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4 Grounds of the impediments

Definition of Mistake (Ghalat)

Concept of mistake in islamic contract

Islamic law conceives of mistake as a substantive

or intrinsic element which capable of occurring

only during the formation of contractual

agreement.

Mistake could arise from an assumption as to the

existence, quality or quantity of the contractual

object or to the nature or existence of the contract

itself.

The provisions concerning mistake are

scattered and usually are to be found in the

books of fiqh among the discussion in

option of description, defect or sight.

The Islamic concept of mistake is

inextricably bound to the notion of consent

in contract.

The law lacks in formulated theory because

the provision of mistake are in actuality,

mostly preclusions or safeguards designed

to prevent its very incidence.

Categories of Mistake

MISTAKE AS TO OBJECT

Mistake as to Object of the contract

MISTAKE AS TO MEANING (GHALAT AL-MAA'NA)

Mistake as to meaning(Ghalat al-Maa’na)

According to classical jurists, a mistake with

regard to the substance (Jins) of the object will

constitutes the contract void ab nitio.

It considered as substantive mistake.

Based on Art. 208 of Al-Majella:

“If the object is declared in kind (Jins) and the

object proves to be another kind, the sale is

invalid (batil)”.

Examples

In this case, the mistake as to meaning is

also actionable under the option of

description.

This shows that the Islamic doctrine of

mistake takes on noticeably wider ambit

that mistake in common law.

Mistake as to desired quality (insubstantial) of the object

Insubtantial quality (Wasf) of a contract refer to

the object being in the same substance as

contracted for, but different in its quality.

It is regarded as valid but not binding - the remedy

is sought under Islamic law is not under mistake

(ghalat) but either under the option of defect or

description.

Example of insubstantial mistake

1) Manifest expression of intent1) Manifest expression of intent2) Deduction of intent from circumstances of 2) Deduction of intent from circumstances of the case the case 3) Deduction of intent from the nature of the 3) Deduction of intent from the nature of the thingsthings

MISTAKE WITH STIPULATION OF INTENTION

Manifest Expression of IntentManifest Expression of Intent

What is about ?

Expression of intents formula are al- Tasmiya

(nominator) and al- Inshara (indication)

Explanation?

Nomination represents the real will of the

contracting party

Indication represents the apparent will A

Example?

sales by catalogue

Explanation?

• Not necessary for manifestation of a contracting

party’s will to be express.

• The other party may reasonably assume to have

tacitly understood or deduced his co-contractor’s will

from his accompanying circumstances or origin and

be expected to recognised a mistake

Example?

selling stone in a market for a precious jewel may

reasonably be assumed to be that category of

value.

Deduction of Intent from the Deduction of Intent from the Nature of the ThingsNature of the Things

What is about?

The option of defect

Explanation?

• Established option with an implied condition for there is an implied

condition of guarantees concerning the soundness of the object.

• Unless, contractor expressly inserts a condition of waivers against defects

in the contracts.

Example?

• Anything which appreciably diminishes the value of an object of ordinary

commerce is regarded as a defect giving rise to an option.

Khiyar al-Ru’ya

NON- DISCLOSURE OF THE WILL

What is about?

• General Rule in Islamic jurisprudence:

If a contractor agrees to buy an object without

having seen it, he is allowed an Option of

Inspection, which gives him a right to ratify or

rescind the contract.

• In this doctrine:

A contract formed by the will of two parties cannot

be valid when the will of one of those parties has

been breach by mistake as to the intended object.

MISTAKE AS TO PERSON

Mistake As To PersonNot explicitly formulated by the classical

jurist.

Resolution may be adopted to form general

outline of a doctrine.

Not affect the contract unless the persona of

the contractor, or a substantive quality

thereof, which give rise to a mistake, is a

legal cause to the contract.

Mistake As To PersonSpecific contract in which a mistake as to person

of the co-contractor has become importance.

Party who suffers is given the right to annul the

contract following the French Civil Law concept.

Contrasted with English Common Law where

Mistake as to Person falls into the category of

Mistake which negate consent

Mistake As To Person1) Marriage Contract.

The person of the spouse is generally of prime

consideration in the contract.

Sanhuri, a modern author, distinguish between

qualities generally, and essential qualities of the

person.

Mistake as to essential qualities of the person in

Sanhuri’s opinion will invalidates the marriage

contract.

Mistake As To Person

2) Unilateral Contract of Gift.

The donee constitute a substantive aspect

of the contract.

A mistake as to his person will give the

donor the right to withdraw or demand the

return of his gift.

Mistake As To Person3) Unilateral Contract of Bequest

The legatee is regarded as a cause of the

contract.

Al-Kasani states that among the important

condition of a contract is a consent (Rida) of the

testator because it is connected with the

property.

Therefore, a bequest made in jest or by

compulsion or mistake is invalid.

Mistake As To Person4) Contract of Pre-emption and Agency.

In the contract of agency, Mistake pertains not so

much to the identity of the person as to his

substantive qualities.

For example, a minor purporting to be an agent

lacks capacity so to act.

If the third party dealing with the agent believes

the latter has proper capacity to contract, this is a

mistake in the substantial quality of the agent, that

is his capacity to the contracts.

Mistake As To PersonThus the third party who deals unwittingly

with such an agent may avoid the contract

on the ground of Mistake.

Abu Yusuf states that if the buyer is aware of

the status of the agent minor, he is not

allowed to avoid, whereas if he is mistaken

wittingly, he may be given the option to

annul or perform.

MISTAKE AS TO LAW

Mistake As To LawGeneral principle of the civil law that Mistake

as to Law, like a mistake as to fact, may vitiate

the consent of the contracting party.

Bellafonds states that the Shariah, as

formulated by the classical jurist, rarely

distinguishes between the concept of Mistake

as to Law and that of ignorance of the law.

Mistake As To LawModern exposes of the principle of

contract, there is a distinction made

between Mistake and ignorance of the law.

The general maxim that “ignorance of the

law is no excuse” with regard to Mistake is

not always applicable is Islamic law.

Mistake As To LawCompendiums on Usul al-Fiqh, the principle is that

ignorance of the law is a valid excuse as long as it

is not accompanied by negligence (Taqsir).

Whoever is ignorant of the law and is negligent, is

held answerable to this ignorance and will not be

considered a Mistake in Law.

Whoever is ignorance of the law and is not

negligent in that ignorance is excused his

ignorance and it may be regarded as a Mistake as

to Law.

Mistake As To Law The primary assumption of Islamic Fiqh is that Mistake as to

law is not excusable except if the special surrounding

condition can be established to rebut the charge of the

assumed negligence regarding the ignorance as to the law.

The Hanafi author, al-Kasani states, in the sale of moveable

property, if a neighbour asks for a right of pre-emption to

that property, and the buyer, thinking that his neighbour

may legally have per-emption over it, submits that right of

pre-emption to him, when later one of the two want to revoke

the contract without the other’s consent, he will not able to

because when the submission is made, it became a contract

between them.

Mistake As To LawHere, the buyer mistakenly thinks that pre-

emption may be allowed on moveable objects,

which is mistake in law in Hanafi school.

This ignorance cannot be considered excusable

because it encompasses negligence on the

buyer’s behalf.

Therefore, he is not allowed to revoke the sale

due to ignorance, and the contract is binding

upon him.

MISTAKE AS TO VALUE (GHABN AL-FAHISH)

MISTAKE AS TO VALUE (GHABN AL-FAHISH)Definition The Islamic Law only recognizes mistake

to value as one of the impediment to contract if it is regarded as Ghabn al-fahish (Flagrant misrepresentation).

 The Majelle in its glossary has defined

Ghabn al-fahish as “Excessive deception in the value of goods”

The Articles of the Majelle further elaborate to what extent shall a deception be considered excessive and enable a contract to be vitiated.

Article 165 states that excessive deception means:-not less than 1/20 of the total price in

respect of goods,not less than 1/10 of the total price in respect

of animals;not less than 1/5 of the total price in respect

of real estate unless it is accompanied by verbal deception (Taghrir) or fraud (Tadlis)

 

Article 356 states that “ If there is an excessive deception without fraud in a sale, the person deceived cannot annul the sale”.

 Article 357 states that when one party has

defrauded the other and it has been ascertained that there has been excessive deception the person who is so deceived can annul the sale.

 The rationale is that in the case of contract

that is flawed due to excessive deception there is lack of equivalence in the contract which would result injustice to one of the parties.

CONDITIONS ATTACHED (OPINION OF THE JURISTS)

According to Hanafi, Shafi’i and Hanbali school: Ghabn must be accompanied by fraud or verbal deceit.

 The Shafi’i school further added that

Ghabn must be accompanied by flagrant misrepresentation. A mistake accompanied by Ghabn alone does not give rise to rescission unless accompanied by taghrir.

  

According to Hanafi, Shafi’i and Hanbali school: Ghabn must be accompanied by fraud or verbal deceit.

 The Shafi’i school further added that

Ghabn must be accompanied by flagrant misrepresentation. A mistake accompanied by Ghabn alone does not give rise to rescission unless accompanied by taghrir.

However the the I’badi school was of the opinion that a contract maybe cancelled for any diminution in value of the object whether or not that diminution is a veritable defect.

Therefore it is clear that in order for a

mistake as to value have effect on the validity of the contract it is very pertinent that it must be accompanied with the element of fraud and verbal deception.

Exception to condition

The only exception to the rule that mistake must be accompanied by fraud and verbal deception is applicable in the case of contract which involves the property of a minor, a waqf donor or treasury.

 

The effect of Mistake as to value

 Ibn Al-Hamam in his book al-Bahr al-raiq

states that a contract for the sale of property (Qunya) if the Buyer is deceived in the exorbitant manner by the seller has the right to return the property to the buyer under the principle of Ghabn. has the right to return the property to the seller.

 According to Ibn A’bidin there are 3

different stances taken by Islamic fiqh towards Ghabn unaccompanied by tgahrir:-

1. the sale is valid but maybe rescinded

absolutely;2. rescission is not absolute3. if deceit has also occurred rescission is

absolute.

According to the Shafi’i school: Ghabn accompanied by taghrir maybe rescinded at the option of the buyer

According to Hanbali school which allow option to rescind on 3 grounds and must be accompanied by taghrir as follows:- the sale to receive passenger;al-Najsh; the contract of dispatch when the carrier is unaware of the value of

the commodity and does not consider it to be a condition of the contract. If he asks the contractor for indemnity and is deceived then the carrier is given the option of Ghabn since there is verbal deceit.

  Maliki school was of the opinion that rescission is

permissible on 3 conditions as follows:-

  where the Ghabn al fahish occurs in a sale other than at

public auction and the Ghabn al-fahish exceed 1/3 of the price or is underpriced by a 1/3 or more in a purchase;

  where it occurs in a sale whereby it maybe determined that

any reasonable person might have so been deceived , in which case consideration must be had to the price at the time of contracting. The prejudiced party must have had no knowledge about the value prior to the contract;

the claim must proceed within a year of the action which give rise to the deceit so that longer lapses of time leading to breaches of agreement may not disrupt the ordinary continuance of trading relations.

 

Application of doctrine of mistake as to value by modern statutes

  The doctrine of Mistake as to value has been adopted by the

modern legislations in the Islamic country as follows:-

Article 125 of the Iraqi Civil Code state that Ghabn may be pleaded where the needs of one parties have been exploited or where he has been deliberately confused or intimidated into the agreement, or where he has been misinformed or is of subnormal intelligence.

Article 170, UAE Civil Code, Law No. 2 of 1987 provides that where exploitation or conspiracy has been exerted in the disposition of property of subsequently restricted personthe judge may avoid the contract despite the fact that the disposition were made prior to the court’s restriction.

Article 24 of the Bahrain Contract Law 1969 states that an erroneous opinion as to the value of the of the thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact.

The Malaysian Contracts Act

      

ConclusionFrom the discussions mentioned above we can

conclude that the Islamic Law does not allow a mistake by itself to form an impediment to the contract or to affect the validity of the contract.

 There must be an element of fraud or deceit

exist in the transaction to enable the contracting party to plead that there is a mistake in the contract and subsequently demand that the contract be void or voidable.

 

This is because by the existence of the element of fraud or deceit, it affected the consent of the parties whereby in the event if the party who is so deceived has the knowledge of the deception than he would not have entered into the contract.

However for the purpose of preserving public interest the only contract that can be avoided on the grounds of mistake even though there is no element of fraud or deceit is the contract involving the property of the minor, waqf donor or treasury.