Deck 2: Islamic Law of Contract

Question 1

A unilateral contract is binding for the person who makes it, as well as on the person in whose favor it has been made.

Answer 1

False

Question 2

The legal consequence of a valid contract is its voluntarily nature.

Answer 2

False

Question 3

The concept of wa'ad is based on the principle of fulfilment of promise in all dispositions.

Answer 3

True

Question 4

The majority of jurists opine that fulfilling wa'ad is obligatory and it is usually enforceable.

Question 5

There is general consensus amongst the Muslim jurists on the binding nature of wa'ad.

Question 6

'Aqd' can be defined as an agreement among contracting parties which is concluded through an offer and acceptance with the consequences of binding legal obligation for one party.

Question 7

Islam establishes the need to lawfully acquire property and validates all measures and policies towards the protection of such right.

Question 8

The conditional bilateral promise occurs when a party promises to sell a commodity and the other party agrees to buy it if certain conditions occur.

Question 9

The Qur'an and Sunnah have barely addressed legal aspects on contractual relationships and terms of contract that form the basis of the modern Islamic finance transactions.

Question 10

Classification of contract according to its legal consequences puts emphasis on the extent of validity or binding nature of the contract.

Question 11

All valid contracts are enforceable, but all enforceable contracts are valid.

Question 12

The meeting of minds among the parties to the contract is important is considered one of the most important elements of a contract.

Question 13

It is an ethical behaviour for a trader to exploit unsuspecting buyers who are not aware of the prevailing market price.

Question 14

Business transactions are extremely regulated aspect of Shari'ah as they
are not subject to change over time and place and their underlying philosophy is retained.

Question 15

The Prophet PBUH. entered into series of contracts with merchants and customers while managing the business of his first wife Khadijah.

Question 16

Islam gives an authentic right of acquisition of property to all.

Question 17

The circumstances of a particular contract determine its legal consequences.

Question 18

The Sharī'ah puts a cap on the amount of profit one must make while carrying out a particular business.

Question 19

The underlying principle regulating profits in business transactions is that a commodity should not be sold at more than 20% of its cost.

Question 20

Quasi contracts can sometimes be enforceable but in other circumstances are not.

Question 21

The rationale behind the prohibition of any business transaction that involves speculative elements is to avoid unnecessary risk-taking, which will eventually lead to disputes between the parties.

Question 22

The four elements of a valid contract of sale are offer and acceptance, subject matter, consideration or price, and legal capacity of the parties.

Question 23

A contract may be considered deficient if it is lawful in its substance but unlawful in its description.

Question 24

The prohibition of Maisir or Qimar arises from the premise that the agreement between the parties involves certain immoral and undue benefits based on false hopes in the contract.

Question 25

Riba al-nasi'ah relates to loan trade and riba al-fadl relates to loan.

Question 26

There is no contradiction between Islam's strong attitude towards people earning their means of livelihood in a legitimate manner through hard work and making some gains through the game of chance.

Question 27

Unlawful earnings involves:

A) excessive gains in business transactions and undue profits
B) excessive commissions and service charges by some banks and financial institutions
C) exploitation of fellow beings while acquiring one's property
D) all of the above

Question 28

The majority of jurists and Muslims believe the bank interest is equivalent to riba and must be avoided.

Question 29

Which one of the following statements regarding earning a living is true?

A) according to Al-Nawawi, the best ways through which one can earn a living are agriculture, trading, and manufacturing
B) Imam al-Mawardi prefers a particular means of livelihood whereby people earn their living with their own hands regardless of the type of work they do
C) any earnings received from clean and just business dealings or work are permissible in Islam
D) all of the above

Question 30

A contract of sale involves the exchange of property for a well-defined consideration in accordance with the consent of at least one party to the contract.

Question 31

The terms "void contract" and" deficient contract" are identical so they can be used interchangeably.

Question 32

The underlying rule in void contracts is that they do not need to be validated by the consent of the contracting parties.

Question 33

Speculative contracts which contain uncertain elements constitute the second major prohibition of contracts under the Sharī'ah.

Question 34

There is a consensus amongst Muslim jurists on the literal definition of riba and what constitutes riba.

Question 35

The rule in fiqh al-mu'amalat is that all transactions are permissible as long as they:

A) are not tainted with prohibited gain
B) do not involve usury, deception, speculation, and undue profits
C) do not engage prohibited items
D) all of the above

Question 36

Bai' al-Gharar contracts are speculative or uncertain contracts which involve excessive risks.

Question 37

Bai' al-Gharar contracts are lawful financial contracts thus are permitted in Islamic Law.

Question 38

The two types of riba transactions are riba al-nasi'ah and riba al- bai'.

Question 39

Riba is forbidden in Islam due to its resultant harmful economic, social, psychological and spiritual effects.

Question 40

Despite its harmful effects on personal levels, riba could have positive implications on the state level evidenced by the economic welfare witnessed in the majority of Western countries.

Question 41

The power to sell is denied in the following circumstances in order to avoid elements of uncertainty Bai' al-Gharar.

A) things which, as the object of a legal transaction, do not exist.
B) things which exist but which are not in possession of the seller or the availability of which may not be expected
C) things which are exchanged on the basis of uncertain delivery and payment.
D) all of the above

Question 42

Which one of the following contracts is not among the prohibited forms of contracts in Islam?

A) bay' al-Gharar
B) bay' al-Riba
C) bay' al-salam
D) bay' Muzabanah

Question 43

The legal consequences of a contract may result in an.:

A) valid contract Sahih.
B) invalid or deficient Contract Fasid.
C) void contract Batil.
D) all of the above

Question 44

Classifying contracts according to their nature includes:

A) unilateral contracts 'aqd infiradi.
B) bilateral contracts 'aqd thuna'i.
C) quasi contracts shibh al-'aqd.
D) all of the above

Question 45

The most prevalent form of contract in modern Islamic financial transactions are:

A) informal contract
B) bilateral contracts
C) negotiable contract
D) contracts of partnership shirkah.

Question 46

All forms of contracts fall under either of the following two classifications:

A) wa'ad and musharakah
B) muwa'adah and murabahah
C) wa'ad and muwa'adah
D) murabahah and musharakah

Question 47

Contracts can be classified in accordance to their nature and this classification includes

A) commercial contract
B) unilateral contract
C) civil contract
D) all of the above

Question 48

Discuss the ruling of the International Islamic Fiqh Academy regarding government intervention in price fixing.

Question 49

If any contract was created by the mere operation of law without a formal agreement between the parties, it becomes:

A) a unilateral contract
B) a commercial contract
C) a quasi contract
D) none of the above

Question 50

Muslim scholars have classified Shari'ah contract of sale according to:

A) its nature,
B) its circumstances
C) its legal consequences
D) all of the above

Question 51

Discuss the different juristic definitions and interpretations of the term'aqd.

Question 52

-------------is a kind of pre-Islamic sale contract where it is agreed that when the seller throws an item to the impending buyer, it becomes binding on the latter to buy it. It also means battering items without inspection

A) bay' al-Hisat
B) bay' al-Munabadhah
C) bay' Muzabanah
D) bay' al-Gharar

Question 53

The classification of Shari'ah contracts into different types is based on:

A) the primary sources of Qur'an and Sunnah
B) general principles of the Shari'ah
C) the judgments made by learned jurists through independent legal reasoning and deduction ijtihad.
D) b and c

Question 54

Types of legal capacity in a contract ahliyyah.

A) ahliyyah al-wujub and ahliyyah al-'ada
B) ahliyyah al-wujub and ahliyyah al-fard
C) ahliyyah al-'ada and ahliyyah al-fard
D) none of the above

Question 55

which of the following statements is true?

A) Wa'ad is a unilateral undertaking and muwa'adah is a bilateral undertaking
B) Wa'ad is a unilateral undertaking and muwa'adah is a bilateral undertaking.
C) Both wa'ad and muwa'adah are bilateral undertakings
D) None of the above

Question 56

Which one of the following is not an element of a valid sales contract?

A) offer and acceptance
B) subject matter
C) witnesses
D) consideration or price

Question 57

The substance of a contract comprises all the following EXCEPT:

A) the offer
B) acceptance
C) the parties
D) the subject matter

Question 58

All of the following are examples of unlawful earnings except:

A) short-measures in trade through underweight
B) hording to inflate prices at a later period
C) earning through musharakah mode of finance
D) money-lending that involves usury

Question 59

A contract that is lawful in its substance but unlawful in its description is considered:

A) binding contract
B) deficient contract
C) void contract
D) none of the above

Question 60

Classical examples of gharar mentioned in the Sunnah include contracts of sale for the following:

A) newly born calf
B) fish in the sea
C) ripe fruits in the market
D) all of the above

Question 61

Contrast the different views of Muslim jurists regarding the binding nature of wa'ad.

Question 62

Identify the six types of bilateral contracts sanctioned by Muslim jurists.

Question 63

Discuss the legality of muwa'adah.

Question 64

Explain the reasons behind the prohibition of riba.

Question 65

Discuss the International Islamic Fiqh Academy resolution aimed at resolving the controversy over the binding nature of wa'ad.