What Does The Quran Say About Contracts?

According to the Quran, a person should stand up for justice even if it means going against his or her own family or themselves. It forbids acting unfairly and distorting the law. Another verse claims that God has commanded people to act justly and that He loves those who treat others fairly. In this context, the Islamic scholar Ibn Taimiyyah (d. 13th century) stated: “God does not uphold the unjust even if it is Muslim (believing) but He upholds the just state even if it is unbelieving.” Furthermore, according to a Prophetic tradition, nothing punishes a sinner more quickly than injustice (and oppression) and the severing of family bonds.

Contracts are essential in Islam to protect all parties from injustice of any kind. Oral or written contracts are both acceptable, but written contracts are preferred. The Quran commands people to follow through on their commitments once they are made. In addition, the Quran says that people must carry out their duties because they will be questioned about whether or not they did so on the Day of Reckoning. The Quran also states that a person must fulfill any obligations they may have entered into and that Allah detests those who promise to do something but then fail to follow through on their promises.

Contractual obligations and rights between the employer and employees may be specified in a contract. Similar statements are found in hadiths as well, where the Prophet refers to someone who breaks a promise made in a contract as a hypocrite. He betrays trust when entrusted with something. Another hadith we came across states that people should follow their agreements unless they contain conditions that are against Islamic law and convention. According to another tradition, Islam forbids any agreement that would be detrimental to any party.

Guidelines that must be adhered to before any contractual obligations begin.

• The parties should come willingly to work together and there should be no coercion involved in the contract’s creation. The Quran permits any party to openly terminate a contract if they feel that it was imposed against their will and are afraid that the other party is abusing their position because of unfair terms in the agreement. The Quran also teaches that someone who follows agreements is similar to a prophet, and people who break agreements are similar to Satan. Each party needs to understand their rights and responsibilities.
• Among other things, the contract should clearly state the quantity and quality of work as well as the amount of compensation, time of work, and interval of compensation.
• To facilitate an amicable resolution in the event of a dispute, the parties should put their agreement in writing. “Do not try to get out of writing the contract down, along with its due date and contract terms, whether it is small or large,” the Quran says. This process reduces the likelihood of doubt, makes more credible testimony, and is more equitable in God’s eyes”.
• The Quranic verse, “Do not wrong others, and you will not be wronged”, is also incorporated into the contract as a boilerplate no-harm clause as well as a hadith that advises against causing harm to others or suffering yourself. No clause in the agreement should give one party an unfair advantage at the expense of the others.

Regarding whether to uphold or terminate the agreement, Islam generally advocates for its continuation, unless and until it compels the employer or employee to commit a crime. However, in cases of extreme negligence or flagrant misconduct, it permits the employer to fire an employee without having to pay a severance.

It also permits the worker to change jobs if another opportunity arises and to end the employment agreement. According to a Prophetic tradition, “If you swear to do something and a better option presents itself, break the vow, make amends, and do the right thing.” To determine whether a contract can be broken at the will of one party or not, as well as whether cancellation of the contract is permitted by agreement or unilaterally, rules governing contract termination and other terms must be followed.

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