Contract is one of the branches of Islamic law that regulates our daily activities and prevents us

from doing anything that is against the Syariah. Much of the Islamic economics and finance are
based on contracts between two or more parties. It is divided into numerous classifications that
are based on various considerations. The general principles of contract should be observed to
ensure the daily activities carried out by us are done smoothly. Whether it is a contract to
purchase goods or a contract to make a loan, one needs to understand the concept of contract in
Islam and how it differs from the man-made law.

Generally, contract in Islamic law means an agreement made by two parties whereby the
consequences of contract were intended to be legally enforceable 1. Meanwhile, technically, it
may be defined as an obligation that is linking to offer and acceptance resulting in legal effects
on the subject matter of the contract 2. However, from the perspective of the man-made law, it is
define as the body of law that governs oral and written agreements associated with exchange of
goods and services, money, and properties.

There are three categories under the prohibited elements of Islamic finance. Duress or Ikrah falls
under the second category which a contract may be prohibited if it can be proved to be 3. A legal
contract might be affected to impair if the existence of duress is present. In Islamic
jurisprudence, duress is when in an event, one has been forced to do something one dislikes, alas,
and against one desire one has to come in, in order to avoid harmful consequences 4. A contract
can be deemed void as there is no mutual consent on either one of the parties.

1 Hashim, H. M. (n.d.). An Overview of Contract under Islamic Law, Its Classifications

and General Principles [PDF].

2 Ibid.

3 Aziz, B. (n.d.). PROHIBITED ELEMENTS IN ISLAMIC FINANCE. Retrieved May 07,

2017, from
http://www.academia.edu/11352021/PROHIBITED_ELEMENTS_IN_ISLAMIC_FINANCE

4 Ibid.
For duress to be accepted by Syariah, there are three conditions that is needed to be fulfilled 5.
First, it should be from a person who is able to implement with what one has threatened. Second,
the compeller must be serious in ones threat. Finally, the matter under the threat must be very
difficult for the compeller to bear.

Jurists have three different opinions on the issue of whether the contracts under duress are
considered valid or invalid6.

1. Majority of the jurists have agreed that duress causes the nullification of the contracts.
Consent that may come following after the removal of duress is not accepted.
2. Majority of Hanafi jurists have agreed that duress causes the nullification of the contracts
however, if the consent is given following after the removal of duress, the contract is
considered valid.
3. Zufar, a Hanafi jurist, state an opinion, that duress makes the contracts become dependent
on the permission of the compelled contracting party. If one gives permission, the
contract becomes valid.

5 Forcing a Person to Utter a Word of Disbelief. (n.d.). Retrieved May 07, 2017, from
http://www.myreligionislam.com/detail.asp?aid=6025

6 Aziz, B. (n.d.). PROHIBITED ELEMENTS IN ISLAMIC FINANCE. Retrieved May 07,

2017, from
http://www.academia.edu/11352021/PROHIBITED_ELEMENTS_IN_ISLAMIC_FINANCE
References

1. Aziz, B. (n.d.). PROHIBITED ELEMENTS IN ISLAMIC FINANCE. Retrieved May 07,

2017, from
http://www.academia.edu/11352021/PROHIBITED_ELEMENTS_IN_ISLAMIC_FINA
NCE

2. Forcing a Person to Utter a Word of Disbelief. (n.d.). Retrieved May 07, 2017, from
http://www.myreligionislam.com/detail.asp?aid=6025

3. Hashim, H. M. (n.d.). An Overview of Contract under Islamic Law, Its Classifications

and General Principles [PDF].