Ethica Institute of Islamic Finance™

How should one proceed to resolve disputes regarding the terms and conditions of an agreement?

In order of precedence, disputes regarding the terms of an agreement should be resolved according to the following:

• Evidence and witnessing;

• Swearing of oaths by either buyer or seller, where the word of the one swearing the oath takes precedence over the word of the one not swearing an oath;

• Swearing of oaths by both buyer and seller, creating a deadlock; all else equal, it is recommended for a statement of denial to take precedence over a statement of affirmation (e.g. “this sale is not invalid” takes precedence over “this sale is invalid”, because the former statement supports the status quo (i.e. a valid sale) and denies a need for change);

• Failing an agreement on terms, the buyer and seller have the right to agree new terms;

• Failing an agreement on terms and any subsequent resolution, the buyer and seller have the right to cancel the sale between themselves amicably;

• If no amicable solution is possible, the relevant authority (e.g. judge) cancels the agreement and returns any exchanged property to its original owner.

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