The Concept of Promise and Bilateral Promise in

Financial Contracts: A Fiqhi Perspective

by

Dr. Mohamad Akram Laldin

Executive Director

of

The International Shari‟ah Research Academy

Kuala Lumpur, Malaysia

Table of Contents

Introduction………………………………………………………………………. 3

Literal and Technical Definitions of “Promise” (waÑd)…………………………. 4

Literal and Technical Definitions of “Bilateral Promise” (muwÉÑadah)………… 6

The Legal Status of Promises in the SharÊÑah....................................................... 7

Types of Promises……………………………………………………………….. 7

Juristic Opinions on the Rule Regarding Fulfillment of Promises………………. 8

Choosing the Weightiest Opinion……………………………………………….. 19

Legal Maxims with Bearing upon Fulfillment of Promises……………………... 21

Decisions of Fiqh Councils and Other FatwÉs Regarding Promises and Bilateral

Promises……………………………………………………………………….

22

Promises and Bilateral Promises Are Among the SharÊÑah Standards.................. 26

Suggested Parameters for Promises and Bilateral Promises…………………….. 28

Conclusion.…………………………………………………….…………………. 30

References…………………………………………………………………………. 32

In the Name of Allah, the Beneficent, the Merciful

Introduction

All praise is for Allah, who has assigned everyone their due rights, who has prohibited

injustice upon Himself and has, likewise, prohibited amongst His servants. He has ordered

them to fulfill their promises, having said,

ا أها الرن آمنىا أوفىا تالعمىد

“O you who believe, fulfill all contracts.”1

He also said,

عادال وعد الله الله ال ل

“[It is] the promise of Allah. Verily, Allah does not break His promise.”2

Peace and blessings upon the Beloved, the Chosen One, who said,

افك ثالث ، وئرا وعذ أخف ، ئرا حذث وزب : آة ا خا .وئرا اؤت

“The signs of a hypocrite are three: When he speaks, he lies; when he promises, he breaks his

promise; and when he is entrusted, he betrays the trust.”

To proceed:

The topic of promises―along with related issues, including whether fulfillment of a promise

is obligatory or not―is a topic that needs clarification and precise determination in this age

of ours. It is a vitally important topic because promises are related to a great number of

contemporary issues, especially with regard to the contracts that Islamic banks engage in.

Anyone who intends to write about contracts must, of necessity, discuss promises and to what

extent they are binding or non-binding. That is because a great many Islamic banks conduct

1 SËrah al-MÉ‟idah: 1. The word ÑuqËd (contracts) includes promises, covenants, oaths, etc.

2 SËrah al-Zumar: 20.

their business through contracts based upon binding promises. Therefore it has become quite

useful to examine just how binding such promises are, and that is what we are about to do in

this piece of research. I ask Allah‟s help in doing so; may He enable me to present it well,

and may He use me to make the truth manifest. Surely, it is He who controls all that and has

power over it. And all praise is for Allah from the beginning to the end.

WaÑd (Promise) in the Arabic Language

The 3-letter root W-Ñ-D (waÑd), corresponding to the verb waÑada, indicates a promise but

can also be used for a threat. The noun waÑÊd is used exclusively for a threat. The

corresponding verb is awÑada. ÑAdÊl ibn Faraj said:

وعذين تاسج واألداأ

“He threatened me (awÑadanÊ) with prison and dark (consequences).”3

MuwÉÑadah is derived from mÊÑÉd and Ñidah, which also mean „promise‟. The plural of Ñidah

is ÑidÉt, whereas waÑd has no plural form. The waÑÊd of bees is their buzzing when they

intend to attack. Abul-Naham al-ÑIjlÊ said:

لة األعضي ىعذ

“He threatens the heart of the unarmed [man].”

The verb waÑada can be transitive by itself or with the particle bi-. Besides Ñidah, other

derivations of waÑd that carry the same meaning are mawÑid, mawÑidah, mawÑËd and

mawÑËdah. All of these are maÎdars (verbal nouns). According to Ibn al-JinnÊ, waÑd does

have a plural: wuÑËd. In Allah‟s statement,

3 In Abul-×asan AÍmad ibn FÉris ZakariyyÉ, MuÑjam al-MaqÉyÊs fÊ al-Lughah, Beirut: DÉr IÍyÉ’ al-TurÉth al-

ÑArabÊ, 1422/2001), p. 1058.

ومىلىن متى هرا الىعد إن كنتم صادلني

“They say, „When will this waÑd (promise) occur, if you are indeed truthful?‟”4 the intended

meaning is “When will the fulfillment of this promise occur? Show us!” Al-AzharÊ stated that

both waÑd and Ñidah are plain nouns as well as verbal nouns and that the plural form of Ñidah

is ÑidÉt, while waÑd has no plural form.

MuwÉÑadah is only conceivable between human beings. MÊÑÉd and muwÉÑadah are used for

the time and place of a promised event.5

The Technical Meaning of WaÑd in Fiqh Terminology

The MÉlikÊ scholar, Ibn ÑArafah, said, “ÑIdah is a declaration that the declarer intends to

perform a good act in the future.”6

Al-ÑAynÊ stated, “WaÑd is a declaration that good will be done to someone in the future.

IkhlÉf al-waÑd means to turn a promise into a contradiction, that is: to fail to fulfil it.”7

After examining the two definitions, the following becomes clear:

1. The technical definition of waÑd (promise) is based upon the linguistic definition,

affirming the positive meaning and excluding the negative meaning (threat). A

promise has to be for something maÑrËf (recognized as good by the SharÊÑah and

sound intellect). If a promise is to do something evil or wrong, then it is not obligatory

to fulfil it.

2. The time in which a promise is to be fulfilled is the future, not the time at which the

promise is made.

4 SËrah YËnus: 48.

5 See Ibn ManÐËr, LisÉn al-ÑArab, (Beirut: DÉr IÍyÉ’ al-TurÉth al-ÑArabÊ, 3

rd. ed.), 5:341-342.

6 MuÍammad ÑUlaysh, FatÍ al-ÑAlÊ al-MÉlik fÊ al-FatwÉ ÑalÉ Madhhab al-ImÉm MÉlik, (1378/1958), 1:254.

7 Al-ÑAynÊ, ÑUmdat al-QÉrÊ’, SharÍ ØaÍÊÍ al-BukhÉrÊ, (IdÉrat al-ÙibÉÑah al-MunÊrah), 1:22.

A distinction needs to be made between waÑd and nadhar since fulfilment of both

takes places in the future, so there is a similarity between them from this angle.

However there is a difference, for, although nadhar contains the meaning of a

promise, it is explicitly with reference to an act done to draw the actor closer to Allah,

and if it is not fulfilled, expiation (kaffÉrah) becomes due.8

A: As for muwÉÑadah, it is only between human beings. MÊÑÉd and muwÉÑadah are used

for the time and place of a promised event.9 It is used for the inception of two

reciprocal promises by two persons: Party A promises Party B something, and Party B

promises Party A something in return.

The Technical Meaning of MuwÉÑadah in Fiqh Terminology

It is a declaration by two parties of their intention to enter, in the future, into a contract, the

consequences of which will affect both of them. The school of thought that uses this term

most extensively is the MÉlikÊs. Al-×aÏÏÉb states, regarding marriage:

MuwÉÑadah is when each party promises the other to effect a marriage. The word

form indicates two parties acting upon one another. It cannot happen unless there

are two actors. If only one of them makes a promise, it is called Ñidah.10

The reality of a promise is that a person obliges himself/herself to do a good deed for the

benefit of another person, even if it entails some harm to the actor or to a third party.11

The obligation that arises from the promise should be fulfilled, from a purely religious

perspective (i.e., to avoid damaging one‟s relationship with Allah) and from the perspective

of personal integrity and good moral behavior, all of which are encouraged by the SharÊÑah.

However, jurists differ as to the legal strength of such a promise. ImÉm al-NawawÊ said,

8 Majallat MajmaÑ al-Fiqh al-IslÉmÊ, (Session Five, No. 5, 1409/1988), 2:756.

9 Abul-×asan, MuÑjam al-MaqÉyÊs, p. 1058.

10 MawÉhib al-JalÊl, 3:413.

11 Shaykh HÉrËn KhalÊf JÊlÊ, al-WafÉ‟ bi al-WaÑd, Majallat MajmaÑ al-Fiqh al-IslÉmÊ, (Session Five, No. 5,

1409/1988), 2:890.

“Scholars agree that a person who promises another to do an act which is not prohibited

should fulfil his promise; but is that obligatory in a legal sense (wÉjib) or merely

praiseworthy (mustaÍab)? About this they differ.”12

The Legal Status of Promises in the SharÊÑah

Promises are permissible but neutral (mubÉÍ), based upon the general indication of the texts

that mention fulfillment of promises; among them Allah‟s statement, “O you who believe,

fulfill all contracts,”13

and the statement of the Prophet (peace be upon him),

افك ثاث ، وئرا وعذ أخف ، ئرا حذث وزب : آة ا خا .وئرا اؤت

“The signs of a hypocrite are three: When he speaks he lies; when he promises he breaks his

promise; and when he is entrusted he betrays the trust.” Some versions use the word ÑalÉmÉt

(indicators) instead of the word Éyah (sign). One version has the addition:

س أ وصى وصع صا وئ

“…even if he fasts, performs prayer and claims to be a Muslim.”14

A version collected by

BukhÉrÊ states:

افما خاصا وا ف و افاق حتى ذعها ، أستع خصة وات ف ه خصة وات ف ؛ و

خا ذ غذس ، وزب وئرا حذث، ئرا اؤت فجش ، وئرا عا .وئرا خاص

“There are four [character traits]; anyone who has them all is a pure hypocrite; and anyone

who has one of them has one of the attributes of hypocrisy until he rids himself of it. When

12

YaÍyÉ ibn Sharaf al-NawawÊ, al-AdhkÉr, 4th

ed., p. 282. 13

SËrah al-MÉ‟idah: 1. 14

AÍmad ibn ×anbal, Musnad AÍmad, Cairo: Mu‟assasat QurÏubah, 2:397.

he is entrusted he betrays the trust; when he speaks he lies; when he binds himself with a

pledge he double-crosses; and when he disputes he exceeds [the limits of decency].”15

Every person can promise whomever he wishes to from among humanity; however, it should

be pointed out that people should be cautious about freely making promises to others, for

keeping a promise is a matter linked to the future, and no one knows what his circumstances

will be in the future. Allah said,

اوما تدزي نفس ماذا تكسة غد

“No soul knows what it will earn tomorrow.”16

Types of Promises

A promise can be for something good (maÑrËf); for instance, an interest-free loan (qarÌ

Íasan), or charity, or a gift of money, or a loan of something beneficial, or transferring

ownership of a tangible asset. It may also be a sociable act, such as visiting a friend or a sick

person, or accompanying someone on a journey, or staying with them. A promise may also be

for entering into a binding contract. Examples of that include a promise to marry or to buy or

sell. A promise may also be to enter into a non-binding contract, such as wakÉlah (agency) or

juÑÉlah.17

In summary, a promise can be for anything that is lawful in the SharÊÑah. Likewise,

a promise can be to forgo a human right; for instance, to forgo a financial right pertaining to

15

Al-NawawÊ, SharÍ ØaÍÊÍ Muslim, (Beirut: DÉr al-Fikr), 2:47-48; Ibn ×ajar al-ÑAsqalÉnÊ, FatÍ al-BÉrÊ: SharÍ

ØaÍÊÍ al-BukhÉrÊ, 1:89. 16

See al-ÑUlaysh, FatÍ al-ÑAlÊ, 1:257. 17

Translator‟s note: JuÑÉlah is a contract to perform a particular action for a particular compensation. In that, it

is a type of ijÉrah, but it is non-binding, so there are fewer conditions for its validity. For instance, someone can

announce, “Whoever finds my lost camel will get such-and-such a prize.” This task could take an hour or a

month, so its indeterminate nature would make it invalid as a binding contract. Also―and this is why it was

cited here―in juÑÉlah the hirer can stipulate, “Whoever sews me a garment like this in one day will get such-

and-such.” If the worker completes it in one day, he is entitled to the compensation, but if he takes longer he is

not. Both parties in juÑÉlah have the option to cancel before the work starts, but once the work starts the

requestor of the work loses that option. See http://www.islam-qa.com/ar/ref/21239.

oneself or another person. It is also conceivable that a promise could be to commit an act of

disobedience to Allah; for instance, a man promises his friend to kill his enemy or his creditor

who is demanding payment or to wantonly destroy his property.18

Juristic Opinions on the Rule Regarding Fulfillment of Promises

Jurists expressed a range of opinions as to whether fulfillment of promises is legally binding

or not. The opinions of scholars and their evidence regarding the extent to which promises are

binding are as follows:

Scholars took three positions on that:

Position One: Fulfilling promises is praiseworthy (mustaÍab) but not obligatory (wÉjib).

Position Two: Fulfilling promises is always obligatory.

Position Three: Fulfilling promises is basically obligatory, but with conditions and

exceptions.

The details of these positions and the evidence for them are as follows:

Position One: The view of the majority of scholars, including ImÉm AbË ×anÊfah, ImÉm al-

ShÉfiÑÊ, ImÉm AÍmad, the ÚÉhirÊs, and some MÉlikÊs, is that keeping a promise is

praiseworthy but not obligatory; however, when the giver of a promise fails to keep it, he has

lost merit and done something highly disliked; still, it is not a sin.19

18

Shaykh HÉrËn KhalÊf JÊlÊ, al-WafÉ‟ bi al-waÑd fÊ al-fiqh al-IslÉmÊ,” Majallat MajmaÑ al-Fiqh al-IslÉmÊ,

(Session Five, No. 5, 1409/1988), 2:891. 19

Al-NawawÊ, al-AdhkÉr, p. 282; al-ÑAynÊ, ÑUmdat al-QÉrÊ’, SharÍ ØaÍÊÍ al-BukhÉrÊ, 12:121; ÑUlaysh, FatÍ al-

ÑAlÊ al-MÉlik, 1:254; Ibn ×azm, al-MuÍallÉ, al-Maktab al-TijÉrÊ, 8:28; al-MubÉrakpËrÊ, TuÍfat al-AÍwadhÊ,

SharÍ JÉmiÑ al-TirmidhÊ, al-Maktabah al-Salafiyyah, 6:131.

We see here that the holders of this view negated sin as a consequence of not keeping a

promise. That is when breaking the promise is considered in isolation. However, if the one

who made the promise intended by the breach to harm the person to whom he made the

promise, his intention would definitely make him sinful.20

Evidence for This View:

The first item of evidence:

ا سسىي اهلل أوزب اشأيت ؟ لاي : أ سسىي اهلل صى اهلل ع و س سأ سج فماي : ع عطاء ت ساس

لاي سسىي اهلل ؟ وألىي أعذا ،ا سسىي اهلل : فماي . ال خري يف اىزب : سسىي اهلل صى اهلل ع و س

. ال جاح عه: صى اهلل ع و س

ImÉm MÉlik collected in al-MuwaÏÏa’ that a man asked Allah‟s Messenger (peace be upon

him), “Can I lie to my wife, Messenger of Allah?” He replied, “There is no good in lying.”

The man said, “Messenger of Allah, [can] I make promises to her and tell her [things to make

her happy]?” Allah‟s Messenger (peace be upon him) said, “It won‟t be held against you.”21

AbË DÉwËd collected a narration in which the Prophet (peace be upon him) said,

أخا -ئرا وعذ اشج فى أ ت ف -و ف ع عاد فال ئث جئ . و

“When a man promises his brother, intending to keep his promise, but then does not keep it

and does not come to the appointed meeting, there is no sin upon him.”22

These two ÍadÊths indicate that failure to keep a promise is not in the category of a lie, that a

person who fails to keep a promise is not culpable for doing so, and that keeping a promise is

part of the perfection of moral excellence.

20

QÉrÊ‟ ÑAlÊ ibn SulÏÉn MuÍammad, MirqÉt al-MafÉtÊÍ, SharÍ MishkÉt al-MaÎÉbÊÍ, 4:653. 21

ImÉm MÉlik, al-MuwaÏÏa’, along with al-BÉjÊ’s commentary, al-MuntaqÉ, 7:313. 22

Sunan AbË DÉwËd, ÍadÊth no. 4343.

The second item of evidence: They also argue on the basis of a gift (hibah), for, according

to the majority of scholars, the transaction is not complete until the recipient takes possession

of it. The MÉlikÊs disagree about that. The implication of the majority view is that, in case a

person promises to give someone a present, but then changes his mind before the recipient

takes possession of it, the presumptive recipient has no legal recourse to compel the promisor

to keep his promise. Similarly, anyone who starts to perform a benevolent act for another

person is not obliged to complete it if the prospective recipient has not taken full possession

of the benefit. If the charitable act does not become binding before its completion, then there

is even less ground to consider the promise to perform that charitable act binding.23

Statements of Scholars Supporting This View:

Al-Muhallab said,

All agree that keeping promises is commended and encouraged [by the SharÊÑah],

but it is not obligatory, based upon their consensus that a person who was made an

unfulfilled promise cannot contend with the creditors [of the promisor for his

assets, in case of bankruptcy].24

Ibn BaÏÏÉl said, “None of the Salaf has transmitted the absolute obligation to keep a promise.

It has only been reported from MÉlik that it is obligatory to keep that for which there is a

[special] reason.”25

×ÉfiÐ Ibn ×ajr took issue with the claim of consensus on the issue, saying,

The report of consensus regarding that is unacceptable, for the existence of a

dissenting view is well known, even if it was voiced by a small minority. Ibn

23

See al-MubdiÑ, 9:345. 24

FatÍ al-BÉrÊ, 5:29. 25

Ibid. 5:222.

ÑAbd al-Barr and Ibn ÑArabÊ stated that the most eminent of the dissenters was

ÑUmar ibn ÑAbd al-ÑAzÊz.26

The rational basis for this opinion is that it is a promise to do what is praiseworthy (maÑrËf),27

and there is no way to compel someone to do what is praiseworthy. And Allah knows best.

Ibn ×azm said about this topic:

If he promised, swearing an oath to it, but made an exception by saying, “If Allah

wills,” he is absolved of violating his oath, based upon the text and the absolutely

confirmed consensus. If he is absolved of violating his oath, then he is not obliged

to do the act for which he swore the oath, which is the promise he made. And

there is no difference between a promise for which an oath was sworn and a

promise for which no oath was sworn. Moreover, Allah said, “Do not say about

anything, „I will do that tomorrow,‟ unless Allah wills.”28

It is, thus, valid to consider a promise without an accompanying exception to be

prohibited. It follows with certainty that whoever makes a promise and does not

make an exception [by saying, “If Allah wills,”] has disobeyed Allah, the Exalted,

in his promise. And it is not permissible to pressure anyone into disobedience [of

Allah]. Therefore, if he says, “If Allah wills,” or something similar that makes

fulfillment contingent upon the will of God, he has not broken his promise if he

does not do [the act]. That is because he only promised to do it if Allah willed,

and we know that if Allah had willed he would have carried it out. If he doesn‟t

carry it out, it means that Allah did not will it to be.29

Position Two: This view holds that it is obligatory to fulfill promises across the board.

Among those who held this opinion were the well-known jurist Ibn Shubrumah. He

considered it absolutely obligatory to fulfill all promises and said that judges should oblige

promisors to fulfill their promises unless there is a valid excuse that prevents fulfillment.30

Another jurist who held that view was Caliph ÑUmar ibn ÑAbd al-ÑAzÊz. ImÉm al-BukhÉrÊ

mentioned in his ØaÍÊÍ that this was also the position of ×asan al-BaÎrÊ and that the judge

SaÑÊd ibn al-ÑAmr ibn al-AshwaÑ al-HamadÉnÊ ruled in court cases that fulfilling a promise is

26

Ibid., 5:29. 27

AÌwÉ’ al-BayyÉn, 4:325. 28

SËrah al-Kahf: 23-24. 29

Ibn ×azm, al-MuÍallÉ bil-ÓthÉr, al-Maktab al-TijÉrÊ, 8:29. 30

Ibid. 8:28.

obligatory. Ibn al-AshwaÑ stated that the view that fulfilling promises is obligatory was held

by the Companion Samurah ibn Jundub (may Allah be pleased with him). Al-BukhÉrÊ added

that IsÍÉq ibn RÉhawayh held the same view and used Ibn al-AshwaÑ‟s narration as support

for the position that promises must be fulfilled.31

Some MÉlikÊs also took the view that keeping promises is obligatory, even though it was

characterized as a weak position.32

Ibn al-ÑArabÊ is one of those MÉlikÊs who held that

fulfilling promises is obligatory.33

Ibn al-ShÉÏ declared it the correct view in his commentary

upon al-FurËq.34

The ×anbalÊ scholar Ibn Rajab mentioned that some literalists (ÚÉhirÊs) also held the same

view.35

The ShÉfiÑÊ scholar, ImÉm al-GhazÉlÊ, stated that if the promise is understood to be

serious, then it must be fulfilled, unless there is a genuine excuse that makes one unable to do

so.36

The seriousness of a promise may be deduced from an oath sworn to emphasize it, or the

calling of witnesses to bear witness to it, or similar supporting clues.

Al-QarÉfÊ said in al-FurËq:

Know that the jurists differed regarding a promise: Is it obligatory, from a

SharÊÑah point of view, to fulfil it or not?....The correct view, in my opinion, is

that it is absolutely obligatory to fulfil promises; therefore it becomes necessary to

interpret any contradictory evidence [in a way that reconciles it with this ruling].37

The Evidence for This Position:

The first item of evidence: from the Qur‟an, passages such as:

31

Ibn ×ajar al-ÑAsqalÉnÊ, FatÍ al-BÉrÊ: SharÍ ØaÍÊÍ al-BukhÉrÊ, (Beirut: DÉr al-MaÑrifah), 6:218. 32

ÑUlaysh, FatÍ al-ÑAlÊ al-MÉlik, 1:256. 33

Al-QurÏubÊ, al-JÉmiÑ li-AÍkÉm al-Qur’Én, (Cairo: DÉr al-KitÉb al-ÑArabÊ), 18:29. 34

Al-QarÉfÊ, al-FurËq, printed along with the commentary of Ibn al-ShÉÏ and MuÍammad al-Shaykh ×usayn‟s

abridgment of al-FurËq, 4:24. 35

Ibn Rajab, JÉmiÑ al-ÑUlËm wa al-×ikam, (Beirut: DÉr al-ÑUlËm al-×adÊthah, Baghdad: DÉr al-Sharq al-JadÊd),

p. 404. 36

Al-GhazÉlÊ, IÍyÉ’ ÑUlËm al-DÊn, (Cairo: al-Maktabah al-TijÉriyyah al-KubrÉ), 3:133. 37

Al-QarÉfÊ, AnwÉr al-BurËq fÊ AnwÉÑ al-FurËq, 7:51.

ا أها الرن آمنىا لم تمىلىن ما ال تفعلىن

“O you who believe, why do you say what you do not do?”38

Commentators mentioned that

this verse was used to argue that whoever has entered into an agreement has obliged himself

by it and, therefore, must fulfill it. And a promise is one of those things which a person has

obliged himself to do, although there is disagreement about whether that is obligatory or

praiseworthy.39

Those who considered fulfillment of promises obligatory used this verse as

evidence, saying, “If one promised and then failed to fulfill it, then he has said what he didn‟t

do and would thus enter into the disapproval of this verse. This logically requires that

breaking a promise is prohibited. Therefore, it is obligatory to fulfill promises in order to

avoid the attribute of lying.40

The second item of evidence: Keeping one‟s promises is a feature of every divinely revealed

religion, and it is something the previous prophets were careful to guard. Allah said,

وإتساهم الري وفى

“And Abraham, who fulfilled [his promises, covenants, etc.]”41

He also praised Ishmael for

being true to his promises, saying,

اعل إنه كان صادق الىعد نثا وكان زسىالواذكس ف الكتاب إس

“And mention in the Book Ishmael. He was true to his promise, a messenger and a

prophet.”42

And there are texts in our SharÊÑah that emphasize the importance of keeping

promises, such as Allah‟s statement,

عاد ال وعد الله الله ال ل

“[It is] the promise of Allah. Allah does not break His promise,”43

and His statement,

38

SËrah al-Øaff: 2. 39

Al-QurÏubÊ, al-JÉmiÑ li-AÍkÉm al-Qur’Én, 18:79; al-JaÎÎÉÎ, AÍkÉm al-Qur’Én, (Beirut: DÉr al-KitÉb al-

ÑArabÊ), 3:442. 40

Al-QarÉfÊ, al-FurËq, 4:20; Ibn ×azm, al-MuÍallÉ, 8:28. 41

SËrah al-Najm: 37. 42

SËrah Maryam: 54.

وعد الله حك

“Allah‟s promise is true.”44

All these texts emphasize that Allah decisively bound Himself to

keeping His promises; therefore, his servants must also keep their promises.

The third item of evidence: BukhÉrÊ and Muslim both reported that Allah‟s Messenger

(peace be upon him) said, “The signs of a hypocrite are three: When he speaks he lies; when

he promises he breaks his promise; and when he is entrusted he betrays the trust.” Some

versions use the word ÑalÉmÉt (indicators) instead of the word Éyah (sign). One version has

the addition: “…even if he fasts, performs prayer and claims to be a Muslim.” A version

collected by BukhÉrÊ states: “There are four [character traits]; anyone who has them all is a

pure hypocrite; and anyone who has one of them has one of the attributes of hypocrisy until

he rids himself of it. When he is entrusted he betrays the trust; when he speaks he lies; when

he binds himself with a pledge he double-crosses; and when he disputes he exceeds [the

limits of decency].” In Muslim‟s version,

ذ غذس، وئ ئرا حذث وزب فجش ، وئرا وعذ أخف را عا . ، وئرا خاص

“When he speaks he lies; when he binds himself with a pledge he double-crosses; when he

makes a promise he breaks it; and when he disputes he exceeds [the limits of decency].”45

We

mentioned this earlier while discussing the legal status of promises in the SharÊÑah. The angle

of proof in this ÍadÊth is that the Prophet (peace be upon him) counted the breaking of one‟s

promise as a character trait of hypocrites; and hypocrisy is considered despicable in the

SharÊÑah. In fact, Allah said about hypocrites that they are

ازف الدزن الأسفل من الن

43

SËrah al-Zumar: 20. 44

SËrah LuqmÉn: 33. 45

Al-NawawÊ, SharÍ ØaÍÊÍ Muslim, (Beirut: DÉr al-Fikr), 2:47-48; Ibn ×ajar al-ÑAsqalÉnÊ, FatÍ al-BÉrÊ: SharÍ

ØaÍÊÍ al-BukhÉrÊ, 1:89.

“in the lowest depths of the hellfire.”46

This indicates that breaking one‟s promise is

prohibited; therefore, keeping one‟s promise is obligatory.47

The fourth item of evidence: Miswar ibn Makhramah said that he heard Allah‟s Messenger

(peace be upon him) mention one of his in-laws, saying,

. وعذ فأوفى “He made me a promise, and he kept it.” BukhÉrÊ collected it and mentioned it in the context

of arguing that keeping promises is obligatory.48

The angle of reasoning from this ÍadÊth is

that Allah‟s Messenger (peace be upon him) used to keep his promises and expected Muslims

to do the same.

The fifth item of evidence: JÉbir ibn ÑAbdullÉh related that soon after Allah‟s Messenger

(peace be upon him) died, wealth came to AbË Bakr from al-ÑAlÉ‟ ibn al-×aÌramÊ, the

governor of BaÍrayn. AbË Bakr announced, “Whoever was owed a debt by the Prophet

(peace be upon him) or had been promised [wealth] by him should come to me.” JÉbir told

him, “Allah‟s Messenger (peace be upon him) promised me such-and-such, and such-and-

such, and such-and-such,” and he stretched out both hands three times. AbË Bakr counted

500 dirhams into his hands three times.49

The angle of reasoning from the ÍadÊth is that AbË Bakr fulfilled the promise of Allah‟s

Messenger (peace be upon him), which indicates the importance of keeping promises and that

they are not to be broken.

The sixth item of evidence: Ibn ×azm quoted a ÍadÊth in which Allah‟s Messenger (peace

be upon him) said:

46

SËrah al-NisÉ‟: 145. 47

See al-QarÉfÊ, al-FurËq, 4:46. 48

Ibn ×ajar al-ÑAsqalÉnÊ, FatÍ al-BÉrÊ, 6:218. 49

Ibid.

واجةحك وأي املإ

“The promise of a Muslim is a binding obligation.” However, he said about it, “[The isnÉd]

contains HishÉm ibn SaÑÊd, who is a weak [narrator], and the isnÉd is also discontinuous

(mursal).”50

The seventh item of evidence: When Allah‟s Messenger (peace be upon him) would make a

promise he would always add, “Perhaps (ÑasÉ).” And ÑAbdullÉh ibn MasÑËd (may Allah be

pleased with him) would never make a promise without adding, “God willing.” After

mentioning that, al-GhazÉlÊ interpreted it to mean that when a promise is seriously given it

must be fulfilled, unless a real excuse makes it impossible to do so. If a person‟s mind is set

at the time of making a promise that he will not fulfil it, that is hypocrisy.51

The eighth item of evidence: Al-TirmidhÊ collected a ÍadÊth in which Allah‟s Messenger

(peace be upon him) said,

. وال تعذ ىعذة فتخف، وال متاصح ، ال متاس أخان

“Do not wrangle with your brother, do not make fun of him, and do not make him a promise

and then break it.” AbË ÑÔsÉ [al-TirmidhÊ] said, “This ÍadÊth is acceptable for legal arguments

(Íasan) but isolated (gharÊb); we don‟t know of it except by this isnÉd (wajh).”52

The angle of reasoning from this ÍadÊth is that the prohibition of breaking promises indicates

the obligation of fulfilling them; therefore, it befits a person to keep all his/her promises.

That is a summary of the evidence relied upon by those who say that fulfilling promises is

obligatory.

50

Ibn ×azm, al-MuÍallÉ, 8:29. 51

Al-GhazÉlÊ, IÍyÉ’ ÑUlËm al-DÊn, 3:133. 52

Al-MubÉrakpËrÊ, TuÍfat al-AÍwadhÊ, SharÍ JÉmiÑ al-TirmidhÊ, (MadÊnah: al-Maktabah al-Salafiyyah), 6:131.

Position Three: distinguishes between situations in which keeping a promise is obligatory

and situations in which it is not. Those who hold this position are the MÉlikÊs in general;

however, they are divided into two camps when it comes to the details of the position.

The First Party: exemplified by Ibn al-QÉsim and SaÍnËn, and their view is found in al-

Mudawwanah; they say that it is obligatory to fulfil one‟s promise and a judge should compel

the promisor to do so, if the promise is linked to a cause and, as a result of the promise, the

one to whom the promise was made enters into a course of action.53

The Second Party: is exemplified by AÎbagh, and [many MÉlikÊ scholars] said it is a strong

opinion. He said it is obligatory to fulfil one‟s promise, and a judge should compel the

promisor to do so, if the promise is linked to a cause, even if the one to whom the promise

was made has not yet entered into the action [linked to the promise]. An example of this is

your statement, “I want to marry,” or “I want to buy such-and-such,” or “I want to pay off my

creditors, so loan me some money,” or “I want to travel to such-and-such a place tomorrow,

so loan me your horse,” and the other person then expresses his agreement to the request. But

then the promisor decides to withdraw his promise before you marry or buy or travel.

According to this view, the promisor is bound to fulfil his promise and should be compelled

to do so by a judge.54

These examples comprise a request and a response. The same rule

would apply, however, if the offer was made without any request from you. The person says,

“I will loan you such-and-such or give you such-and-such so that you can pay your debt or

marry,” etc. In such a case the promise is binding, and the promisor should be compelled to

fulfil it by a judge.55

The last case represents a unilateral assumption of obligation.

53

ÑUlaysh, FatÍ al-ÑAlÊ al-MÉlik, 1:254; al-QarÉfÊ, al-FurËq, 4:25. 54

ÑUlaysh, FatÍ al-ÑAlÊ al-MÉlik, 1:254. 55

Ibid.

The difference between the views of the two MÉlikÊ sub-schools becomes apparent in certain

cases; for instance:

First: The first party says, “My creditors are pressing me to repay them, so loan me money in

order that I may do so.” The other party agrees, but then decides to retract his promise. In

AÎbagh‟s view the promise must be kept because it is linked to a cause. According to MÉlik

and those who agree with him, the promise is not binding because the one to whom the

promise was made has not yet taken any action on its basis. The exception to that would be if

the creditors had been led to believe that they will be repaid on a certain date or he called for

witnesses to witness his promise.56

Second: Someone owes you money, and they request you to extend the period of repayment

to a certain date. You say, “I grant you respite till such-and-such a date.” In this case you are

obliged to honor your word and grant him the respite till the stated date. That is, according to

AÎbagh, because the promise has been linked to a specific cause. According to MÉlik and

those who agree with him, the promise is not binding unless going back on one‟s word places

the other party in great difficulty or a contextual clue indicates that he, not the promisor,

wanted the delay.57

The difficulty would be exemplified in the debtor, based on the promise,

using his available funds to pay another creditor or to buy something he needs.58

The reasoning of the MÉlikÊs in support of their differentiation is that the texts of the SharÊÑah

on the topic seem to be contradictory; some of them indicate an unrestricted obligation to

fulfil promises. These are the evidences cited by those who consider it obligatory to fulfil all

promises without distinction. On the other hand, some texts indicate that going back on a

56

Ibid., 1:256. 57

Translator‟s note: The request would be the contextual clue in the example above; MÉlik‟s basic rule would

apply in cases without a request or the hint of a request. 58

Ibid., 1:257.

promise is not a lie, such as the ÍadÊths in al-MuwaÏÏa’ and Sunan AbË DÉwËd. Also, the

verse

تفعلىند الله أن تمىلىا ما الكثس ممتا عن

“It is most hateful to God that you say what you do not do,”59

was revealed regarding people

who said, “We made jihÉd,” when they had not done so, and said, “We did such-and-such

good deeds,” when they had not.60

No doubt, this behavior is prohibited because it is lying.

As for breaking one‟s promise being an indicator of hypocrisy, it has two interpretations:

when it has become an ingrained character trait, or when the person intends to break the

promise even as he‟s making it, as was mentioned earlier. Therefore, these texts must be

reinterpreted away from their apparent meanings so that the evidence can be reconciled. The

holders of this position agreed with Position Two under certain conditions; i.e., when the

promise is linked to a cause and the recipient of the promise has acted on the basis of it. And

they agreed with Position One in all other circumstances; i.e., those that do not fulfill those

conditions. That is what al-QarÉfÊ said,61

although Ibn al-ShÉÏ rejected this statement in his

commentary on al-FurËq, saying that the ÍadÊths in al-MuwaÏÏa’ and Sunan AbË DÉwËd

should be interpreted in light of the Qur‟anic verse and in light of the ÍadÊth about the traits

of hypocrisy to mean that toleration of breaking promises is when one is forced by pressing

need.62

Ibn ×azm criticized the distinction made by the MÉlikÊs, saying:

As for MÉlik’s division, there is no basis for it and no evidence to support it,

neither from the Qur‟an, nor the Sunnah, nor a statement of a Companion, nor

qiyÉs. If they say that he will cause him harm if his promise causes him to

undertake a deed or expenditure, we would say to them, “Suppose it is as you say.

From where do you come with the idea that one who harms another, wrongs him

and beguiles him is obliged to pay him a monetary compensation? We don‟t know

59

SËrah al-Øaff: 3. 60

See al-QurÏubÊ, al-JÉmiÑ li-AÍkÉm al-Qur’Én, 18:77-79, for a discussion of the asbÉb al-nuzËl (circumstances

of revelation). 61

Al-QarÉfÊ, al-FurËq, 4:25. 62

Ibn al-ShÉÏ’s commentary of al-QarÉfÊ’s, al-FurËq, printed along with it, 4:25.

of this in the religion of Allah except if it is established by a text. And whoever

exceeds the limits of Allah has wronged himself.”63

Choosing the Weightiest Opinion

After having examined the opinions of scholars on this issue and their evidence, the

weightiest opinion, in my view, is that it is obligatory to fulfill promises, specifically in the

domain of financial dealings and transactions (commercial promises). That is due to the

following reasons:

1. The texts of the Qur‟an and Sunnah indicate the importance of fulfilling promises, and

although they do not conclusively indicate that doing so is obligatory, there is no

difference among scholars that fulfilling promises is an aspect of noble morality.

Proceeding from this, we say that when the things we consider to be aspects of noble

morality are not fully realized unless they are made obligatory, there is no objection to

making ijtihÉd and organizing these matters by laying down statutes that will protect

the society from the harm of people not fulfilling their promises. This is especially

relevant in matters related to human rights and to financial obligations, for protection

of wealth is considered one of the five essential objectives of the SharÊÑah.

2. Breach of promise in financial dealings usually leads to harm and financial loss.

Therefore, it is only fitting that this type of harm be avoided, in line with the

statement of Allah, the Exalted,

حسنني وال تلمىا تأدكم إلى التهلكة وأحسنىا إن الله حة ال

“Do not contribute to your destruction with your own hands, but do good, for Allah

loves those who do good.”64

It is also consistent with the statement of the Prophet

(peace be upon him),

63

Ibn ×azm, al-MuÍallÉ, 8:28.

ال ضشس وال ضشاس

“Harm should neither be initiated nor reciprocated.”65

Making promises legally

binding will go a long way to reducing financial harm that results from breach of

promise.

3. [Some say] that the statements of early scholars about fulfilling promises were in the

context of promises to do general acts of kindness (maÑrËf); they were not focused on

promises in transactions of exchange. This―and Allah knows best―is incorrect, for

it is necessary to examine fulfilment of promises according to the indications of the

SharÊÑah evidence. If the texts indicate the obligation to fulfil promises, it is

appropriate to understand the obligation to be general and comprehensive, so as to

include both promises to do general acts of kindness as well as promises to enter into

contracts. The evidence used by those who consider keeping promises to be

obligatory are of general and comprehensive indication; they do not distinguish

between one type of promise and another. Moreover, the statements of early scholars

about promises were unqualified; they are applicable to promises to do favours and

general acts of kindness as well as other types of promises. BukhÉrÊ said in his ØaÍÊÍ:

Chapter: The Order to Fulfil Promises; and Doing So Is Good…and Ibn al-

AshwaÑ Passed Judgment that Promises Are to Be Fulfilled, and That Was

Also Reported from Samurah ibn al-Jundub. AbË ÑAbdullÉh said, “And I

Saw IsÍÉq Ibn RÉhawayh Using Ibn al-AshwaÑ‟s Narration as Legal

Evidence.66

Ibn al-AshwaÑ‟s narration is what he attributed to Samurah ibn al-Jundub. Ibn ×azm

said, “Ibn Shubrumah stated that all promises are binding, and the promisor is to be

64

SËrah al-Baqarah: 195. 65

MuÍammad ibn YazÊd al-QazwÊnÊ, Sunan Ibn MÉjah, ed. MuÍammad Fu‟Éd ÑAbdul-BÉqÊ, (Beirut: DÉr al-

Fikr), 2:784. 66

ØaÍÊÍ al-BukhÉrÊ, p. 510.

legally compelled [to fulfil his promise].”67

Therefore, it is possible to say that those

who consider promises binding in benevolent acts would likewise have to consider

them binding in contracts of exchange, based on what has already been stated, and

also because the ruling that promises are binding is not based upon the subject matter

of the promise being a benevolent act or some other type of act. It is only in

consideration of the promise itself and that it was made by the promisor, no matter

what its subject matter may be.

4. The Islamic Fiqh Academy issued a decree that unilateral promises are legally binding

but that bilateral promises are not permissible in a murÉbaÍah-lil-Émir-bil-shirÉ’

sale.68

It appears to me that the reason for this ruling is that if the promise is from one

party only, it is not possible to append it to the contract, for the contract must consist

of two contracting parties. If the promise cannot be appended to the contract, then it

cannot be covered by the ruling for it with regard to its prohibition; for instance, when

the commodity being sold is not owned by the one requested to make the purchase.

The matter is different when there is a promise from both parties. If the promises are

binding, they correspond to the contract itself and, thus, take its ruling. It should be

clarified here that the Fiqh Academy did not distinguish between unilateral and

bilateral promises with regarding to their binding nature; rather, both are binding in

67

Ibn ×azm, al-MuÍallÉ, 6:278. 68

Translator‟s note: MurÉbaÍah-lil-Émir-bil-shirÉ’ is a cost-plus-profit sale initiated by a purchase request from

a customer. For example, a medical clinic wants to buy the latest imaging device but can‟t afford to pay in cash.

The owner approaches the Islamic bank to purchase it on his behalf and then sell it to him at a price that

includes the original purchase price plus a profit for the bank, with payment to be made in instalments. The

profit may be calculated as a lump sum or as a percentage of the purchase price. The price usually takes into

account the length of time it will take to finish paying for the item, but the price cannot increase once it is agreed

to in the contract. The standard practice is for the bank to bear responsibility for the commodity if it is destroyed

before delivery to the customer as well as for inconspicuous defects that become apparent within a certain

period after delivery. The bank normally wants the prospective customer to give it a binding promise to buy the

commodity once the bank has purchased it; otherwise, the bank might face difficulty finding another buyer. The

customer might also want the bank to promise to sell it to him (instead of a new buyer offering a higher price) or

to lock in the price at the time of the initial agreement. See: http://www.islamonline.net/servlet/Satellite?

cid=1122528602360&pagename=IslamOnline-Arabic-Ask_Scholar%2FFatwaA%2FFatwaAAskThe Scholar

the opinion of the Academy, as is made explicitly clear in its decision regarding

unilateral promises and is implied in its decision regarding bilateral promises.

Therefore, it prohibited bilateral promises in a murÉbaÍah-lil-Émir-bil-shirÉ’ sale

unless the option to annul is upheld. The reason the promises are not binding does not

go back to the view that bilateral promises are not of a binding nature; the reason is

the presence of the option to annul.

Legal Maxims with Bearing upon Fulfillment of Promises

There are a number of legal maxims relevant to the subject of unilateral and bilateral

promises. Among them are the following:

اإلسا ذوب ئىل اىفاء تاىعذ غري أ ىى ره ستحما ع

1. People are encouraged to keep their promises without it being obligatory upon them.69

امئرا وا عاىعذ ئال ال ض

2. Promises are not binding unless they are conditional.70

املىاعذ ال تعك هبا اضو وى ذب ئىل اىفاء تاىعذ

3. Promises are not binding; however, keeping promises is encouraged.71

املىعىد اعمذ واملتحمك جع

4. What is promised in a contract is to be treated as existent.72

All these maxims are taken from books of fiqh from the ×anafÊ school, which is why we find

that they all tend to indicate that promises are not binding, reflecting in that the ×anafÊ

position on the issue.

69

Al-SarakhsÊ, al-MabsËÏ, 21:29 (KitÉb al-ØulÍ). 70

Ibn Nujaym, al-AshbÉh wa al-NaÐÉ’ir, p. 344. 71

Al-SarakhsÊ, al-MabsËÏ, 15:92 (BÉb al-DaÑwÉ al-GhalaÏ fÊ al-QasÊmah). 72

Ibid., 13:25, (BÉb al-BuyËÑ IdhÉ KÉna fÊhÉ al-SharÏ).

Decisions of Fiqh Councils and Other FatwÉs Regarding Promises and Bilateral

Promises

The topic of promises, particularly promises related to certain contracts of the SharÊÑah, has

been discussed by a number of SharÊÑah boards and Fiqh Academies. Among the decisions

and fatwÉs issued on the topic are the following:

1. The fatwÉ of the United SharÊÑah Board (1/5) (H.A. 93/4)

Regarding a promise to buy or an agreement for commercial cooperation on a

murÉbaÍah basis, it is possible to indicate the percent of profit and the duration [of

the arrangement] on a yearly basis; however, when the contract is actually made

effective the multiplicative increase of the percentage must be given due

consideration, after which the profit must be stipulated without any further increase in

case the payment period is extended.

The Board considers it necessary to stipulate in a promise to buy or in a commercial

cooperation agreement that “the profit in all murÉbaÍah transactions must be set

without any possibility of increase” so that it cannot be understood that there is a

possibility of reapplying the percentage formula if the number of years increases.

2. The fatwÉ of the United SharÊÑah Board (14/5) (H.SH. 96/4)

The Board approved the mention in the agreement of a promise to buy that the

promisor undertakes to buy the commodity “on the basis of a yearly percentage of

***;” however, the Board stresses the necessity of defining the total profit for each

transaction at the time of actually making the contract effective.

Therefore the Board requested clarification of that point by altering the clause to say,

“The purchase process shall be completed on the basis that the Second Party shall

promise to buy the stipulated commodity from the First Party for a stipulated profit on

each transaction of *** % per annum.”

3. The fatwÉ of the Second Islamic Banking Conference held in Kuwait:

The Conference, held in Kuwait City from 6-8 JumÉdÉ al-Ókhar, 1403/1983, issued a

decision that the promise is binding upon the purchase-orderer, or the bank, or upon

both of them. That is because affirming the binding nature of promises is more

effective in preserving the benefits of dealings and the stability of transactions. This

position protects the interests of both the bank and the client, and affirming the

binding nature of promises is acceptable from a SharÊÑah point-of-view; however,

each bank is free to adopt its own position on the issue of whether promises are

binding, i.e., as per the decision of its own SharÊÑah board. The Conference also

decided that it is permissible in the SharÊÑah to exchange bilateral promises to conduct

a murÉbaÍah-lil-Émir-bil-shirÉ’ sale, after ownership of the commodity has passed [to

the bank] and it has taken possession of it, whereupon it sells it to the one who

ordered its purchase, at a rate of profit mentioned in the previous promissory

agreement, as long as the responsibility for the commodity is borne by the bank in

case it is destroyed before the bank delivers it to the customer and as long as the bank

accepts the customer‟s right to return the commodity due to hidden defects that would

entail the right of return for defective merchandise.

4. The First Barakah Conference, FatwÉ No. 13, SharÊÑah FatwÉs on Economics, Dallah

Barakah, p. 83.

Question:

What is the position on a bilateral promise for the purchase of various currencies at

their price on the day of the agreement (the day of the promise) with both the

exchanged currencies to be paid at a future date, and with the exchange of both being

on the spot at that time? All of that will be either on the basis that the bilateral

promises are binding or on the basis that they are not binding.

FatwÉ:

If the bilateral promise is binding then it enters into the prohibition of selling a debt

for a debt and is, thus, not permitted. However, if it is not binding on either party then

it is permitted.

5. The Sixth Barakah Conference, FatwÉ No. 23, SharÊÑah FatwÉs on Economics,

Dallah Barakah, p. 84.

Question:

What is the ruling on a bilateral promise in currency transactions?

FatwÉ:

The decisions of the Second Islamic Banking Conference held in Kuwait in March of

1983 CE are confirmed, that a bilateral promise in the sale of currencies by delayed

payment is permissible if the bilateral promise is not binding. (That was the majority

opinion.) However, if the bilateral promise is binding, then the transaction is not

lawful in the SharÊÑah.

6. Kuwait Finance House SharÊÑah FatwÉs on Economic Issues (vol. 2), FatwÉ No. 96:

Question:

A bilateral promise to buy a specified amount of a specified currency at a specified

price within a specified period, with the seller pledging to deliver the amount...

Answer:

This transaction is not permitted in the SharÊÑah because it is a promise to buy

currency. The format that is permitted in the SharÊÑah for currency transactions is a

decisive sale that is completed on the spot (i.e., the immediate transfer of one form of

money for another).

Relevant Decisions of the Islamic Fiqh Academy:

1. Decision No. (3/2) Regarding Fulfilling Promises and MurÉbaÍah Lil Ómir Bil ShirÉ’

The Council of the Islamic Fiqh Academy in its fifth conference, held in Kuwait 1-6

JumÉdÉ al-ÕlÉ, 1409/10-15 December, 1988, after hearing the research papers

presented to the Academy regarding the fulfillment of promises and murÉbaÍah lil

Émir bil shirÉ’, and after listening to the discussion generated on the subject,

has decided:...

Second: The promise (that is put unilaterally forward by either the purchase-orderer or

the bank) is binding upon the promisor from a religious point of view except in case

of a [valid] excuse. It is also legally binding in a court of law if it is made conditional

upon a cause, and if the one to whom the promise was made undertook actions

entailing expense due to the promise. In such a case the binding nature of the promise

takes effect either by the actual fulfillment of the promise or by monetary

compensation for the actual damages incurred as a result of the breach of promise

without valid excuse.

Third: Bilateral promises (issued by each party to the other) are permitted in

murÉbaÍah sales on the condition that either or both parties have the option to annul

the sale; however, if there is no such option, such a promise is not allowed because a

binding bilateral promise in a murÉbaÍah sale bears a similarity to the sale transaction

itself. In that case the condition is laid down that the seller must be the owner of the

commodity being sold in order that no dispute arises [based upon the prohibition of

the Prophet (peace be upon him) of people selling what they do not possess].

2. The Islamic Fiqh Academy of the OIC, in its seventeenth session, held in Amman,

Jordan from 28 JumÉdÉ al-ÕlÉ until 2 JumÉdÉ al-Ókhirah, 1427, corresponding to 24-

28 June, 2006, after hearing the research papers presented to the Academy on the

topic of bilateral promises and mutual agreements in contracts, after perusal of

Decision Nos. 40-41 (5/2 and 5/3), and after listening to the discussion generated on

the subject, has decided the following:

First: The basic rule for bilateral promises is that they are binding from a religious

point of view but are not legally binding.

Second: Bilateral promises and mutual agreements to contractual forms in order to

skirt the prohibition of ribÉ―for example, collusion to transact an ÑÊnah sale or a

bilateral promise to engage in a sale combined with a loan―are prohibited in the

SharÊÑah.

Third: There may be cases where it is impossible to conclude a sales agreement due to

the commodity not being in the possession of the seller while a general need exists to

oblige both parties to implement a contract in the future, either by legislation or some

other means, such as the recognized practices of international commerce. An example

of the latter would be opening a letter of credit in order to import goods. In such cases

it is permissible to oblige both parties to fulfil their promises, either through

governmental legislation or by the agreement of both parties to a clause in the

agreement that will make the promises binding on each of the two parties.

Fourth: The binding bilateral promise in the case described in Article Three does not

take the ruling for sales to be executed in the future; the ownership of the commodity

being sold does not transfer to the buyer, the purchase price does not become a debt

owed by him, and the sale does not take place until the agreed-upon date by the

exchange of offer and acceptance.

Fifth: Should one of the two parties fail to keep his promise in the circumstances

described in Article Three, he shall be legally compelled to fulfill the contract or to

bear responsibility for the actual damages suffered by the other party as a result of his

breach of promise (but not for any [estimated] lost opportunity).

3. Decision No. 136 (15/2) Regarding MushÉrakah MutanÉqiÎah and its SharÊÑah

Parameters

The Islamic Fiqh Academy of the OIC, in its fifteenth session, held in Muscat, Oman

14-19 Muharram, 1425 AH/6-11 March, 2004 CE, after hearing the research papers

presented to the Academy on the topic of diminishing partnership (mushÉrakah

mutanÉqiÎah) and its parameters, and after listening to the discussion generated on the

subject, has decided the following:

3. MushÉrakah mutanÉqiÎah is uniquely characterized by the presence of a binding

promise by only one of the two parties to effect multiple purchase contracts by which

he/she will gain possession of every portion of the [other party‟s] stake. (The

contracts of sale can be concluded using whatever methods indicate offer and

acceptance).

From the survey of fatwÉs and decisions just mentioned, it becomes clear that promises in

financial transactions are binding particularly in those circumstances in which harm is

inflicted by the breach of promise.

Promises and Bilateral Promises Are Among the SharÊÑah Standards Put Forth by the

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)

1. SharÊÑah Standard No. 1: Trading in Currencies

2/9: Bilateral Promises in Currency Trading:

a. A bilateral promise is prohibited in currency trading when it is binding upon

both parties, even when it is done to treat the risk of decline in a currency‟s

value. As for a unilateral promise from one party only, that is permissible, even

if it is binding.

2. SharÊÑah Standard No. 5: Guarantees

7/8/2: It is permissible to take a deposit from the customer who has promised to buy

in order to ensure that he fulfils his promise, if the promise is binding upon the

customer. It is called “a surety of seriousness” (hÉmish al-jiddiyyah). It is a deposit

but is different from ÑarbËn (an earnest-money deposit) due to the absence of a

contract. The rules mentioned in 7/8/1 apply to it. In case of a breach of promise, only

an amount equal to the actual harm is to be taken from it; that is, the difference

between the costs incurred and the price at which it is sold to someone else.

3. SharÊÑah Standard No. 8: MurÉbaÍah for a Purchase-Orderer

2/3: The Customer‟s Promise

2/3/1: It is not permitted for the contract document to include a binding bilateral

promise, or what functions as the same, on the two parties (the institution and the

customer).

2/3/2: Neither a promise nor a general agreement (framework) is a requisite of

murÉbaÍah. It is only for assurance of the serious intent of the customer to carry out

the transaction after the institution has purchased the commodity. If the institution has

alternative opportunities to market the commodity it can forego the promise and the

framework.

2/3/3: It is permissible for the institution and the customer to issue a bilateral promise,

on the condition that the option of annulment is preserved for either or both of the

contracting parties.

2/3/4: It is permissible for the institution and the customer, after the promise and

before the sealing of the murÉbaÍah contract, to agree to change certain articles of the

promise from their previous formulation, whether the change is in the time period, the

profit, or some other contract term. However, the agreement cannot be changed

without the agreement of both parties; neither party has a unilateral right to make

changes.

2/3/5: It is permissible for the institution when buying the commodity to reserve for

itself the option of annulment within a specified period, so that, if the customer fails

to buy the commodity, it will be able to return it to the seller within the stipulated

period by virtue of the annulment option that is approved by the SharÊÑah. The right of

annulment in the contract between the institution and the original seller is not

impaired by the institution‟s offer of the commodity to the customer. It only lapses

upon the actual sale of it to him.

2/5/3: In case a binding promise has been made, it is permissible for the institution to

take a sum of money known as “a surety of seriousness” (hÉmish al-jiddiyyah) which

the customer pays upon a request from the institution to be sure of the customer‟s

financial ability and also to have confidence of being compensated for any losses

suffered should the customer breach his binding promise. By this means the

institution does not have to demand restitution for damages; all it has to do is deduct it

from the surety of seriousness. The surety of seriousness is not considered ÑarbËn (an

earnest-money deposit). This sum advanced as a surety of seriousness is a deposited

trust. The institution will either hold it in safekeeping, in which case it has no right to

put it to any use, or it will take it as a trust for investment, i.e., the customer grants the

institution permission to invest it and share any profit earned with the customer (i.e.,

on a muÌÉrabah basis).

4/2: The institution has the right to receive compensation for any actual damages

resulting from the customer‟s cancellation in case the promise is binding. This is by

having the customer bear responsibility for the difference between the price at which

the commodity is sold to a third party and the original price that the institution paid to

the first seller.

4. SharÊÑah Standard No. 9: Leases and Rental Ending in Transfer of Ownership (IjÉrah

Muntahiyah bi al-TamlÊk).

8: Transfer of Ownership of the Tangible Asset Being Leased in a Rental Ending in

Transfer of Ownership

8/1: It is necessary in a rental ending in transfer of ownership to stipulate the means

by which the ownership of the asset will be transferred to the renter. That should be in

a document separate from the rental contract. It may be by any of the following

methods:

a. a promise to sell for a nominal price, or for a real price, or for an advance lump-

sum payment for the remainder of the rental period, or at market price;

b. a promise to gift it;

c. a gift contract conditional upon the payment of all the instalments.

In case a promise is given to make a gift of the asset or to sell it, or in case of a gift

contract conditional upon external documents, it is not permitted to state that it is an

inseparable part of the contract for rental ending in transfer of ownership.

8/2: A promise to transfer ownership by one of the means mentioned in clause 8/1 is

binding upon the one who gives it. It is obligatory that the binding promise be limited

to one of the two parties. The other party will have the option to cancel. This is to avoid

a binding bilateral contract, which is prohibited, for it makes the promises equivalent to

a contract, making it subject to the same rules.

5. SharÊÑah Standard No. 12: Partnerships and New Forms of Partnership

3/1/6/2: It is permitted for one partner in a partnership to issue a binding promise to

buy the assets of the partnership within the period of its existence or at the time of

clearance at the market price or at a price agreed upon at the time of purchase. It is not

permitted to promise to buy them for a nominal price.

6. SharÊÑah Standard No. 16: Selling Commodities in Organized Markets

5/2/3: The SharÊÑah-Compliant Alternative to Options

5/2/3/1: It is permissible in the SharÊÑah to enact a contract for the sale of specific

existent items along with payment of a portion of the price as an earnest-money

deposit (ÑarbËn) which will give the buyer the right to annul the deal during a

specified period in return for the seller gaining the right to keep the earnest-money

deposit in case the buyer exercises the right of annulment. It is not permitted to trade

the right established by the ÑarbËn.

5/2/3/2: [It is permitted] for the owner of the existing commodity to issue a binding

promise to sell or for the party interested in acquiring it through a purchase to issue a

binding promise, as long there is no quid pro quo involved. This right is not tradable.

Suggested Parameters for Promises and Bilateral Promises

If we say that fulfilling promises is a binding obligation, then promises should not be used

indiscriminately; rather parameters must be laid down for their use. These parameters are

essential in order to prevent excessive permissiveness in making promises binding and

ignoring the fundamental purpose of contracts. Among the suggested parameters are the

following:

1. Promises should not displace and impede the objectives of contracts. Partnership

contracts are intended to make the contracting parties share in profit and loss;

therefore, promises should not be used to negate this feature of sharing profit and

loss.

2. The primary objective of promises should not be to replicate the features of

conventional products; promises should not be made the means for deferring to

the dominant elements of conventional transactions.

3. Promises should not be used except in situations that call for their use; they should

not be made a primary constituent of contracts.

4. Both the customer and the bank should have the complete freedom to complete

the contract or abandon it. Neither party should encumber the other with specific

conditions; this is in order to ensure that both parties are satisfied with the contract

when it is enacted.

5. A binding promise can only be issued by one of the two contracting parties.

Therefore, it is not permitted for the promissory document (or what fills in for it)

to comprise any binary promises binding on both parties (the institution and the

customer).

6. The basic purpose of a binding promise is to gain assurance that the promisor will

fulfil his responsibilities, as stated in the promise. In case the promisor is unable to

fulfil his promise and the institution has alternatives to the promise, the institution

should avail of the alternatives instead of demanding compensation from the

customer.

7. Both contracting parties should be given complete freedom to change the articles

of the contract, on the condition that the change occurs with the agreement of both

parties. Neither party should have a unilateral right to make changes.

8. In case of a breach of a binding promise, the institution would have the right to

compensation for actual damages resulting from the customer‟s reneging, but it is

not lawful to include calculated lost opportunity costs as part of the compensation.

9. The document of the binding promise should be kept separate from the contract.

Conclusion:

Developments in the field of Islamic banking and Islamic financial markets impose demands

upon all stakeholders to adopt a long-term vision regarding some aspects of implementation

in this field. When SharÊÑah scholars gave permission to Islamic banks for certain transactions

in the early period of the development of Islamic banks, it was to give those banks an

opportunity to grow. The time has now come to re-examine the details of these issues and

change what is in need of being changed. Regarding promises, we have found that some

Islamic financial institutions have been indulgent in their use. It is worth mentioning that

many institutions use promises in order to protect the bank or the investors from the element

of risk. Unfortunately, some have also used promises as a means to replicate the features of

conventional usurious products. The time has now come for all those dealing with Islamic

financial institutions to understand the objectives of Islamic transactions. One of them is

formulated in the famous legal maxim

اغش تاغ

“Responsibility accompanies profit.”

Therefore, all parties must understand how important it is for both parties of a contract to

bear responsibility for the risks involved and not try to shift all the risk to the other party.

It is also necessary to reiterate and emphasize that the products offered by Islamic financial

institutions must be subject to the parameters of the SharÊÑah, which include Islamic legal

maxims, Islamic morals and the objectives of the SharÊÑah. We end this article with a

statement made by ÑUmar ibn ÑAbd al-ÑAzÊz,

.اط ألضة تمذس ا ئحذثىا فجىس حتذث

“Legal cases arise among people in proportion to the new forms of corruption they initiate.”

May Allah bless our sayyid, MuÍammad, and his family and all his companions; and all

praise is for Allah, Lord of the Universe.

And we ask Allah success and appropriateness in all our strivings to please Him.

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Websites

www.moamalat.al-islam.com

www.almoslim.net

www.ubs.com