Five (5) options / rights [Khyarat] that are enacted with a transaction in Islamic Economics

right-lawThe term khiyār refers to the option or right of the buyer and seller to rescind (i.e. cancel) a contract of sale.

There are five khiyārāt (pl. of khiyār) in a sale contract which are as follows:

1. Khiyār al-Sharṭ (Optional condition), where, at the time of a sale, the buyer or seller can make a condition giving him the option to rescind the sale within the specified four days. This option is called Khiyār al-Sharṭ.[1]

Specification of the days is necessary for this khiyār. Within this period, the buyer or seller has the right to rescind the sale without any reason. If the buyer makes the condition, it is called Khiyār al-Mushtarī (option of the buyer) and when made by the seller, it is called Khiyār al-Bāʾiʿ (option of the seller). This khiyār is not transferred to heirs.

2. Khiyār al-Ruʾyah (Option of inspecting goods), where the goods can be returned after inspection. This applies automatically to all contracts.[2]

Example: A buys machinery from B without seeing it. However, A has the option to return the machinery after inspection.

3. Khiyār al-ʿAyb (Option of defect), where the goods can be returned if found defective. It is the responsibility of the seller to supply goods free of defects or at least point out the defects to the buyer. In no way is the seller allowed to hide the defects of the goods, as that would constitute as fraud. In one ḥadīth, the Prophet (ṣallallāhu ʿalayhi wasallam) has stated, “He who indulges in fraud is not amongst us.” Thus, the buyer has the right to return the product in case of a defect (that which is considered a defect in the market) which also depreciates the value of the goods.[3]

Example: A buys batteries from B. However, A has the option to return them to B if the batteries are found to be defective or in a nonfunctional condition.

4. Khiyār al-Waṣf (Option of quality), where the goods were sold specifying a certain quality by the seller but that quality is found absent in the goods.[4]

Example: A buys a car from B who specified that the car has automatic transmission. However, when A uses the car, he finds the transmission to be manual. In that case, he can return the car to B because of the absence of the specific quality.

5. Khiyār al-Ghabn (Option of price), where the seller sold the goods at a price far higher than the market price. In such a case, the buyer has the right to return it to the seller.[5]

Example: A Parker pen is sold to A by B at a price of Rs.500/-. However, if after the sale A discovers its market price to be Rs.250/-, then he has the option to return the pen to B.

Iqālah (Recession of contract) is where both parties freely consent to rescind the contract, i.e. each party will give back the consideration received by it. Neither the buyer nor the seller has the sole right to rescind the contract after its execution. Often the buyer wants to rescind the contract after buying goods. In such a case, it is necessary that he get the seller’s consent. This mutual agreement between the buyer and seller to rescind the contract is called Iqālah.

transactionsIn one ḥadīth, the Prophet (ṣallallāhu ʿalayhi wasallam) has stated, “He who does the Iqālah (rescinding of the contract) with a Muslim who is not happy with his transaction, Allah will forgive his sins on the Day of Judgment.”

However, it may be noted that the price of the goods being returned under Iqālah will remain unchanged.

Effect on third parties: Iqālah is treated as a new sale, as if a new contract is entered between the parties rescinding the original contract.

(Taken from Islamic Banking by Mufti Ashraf Uthmani)

 


[1] “Muftī Ebrahim Desai Ṣāḥib (dāmat barakātuhū) has mentioned the duration to be three days, i.e. after three days the option automatically expires. However, Muftī Imran Usmani (dāmat barakātuhū) mentions:

‘At the time of a sale, the buyer or seller can make a condition giving him the option to rescind the sale within the specified four days. This option is called Khiyār al-Sharṭ. Specification of the days is necessary for this Khiyār. Within this period, he has the right to rescind the sale without any reason.’ (Guide to Islamic Banking pg. 77)”

Imām Abū Ḥanīfah (raḥimahullāh) is of the opinion of three days, beyond which the option will become detrimental to the opposite party, since he will have to wait for completion of the sale. This is also understood from one ḥadīth (al-Dāraquṭnī #2993).

However, Imām Abū Yūsuf and Imām Muḥammad al-Shaybānī (raḥimahumallāh) are of the opinion that this option can be any specified number of days as long as it is specified at the time of the sale. They contend that since it is a matter affecting both buyer and seller, as long as they mutually decide on it, it should be fine. They base their opinion on another ḥadīth of Bukhārī Sharīf (#2107) which does not mention any condition for three days.

The latter position is more suitable to our current industrial trends where such options may be required to allow for a fruitful transaction.

 

 

 

[2] The option is specific to the buyer. This means that a seller who may not have seen the commodity he is selling will not have the option to cancel the sale on seeing the item. At the same time, the option aids the buyer from a potential fraud.

This right or option is to safeguard a buyer’s anticipation from the commodity. If the flyer shows a certain type of fridge with six trays for example, while the one delivered only had four, then such a discrepancy is contrary to one’s anticipation. However, if the buyer says that he thought it would be bigger while the quantity had been sufficiently mentioned in the advert, then such a discrepancy is not covered in this option.

Similarly, when we go to Walmart and check out a sample fridge in store, and then order the fridge to be delivered, then there is no khiyār al-ruʾyah. If the fridge turns out to be different, then such a sale will be rectified by giving the buyer a choice to either accept this sale or return the item.

 

 

 

[3] The khiyār (option) applies to defects in the commodity which were not known to the buyer beforehand. If the buyer was informed of the error, and still continued with the sale, then he cannot exercise this option.

It also follows that it is the Sharʿī duty of a seller to inform the buyer of any hidden defects in the commodity. If the buyer comes to know of such a defect at a later time, then he can exercise the option.

The option gives the right to the buyer to either accept the commodity along with the defect in lieu of the agreed price, or return the item. It does not give him the right to retain the item and seek the compensation or discount from the seller in lieu of the defect.

 

 

 

[4] Essentially, khiyār al-ʿayb and khiyār al-waṣf seem identical. However, they primarily differ in two ways:

  1. Khiyār al-ʿayb (the option of defect) is awarded to the buyer within a sale by default. The buyer is not required from the side of the Sharīʿah to make such a condition in his sale. Khiyār al-waṣf (the option of quality) on the other hand must be stipulated from the side of the seller.
  2. Khiyār al-ʿayb (the option of defect) is only considered if the defect within the commodity is regarded as a defect by the norm. In contrast, in khiyār al-waṣf (the option of quality), the shortcoming is assessed based on the stipulated condition of the commodity in the contract, even if the norm of the industry does not regard it as a defect.

 

 

 

[5] This option has two main factors:

  1. Ghabn (commodity extremely overpriced)
  2. Taghrīr (deception)

t3In order for this option to take effect, taghrīr must be found. If someone overprices an item and the buyer is aware of this overpricing, then there is no deception. Accepting such a transaction is his contentment with the overpricing. Such a sale will be valid and the buyer will not have the right of the option. However, if the item was overpriced and the buyer becomes aware of this overpricing later on, then this will be deception, just like finding out that one has been swindled out of money for fake Adidas. The option could be used in this case by the buyer.

(Endnotes taken from unpublished personal notes on Muftī Ebrahim Desai’s al-Madkhal fi al-Buyūʿ ~Abuhajira)

 

 

 

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