In the Name of Allāh,

the Entirely Merciful, the Especially Merciful

Praise is due to Allāh, Lord of the worlds, may the blessings and peace be upon our master Muḥammad, the last of prophets, on his family, and all his companions.

Resolution No. 132 (6/14) Adhesion Contracts

The Council of the International Islamic Fiqh Academy of the Organization of the Islamic Conference, holding its 14th session in Doha, State of Qatar,on 7–13 Dhū al-Qi’dah 1423h (11–16 January 2003),

Having examined the research papers submitted to the Academy concern- ing Adhesion Contracts,

Having listened to the discussions on the subject,

Resolves

1. Adhesion Contract is a western recent legal term given to agreements characterized by the following terms and conditions:

   1. The contract relates to goods or services that all people need and cannot do without, such as water, electricity, gas, telephone, mail services, public transport, etc.
   2. The supplier of such goods or services has an actual or legal monopoly status in their provision or at least controls their provision to the extent that makes competition very restricted.
   3. The supplier alone has exclusive control over the detailed terms and conditions of the contract, leaving no room for the other party to negotiate, drop, or amend any of them.
   4. The offer (supply) is made unified and continuously open to the whole public with the same terms and conditions.
2. The Adhesion Contract is concluded by the meeting of the offer and acceptance, which are presumed in any means that indicates the mutual consent of its two parties and the conformity between their two wills to conclude it, according to the terms and conditions presented by the supplier, and without making it conditional to a certain form of wording or a specific written format.

3. In view of the fact that the dominating party may misuse his control over the price and other terms of the contract, and hence fix them at a level that harms the public, it is mandatory in Shariah that adhesion contracts must be subject to state revision before implementation so that the state can endorse those which prove to be fair, and amend or cancel those which could lead to oppression of the complying party; this is in application to the Shariah vital principle of justice.
4. From the standpoint of Fiqh, actually concluded adhesion contracts could be divided into two categories:

First category: adhesion contracts that have a fair price, and do not contain any oppressive conditions regarding the complying party. A contract of this kind is valid in Shariah and binding to its two parties. Neither the state nor the judiciary has the right to interfere for cancel- lation or amendment of such contract, as there will remain no Shariah justification for doing so. That is because the party who controls the good or the service has willingly offered it at the Shariah-acceptable price, which is the normal price for similar goods or services (trivial inequity in price is condoned by Shariah and usual and customary tradition, for be- ing inevitable in financial exchange transactions) and also because selling a commodity to somebody, who is compelled to buy it, at a fair price is unanimously accepted by Shariah scholars.

Second category: is adhesion contracts, which are oppressive to the complying party because of their unjust price (comprising extreme ineq- uity) or its arbitrary and harmful conditions. In this case, the state should interfere to enforce a fair price and safeguard those who need to buy the good or the service in question. That is to say, the state may reduce the price to be commensurate with the price generally charged for similar goods or services, or it may cancel or amend the unfair conditions to achieve justice between the two parties to the contract. Interference of the state in this manner is based on the following justifications:

1. It is the state’s duty (walī al-Amr) in Shariah to ward off the harm encountered by the public when an individual or a company monopolizes a particular good or service and refrains from selling it to them at a fair price. Interference of the state to enforce the fair price, in this case, will ensure observation of two rights: the right of the public to be relieved from the harm resulting from a miscast of the monopolist with regard to price or conditions, and the right of the monopolist to get fair compensation.

1. Such pricing implies that more priority is given to the common interest of those who are in need to buy the goods or services for a fair price, over the private interest of the oppressive monopolist who refrains from selling the good or service to them except for an exorbitant price or unfair conditions. This priority order is well affirmed and established in the Fiqh Maxims that “Public interest supersedes private interest” and that “Private harm should be endured for warding off public harm.”

5. In the exclusive agency of imports, three cases should be distinguished:

First Case: when there is no indispensable need for the good or service in question whether for the public at large or of a group of them, such as when the good or service is of entertainment nature that people can do without or when there is a necessity or need that is not specific for this good or service because there exists another substitute available in the market at a fair price. In this case, the agents who has the exclusive right of imported good or service is entitled to sell it at the price he agrees upon with the buyer. Neither the state nor the judiciary has any right to interfere in fixing the price, as – in principle – contract validity is based on mutual consent of the two parties and the contract’s outcome is what they willingly commit themselves to. Moreover, because the agent’s ex- clusiveness of the product and its monopolization (if the word monopoly is taken in its strict linguistic sense) are permissible in Shariah, providing that the deal does not involve any harm or oppression to the public; a matter which makes pricing not permissible.

Second Case: when there is an indispensable public or group need for the good or service in question and the agent is willing to offer it at a fair price, i.e. a price that does not involve any excessive inequity or op- pressive control. In this case, also the state (or the judiciary) has no right to interfere in fixing the price because the act of the agent of exclusively owning the good or service in question and monopolizing it is a lawful act of disposing of own property, without causing harm to others. Then there should be no interference with him on this.

Third Case: when there is an indispensable public or group need for the good or service in question, and the agent is unwilling to offer it except for an excessively high price or subject to oppressive conditions; in such a case, the state must interfere with warding oppression off those who need it by way of enforced pricing on the agent.

Indeed, Allāh is All-Knowing.