KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES

‘Comparison of Principles of Sale Contract between Conventional and Shari’ah Laws’

LAW 3512

COMMERCIAL LAWS

(SECTION 3)

Any form of cheating or attempt to cheat is a serious

Offence which may lead to dismissal

Introduction

We are blessed as a human being on the earth as the only creature created by God who has the ability to think upon choosing between alternatives. Humans are associates with many labels and beliefs that they uphold throughout their life. Major differences of choosing between alternatives would be based on their framework of thinking mostly derive from their religions or beliefs. Speaking from Malaysia context, Islamic belief would be a stronger influence for Malaysian citizens before embarking into any decision. Although, Malaysia is known as the Islamic state but Malaysia still uphold conventional laws as the supreme laws for the state over Islamic Laws which ruled by the Federal Court. Islamic Laws would only covers family laws, inheritance and few specific issues among muslims[1]. We would further discuss on the framework of sale contract from Islamic and conventional point of view.

Take a look around and it is apparent in our daily lives that transactions need to occur for us to carry on sustaining our needs and wants. As humans we ought to want things and we need to have goods that are essential for our daily lives in order to carry on living our lives in ease or in comfort. For an example, we would like to have a phone, a car, nice looking shoes, clothes and many nice things; on the other hand we need to have goods such as food, water and shelter. In order to possess such items, transfer of ownership must take place lawfully and in accordance with various conditions as stipulated by the Sharia since we are now talking from the Islamic perspective of things. Besides, few current practices by Malaysian using conventional laws might have some contradiction with the Sharia laws.

The transaction that is involved with the above mention purpose is the transaction of sale. A sale transaction occurs every year, every month, every day, every hour, every minute and every second. Sales transaction occurs almost every second throughout the world be it in supermarkets, shops, cafes, hospitals, car showrooms and etcetera. This in turn should show the magnitude and the role this transaction plays in everyday life. Having said that, there ought to be some form of mechanism that governs these transactions. From the Islamic perspective there are certainly exists such mechanisms. There are many principles in place that govern the contract of sale which in turn intends to safeguard both the buyer and the seller with regards to a sale transaction.

Furthermore, it is believed that neither Islamic Laws nor Conventional Laws do rejects totally the principles from both sources but rather should be look as compliment to each other. Islamic legal framework would provide basic guidelines in which should be details of by man-made laws for the implementation of it. Simple example would be on the guideline provided by the shariah that the citizens should abide by their leaders especially on the grey area which is the implementation of ta’azir (Islamic laws). According to Online Encyclopedia of Britannica ta’azir would refer to “most other offenses in Islamic law are called taʿzīr crimes (discretionary crimes), and their punishment is left to the discretion of the qāḍī (judge), whose options are often limited to traditional forms (imprisonment or corporal punishment) but who may also feel obliged to enforce”[2].

There are also many laws involved deriving from two streams. For example, the law of contract, law of hires purchase, law of marriage and law of agency. For the sake of this study, we are going to focus on the contract of sale as our point of interest.

Background of study

It can be said that there is somewhat a necessity to provide a comparison between the conventional aspect of a sales contract and the Islamic aspect of a sales contract. When we were given the task of doing this paper we pondered upon ourselves in questioning why is there a need to provide a comparison for conventional and Islamic bay’’ contracts. The Muslim believed that their divine source is better than the conventional legal framework. Hence, it is crucial for us to investigate the fine line between them. If it is true the Islamic Laws better than Conventional Laws in terms of practices then society needs to be considered the option available to them.

The first thought that came to mind was that the Islamic bay’ contract is much more better than the conventional sales contract as it is derived from sacred sources such as the Holy Qur’an[3] and the Sunnah[4] in addition to secondary sources provided by various Islamic scholars, hence this should mean that the Islamic bay’ contract is much more better than the conventional sales contract. It is also said to be better because Islamic Laws is derived from the divine source which remain unchanged from the day of the revelation.

However, although it is true that the Islamic bay’ contract is better and more holistic in nature as compared to the conventional sales contract for the very simple reason that the Islamic bay’ contract is derived from divine sources, the conventional sales contract is almost at par with the Islamic bay’ contract with a few exceptions and of them is that the conventional sales contract allows for the sale of goods that are prohibited by the Sharia, but still the conventional sales contract is still a comprehensive law and it is somewhat Sharia compliant as well to a certain extend. Therefore the thought of putting it out there that the aim of the paper is to put it out there that the Islamic bay’ contract is better compared to the conventional sales contract would not be a good aim and it has its shortcomings as well.

Hence, a better aim of the paper would be to educate people regarding various aspects of an Islamic bay’ contract and a conventional sales contract. The purpose here is to study the comparison of the two contracts of sales. Therefore, the paper is solely intended to provide a rough idea of what the two contracts are about and what it entails. It is clearly known that there has to be differences between the Islamic bay’ contract and the conventional sale contract as their origins are from two different sources although commonality might exist in terms of sources of origin between the Islamic bay’ contract and the conventional sale contract.

It is to be noted that there are many things to be covered under the laws of contract. Hence this paper intended to covers only three main points which are the definition, types and fundamentals principles of both contracts. Discharge and remedies for breaching the contract would not be covered in details. It is also to be noted that the coverage of this paper would be within the legal framework of Malaysia legal system. Among all, we decided to study this paper as the demand for Islamic laws implementation nowadays is tremendous to compliment or overrule the conventional laws especially in dealing with usury.

The paper will first provide an outline regarding the conventional aspect of a sales contract. Then, it will take course of providing an insight into the Islamic bay’ contract. In addition to that, after the two types of sale contract namely the Islamic bay’ contract and the conventional sale contract has been highlighted, a comparison of the two will be provided for.

Literature Review

There are many researches done before in explaining on the fundamental principles between conventional and Islamic law system with respect to the sale contract. Unfortunately, not many of the research manage to compare eye to eye between these two main streams of laws. Hence, we would like to take this opportunity to study on the comparison of principles of sale contract between conventional and shariah laws.

First let us take a look at the Islamic definition and conventional definition of a contract for the very simple reason that we are looking at the both perspective of a sale contracts hence it would only be right to begin with the definition.

Section 2 of the Sale of Goods Act 1957 (SOCA) defines the words ‘goods’ as refer to ‘every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale’[5]. By virtue of this definition the law would not govern land or things attached to it, choses in action or right and services.

The definition of goods further specified in the section 6 of SOCA which mention that the contract of sale may either be existing goods or future goods. ‘Existing goods would refer to goods already possessed or owned by the seller, and may be either specific or goods that are agreed upon at the time of the contract is made. While specific goods would refer to goods identified and agreed upon at the time a contract of sale is made’[6].

Essentially, contract is ‘aqd in Arabic. In its literal sense it carries the meaning of linking together, tying, binding two ends of something in order to form a strong connection between the two[7]. However, in its technical spectrum it carries the meaning for which consequences for the object or subject matter exists as a result of there being a legally binding obligation.

It is important to note that a promise does not carry any weight in terms of forming a contract because it is a mere promise for which the effect takes place in the future. A promise is only an implied agreement formed to provide consent for a transaction to occur in the future.

Furthermore, according to the Sharia, if a contract is to be formed it should not only be approved by law and legally binding, a contract has to be recognized by the Sharia as well. In order to add more sense, currently a nation has its own laws that govern transactions but under Islamic principles, a contract ought to be recognized by the Sharia as well in addition or over and above the law that is currently in place. For an example, sale of alcohol between a seller and a buyer maybe valid according to the law but according to the Sharia it does not form a contract due to violations against Sharia principles[8].

The conventional sale of contract further expands the definition of sale contract by differentiating between sale and agreement to sale. According to section 4(1) SOCA sale refers to, ‘a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price’[9]. The property in goods refers to the ownership while the valid consideration for the goods would be in monetary forms as explicitly mentioned in the Act.

Nature of conventional sales contract further divided into two; absolute and conditional sale. Absolute sale would refer to the ownership of the property is transferred without any condition. If the consideration is in near future it would turn to agreement to sell not absolute sell[10]. Conditional sale is where the agreement for future sale of goods delivered only after completion of conditions[11].

Now having given a brief explanation regarding a contract in general with regards to Islamic Principles, let us moves on to the wider topic of a sales contract. Generally, the whole scope of the paper shall now take the course of covering the pillars of a contract from an Islamic perspective. Generally, the sale of contract severely depends on the pillars of contract as set out by the Sharia simply because all one needs to do in order to fulfill a sale contract is to fulfill the pillars of a contract as it is almost the same. Before that let us lists down the types of sale that exists according to Islamic principles.

According to Dr. Muhammad Imran Usmani there exist four types of sales[12]:

• Valid sale also known as Bay’ Sahih

• Void or a non-existing sale known as Bay’ Baatil

• Existing sale but void due to defect known as Bay’ Fasid

• Valid but disliked sale known as Bay’ Makrooh

There also exists bay’[13] transactions that are in contention[14] meaning that various school of thoughts have provided different opinions on this matter. Some of the bay’ transactions that can be said to be doubtful in its nature would be bay’ al-‘Urbun[15], bay’ al-‘Einah[16] and bay’ al-Tawarruq[17].

Findings from Library Research

After a thorough discussion and research from all the literatures, we have summarized the finding of both Islamic and conventional sales contract principles as follows:

A) Fundamental Principles of Conventional Contract of Sale

Contract of sale is essentially needs to fulfill all necessary pillars of law of contract. There are the offer and acceptance, considerations (price), capacity and subject matter of sale.

1. Offer and Acceptance

- Sale contract is made by the offer to buy or sell goods for price and by acceptance of such an offer. The contract may provide for immediate exchange between goods and money as well as to facilitate the delivery of postponed payment or goods for future dates or payment in installments[18]. It can be communicated by oral, written or conduct fully or partly.

- There are also many law cases which deal with these fundamental principles in great details. One of it would be the Carlill V Carbolic Smoke Ball Co[19]. Although, it is initially impossible for person to make contract with public, sufficient consideration by inserting amount of money into bank as guarantee would be considered as valid contract.

2. Subject Matter

- The goods can be either existing goods or future goods explained earlier in the literature review. Additional to it would be, the goods may be either specified or unspecified at the time the contract is made. Specified goods would imply the goods identified and agreed upon during the making of sale contract. On the other hand, unspecified goods are the goods which are not been identified during the sale contract.[20]

3. Consideration (Price)

- Price is the money consideration for the sale of goods. The determinant of price can be as follows. It may be fixed by the contract, agreed upon contracting parties, if it is not fixed the buyer should pay reasonable price to the seller[21] or if the price is to be determined by the third party, the valuer must do the valuation otherwise it would be void. If the valuer is prevented from making valuation because of seller or buyer fault, then the innocent party may claim damage[22].

- Murugesu V Nadarajah[23] would be one of the suitable cases which address the consideration as one of the fundamentals principle. In this case, the court held that a promise made by one party in return for a promise made by the other, in such case each promise is the consideration for the other.

4. Capacity

- The person who qualify to enter the contract should be competent parties which covers the majority age[24], sound minded and indebtedness.

- Leha bt. Jusoh v Awang Johari b. Hashim[25] would be one of the cases that best described minority age as incapable to enter into contract.

B) Fundamental Principles of Islamic Contract of Sale

1. Ijab and Qabul for a bay’ contract

- Let us take a look at the first pillar which is expression or more commonly known as ijab and qabul[26]. Consent can come in many forms such as in writing, orally or by an implied conduct. Consent can is mostly frequent communicated in the form of words or oral/verbal communication. The words used must show that a contract with regards to the subject matter and etc. is intended to be formed and what contract is intended to be formed. It is important to note that future tense is not allowed because it only amounts to a mere promise. Having said that, the Sharia does not stipulate for a contract to be mentioned verbally in a fixed manner. As long as the consent is communicated clearly and effectively it is good enough.

- In addition to that, consent can also be provided in the form of physical actions via conducts, writing and conducts that are customarily accepted to be an indication of consent. For an example, in Malaysia when we take a pack of fried rice we don’t tell the vendor our intention to buy it, all we do is pick it up and pay for it. This is a form of consent by our actions and conduct.

- It must be mentioned though that the best form of consent comes by way of writing because it is in black and white and it is the best form of consent as there is proof and the above signed agreement cannot be altered and changed as opposed to verbal sayings and etc.

- There exist conditions as well with regards to expression as it should be in full form of clarity as it is important to present or show the intention of both parties in forming a sale contract. In addition to that, it is a must for the buyer to agree to what the seller is offering. If there is a difference hence a contract of sale is not formed. There also needs to be continuity between ijab and qabul whereby the acceptance should come after the offer in the same session of contract before both parties end negotiations and talks.

2. Parties to a Sales contract/ Capacity

- The next pillar of contract according to Islamic principles is the parties to a contract. It has been established that for a transaction to take place there needs to be consent, to be more accurate mutual consent is needed. Logically, if there needs to be mutual consent then there has to be more and one person in a particular contract. Therefore, the question of who’s capable of giving such consent then arises. This question is tackled beautifully by Islamic principles.

- Under Islamic principles, a person needs to possess legal capacity in order for him/her to conclude a contract. In this case, legal capacity can be equated to competence with regards to a person receiving and undertaking various obligations as set out by a contract. Capacity under Islamic principles is divided into 2 categories namely receptive capacity and legal capacity. However, with regards to a contract what we are concerned is about the characteristics of legal capacity.

- Legal capacity as per Islamic tenets means the ability of a person in entering a contract to carry out the performance of the contract, as the ability to carry out the performance plays a role in ensuring the validity contract. To take performance into a deeper meaning is covers areas of being able to manage his own wealth and to receive obligations and rights in line with the Sharia. The determination of legal capacity highly depends on puberty and maturity. In order to determine whether one has attained puberty and maturity, scholars use age as a guideline in determining it. According to Hanafi scholars, they are of the opinion that age of puberty is eighteen for makes and seventeen for females. On the other hand, other schools of thoughts are of the opinion that the age of puberty is at fifteen for both male and female.

- However there are situations in which sales contract can be cancelled or terminated despite one having full legal capacity with regards to entering a contract. There also exist situations whereby one cannot enter into a contract as opposed to the previous statement, the contract has been concluded by there are scenarios in which a contract cannot come into play at all due to the following reasons:

• Insanity whereby a person’s mental ability to think rationally and make decisions rationally is compromised hence all contracts including a sale contract entered by an insane person is strictly invalid.

• A person who is sleeping does not possess the right frame of mind thus a sales contract entered by such a person is invalid.

• A person in the state of being unconscious does not have the right frame of mind as well hence contracts entered by such a person is certainly invalid.

• Intoxication causes one’s mind and judgment to be affected hence affecting one’s ability to make decisions rationally what more to think rationally. However, there are 2 opinions on the validity of a contract entered by an intoxicated person. The Maliki jurists say whether intoxication is voluntary or involuntary all contracts entered by such a person is invalid. However, there are fiqh schools that are of the opinion that contracts entered by an intoxicated person involuntarily is not valid but if intoxication was brought upon the person voluntarily the contract remains as it is and it does not invoke invalidation.

• A person who is a prodigal is not allowed to enter into a contract either of if he or she enters into a contract the contract then becomes invalid. A prodigal in this case would be a person who makes decisions that is against or not in line with the Sharia. A person who is arrogant and extravagant when making decisions.

• A person who is bankrupt is not able to enter into a contract until he or she is cleared from their bankrupt status.

To sum up, there are there categories of capacity according to Islamic Laws. There are known as full capacity for those who attain the age of puberty which differ according to fiqh school as mention above, without capacity refers to insane people and minor (those who did not attain the age of puberty) and deficient capacity address those in the case of mumayyiz[27], idiot or intoxicant person, forgetful person or indebted person.[28]

3. Subject Matter of a Bay’ Contract

- Since we are talking about the contract of sale then it is important to make sure that the course of this aspect of pillars of a contract is in tandem with the contract of sale. Therefore in the case of a contract of sale the subject matter that is being referred to would be the item being sold.

- Firstly, according to Islamic principles the subject matter ought to be something that is allowed by the Sharia, something that is legal according to the Sharia and not a country’s local law. Therefore, unlawful items such as pork, alcohol, intoxicants and etc. are not allowed. Items such as lottery tickets sold are prohibited goods as well. In addition to that, the item must not be harmful to anyone especially the public instead the product or item being sold should be beneficial to the buyer and the seller in a manner that is recognized in the Sharia. Simply put the goods ought to be halal as enshrined by the Sharia.

- Secondly, in order for a sales contract to come into play the goods sold ought to be in existence at the time the sales transaction is concluded. The reason being so is to prevent the occurrence of uncertainty (gharar) and complications to arise in the future. However, there is an exception to the rule that the gods must be in existence already. The exception is with regards to the transactions of Salam and Istithna. A salam contract occurs whereby certain specific commodities are allowed to be ordered during the present and can be delivered in the future. It is important to note that these commodities must of approved ones by the Prophet S.A.W. Istithna is a transaction whereby a good is ordered and then only manufactured hence delivered in the future. With such a transaction there exist safeguards as well. The good must be specifically made known of, measurements and weightage must be ascertained in addition to the date of delivery and the price of the goods.

- Thirdly, when entering into a sale contract, if there is delivery at a future date. It must be made sure that the subject matter will and can be delivered. The seller must provide such an assurance and confirmation to the buyer. This is to prevent complications from coming up in the future with regards to the transaction.

- Last but not least, the subject matter must be made known in an accurate and precise manner so that all parties are aware what they are selling and buying. The subject matter must be made available for the buyer to see and the quality, quantity and make must be disclosed to the buyer as well so that the buyer knows what he is getting. If the goods are not available during the time of the sale then the goods must be describe in attention to detail to prevent uncertainties from occurring.

- These are all the elements that generally form a contract according to Islamic tenets. These principles are then taken and can be applied to a contract of sale. Generally, the fundamentals of a contract of sale is the same as the fundamentals of a general contract however it should be applied in a manner suitable with the contract of sales meaning that these principles should be applied in a spectrum that is in tandem with the contract of sales.

4. Consideration

- It is to be noted that the consideration should exist in exchange for any transaction be it from the offeror or offeree. The consideration might be something which is valuable in nature or something to be delivered in near future. Nowadays people used to refer it as the price of the goods. According to Islamic principles there are certain conditions which need to be followed in order to become a good consideration. The principles are as follows[29]:

1) The good must be present during the majlis. However, money would be an exception.

2) The goods must be permitted by shariah and have value.

3) It must be legally owned by the owner

4) It must be delivered at the time of contract except in bay’ al’muajjal

5) Quality and quantity must be made known to the parties.

Shariah scholars have given their jurisdiction pertaining to the following sales contract with deferred consideration as follows:

1) Deferred Payment ( bay’ bithaman ajil) – this is a contract in which the goods would be delivered at instant while the payment would be deffered at future date. According to Burhanuddin al Marghinani ‘a content of sale duly concluded is valid whether the payment is immediately paid or deferred, provided the period be fixed and known’[30].

2) Deferred Delivery (Salam) – this is a type of contract in which the payment would be in advance while the goods would be deliver in future time. It was being prohibited during the time of the prophet but allowed nowadays due to the need especially on the agriculture goods. However, in order for the goods to be legal the price of the goods must be known and paid at the point of the contract, be able to be delivered and described precisely.

3) Deferred Delivery (Istisna) – this is a type of contract in which the payment would be in advance while the goods would be deliver in future time. The condition would be the same as salam but salam would be effected on any goods while istisna is focusing on manufactured goods only. Moreover, price of istisna is compulsory to be paid in advance but not salam.

5. Qur’an & Hadith

The following principles as stated above earlier in the paper are extracted from some the following verses in the Qur’an and various hadith available.

• Recommendation for wealth to be appropriated lawfully and by way of mutual consent – O ye who believe! Eat not up your property among yourselves in vanities: but let there be amongst you traffic and trade by mutual good-will: nor kill (or destroy) yourselves: for verily God hath been to you Most Merciful! Qur’an (4:29)

• The item of sale should be possessed and owned by the seller and a property no belonging to the seller cannot be sold – ‘The messenger of Allah forbade me to sell a thing which is not my property’ (Tirmidhi) & ‘The messenger of Allah forbade me to sell a thing which is not my property or something that is not apparent and seen clearly’ (Bukhari)

• Various pillars of the contract regarding to aspects of offer and acceptance more importantly with regards to parties to a contract – ‘O ye who believe! When ye deal with each other, in transactions involving future obligations in a fixed period of time, reduce them to writing, let a scribe write down faithfully as between the parties: let not the scribe refuse to write: as God has taught him, so let him write. Let him who incurs the liability dictate, but let him fear his Lord God, amd mpt diminish aught of what he owes. If the party liable is mentally deficient, or weak, or unable himself to dictate, let his guardian dictate faithfully, and get two witnesses, out of your own men, and if there are not two men, then a man and two women, such as ye choose, for witnesses, so that if one of them are called on (for evidence). Disdain not to reduce to writing (your contract) for a future period, whether it be small or big: it is juster in the sigh of God, more suitable as evidence, and more convenient to prevent doubts among yourselves but if it be a transaction which ye carry out on the spot among yourselves, there is no blame on you if ye reduce it not to writing. But take witness whenever ye make a commercial contract; and let neither scribe nor witness suffer harm. If ye do (such harm), it would be wickedness in you. So fear God; for it is God that teaches you. And God is well acquainted with all things. Qur’an (2:282)

• The basis of all bay’ transactions – That is because they say: “Trade is like usury,” but God hath permitted trade and forbidden usury. Qur’an (2:275)

• Characteristics of goods should be made known to all parties and nothing should be hidden – “When you enter into a transaction, buying or selling, say: there should be no deception” (Sahih Muslim)

Comparison between Shariah and Conventional Laws of Contract Sale

A) Similarities

- Both streams acknowledge offer and acceptance as one of the principle in sales contract. It must be communicated be it in terms of written, orally or by conducts.

- Both stream agreed that the goods or payment can be exchange at instant or at future date. As for the money it can be settled on installment basis.

- Both stream agreed that the price of the goods should be fixed at the time of the contract.

B) Differences

- According to conventional laws, the capacity of an individual to enter into sale contract must be a competent party which possesses majority age, sound mind and indebtedness. On the other hand, the shariah laws capacity of an individual into three main segments which are the full capacity, deficient capacity and without capacity as discussed in the findings earlier.

- Conventional Laws divided goods into two definitions which are the future goods and specific goods. Shariah laws permit any kinds of goods as long as it is lawful and within sharia boundaries. Simple example would be the selling of beer. It would be valid under conventional laws but not under shariah laws.

- The transaction involves in conventional laws would be movable property, stock and share and collection of money only. On the other hand, the shariah law governs istisna, salam, and barter trading which apply to even immovable property.

- Although both streams accept payment in future date for instant goods, conventional law would charge interest for any delayed payment in which contradict with the fundamentals of shariah laws which prohibit usury and allowed only business transactions.

Conclusion

The order of the day is to provide an insight regarding the comparison between an Islamic sale contract and a conventional sale contract. The intention of the paper is to educate people on the existence of similarities and differences that exist with regards to an Islamic sale contract and a conventional sale contract as we feel that education in terms of highlighting the differences between an Islamic sale contract and a conventional sale contract is lacking.

To provide and analysis regarding the comparison between the two streams of sales contract we first introduced the Islamic aspect of a sale contract and then it was followed by the conventional aspect of a sale contract. The reason being so was because we felt that more emphasis was needed to be given to the Islamic aspect and the Islamic sales contract appears to be more comprehensive and holistic as a law.

In a nutshell, there are similarities between two streams of laws in which they celebrated equal terms with regard to the needs of offer and acceptance and the differences lie mostly with regards to the capacity of an individual to enter into a contract and the type of goods that are involved in a sale transaction as stated in the earlier parts of the paper. In addition to that it can be said that the Islamic sale contract covers the loopholes that exist in the conventional sales contract.

Bibiliography

Abdullah Alwi Haji Hassan (ed), 2007, Sales and Contracts in Early Islamic Commercial Law, The Other Press Sdn. Bhd.

AbdulRahman Yahya Baamir, 2010, Shari’a Law in Commercial and Banking Arbitration: Law and Practice in Saudi Arabia, Ashgate Publishing Company.

Abou Bacar Abdullah, 1995, The Principle of Al Bai Bithaman Ajil (Deferred Payment Sale) as practiced by the Islamic Bank of Malaysia and other Banks, p.39.

Frank. E Vogel, Samuel L. Hayes, 1998, Islamic Law and Finance: Religion, Risk & Return, Arab & Islamic Laws Series, Kluwer Law International.

Datin Paduka Zaitton Dato Othman, Islam In Malaysia Today And Its Impact "The practice of Shariah Laws in Malaysia”, http://www.muslim-lawyers.net/news/datoothman.html (Retrieved on 2013-04-06).

http://global.britannica.com/EBchecked/topic/584972/tazir (Retrieved on 2013 – 04- 06).

Islamic bay’’s Contract by Dr. Muhammad Imran Usmani, Jamia Darululoom Karachi Meezan Bank Ltd. Retrieved from http://www.slideserve.com/hoai/islamic-sales-contract (Retrieve at 2013-03-24)

Lee Mei Pheng and Ivan Jeron Detta, Commercial Law. Selangor: Oxford Fajar Sdn. Bhd. 2011.

Muhammad Yusuf Saleem, 2013, Islamic Commercial Law, John Wiley & Sons Singapore Pte. Ltd.

Muhammad Yusuf Saleem. An Introduction to the theoretical foundation of Islamic transaction. Selangor: Ilmiah Publishers Sdn Bhd.2009.

Nurdianawati Irwani Abdullah ,Siti Salwani Razali and Zuhairah Ariff Abd Ghadas. Malaysian Business Laws Selangor: Pearson Malaysia Sdn Bhd.2011.

Sale of Goods Act 1957 (Malaysia).

Susan E. Rayner, 1991, The Theory of Contracts in Islamic Law, Graham & Trotman.

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[1] Datin Paduka Zaitton Dato Othman, Islam In Malaysia Today And Its Impact "The practice of Shariah Laws in Malaysia”, http://www.muslim-lawyers.net/news/datoothman.html (Retrieved on 2013-04-06)
[2] http://global.britannica.com/EBchecked/topic/584972/tazir (Retrieved on 2013 – 04- 06)
[3] The Quran is the religious book for Muslims which was revealed to Prophet Muhammad (peace and blessings be upon him) through angel Jibril. It has been said by Allah (God) in the Holy Quran.
[4] Hadis is the sayings, doings and tacit approvals of Prophet Muhammad (peace and blessings be upon him). Whatever he said, whatever he did and whatever he tacitly approved for people are known as hadis. Hadis was collected and preserved during the life time of Prophet Muhammad and even after this death by his close companions.
[5] Sale of Goods Act 1957 (Malaysia), section 2.
[6] Lee Mei Pheng and Ivan Jeron Detta, Commercial Law (Selangor: Oxford Fajar Sdn. Bhd, 2011), 178–9.
[7] Muhammad Yusuf Saleem, An Introduction to the theoretical foundation of Islamic transaction (Selangor: Ilmiah Publishers Sdn Bhd, 2009), 80.
[8] Muhammad Yusuf Saleem, An Introduction to the theoretical foundation of Islamic transaction (Selangor: Ilmiah Publishers Sdn Bhd, 2009), 101.
[9] Sale of Goods Act 1957 (Malaysia), section 4(1).
[10] Sale of Goods Act 1957 (Malaysia), section 4(3).
[11] Sale of Goods Act 1957 (Malaysia), section 4(4).
[12]Islamic bay’’s Contract by Dr. Muhammad Imran Usmani, Jamia Darululoom Karachi Meezan Bank Ltd. Retrieved from http://www.slideserve.com/hoai/islamic-sales-contract at 1.10pm March 24th 2013.
[13] In the practical sense, bay’ is commonly understood as a contract whereby the seller agrees to transfer the goods to the buyer in return for a money consideration called price. This definition is quite similar to the SOCA 1957 which defines a contract of sale of goods as a contract whereby the seller transfer or agrees to transfer the property in goods to the buyer for a price.
[14] Muhammad Yusuf Saleem, 2013, Islamic Commercial Law, Chapter 1- Contentious Sales, John Wiley & Sons Singapore Pte. Ltd.
[15] Sale contract in which a person who wants to purchase a certain property would first pay money to the seller on the condition that, if the sale is executed, the advance payment would go towards the price of the goods, and if the sale is not executed, the down payment is considered a gift from the buyer to the seller.
[16] Is a contract in which a person sells certain goods for a deferred price and repurchases them immediately for a lower cash price from the same person.
[17] A contract in which a person purchases certain goods at a deferred higher price in order to sell it in the market to a third party for a lower cash price.
[18] Sale of Goods Act 1957 (Malaysia), section 5(1) & (2).
[19] [1892] 2 QB 484
[20] Sale of Goods Act 1957 (Malaysia), section 2.
[21] Question on reasonable would depend on case to case basis as according to SOCA section 9(2).
[22] Sale of Goods Act 1957 (Malaysia), section 10(1).
[23] [1980] 2 MLJ 82
[24] Section 1 of English Law Reform Act 1969 stated that the majority age would no longer be 21st years old but 18th years old and above.
[25] [1978] 1 MLJ 2002
[26] Refers to offer and acceptance.
[27] A child who is not able to differentiate between good or bad
[28] Muhammad Yusuf Saleem, An Introduction to the theoretical foundation of Islamic transaction (Selangor: Ilmiah Publishers Sdn Bhd, 2009), 88-89.

[29] Nurdianawati Irwani Abdullah ,Siti Salwani Razali and Zuhairah Ariff Abd Ghadas, (Malaysian Business Laws Selangor: Pearson Malaysia Sdn Bhd) ,2011, 312-3.
[30] Abou Bacar Abdullah. 1995, The Principle of Al Bai Bithaman Ajil (Deferred Payment Sale) as practiced by the Islamic Bank of Malaysia and other Banks, p.39.

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