The Shari’ah rulings on Online
Financial Dealings has discussed in details in the sharia
standard[1]
for Islamic Financial Institutions developed by AAOIFI. This standard covers
the Shari’ah rulings relating to conclusion of financial contracts online,
either by launching commercial websites,
or by provision of online access services. The standard also indicated the
various aspects pertaining to this subject such as the Shari’ah
status of the contracts concluded in this manner, determination of the time of
contract inception, permissible procedures of possession after signing the
contract, and Shari’ah rulings relating to protection of online financial
dealings.
According to the standard, it is permissible in Shari’ah to:
1) Launching Commercial Websites for Contractual Dealings and and to conclude online contracts
2) Provide online access services to users on the basis of subscription contracts or any other similar arrangement, and against a specific fee.
The contract for provision of online access service by the institution is a shared-hiring contract “Ijarah Mushtarakah” signed between the institution and the beneficiary. Therefore, it should become subject to the conditions and rulings of the contract for hiring of persons in general, and those of the contract for hiring of a shared employee in particular. Moreover, the institution which provides online access service should take all necessary precautions and measures to prevent impermissible use of the internet by the beneficiaries to whom the Institution provides the access service.
The various aspects
pertaining to Online Financial Dealings
1) Contract Signing Session (Majlis al-’Aqd) for Concluding Online Financial Contracts
When the contract is concluded through audio or audiovisual communication
between the two parties, it should become subject to the same Shari’ah rulings
on contracts signed in the presence of the two parties. Consequently it should
satisfy the rulings relating to this type of contracts which include, for instance:
simultaneous presence of the two parties (Itihad al-Majlis), non-existence of
any indication of disinterest from any of the two parties, succession of offer
and acceptance (as per normal practice), and all the other rulings. The
contract signing session in this case is the time of communication between the
two parties if the conversation relates to the contract. If the conversation is
over or disconnected, or the two parties shifted to another subject, the
contract signing session is considered to have stopped (unless disconnection of
the conversation is for a reasonably short while).
When the contract is concluded through written
communication, by e-mail, or through access to site, it shall become subject to
the rulings applicable to contracts signed in the absence of the two parties,
because such deal is similar to message contracting. The contract signing
session in this case starts from the moment of communicating the offer to the
concerned party up to issuance of acceptance. The contract signing session may
also be discontinued when the offering party retreats from his offer before an
acceptance decision is made by the other party. When the offering party
specifies a certain period for validity of his offer, the time allowed for
acceptance should cover the whole period. The offering party has no right to
withdraw from his offer during that period.
When the contract is concluded through online bidding the
highest bidder should not retreat from his bid until the bidding process is over.
The highest bidder should also not retreat from his offer after finalization of
the bidding process if the seller had made a condition that the offer should
remain binding for a certain period, or if the normal practice necessitates
validity of the offer for such period.
2) Expressing Offer and Acceptance in Online Financial Contracts
Expression of offer and acceptance in online contracts can
be in any form that indicates the consent of the two parties to conclude the contract.
When the offering party sends through website or e-mail a
message containing all the rights and commitments pertaining to the contract in
question without retaining the right of withdrawal if the message is accepted,
that message is considered as an offer.
When the offering party sends the electronic message through
website or e-mail without indicating all the rights and commitments relating to
the contract in question, or when he stipulates a condition that he should have
the right of withdrawal even if the message is accepted, the message is
considered to be an announcement or an invitation for contracting rather than
an offer. In this case a process of offer and acceptance has to be done.
When the contract is concluded through website, clicking on
the acceptance icon is considered as acceptance in the strict Shari’ah sense if
the system in the website does not require confirmation of acceptance. If the
system in the website requires confirmation of acceptance in any way,
acceptance does not take place without making such confirmation. The Institution
which provides its services on website should include in the system a step for
acceptance confirmation as a precautionary measure against dealers’ mistakes.
3) Time of Commencement of an Online Contract
Irrespective of the method of contracting, an online
contract is considered to be valid since the time when the other party accepts
the offer and whether the offering party has come to know that or not.
4) Possession (Qabd) in Online Financial Contracts
Regarding online contracts, possession in the strict Shari’ah sense takes place through all accepted methods of actual and constructive possession.If the sold commodity is computer software or the like, possession in the strict Shari’ah sense takes place when the purchaser, after signing the contract, downloads the software or the data or any good of this type from the website to his personal computer.
When the sold commodity is a currency, gold, silver or any other commodity in which instant exchange (Taqabud) is required, instant exchange of the two objects of the contract should be ascertained during the contract’s signing session.
5) Protection of Online Financial Dealings
1)
Protection of commercial sites and dealers data
against being trespassed. Commercial websites are considered as private
properties of their owners, and therefore their trespassing could necessitate compensation.
- The institution should use all possible measures of website protection, so as to safeguard its own rights as well as the rights of its clients.
- Trespassing of dealers’ online data is impermissible. It is strictly prohibited to sell such data or transmit it to others without the permission of its owners
- Verification of trespassing of commercial sites and data stealing should be done by referring to the prevailing traditions and regulating rules which do not encounter the rules and principles of Shari’ah.
- The compensation due in case of trespassing should comprise direct financial loss as well as actual loss of earnings. Expert advice for assessment of compensation can also be sought when need arises.
- Compensation shall become due only when it is claimed, whereas claiming compensation does not have a specific time limit after the incident of trespassing is known. In this regard relevant rules and regulations should be observed provided that they do not contradict with the rules and principles of Shariah.
- In case of stealing money or confidential data from a protected website the responsibility should rest with the person who committed the theft directly. If it is not possible, for a permissible reason, to charge the person who committed the act of theft directly, the responsibility should rest with the one who facilitated the act. The owner of the site is by no means chargeable for such act, if he has taken all possible measures to protect his site, and unless he has pledged to shoulder such responsibility under all circumstances.
2)
Verification of dealers’ identities
- In order to safeguard its own interests, the Institution should take all possible precautions and measures to verify the identities of its website dealers, and make sure that they are legally competent for concluding valid contracts.
- It is acceptable in Shari’ah to adopt the electronic signature as a means of verifying the identities of dealers, provided that such means is adoptable by virtue of the prevailing rules and regulations.
- When forgery or an error is committed with regard to the personality or characteristics of one of the two parties, the other party has the right to terminate the contract.
- For verification of forgery or error recourse should be to the general rules of evidence.
3) Protection of dealers from adhesion contracts (’Uqud al-Iz’an)
- It can be noticed that in a big part of the online contracts the offer is addressed to the public in general and the contract has uniform details. In such contracts also the offering party alone has the right of stipulating the terms and conditions of the contract, while the other party does not have the right to change such terms and conditions. A contract of this type is considered as an “adhesion contract” when it relates to a commodity or usufruct that nobody can do without, and the offering party assumes actual and legal monopoly or face only meager degree of competition in its supplying.
- According to Shari’ah, online adhesion contracts should be subject to state control so as to protect dealers by endorsement of what is equitable and elimination of what is inequitable in these contracts, before launching them to dealers.
- If the price in the online adhesion contract is fair, and the terms and conditions of the contract do not entail any injustice for the adhering party, the contract is considered to be permissible and binding to its two parties.
- If the price in the online adhesion contract is unfair (comprises excessive injustice), or the contract includes an unjust condition for the adhering party, the latter has the right to resort to law for nullification of the contract or amending its conditions for the sake of relieving him from the consequent injustice.
4)
If the online contract is concluded on the basis
of describing the sold object, or depending on the fact that the buyer has
previously seen the object, or on presentation of a model resembling the object,
Some of the Shari’ah Basis for the Standard
i.
The basis for
permissibility of launching commercial websites if such sites are free from
impermissible practices is the fact that in principle, transactions in any form
are allowed, unless they lead to commitment of an impermissible act. Moreover,
launching of such sites serves the interests of a large number of people in this
era, and thus, conforms to the underlying mission of Shariah.
ii.
Permissibility of
concluding online financial contracts is due to the fact that such contracts do
not involve any impermissible aspect. They carry no difference from traditional
contracts except in that the means used for their conclusion is different. If,
in principle, contracts as such are allowed as long as they observe the rules
of transactions in Shariah, it is only natural that the means whereby these
contracts are concluded become allowed as long as they conform to permissible
rules of contracting.
iii.
Concluding online
contracts through audio or audio-visual communication between the two parties is
classified under the category of contracts concluded in the presence of the two
parties, because in such online contracts both parties are in fact present at
the same time, although not in the same place. Therefore, simultaneous presence
of the two parties in terms of time, which constitutes the prerequisite meant
by coincidence of presence,[2] is fulfilled at the time
of exchanging offer and acceptance.
In this connection the International Islamic Fiqh Academy
issued a resolution about the Shariah ruling on concluding contracts through the
modern means of communication. The text of the resolution is as follows:
“If any two parties enter into a contract at the same time
while they are in different places – this includes
contracting through telephone and wireless devices – contracting between these
two parties is considered as contracting between two present parties”[3]. Needless to say, there is no difference between contracting
through a telephone call, and contracting through online voice communication.
iv.
When the contract is
concluded through written communication, by e-mail, or through access to site,
it shall be classified as a contract signed in the absence of the two parties.
This ruling is based on the fact that exchange of offer and acceptance in this
case takes place without simultaneous presence of the two parties. In this
regard the Al Baraka Seminar on Islamic Economics issued a resolution stating
that
“According to Shari’ah, when an online contract is signed
between two parties who are not in the same place, it is considered as a
contract between two absent parties if neither of the two parties can hear the
voice of the other. Consequently such contract should become subject to the
Shari’ah rulings on message contracting”[4].
v.
The ruling that the
offering party does not have the right to retreat from his offer within the
period specified by the seller for validity of the offer is based on the
viewpoint of some Maliki scholars who believe that if an offer is announced to
be valid for a specific period it should remain valid throughout that period.
This viewpoint has been emphasized by Al- Hattab quoting Abu Bakar Al-Arabi.[5] In this
regard also The International Islamic Fiqh Academy issued a resolution emphasizing
the following:
“When the offering
party issues a term-offer through these devices, he is committed to keep his
offer during the specified period. He does not have the right to retreat from
it.”(6)
vi.
When the offering party sends the electronic
message through website or e-mail without indicating all the rights and
commitments relating to the contract in question, or when he stipulates a
condition that he should have the right of withdrawal even if the message is
accepted, the message is not considered as an offer, because from a Shari’ah
point of view an offer should be categorically obvious and cannot bear any
other meaning.(7)
vii.
The ruling that
irrespective of the method of contracting an online contract is considered to
be valid since the time when the other party accepts the offer and whether the
offering party has come to know that or not, is based on the fact that Shari’ah
scholars define contract as “the
concordance of two wills”. Therefore as soon as the accepting party declares his
consent concordance between the two wills takes place and the contract becomes
valid[6]. A resolution issued in this regard by the International Islamic Fiqh
Academy states: “When a contract is to be signed, through a written message or
a messenger, between two absent parties who are not in the same place and
neither of them can see or hear the other - a case which includes contracting
through telex, fax and PC screens - the validity of such contract starts as
soon as the concerned party receives and accepts the offer”[7].
viii.
The ruling that possession in the strict Shari’ah
sense takes place when the purchaser, after signing the contract, downloads the
computer software or the data or any other good of this type from the website
to his pc, is based on the fact that possession takes place actually and
constructively when the sold object is released and disposition is facilitated
for the buyer. Possession of objects differs according to the type of the
object in question and how its possession is normally perceived. In this
respect a resolution has been issued by the International Islamic Fiqh Academy
regarding possession and its forms, especially the recent ones.(10)
ix.
Prohibition of
trespassing commercial websites and data theft is derived from prohibition of
all forms of encroaching upon rights of others because Allah, the Almighty,
says: {“…but transgress not the limits. Truly, Allah likes not the
transgressors.”}.[8] Moreover, websites have financial worth, and are considered as private rights
of their owners. Trespassing of such sites may result in financial harm for their
owners. In this regard the International Islamic Fiqh Academy issued a
resolution emphasizing prohibition of transgression against trade name, trade
address, trademark and all other similar rights.[9]
x.
Acceptability of
adopting the electronic signature as a means of verifying the identities of
dealers if such means is recognizable by the prevailing rules and regulations
is based on the need to avoid the harm that could arise from online forgery in
the dealers’ identities. In addition to that, adopting electronic signature
does not constitute an impermissible practice. In fact Shari’ah encourages the
use of technological means to preserve peoples’ wealth, because preservation of
wealth constitutes one of the main five aims (Maqasid) of Shari’ah.
[1] Shari’ah
Standard No. (38): Online Financial Dealings, page 943
[2] See: “Fath Al-Qadir” [3: 190–192]; “Hashiyat
Al-Dusuqi ’Ala Al-Sharh Al-Kabir” [3: 5]; “Mughni
Al-Muhtaj” [2: 5];
“Al-Mughni” [3: 481]; and see “Al-Madkhal Al-Fiqhi Al-’Am” [1: 348].
[3] Resolution No. 52 (3/6).
[4] The 19th Al Baraka Seminar on Islamic Economics,
held in Makkah Al-Mukarramah, on 6–7 Ramadan 1420 A.H., corresponding to 2-3
December 2000 A.D.
[5] (5)
See: “Mawahib Al-Jalil” by Al-Hattab [4: 241]. This viewpoint has been adopted
by a number of civil laws, and is known as “Term Offer”. See article (98) of
the Jordanian Civil Law and article (93) of the Syrian Civil Law.
[6] (8)
See: “Bada`i’ Al-Sana`i’” [6: 2994] and “Hashiyat Ibn ’Abidin” [7: 26].
[7] (9)
Resolution No. 52 (3/6).
[8] (11)
[Al-Baqarah (The Cow):190].
[9] (12) Resolution No. (5), 5th Session 1408 A.H.
– 1988 A.D.
