Khiyar al-shart (option of stipulation)

خيار الشرط

The option of stipulation (khiyar al-shart) is a compound name for the right, set by stipulation, of one party to choose between confirming and annulling; Ibn Arafa defines it as a sale whose conclusion is held back for a confirmation expected. Other names: the stipulated option (distinguished from the legal option, such as defect), the option of deliberation, and the sale of option. ¹² Its lawfulness: most jurists hold it lawful and not contrary to the contract, on the report of Ibn Umar and of Habban ibn Munqidh ("when you sell, say: no deceit" and "you have the option three nights"); al-Nawawi and Ibn al-Humam report agreement. ²³ Wording: no fixed words; any word that conveys the option (consent, will) is enough, and custom counts for the Malikis, as when people have long bargained with an option in a certain sale. ³⁴ Conditions: it must be stipulated in the contract or its session in the Shafii and Hanbali view; the Hanafis allow it to be added later as if at the contract; it must be limited by a known term, since an unlimited option causes gross ignorance. ⁴⁵⁵⁶ Term: the least is not fixed and may be a moment; for the greatest, Ahmad, Muhammad al-Shaybani, Abu Yusuf and others allow any term by agreement, while Ibn Abi Layla, Ibn Shubruma and others too; Ahmad says he dislikes a long term, and the author of Ghayat al-Muntaha finds a term far beyond custom (such as a thousand years) invalid; Malik limits it by need and what is usual for the sale. ⁶⁷ Purpose: to let the party consider and test the thing; the term under the Malikis is measured by what the thing needs to be tested and consulted about. ⁶⁷ Term for land: the outer limit is one month plus six days, so the option may run up to thirty-six days; two further days are added so that the buyer, still holding the thing at the end of the term, can return it. ⁸ Animals: if the option is to learn their food, strength and price, the limit is three days; if to test them within the town, one day or so; outside it, a barid (half a day's march) according to Ibn al-Qasim and two barids according to Ashhab. Clothes, goods and fungibles: three days plus one day. Fruit and vegetables: the term is set by what testing needs before they change. ⁸ The third view fixes three days with their nights for any subject, and forbids more. It is the view of Abu Hanifa, Zufar and (in the better-known report) al-Shafii. The sources are the report of Habban ibn Munqidh and the hadith of the sheep with its udder held full (musarrah): whoever buys a sheep so held has the option for three days, as al-Shafii argued. ⁸⁹ Beyond three days: for Abu Hanifa and Zufar the contract is void as fasid; for al-Shafii it is void as batil. Abu Hanifa alone holds that dropping the excess makes the contract valid, as long as the three days have not passed; Zufar disagrees, since continuation follows the original validity. The Malikis add that the term is faulty if it is to consult someone whose view is known only after it ends, or if it greatly exceeds the life of the goods; one extra day does no harm. ⁹¹⁰ An option with no term has four views. (1) The contract is void or invalid: al-Shafii and, in one report, Ahmad; the Hanafis hold the sale invalid without distinguishing gross from small uncertainty. Abu Hanifa and his companions hold that if the defect is removed within the three days the contract becomes valid; the two companions hold it valid even after three days. (2) The condition is void but the contract stands: one report of Ahmad, and Ibn Abi Layla. (3) The contract stands and the term is set: Malik lets the judge fix the usual term for testing such goods; Ibn Taymiyya suggests three days if they gave none. (4) The contract stands and the option stays open as it arose, the view of Ibn Shubruma and one report of Ahmad. ¹⁰¹¹ Permanent option: a condition that makes the option last forever (or for unstated days) invalidates it. Unknown term: invalid, whether the uncertainty is gross (wind, rain, a person's arrival or death, the birth of a pregnant animal) or slight (harvest, threshing, the return of pilgrims). ¹¹ Connection: the term must start at the contract. If the term is set to begin later (from the end of the month or tomorrow) the sale is void for the Hanafis, Shafiis and Hanbalis; the Hanafis rescue it by counting the gap within the term, as in an option of two days after Ramadan in a contract made at the end of Ramadan. Continuity: the parts of the term must follow one another; for a day held and a day not, the Hanbalis have two views. ¹¹¹² Holder: the option holder must be named. If the parties give it to one of them without naming which, or to whomever one of them chooses, it is void according to Ibn Qudama; al-Nawawi holds the sale valid if the option is for one party only. ¹²¹³ Contracts: the option belongs only to binding contracts that can be rescinded. Sale is its main field, including sale of trust such as murabaha. The exceptions are salam, exchange of money (sarf) and exchange of ribawi goods of the same kind, for which some Hanbalis require the price to be received in the session; Ibn Abidin notes that excluding salam and sarf strains the rule, and the Malikis allow it in short salam. ¹³ Other contracts: leasing takes the option in general for Hanafis and Malikis; Shafiis and Hanbalis allow it only in leases on the debt, or in fixed leases whose term does not begin at once. Transfer of debt (hawala): accepted by the Hanafis, refused by the Shafiis and Hanbalis as it is not built on exchange. Division: divided; division of different kinds is by consent, division of the same kind of values takes the option. Guarantee (kafala): the Hanafis allow it, and Abu Hanifa allows more than three days because it is built on latitude. Waqf: allowed by Abu Yusuf, void for Muhammad, and in the Shafii and Hanbali view. ¹³¹⁴ Who may stipulate: the option may be given to either party or to both, the view of most jurists; al-Thawri and Ibn Shubruma limited it to the buyer. It may be given to a third party: the jurists agree this is sound if the third party can speak for himself. The Hanafis base this on juristic preference (istihsan), because a party with little experience may need someone wiser; Zufar objected because the option is part of the contract. ¹⁴¹⁵ A third party as option holder: the Malikis say that if the term reads 'on the advice of so-and-so', both the contracting party and the adviser may decide alone, since advice does not bind to agreement; if it reads 'on so-and-so's option' or 'consent', the better view is that it is delegation, not agency, and the contracting party cannot decide alone. Words close to these, such as 'if he wills he confirms, if he wills he annuls', count the same. The Shafiis hold the option for a third party is delegation or arbitration, not agency, and that is their sounder view; Abu Yaala held that it is then invalid. ¹⁶ Consultation clause: the Shafiis have two views on whether the party must state he consulted and was told to annul; the Hanbalis do not require it, and al-Nawawi affirmed the first view. The person consulted must be named; 'on my consultation' without naming him is not enough, though al-Adhra'i thought it sufficient. The Hanafis have no text on the point that the compiler found. ¹⁶¹⁷ Agency in the option: the option belongs to the contracting party who stipulates it for himself, whatever his position: owner, guardian, executor, agent, or the partner or mudarib of a company. A guardian or executor may stipulate it for the good of the minor or the ward; an agent acts on the principal's general instruction to contract, which includes an option. ¹⁷ The agent in the Shafii view: an agent may stipulate the option for himself or for his principal. A selling agent may not give the option to the buyer, nor a buying agent to the seller; if he does, the contract is void unless the principal permits it. The better view is that the option does not pass beyond the party named. The Hanbalis agree that an agent may stipulate it for himself. An agent must act for his principal's benefit, since he is trusted. ¹⁷¹⁸ Several parties: as the option holds for a single party, it also holds for several, as when two partners sell a thing or one owner sells to two buyers who stipulate the option for both. ¹⁸ Effect of the option on the contract: it prevents the contract from taking effect in its legal rule for the party holding the option. Abu Hanifa holds this also against the other party; his two companions hold that the rule takes effect for the party without the option. Al-Kasani describes the contract as suspended, not known in its rule until the option ends. The Shafiis treat it as suspended; the Malikis hold the seller keeps ownership of the thing. ¹⁸¹⁹ Effect on transfer of ownership: with the option for both parties the Hanafis hold that neither price nor thing changes hands, and the Shafiis suspend the transfer until the option ends; the Hanbalis hold that ownership passes to the buyer at the contract. With the option for one party, the Malikis hold that ownership stays with the seller, the sale being a dissolved not a formed contract, and confirmation then transfers it; another Maliki view and one of Ahmad hold the buyer owns it, or that it is suspended. When the seller holds the option, ownership stays with him, the buyer may not dispose of the thing, and the seller's disposal is an annulment. When the buyer holds it, ownership leaves the seller. ¹⁹²⁰ Liability for loss (Hanafis): when the seller holds the option and the thing perishes before receipt, the seller bears it. When it perishes in the buyer's hand after receipt and the option has ended, the buyer bears it at the price. When the seller holds it and the buyer had received the thing and it perished during the option, the buyer bears it at value, as with a thing taken for inspection. When the buyer holds the option and it perishes in his hand, he bears it at the price, since loss is a defect that leads to perishing. ²⁰²¹ Liability for loss in other schools: the Malikis put liability on the seller, except that a movable thing that can be hidden, once lost with no proof, falls on the buyer. The Shafiis hold that if the thing perishes by heavenly cause after receipt and the option is the seller's, the sale is dissolved; if the option is the buyer's, the sale is not dissolved. The Hanbalis hold that ownership is the buyer's and so is liability, except measured and weighed goods, where liability stays with the seller until they are measured or weighed by the buyer. ²²²³ Increase in the object: the Hanafis divide increase into four kinds: connected and generated from the thing (fat, healing, ripening); connected and not generated (dyeing, sewing, building and planting on the land); separated and generated (offspring, fruit, milk, eggs, wool); and separated and not generated (rent of a hired thing, compensation for injury, and the mahr for intercourse by mistake). Other schools divide increase only into connected and separated. ²⁴ Ruling on increase in the Hanafi view: the general rule is that increase prevents return, so the contract is binding and the increase goes to the buyer, except that separated non-generated increase never prevents return, while connected generated increase is disputed. If the option is annulled, Abu Hanifa returns the thing with its increase, since ownership was suspended; the two companions hold the increase is the buyer's. ²⁴²⁵ Connected generated increase: Abu Hanifa and Abu Yusuf hold that it ends the option and the holder owns both the thing and the increase; Muhammad holds that the option does not end, and the holder may confirm or annul. ²⁵ Increase in the Maliki view: offspring and wool go to the buyer, as a part of the thing that remains; the rest, such as milk, fat, eggs and compensation for injury, go to the seller, because ownership stays with the seller during the option until the holder uses it. ²⁵ Increase in the Shafii view: separated increase during the option belongs to the one who owns the thing; if the option is for both, it is suspended like the thing itself. Connected increase follows the thing, and a pregnancy present at sale is part of the thing. The Hanbalis give all increase to the buyer, connected or separated, even if the thing is still in the seller's hand before receipt, citing the hadith «the yield goes with the liability». ²⁵²⁶ Delivering the two prices during the option: it is agreed that neither side must deliver during the option unless stipulated; the seller need not hand over the thing at once, nor the buyer the price, until the term ends or the holder waives it. Voluntary delivery does not void the option, if it is meant for testing and not for ownership; if the seller delivers the thing as ownership while holding the option, his option ends. If one party delivers voluntarily and the other refuses, Abu Hanifa does not compel the other, and the Shafiis allow the deliverer to take it back. ²⁶²⁷ Ending the option before use: by the coming of age of a minor for whom a guardian contracted; by madness or the like; or by the death of the holder, which is disputed. Abu Yusuf holds that the minor's coming of age ends the option for the guardian and binds the contract; Muhammad holds that it does not, and his reports differ. Madness does not end the option in itself, but the lapse of the whole term without a decision does; if the holder recovers in the term, he keeps his option for the rest, in the sounder Hanafi view. The Malikis say that if the holder goes mad and does not recover, the sultan considers what is best for him. ²⁷²⁸ Ending the option by confirmation or by lapse of term: the option ends by confirmation, which may be express (words such as «I confirm the sale», «I have waived the option») or by implied act, such as disposing of the thing as an owner would, by sale, bargaining, lease, gift or pledge. Confirmation need not be known to the other party, and the thing need not still exist if it was fit at the contract. A settlement for money or goods to waive the option is valid, and becomes an increase in the price. ²⁹³⁰ Death: the Hanafis and Hanbalis hold that the option ends at the death of its holder, whether buyer or seller, and whether he acts himself or through an agent. The Malikis and Shafiis hold that it passes to the heirs. If the obligor dies, the option stays, and its holder may annul against the heirs, as al-Sarakhsi reports. ²⁹ Lapse of term: agreed in general, since the option is limited to a term and the contract is binding by default; the lapse is taken as confirmation, and the holder's silence over the term is consent, though Abu Yaala differed. The Malikis treat the lapse as an ending, not a confirmation: if the thing is in the buyer's hand, it is confirmation; if in the seller's hand, it is annulment. ³¹ Ending by annulment: may be express by words, such as «I annul the sale» or «I return the price», or by act, which shows return. An express annulment includes the seller saying he will not sell unless the price is raised, and the buyer saying he will not buy unless it is lowered. ³¹ Annulment by act: the option holder annuls when he deals with the thing as its owner would, or with the price if the option is the buyer's and the price is a specific thing. A debt cannot be annulled by act, since prices are not fixed by being named. The reason is that such dealing shows the holder keeps the ownership, and that can only be kept by annulment. Ibn al-Humam and al-Kasani hold that what the seller does with the thing would, if done with the price, confirm the sale, so it annuls the sale by implication. ³² Implied annulment in the Hanafi rulings: eating, drinking and wearing end the option (Qadikhan says wearing once does not); copying from a book does not, but erasing it does; riding an animal to water it, return it or feed it is confirmation for some, and Qadikhan says it does not void the option, by juristic preference (istihsan); sale, gift or pledge of the thing with delivery ends it, without delivery not; leasing is an annulment even without delivery, for some; Abu Bakr ibn al-Fadl separates delivery for testing (no annulment) from delivery for ownership (annulment). ³²³³ Conditions of valid annulment: the option must still exist. Abu Hanifa and Muhammad require that the other party know of the annulment; if the holder annuls without his knowledge the annulment is suspended, valid if he learns of it within the term, and the contract binds if the term ends unknown to him. Abu Yusuf has three reports, the best known requiring no knowledge; al-Shafii, the Malikis and the Hanbalis agree that knowledge is not required. Annulment must cover the whole deal and not split it; the Malikis compel return of all, and the Shafiis hold that splitting is not allowed in the sounder view. ³³³⁴ Transfer of the option at death: Malik and al-Shafii hold the option passes to the heir, since it is a right set to protect the property, like a pledge; the Hanafis say it does not pass, being a personal wish and will that is not transferred. The Hanbalis say it passes only if the holder claimed it before death; Ibn Qudama holds that the option of the dead party lapses, while the other party's option stays. ³⁴³⁵ Madness and fainting: for the Shafiis the option does not end on madness or fainting; the guardian or the judge acts for the holder by what is in his interest; a mute with no understood sign has a judge's agent appointed. For the Malikis, the judge acts when madness is not expected to end, or when it lasts long enough to harm the other party; the sane holder may annul or confirm and overturn the guardian's acts if he has proof. A person in a faint waits until he recovers; if he recovers after the term, a new term is granted. ³⁵³⁶