Sales and Contract in Early Islamic Commercial Law

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About the Book

Sales and Contracts in Early Islamic Commercial Law presents a study of business practices in the early period of Islamic history. Today when the world is moving from geo-politics to geo-economics, the Muslim Ummah is obliged to offer an effective alternative to materialistic and atheistic capitalist economic ideology. The present book, a comprehensive study of market economy in early Islam, provides foundational material for further studies in Islamic economics.

This book deals with following subjects: Pre-Islamic commerce, Qur’anic teachings, ethics of “trade and market, contracts, voidability, risk, restrictions, partnership deposits, loans, pledge, interdiction, hiring, commercial disputes and judicial settlements.

About the Author

Dr. Abdullah Alwi Haji Hassan, the author is a lecturer at the University of Malaya. He did his Ph.D. at the Department of Islamic and Middle Eastern Studies, University of Edinburgh, Scotland, in 1986.

Foreword

If political independence remained a basic concern of the peoples of Asia and Africa during the greater part of the twentieth century, economic independence and viability are likely to become their objectives in the future. It seems that in the changed order of the world, control over markets and economies will assume no less importance than the conquest of and dominance over foreign territories in the past. Thus the time now seems to have come for the Muslim ummah-whose intellectuals have so far been mainly engaged in developing Islamic frameworks for political life-to turn to the urgent task of developing Islamic models for business and economy. The task has assumed a high degree of urgency. For while up until recently the Islamic economic ideology was being considered a third option, besides the capitalist and the communist ones, it now seems to have become the only option worth the name to the capitalist economic ideology.

All this underscores the need for serious academic effort directed to developing viable models for economic life inspired by Islamic ethical norms and legal principles. Without any doubt, the Islamic tradition is sufficiently rich and fecund to respond to the requirements of the time. However, there should be no complacency about the task itself which is simply stupendous. For it consists neither of simply carbon-copying the laws and institutions in vogue in the contemporary world, nor mechanically reproducing the legal formulations bequeathed to us by the Muslim scholars of the past - The task to which the Muslim scholars have to address themselves today is a highly creative and critical one. In fact, it is the same task to which the Muslim scholars of the early centuries of Islam addressed themselves. It consists of looking afresh at the perennial sources of our guidance-the Qur’an and the Sunnah, of critically reviewing the work of the earlier scholars, and thereafter developing models which are at once deeply rooted in and inspired by the teachings of Islam on the one hand, and relevant to the prevalent conditions of the time on the other.

In his present book Dr. Abdullah Alwi Haji Hasan examines the business practices obtaining in the early period of Islam and highlights the legal principles which emerge there from. The author approaches the subject from the perspective of history, economics, law, market management, religion and ethics. As a result, a comprehensive study of the economic practices of early Islam has now become available in a fairly readable form. What is more, hopefully it also paves the ground for further creative work in the field of Islamic law.

Preface

This study originally formed a doctoral dissertation submitted to the Department of Islamic and Middle Eastern Studies (The Muir Institute), University of Edinburgh, Scotland, in February 1986. This book is a slightly revised version of the original thesis.

Firstly, I wish to express my profound thankfulness and gratitude to my esteemed supervisor, Dr LK.A. Howard, for his invaluable assistance and encouragement throughout my period of study from September, 1982 to February, 1986. He patiently supervised the whole of this work and frequently made useful and constructive suggestions for alteration or addition. His advice and criticism have been of great value, sustaining this work, especially during the period of its preparation. Needless to say, for the remaining errors and omissions I hold myself fully responsible. My gratitude is also deserved by Miss L Crawford, the Secretary of the Department of Islamic and Middle Eastern Studies, for her general assistance throughout the period of my stay in Edinburgh, and to members of the academic staff of the department.

Secondly, I would like to acknowledge a special debt of gratitude to Dr R. Douglas of Edinburgh Moray House College of Education, who was kind enough to go through and read the initial draft of this work. He also offered many valuable suggestions for the improvement of the style of presentation and methodology. Deep gratitude also goes to all my closest friends in Edinburgh and the United Kingdom as well as in Malaysia who provided constant encouragement and kept my spirits up.

Thirdly, I would also like to record my appreciation and indebtedness to the authorities of the Main Library of Edinburgh University, particularly to the staff of the Inter-Library Loan Service for their relentless efforts in finding books, without which it might not have been possible to produce this work, and other staff of the library who took trouble in making available to me the works which were used in the course of this research.

Other people who deserve my thanks for the cooperation and help rendered to me in this regard are Professor Dr Muhammad Zain ‘Uthman, the Head of the Department of Islamic Studies, University of Malaya and my colleagues at the same Department, especially Associate Professor Dr Lutfi Ibrahim who persuaded me to come and do this work in the first place. A debt of gratitude is also owed to all members of academic and administrative staff of the Faculty of Arts and Social Sciences, and of the University of Malaya who helped and supported in one way or the other in the course of my study. I must also especially thank Professor Tan Sri Datuk Ahmad Ibrahim, Shaykh Kulliyah of Laws, International Islamic University of Malaysia, and Associate Professor Muhammad Abu Bakar from the Department of History, University of Malaya, Kuala Lumpur, for their help in reading and editing parts of the original manuscript.

Last, but not least, is the debt of thankfulness I owe to my wife, ‘Azizah binti ‘Abdul Ghani, for her characteristic grace and sweetness which was for me unfailing support and continuous encouragement, also to my children, Ahmad Kashfi and Maryam Safiyyah, who kept y life pleasant and happy throughout my academic sojourn in Edinburgh, and also to my daughter, ‘A’ishah Harizah, who inspired me to publish this book when we were back in Malaysia. This work, is, however, dedicated to my mother, Sharifah Zain binti Haji ‘Uthrnan, who encouraged me to pursue my study to the end, especially after the demise of my beloved father, Haji Hassan bin Haji Isma’il. I also wish to take this opportunity to express my profound appreciation to all my brothers, sisters and in-laws and their families. I thank them all for the enormous moral and material support and the encouragement which they have all afforded to me and my family throughout.

This study was made possible, firstly by the study award (from 26th September 1982 to 25th March 1986) under the Academic Staff Training Scheme Programme (Sekim Latihan Akademik Bumiputra) which was granted to me by the University of Malaya, where I am employed as a lecturer, and secondly by the scholarship awarded by the Public Service Department, Malaysia.

In relation to some technical aspects of this work, the separate table of transliterations and list of abbreviations are given on pp. xii-xiv and pp. xv-xx respectively. Further, it is very important to mention here that it was extremely difficult for the writer to pronounce the formula, which is normally rendered in English as “peace be on him” after mentioning the Prophet Muhammad and the other prophets, and “God be pleased with them” and “God have mercy on them” in respect of the Companions or the Successors and other venerable personalities in Islam. The difficulty of including these formulae is evident because they would have sometimes appeared several times in a single page. In consequence of that, these formulae may be regarded as understood and may be taken for granted.

The author is conscious, both as a student and as a Muslim, of man- ifesting his unqualified awareness of man’s inability and weaknesses in his search for truth and knowledge, unless assisted and willed by God, and to round off the acknowledgement I recite the normative statement, as a maxim, with which the classical Muslim ‘ulama’ concluded their written academic works: This written work is accomplished only by the grace of God and He knows best what is true and right. All gratitude and praise be only to Him.

Introduction

A discussion on the law of business transactions or contractual obligations in Islam is bound to investigate the term bay’ since the majority of jurists subsume most other commercial transactions under the rubric of bay’. Literally, bay’ means transaction, both sale and purchase, but in the legal- technical terminology of the jurists it means the simple exchange or barter of commodities; it is an exchange mutually agreed upon between the two or more parties concerned. I In fact, two roots are used in Arabic to imply the contract of sale: b.y,’ and sh.r.y. In both senses of the word, according to original legal procedure, an element of contract or agreement, i.e. safqah, mubaya’ah or mu’ahadah, is assumed when the purchaser strikes his hand on that of the seller to signify acceptance (qabul) of the offer (ijab), which is made usually in the same session. Sale is a bilateral transaction.” The most ordinary foundation for an obligation occurring is the contract (‘aqd). This is the field of pecuniary and business transactions (mu’amalat). The conclusion of the contract is basically informal; only the literal meanings of definite technical terms, such as safqah, striking hand upon hand, for concluding a sale or contract, reflect former symbolic acts. In the more elaborate variant, the vendor should make an offer of the goods, e.g. by pronouncing the words, “I sell you” or “I make you owner of’ such and such a thing, toe purchaser ought to pronounce his consent, e.g. by saying, “I buy the object”, “I accept the ownership of’, or “I accept” the object. ⁶ This action indicates the mutual consent which is required by Islamic law for the validity of a contract of sale or exchange of commodities or properties.” A sale consists of four basic elements, namely al-ba’i’ (the seller or vendor), al- mubta’ (the purchaser), al-thaman (the price) and al-muthamman (the prized or valued commodity).” The legality of sale is sanctioned in the Qur’an.” Such a contract of sale which illustrates the essence of the Islamic law of contractual obligations or commerce and trade includes this particular con- tract as well as other commutative or synallagmatic contracts. Al-Zurqani quotes Ibn al-Arabi who says that in the wider sense of economic contracts, transactions and social contracts (like the institution of marriage) bay’ constitutes the basis of society, since human beings, by nature, rely on food resources and sex. As all resources are created by God for the benefit of man, it is essential that a man should be aware of his basic needs as of the requirements of legal contracts, to which end the study of buyu’ (plural of bay’) is the duty of every Muslim.

THE SCOPE OF THIS STUDY

This study covers the law of contractual obligations or commerce and trade in early Islam. Therefore, other themes do not come within the purview of this investigation, because of their irrelevance or semi-relevance to the actual legal outlook of this law. Those subjects are al-hibab (donation or gift, inter vivos), al-wasiyyab (legacy), al-waqf (pious foundation or mort- main; endowment), the pre-Islamic customary law of al-’umra (donation of a life interest) and al-ruqba (donation with the stipulation that the object becomes the property of the surviving party or reciprocal posthumous gift). Since these contracts incline towards the purport of gifts and donations, accordingly, they are left out of the scope of this study. Moreover, even though al-wakalah (agency or procuration) has a great extent or range of integral relationship with the law of contractual obligations, nevertheless, it needs a separate study because of its wide and independent subject matter and because of the fact that it is open to full research independently, there- fore, it is not included in this study. The study of al-riba (usury) is also not included, except that it is mentioned in various topics which are related to it. It is considered to be unnecessary to work it out in detail in the present study, since the subject of al-riba has been extensively covered by many researchers in the East and the West in recent years. The subjects of al-ghasb (usurpation), ihya’ al-mawat (cultivation of a wasteland in order to acquire its ownership), al-iqta’ (grant of benefice or a piece of land), al- ‘itq (manumission), al-luqatah (found property), and al-sadaqah (charitable gift) have not been studied in the present work either, because they are not pertinent to the law of contractual obligations or sales and contracts in general.

The categories of bay’ (sale) have been thoroughly studied and care- fully developed by al-fuqaha’ (the jurists). However, this thesis is confined to the investigation of the development of business transactions in the introductory stage of Islamic law. Therefore, the chronological phases of its growth during the Prophetic period and subsequently in the early periods of Islam, i.e. the periods of the Companions of the Prophet (al-sahabah), their Successors (al-tabi’un) are examined and, in addition, some legal opinions of the earlier jurists are also inquired into.

This thesis will closely examine the literature of the Qur’an and its exegeses, al-siran (the biography of the Prophet), his traditions, the early historical accounts of the pre-Islamic Arabs, the first and the second generations of Muslims, including their military expeditions, biographies and annals, apart from the early and late legal treatises and manuals. By doing this, one may gain the idea of commerce and trade of intense activity springing out of Makkah, Madinah and the surrounding Arabian market-places during the lifetime of the Prophet, the Companions and the Successors. It is intended that such investigation may reflect not only the commercial lives of the people in the region in pre-Islamic times of Arabia but also may project the commercial activities in the succeeding generations of the Muslim ummah (community). The inception of such Islamic commercial milieu arose from the life of the Prophet himself who retained the impress of his Quraysh education and training. After his prophethood, this fundamentally mercantile character is displayed at every turn. He expanded it in accordance with Islamic precepts and tenets, which were revealed to him.

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