CHAPTER 7

AL-KHIYARAT
OPTIONS (AL-KHIYARAT) OF A
CONTRACT

O p t i o n i s g i v e n to o n e o r b o t h p a r t i e s
t o A c o n t r a c t t o e i th e r c o n f i r m o r c a n c el
the
Contract.
T h e c o n tr a c t i s n o t b i n d in g o n th e
p a r ti es u n ti l t h e o p ti o n is e x er c i s e d t o
c o n f i r m i t.
 A c o n tr a c t c a n c el l ed b y t h e e x e r c i s e o f
an option is presumed as non-existent
a n d w o u l d h a v e n o c o n s e q u en c e s .
 Importance of the options

a. Options allow the parties a time to think over the

terms and conditions of the contract and to make
a choice which is the result of careful thinking
and deliberation.
b. The availability of options also ensures
transparency and eliminates the possibilities of
cheating.
c. Options are designed to protect the interest of
both parties to a contract.
 Characteristics of the options

They are personal to the parties

They are not tradable.
 Options are entitled to either by
law, or by stipulation of the
contracting parties.
 TYPES OF OPTIONS
I. The Option of Sessions:
 The option of session refers to a right given to
both parties to a contract to terminate a contract
while the session still continues and they are not
yet separated.
 This means that the contract is binding only after
the session is over and neither of the parties
rejects the contract during the session.
 The option ceases to exist when the session
ends.
 Cont’d
II. The Option of Condition: (Khiyar al-shart)
 Either or both parties to a contract may insert a
condition into the contract giving them an option,
within a fixed period, to either confirm or cancel the
contract.
 The reason for this option is to:
 give the contracting parties more time to reflect
over the terms and conditions of the contract and
to get the advice of an expert.
 They may also determine whether there are any
incidences of mistake, misrepresentation, defects
or fraud.
 Cont’d

For instance:
 A purchaser may tell the seller that he
has the option for three days or an agent
may stipulate the option on behalf of his
principal.
The option of condition could be
exercised for three days or the parties
may agree on a reasonable period.
However:
 Cont’d

 The parties are not allowed to stipulate that the

option would be exercised within an unknown
period or on the happening of some future
uncertain events as this would amount to
uncertainty (gharar) and render the contract void.
 The parties may either confirm or cancel the
contract during the agreed upon period.
 If the period expires and the contract is not
cancelled, the parties lose the option and the
contract is confirmed and becomes binding.
 Mode of Confirmation or
Cancellation of Contract
 Verbal: Cancellation or confirmation of contract
could be done verbally or by action. The party
who has the option may say that he has
accepted or rejected the contract.
 Confirmation by action: If the party, within the
period of the option sells, rents, mortgages,
invests or lends the object it would mean the
confirmation of the contract by action.
 Cancellation by action: This could be in the
form of returning the object to the other party,
within the specified period.
 Ownership of the subject matter
within the specified period

 According to the Hanafis and the

Malikis the ownership of the sold
goods is not transferred to the
buyer.
 To the Shafiis and Hanbalis the
ownership of the goods is
transferred to the buyer.
 Inheritance of the right of option

 In case of death, according to the

Hanafis the right of option is not
inherited.
 To the Malikis and Shafiis the right
could be inherited.
 Cont’d

III. The Option of Defect (khiyar al-’aib):

 The option of defect gives either of the
parties the right to cancel a contract if he
discovers in one of the counter values a
defect which was not known to him during
the conclusion of the contract.
 This option is applicable to sale and lease
contracts.
 Impact of defect on the subject
matter

A defect reduces the value of the subject-

matter and had the other party known it he
would not have entered into that contract.
The consent he had given to the contract
was not validly obtained.
The sale or lease of defected properties
amounts to taking other people's property
unlawfully
 Cont’d

 The affected party is given an option

to:
 Return the goods and claim his
money.
keep the defective goods and ask for
the refund of some of his money,
which he has given as a price.
 Conditions to be fulfilled to exercise this option

 In order to exercise this option

certain conditions should be fulfilled.
1. The defect should have been
present in the goods before the
contract was concluded.
It should not be a defect caused by
the parties after the conclusion of the
contract.
 Cont’d
2. The defect was not disclosed during
the session of the contract
if the defect was disclosed during the
session of the contract and the parties
knew about it there is no resort to this
remedy.
3. The defect is of nature that would
reduce or diminish the value of the
goods.
 Period within which the option
must be exercised
 Upon knowing the defect the affected
party should not delay the exercise of
option of defect, but there are two
different juristic opinions:
1) According to the Maliki and Shafii
Fiqh Schools the option should be
exercised within a customarily
acceptable reasonable period of time.
 Cont’d

2) According to the Hanafis and

Hanbalis an option of defect is not
lapsed by delay and it is not
necessary for the affected party to
immediately exercise this option. He
however loses the option if he does
any act that would indicate his
acceptance of the defected goods.
 Inheritance of this option

 All Schools of Fiqh agree that the

option of defect could be inherited
as this right is not personal but
concerns the property as such any
one who inherits the defected
property inherits the option.
 Cont’d

IV. The Option of Determination (khiyar al-at’ayin):

 The option of determination refers to the right of the
purchaser to select from among three items, the one
which he would buy.
 The option of determination is applicable to contracts
where the parties agree to conclude the contract but the
buyer has not decided on the choice of the object during
the session of the contract.
 He reserves the option to choose from among three
objects during a certain well defined period.
 The period in which the option could be exercised varies
according to the nature of the transactions and its object,
and according to the usage and local custom.
 Cont’d

 The option could only be exercised:

 when the subject matter of the contract presents
complexities or uncertainties, which it could have
been preferable to avoid.
 The option is also applicable to a sale contract
concluded by an agent who is acting on behalf of
the purchaser. Such an agent in purchase may
want the seller to give his absent principal the
liberty to choose from among the three different
items. The seller, on the other hand, may not agree
unless one of the items is finally purchased.
Cancellation of contract and the option of determination

 The option of determination does not entitle the

purchaser to cancel the sale contract. He can
only select from amongst the three different
items. When the purchaser only puts the option
of determination, the sale contract is binding on
him.
 If the option of determination is coupled with
other options, such as the option of condition, the
purchaser may cancel the sale contract.
Conditions for the exercise of option of determination

1. The option has to be specifically

stipulated by one or both of the
parties.
2. The option could only be exercised
with regard to a maximum of three
objects. Otherwise, the contract will
be voidable (fasid) on grounds of
gharar.
 Cont’d

3. The objects should be of the same

class, but must be different qualities
and prices. If they are of the same
quality and prices, then the option
has no meaning.
4. The price of all the three items
should be known.
5. The period in which the option is
exercised should be ascertained.
Juristic opinions regarding the option of determination

1. Is recognized by the Hanafis and the

Malikis.
2. The Shafiis and the Hanbalis do not
recognize the option of determination. They
argue that if the object of the contract is not
sufficiently determined the contract does
not conform to the basic conditions laid
down for the subject matter.
 Cont’d

V. The Option of Sight or Inspection (khiyar al-

ru’ya):
 The option of inspection refers to the right of the
purchaser, who has not seen the object, to confirm
or cancel the contract after inspection.
 The reason for this option is that the purchaser has
not seen the object. However, if he has seen the
object, the option could not be established to him.
 Inspection gives a purchaser the knowledge of the
sold goods.
 Cont’d

 The nature of inspection gives a purchaser the

knowledge of the sold goods.
 The nature of inspection depends on the nature of
the goods. For instance: certain goods could be
inspected:
 By touching such as clothes
 By smelling such as perfume
 By tasting like edibles such as honey
 If the subject of a sale contract is a house,
inspection would mean seeing all the rooms and
facilities.
 Cont’d

 The option of inspection may have a

greater use where goods are sold by
providing a catalogue or sample or in
e-commerce.
 A purchaser who has bought goods
online is entitled to exercise the option
of inspection if the goods purchased
is not in accordance with the
descriptions given.
 Cont’d

 The Hanafis, Malikis, Hanbalis and

Zahiris, argue for this option while the
Shafiis argue that a sale contract in
which the object is not present is not
valid as it involves uncertainties
(gharar).
 The right cannot be inherited,
according to the Hanafis while to the
Malikis, it is inherited.
‫والسالم عليكم ورحمة هللا وبركاته‪‬‬