Thursday, August 13, 2009

WA'AD VERSUS MUWA'ADAH

Promises are special in our society because there is a societal or moral convention that allows a promisor to be treated as bound to his promise (promises here including behaviour making others believe that one has promised, as well as the more obvious overt statements such as ‘I promise …’).


The fuqaha (Muslim jurists) have different views on the subject of “promise” and their views are summarized as follows :


1. Many of the scholars believe that “fulfilling a promise” is a noble quality and its violation is reproachable, but is neither mandatory (wajib) nor enforceable through courts of law.

2. A number of fuqaha opined thatfulfilling a promise is mandatory (wajib) and a promisor is under moral and legal obligation to fulfil his promise, which means that a promise can be enforced through courts of law.

3. Some Maliki jurists are of the view that in normal conditions, a promise is not binding, but if the promisor has caused the promise to incur some expenses or undertake some labour or liability on the basis of promise, it is mandatory on him to fulfil his promise for which he may be compelled by the courts.


One can equate the Maliki’s view of promise to the civil law principle of “promissory estoppel”, where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it. It is not necessary, in order to attract the applicability of the doctrine of promissory estoppel that the promisee acting in reliance of the promise, should suffer any detriment. The only thing necessary is that the promisee should have altered his position in reliance of the promise.


Wa’ad (unilateral promise) versus Muwa’adah (mutual promise)


In Islamic law, wa’ad (unilateral promise) means promise which connotes an expression of willingness of a person or a group of persons on a particular subject matter. In a commercial transaction, a promise carries dual connotation; an offer from the offeror is known as promise, and acceptance from the offeree is also recognized as promise. Wa’ad in the practical sense can be explained as a commitment made by one person to another to undertake a certain action beneficial to the other party.


On the other hand, muwa`adah is defined as a mutual promise between two parties with the intention to conclude a contract in the future.


Enforceablity of wa’ad and muwa’adah


Keeping in view the requirements of modern businesses, majority of contemporary Shariah scholars has unanimously decided that wa’ad is enforceable by law until and unless the promisor is in a genuine problem. However, in such case, he will have to compensate the promisee for his actual loss (excluding opportunity costs) suffered due to his default.


So far as muwa'adah is concerned according to majority of the Shariah scholars, muwa’adah is not allowed in situations where aqd is not allowed (e.g. forward contracts), and thus is not enforceable by law. However, keeping in view the requirements of modern businesses, some scholars allow muwa’adah and are of the view that it is enforceable by law. They argue that sometimes muwa’adah is genuinely required, for instance, importer/exporter need to hedge foreign exchange in a volatile exchange rate scenario.


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