THE MAIN THORIES OF MUAMALAT CONTRACTS

Learning Objectives

By the end of this topic, you should be able to:

 Explain the theory of Milkiyyah in Muamalat Contracts

 Explain the theory of Mal in Muamalat Contracts
 Explain the theory of Haq in Muamalat Contracts
 Explain the theory of Aqad in Muamalat Contracts

Theories of Milkiyyah
(Ownership)

Theories of Mal
(Property)
Theories Of Muamalat
Contracts
Theories of Haq
(Right)

Theories of Aqad
(Contracts)

Figure 1: Theories of Muamalat Contracts

THEORIES OF MILKIYYAH (OWNERSHIP)

Definition

Milkiyyah or milk is derived from an Arabic word `malaka` whish means to take possession
of something.

Miikiyyah literally means ownership and technically refers to the connection between a
person and a property recognized by the Shariah making it reserved for him to dispose of
anyway he likes as long as is no prohibition from the Shariah.

According to Shariah, Milkiyyah is the reservation of a property preventing another from

benefiting from it and permitting its owner to dispose of it in any manner he likes except that
which is prohibited by the Shariah.
THE MAIN THORIES OF MUAMALAT CONTRACTS

Malik refers to a person who has taken possession of an object or thing. The owned object is
called Mamluk which refers to anything owned by a human being, be it a specific property or
the usufruct of a property and Milkiyyah signifies the authority, often exclusive, which is
vested in the hands of Malik in relation to the object owned.

Ownership inThe Al-Quran

“Know they not that Allah doth Accept repentance from His votaries and receives their gifts
of charity, and that Allah is Verily He, the Oft-Returning, Most Merciful?”

(Al-Quran, Surah Al-Taubah, Chapter 9, Verse 104)

One of the restrictions on property in Islamic Law is the legitimate acquisition of property, as
the sanctity and right to defend property has to be recognized. Another restriction is not to
allow your use of your property to cause harm or problem against other people. Prophet
Muhammad (SAW) once said:

“One should not harm himself or others” (Narrated by Muslim)

This requires considering other’s benefit while using your property. For example,
monopolizing people’s basic necessities is restricted in Islam.

Attributes of Ownership

In Islamic law, ownership must consist of three main attributes:

 A legal authority
 Right to deal with the property includes the right to disposal; and
 Exclusivity which refers to the right of the owner to exclude others from posting
claims to similar use rights on specific property.

Types of Ownership

According to the Proprietary Rights and Extent of Use Right Granted, Ownership can be
divided into two:

i) Full Ownership
 The absolute ownership of a property physically together with benefit.

ii) Part Ownership

 Part Ownership means ownership of the property or ownership of the benefit.

Full Ownership

According to Shariah, full ownership is acquired through four way:

 Acquisition – Acquisition of land or catching of fish or birds

 Contracts of Transfer of Ownership – Trading contracts or hibah
 Inheritance – An heir gets a property from a deceased’s estate.
THE MAIN THORIES OF MUAMALAT CONTRACTS

 Breading – The owner of an animal owns an offspring reproduced by the animal.

Part Ownership

i) Ownership of Property only – The lessor owned the property while its usufruct
is owned by another
ii) Ownership of benefit only – The lessee of the property does not own the
property but he has the right to use the property owned by another for payment of
the rental.

THEORIES OF MAL (PROPERTY)

Definition of Mal

Mal is the Arabic terminology for property.

In the muamalat context, Mal refers to “a thing that is capable of being acquired and owned
by human, disregarding the fact whether it is corporeal or abstract (such as usufruct).

The Mal Principles

The majority of Islamic jurists were of the opinion that something could be regarded as mal
if it could be controlled and benefited from.

Meaning: “Something that can be controlled and benefited from according to customs.”

The Shafi’I School also provided general guideline on what can be considered as a property
if it has value.

Meaning: “Something is categorized as mal if it has value. That is why it can be traded, and
compensation shall be paid by anyone who causes it to be damaged.”

Attributes of Mal

 It could be possessed, or is capable of being possessed. It encompasses corporeal,

usufruct and rights
 It should be capable of being stored. Things like air and sun are not considered as
properties except when some works have been put in storing things, like oxygen tank
 It can be used
 It should be beneficial in the eyes of Shariah
 Urf (customs), whereby all people (some people) considered to be valuable and
beneficial.
THE MAIN THORIES OF MUAMALAT CONTRACTS

Categories of Mal

 Mal Mutaqawwim (Valuable) and Ghairul Mutaqawwim (Non-valueable)

 Mithli (Similar) and Qimi (Dissimilar)
 Aqr (fixed) and Manqul (Movable)
 Istihlaki (Perishable) and Non-Perishable

THEORIES OF HAQ (RIGHT)

To understand the theory of Haq (Right), we will look at the definition, attributes of Haq and
the types of Haq.

Literally, Haq means just, proper, right, correct or true, authentic, genuine, sound, valid,
substantial or real, established, confirmed as a truth, binding, obligatory, incumbent or due,
duty, prescription, equitable to the requirement of wisdom and justice, a just claim, an
obligation.

Haq refers to the right of a person or legal entity on some property or financial assets.

Ownership and right to property is the inherent right of a man to exercise his rights over
property which he possesses and control with obligations connected therewith in the
property acquired, such as to use for his own pleasure, to transfer and to extinguish his right
by way of transfer if he choose.

Attributes of Haq

According to jurists, right must have four main elements to be valid:

 The right shall be something recognized by Shariah. So, any right which is against
Shariah, or ruled by the Shariah as illegal shall not be considered as legal rights even
through people consider it to be a legal right.
 The right shall confer the owner of the exclusive ownership over it. This means that
only the owner has the right to use it.
 Ownership of the right shall come with the responsibility to take care of it.
 It is realized that the right is not meant for itself. Rather it is a mechanism for the
owner of the right to drive benefit from owning the right.

The Types of Haq

Under Islamic Jurisprudence, there are two types of rights:

 Haq Maliy which are rights on assets with financial values. Examples of such rights
are haq dayn (debt rights) and haq tamalluk (ownership rights); and
 Haq Ghairu Maliy which are rights not related to assets with financial values.
Examples of such rights are haq hadhanah (child custody rights) and haq wali (right
to be a wali).
THE MAIN THORIES OF MUAMALAT CONTRACTS

THEORIES OF CONTRACT

The theory of contract is intended to regulate economic cooperation, define contract, explain
its pillars and conditions, and lay down specific rules for different types of contracts.

The fundamental principle governing the law of contract laid down by Islamic law are used
as a basis for all commercial transactions.

The Conditions of Contract (Aqad) in Islamic Law

i. Condition for the contractual expression (Offer and acceptance)

 Both offer and acceptance must be made in clear terms
 Conformity of the offer and acceptance
 Continuity between the offer and acceptance, actually or constructively

ii. Conditions for the contracting parties

 Full legal capacity to undertake and execute the contract
 Legal authority to undertake and execute the contract: either as the actual
owner; or by delegation (agent, guardian or administrator)

iii. Conditions for the subject matter of contract

 The goods must exist at the time of contract
 The goods must legal and capable of enforcement
 The goods must capable of delivery at the time of contract
 The goods must ascertained and known by both contracting parties

Definition of Aqad:

An agreement between 2 persons, which are legally binding and has consequences upon
the subject of contract.

Differences between Wa’ad (Promise and contract)

Wa’ad has no specific definition of its own. However, it can be explained as a commitment or
promise made by one person to another to undertake a certain actual or verbal disposal
beneficial to the second party or a verbal proposition made by someone to undertake
something to the benefit of another person. Traditionally, Wa’ad is unilateral in nature and
binds the promise only.

According to the majority of traditional jurists, a promise is not enforceable in a court of law,
and in this context, a promise is not the same weight as a contractual commitment.

Hindrance to Legal Capacity

There are several factors which impair the legal capacity of a person and prevent him from
concluding contracts and making dispositions in his property.

These legal hindrances can be divided into two:

 Heavenly defects, natural defects

 Acquired defects