to its interpretive flexibility.

III. Third-Party Rights in Contract: English Law

English law, which is primarily governed by the Contracts (Rights of Third Parties) Act 1999,
takes a more structured and codified approach to third-party rights in contracts than does Islamic
law. The traditional theory of privity of contract, which had traditionally barred third parties
from enforcing contract terms, was substantially modified by this act. Third-party rights are
categorised and defined precisely under English law, which makes the legal framework for
enforcing these rights more predictable.

A. Intent to Benefit a Third Party

According to the Contracts (Rights of Third Parties) Act 1999, a third party cannot enforce a contract or a
particular provision without being expressly named as such in the agreement. This requirement makes
sure that there is proof beyond a reasonable doubt that the contracting parties meant for the third party to
directly benefit from the agreement. Essentially, the act proves that there was a clear intention to grant the
third party rights.

B. Abolishing Privity of Contract

The Contracts (Rights of Third Parties) Act 1999 eliminated the long-standing concept of privity of
contract, which is one of the biggest modifications. In the past, only the parties who had directly entered
into a contract could enforce it, according to the doctrine of privity. This restriction was essentially lifted
by the Contracts (Rights of Third Parties) Act of 1999, enabling third parties to directly enforce a
contract's terms.

C. Enforceable Terms

Even though they are not a party to the contract, the third party may, under the act, enforce the provisions
of the agreement that were made for their benefit. This implies that a third party may file a lawsuit to
enforce the terms of a contract if they are specifically stated in the contract and the contracting parties
intend to grant the third party such rights. The act offers a clear and predictable framework for third-party
rights, facilitating the enforcement of contracts.

IV. Comparative Analysis

It is necessary to perform a comparative analysis in order to comprehend how Islamic law and English
law differ in how they handle third-party rights in contracts:

A. Flexibility vs. Rigidity

Adaptability and flexibility are hallmarks of Islamic law. Due to its heavy reliance on the concepts of
justice, equity, and fairness, it can be interpreted in a variety of ways to suit a broad range of
circumstances and transactions. This adaptability is demonstrated by the acknowledgment of third-party
rights in a number of contexts, including debt assignment, agency contracts, and gift contracts. Ensuring
that parties are not unfairly disadvantaged and that justice is done is the fundamental principle.
English law, on the other hand, follows a more rigorous and structured framework. The intent of the
contracting parties to grant third-party rights is emphasised in the Contracts (Rights of Third Parties) Act
1999, which establishes precise guidelines for their enforcement. The act is less flexible than Islamic law
because its goal is to bring predictability and clarity to contractual relationships.

B. Privity of Contract

The privity of contract doctrine is one of the most important differences between the two legal systems. In
contrast to English law, Islamic law does not follow the notion of privity. Under Islamic law, the intention
of the parties involved, as well as the concepts of equity and fairness, are what drive the involvement of
third parties. A more context-specific approach is made possible by the lack of a rigid privity doctrine,
guaranteeing that justice is served in contractual relationships.
On the other hand, third-party rights were restricted by the well-established doctrine of privity in English
law. This doctrine was eliminated by the Contracts (Rights of Third Parties) Act 1999, greatly extending
the reach of third-party enforcement under English law. With this modification, English law now more
closely reflects contemporary business practises and the requirement for third parties to enforce it
directly.

C. Clarity and Predictability

There is more predictability and clarity in the enforcement of third-party rights under English law. Clear
guidelines for third-party enforcement are outlined in the Contracts (Rights of Third Parties) Act 1999.
These include the requirement for express identification and the intention to benefit the third party.
Parties to English law contracts can feel secure and certain about the enforceability of third-party rights
thanks to this codified framework.
On the other hand, although Islamic law is flexible and can be applied to different circumstances, it also
leaves room for interpretation and more ambiguity. Islamic law does not have a specific statute governing
third-party rights, so judicial discretion and scholarly interpretation may play a larger role in determining
how these rights are applied.

D. Commercial Implications

The ways that contracts treat third-party rights vary, and these variations have real-world effects on trade
and business dealings. Because of its codified framework, English law is well suited to contemporary
business practises and offers a straightforward avenue for enforcement by third parties. When numerous
parties may be interested in the terms of a contract, such as in supply chains and international trade, this
clarity can help simplify complex transactions.
In contrast, Islamic law adopts a more conventional stance, prioritising justice and fairness over
formalities. Although this might be helpful in some circumstances, it might necessitate a more case-by-
case examination, which could delay the enforcement of third-party rights in intricate business
agreements. Nonetheless, in order to accommodate Sharia-compliant practises, Islamic finance and
business transactions frequently incorporate these principles, making them an essential part of
contemporary economic activities in Islamic countries.

V. Conclusion

In conclusion, there are significant differences between how third-party rights are handled in contracts
under Islamic law and English law. Islamic law is based on pliable notions of justice and equity, allowing
for the involvement of third parties via the use of tools like gift and agency agreements as well as debt
assignment. Ensuring justice and safeguarding the interests of all parties concerned are prioritised.
On the other hand, a structured and codified framework for third-party rights is provided by English law,
as demonstrated by the Contracts (Rights of Third Parties) Act 1999. The act does away with the
conventional theory of privity of contract, enabling third parties to enforce particular contract terms under
certain conditions. This strategy provides modern commercial relevance, predictability, and clarity.
In the end, the type of transaction, the parties involved, and the jurisdiction's legal requirements all play a
role in determining which legal system will govern contracts and third-party rights. When drafting
contracts, companies and individuals involved in global trade and commerce should take these legal
nuances into account to make sure that third-party rights are properly addressed and upheld. In today's
globalised world, having a solid understanding of both English and Islamic legal frameworks is crucial
for efficient contract management and dispute resolution.

2. What remedies are available for breach of contract under Islamic

law and English law?
*Remedies for Breach of Contract: A Comparative Analysis of Islamic Law and English Law*

We will examine the available remedies for contract breach under English and Islamic law in this in-
depth discussion. While both legal systems offer procedures for handling violations of contracts, their
methods are very different. We will examine the salient features of every system, categorised to aid
comprehension.

*I. Introduction*

In both the English and Islamic legal systems, remedies for breach of contract constitute a basic
component of contract law. It is crucial to have procedures in place to handle breaches of contract and
give the innocent party the necessary compensation when one party doesn't carry out its end of the
bargain. Different approaches to remedying breach of contract are provided by Islamic and English law,
reflecting their respective legal traditions and tenets.

*II. Remedies for Breach of Contract: Islamic Law*

*A. Specific Performance*

Specific performance is one of the main remedies available under Islamic law for contract breaches.
Under the equitable remedy of specific performance, the defaulting party may be ordered by the court to
carry out the terms of the original contract. It guarantees that the parties get what was agreed upon in the
contract. When it comes to contracts involving rare or irreplaceable items, like real estate or custom-made
goods, this remedy is especially popular.

*B. Damages*

Damage awards are recognised by Islamic law as a form of compensation for contract violations. The
purpose of damages is to make up for the losses the innocent party endured as a result of the breach.
However, Islamic law typically seeks compensation rather than punitive measures, in contrast to common
law systems that impose punitive damages. The amount of damages awarded ought to be proportionate to
the actual loss incurred by the injured party. Making the injured party whole and providing restitution are
the main goals.

*C. Rescission*

Another remedy available under Islamic law is rescission. It has to do with ending a contract. The parties
may agree to rescind a contract when it cannot be carried out as originally agreed, and the court may
assist in this process. Rescission, when done correctly, renders the contract void and puts the parties back
in the pre-contractual positions. When either party mutually agrees to terminate the contract or when
performance becomes impossible, this remedy may be used.

*D. Compensation (Kafala)*

A party who has lost something as a result of the breach may be entitled to reimbursement for their actual
losses under Islamic law. The goal of compensation, also known as "kafala," is to make up for the harm
done to the injured party. This remedy is consistent with Islamic law's guiding ideals of justice and
fairness. It aims to protect parties from suffering unjustified harm when a contract is broken.

*III. Remedies for Breach of Contract: English Law*

*A. Damages*

In English law, damages are the main and most typical remedy for breach of contract. To make up for the
losses the innocent party endured as a result of the violation, damages are awarded. The goal of damages
is to restore the position of the innocent party to what it would have been had the contract been carried
out according to the terms. The idea behind damages is to make sure that the breach does not put the
harmed party in a worse financial situation.
English law recognises several categories of damages, each with a distinct function:
- *Expectation Damages:
The purpose of these damages is to reimburse the innocent party for what they would have received had
the contract been carried out according to the original terms. They pay for the immediate loss brought on
by the breach.
- *Reliance Damages:
When an innocent party relies on a contract, they are entitled to reliance damages, which make up for
their actual losses. Amounts spent or money invested in anticipation of contract fulfilment may be
included in these losses.
- *Consequential (Special) Damages:
Special damages, sometimes referred to as consequential damages, are intended to make up for losses that
were anticipated at the time of the contract and that arise from the breach. Even though these damages are
more indirect, they can still be recovered in certain situations.

*B. Specific Performance*

A court may, in some circumstances, compel the party in default to carry out the terms of the contract as
originally agreed. A remedy that is usually available when damages would not be sufficient is specific
performance. When there are special resources or services involved that are difficult to replace, it is
frequently sought after.

*C. Injunction*

Another equitable remedy available under English law is an injunction. It concerns a judicial decree that
prevents one party from carrying out a specific action. An injunction may be granted under contract law
to stop a party from breaking the agreement. When damages are insufficient as a remedy and specific
performance is not appropriate, injunctions are usually used.

*D. Rescission*
Another equitable remedy available under English law is an injunction. It concerns a judicial decree that
prevents one party from carrying out a specific action. An injunction may be granted under contract law
to stop a party from breaking the agreement. When damages are insufficient as a remedy and specific
performance is not appropriate, injunctions are usually used.

*IV. Comparative Analysis*

To better understand the similarities and differences between the remedies for breach of contract in
Islamic law and English law, we can conduct a comparative analysis:

*A. Equitable Remedies*

Both legal systems offer equitable remedies, such as specific performance and injunctions, as options for
addressing breaches of contract. Specific performance, in particular, is a remedy aimed at ensuring that
the non-breaching party receives the benefit they were promised in the contract. This commonality
reflects the fundamental principle of upholding contracts and the rights and expectations of the parties.

*B. Compensation vs. Punitive Damages*

Islamic law and English law differ significantly in their approach to damages. Islamic law focuses on
compensation, aiming to make the injured party whole by awarding damages that cover their actual
losses. The emphasis is on restitution and fairness. In contrast, English law allows for the award of
punitive damages in certain cases, especially when the breach is accompanied by malicious or reckless
behavior. Punitive damages serve to punish the breaching party rather than solely compensate the
innocent party.

*C. Rescission and Restitution*

Both legal systems provide for the remedy of rescission, which effectively cancels the contract. However,
there are differences in the application of this remedy. In Islamic law, rescission may be more readily
available when parties mutually agree to cancel the contract or when performance becomes impossible. In
English law, rescission is often based on factors like misrepresentation, mistake, or illegality that render
the contract voidable. The concept of restitution, returning the parties to their pre-contract positions, is a
common element in both legal systems when rescission is granted.

*D. Legal Codification*

English law benefits from a well-codified system of contract law, making the remedies for breach of
contract clear and predictable. The Contracts (Rights of Third Parties) Act 1999, for example, sets out the
framework for third-party rights, and statutes and precedents provide guidance on remedies. In contrast,
Islamic law relies on principles of equity and fairness, which can result in more varied interpretations and
applications of remedies, depending on the specific circumstances and the judgment of Islamic legal
scholars.

*V. Conclusion*
The remedies available for breach of contract under Islamic law and English law reflect the legal
traditions and principles of each system. Islamic law places a strong emphasis on fairness, equity, and
justice, with remedies designed to ensure that parties