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Monthly Archives: June 2008
June 23, 2008
DR. ZULKIFLI HASAN
The cases that changed Britain: 1917-1954 (Part III)
From Times By Gary Slapper
Bowman and others v Secular Society Ltd

May 15, 1917
This case was of considerable historic significance in supporting the freedom of a citizen to leave his wealth to whom he wanted. It is also solidified a great principle of British freedom of expression by ensuring that no legal disadvantage fell on those with dissentient ideas. The House of Lords upheld the lawfulness of a bequest to a company whose aim was opposing Christian dogma. In making this decision the Lords overruled precedents going back over 50 years. The next-of-kin of a testator challenged the bequest to the society on the grounds that its objects were unlawful. The House of Lords decided that there is nothing contrary to the policy of the law in an attack on or a denial of the truth of Christianity or any of its fundamental doctrines, provided that such an attack or denial is couched in temperate language and did not constitute blasphemy as defined by the common law.
Phillips v Brooks Ltd

April 12, 1919

This is a classic case in the field of contract law. It was an alarm bell for any star-struck retailers prone to be a bit too impressed by any display self-importance. A man bought pearls and rings worth £3,000 from a jeweller’s shop in Wardour Street, London after passing himself off as a wealthy gentleman from St James’s Square. The cheque was dishonoured — the man was in fact an imposter named North, who pawned one of the rings for £350. After the jeweller sued, the court held that as the jeweller intended to make a contract with the man in the shop, even though he was not who he said he was, the property had legally passed to him. North was legally entitled to sell it to a pawnbroker. The jeweller’s attempt to get the ring back failed.
R v Hurst and other Justices of Sussex, ex party McCarthy

November 10, 1923
This is, indirectly, one of the most often quoted cases in English law. It was famous for the Lord Chief Justice, Lord Hewart’s comment: “There is no doubt that it is not merely of some importance, but of fundamental importance, that justice must be done, and be manifestly and undoubtedly seen to be done”. A driving conviction was quashed because one of the magistrates’ clerks had an apparent conflict of interest: he worked for a law firm that acted for someone who was suing the driver in another case. No-one suggested the clerk behaved improperly, but it looked bad to have someone involved who was potentially partisan. The case cements a principle of fundamental significance to a civilised legal system: namely that all judicial processes must not just be fair but must never even be seen to raise a suspicion of unfairness. Public confidence in the law demands nothing less.
Parkinson v College of Ambulance Ltd and Harrison

August 1, 1924
In the realms of the oxymoronic, “buying honour” must sit alongside “open secret” and “larger half”. But the attempt to purchase honours is not a recent development in British public life. In this case, the law set a clear precedent in how it should be treated. The secretary of a charity fraudulently promised Colonel Parkinson a knighthood if he made a large donation. Parkinson, accordingly, gave £3,000. But after he didn’t receive a knighthood, he sued the charity and its secretary for breach of contract. It was held that a contract for the purchase of an honourable title is an improper and illegal contract since it is against public policy. As Parkinson knew he was entering into an improper and illegal contract he could not recover the money. A year later, such activity was also criminalised by statute law.
R v Betts and Ridley

December 20, 1930
Victor Betts and Herbert Ridley agreed to rob a man. The plan was simple: Betts would push him to the ground and seize his bag while Ridley waited in an escape car round the corner. But Betts struck the man with such force that the man died. They were both convicted of murder and sentenced to death. Ridley’s appeal failed. It was held that to be convicted it was not necessary that an accessory should be actually present when the offence was carried out. If the main criminal actor departed wholly from the scope of the agreement then he alone would be liable. But where the principal substantially complied with the plan and there was a departure only in the time, place or manner of execution of it, then the person soliciting the offence would be guilty of that offence, either as an “accessory before the fact” if he were absent and as a principal if he were present or nearby.
Tolley v J S Fry & Sons Ltd

March 24, 1931

This colourful case helped put advertisers on guard against unlawfully exploiting the reputation of public figures without their consent. It encompassed several elements cherished in Britain — sport, chocolate and scandal — and so its legal principle became widely understood. The defendant, a chocolate manufacturer, published an advertisement featuring a caricature of Cyril Tolley, a prominent amateur golfer. It depicted him playing golf with a packet of their chocolate protruding from his pocket. Pictured with him was a caddy, who likened the excellence of the chocolate to that of Tolley’s drive. The ad was published without Tolley’s knowledge or consent. He sued, alleging it constituted a libel. He said the ad was understood to mean that he had permitted his portrait to be exhibited for the purpose of advertising chocolate and that that he’d done so for gain and reward. This would mean that he’d prostituted his reputation as an amateur golf player for advertising purposes. He was awarded £500.
Bell and another v Lever Brothers Ltd and others

December 16, 1931
This case on directors’ contracts caused quite a stir at the time. It concerned what happens when both sides to a contract make a mistake. Lever Brothers, the largest shareholder in the Niger Company, appointed Ernest Bell chairman of Niger’s board at a salary of £8,000 a year. It appointed Walter Snelling as vice-chairman at a salary of £6,000 a year. Behind the company’s back, the two executives speculated in cocoa, a commodity in which Niger dealt, which would have justified both being sacked. But it was for other reasons that their appointments were later cancelled. Unaware of their breaches of duty, Lever agreed to pay Bell £30,000 and Snelling £20,000 — a lot of money at the time — as compensation for terminating their services. Later, Lever said it would have sacked them without pay if it had been aware of their breaches of duty. The company tried to get the money back but the House of Lords said the company’s mistake wasn’t sufficiently fundamental to allow it to avoid the contractual obligation to pay the compensation.
Fardon v Harcourt-Rivington

January 22, 1932

An important ruling on the law of negligence involving cars, pets, shopping and gore. Mr and Mrs Harcourt-Rivington of Langhan Street, London, left their car outside an entrance of Selfridges off Oxford Street. They left their large Airedale dog in the car while they popped in to the department store. For reasons unknown, the dog became excited and started jumping around, barking furiously. It pawed the rear glass window, shattering the window pane. Improbably, a shard of glass flew off into the eye of a passer-by, Oliver Fardon. Fardon’s eye had to be removed. Were the couple liable to pay compensation? The House of Lords ruled that people should take care to guard against “realistic possibilities” but are not liable if we fail to guard against “fantastic possibilities”. The accident in this case, the judges ruled, was a “fantastic possibility”.
Donoghue v Stevenson

May 27, 1932
Among lawyers and law students this is probably the most famous case in British history. Never have so many cases flowed from a single formulation of law. On August 26, 1928, May Donoghue sat in the Wellmeadow Café in Paisley and drank the defendant manufacturer’s ginger beer, which her friend had purchased for her. The bottle contained the decomposed remains of a snail. After drinking it, Donoghue suffered from shock and severe gastro-enteritis. As she could not sue under contract law since it was her friend, and not she, who had purchased the drink, she brought a claim on the alleged negligence of the ginger beer manufacturer. The case settled for £200. Lord Atkin, hearing the case, stated: “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour.” Seventy-five years on, a mountain of cases has arisen from actions brought by citizens under this principle. Negligence cases in their millions have been brought against manufacturers, drivers, employers, government departments, doctors, local authorities, accountants, and even lawyers.
Haynes v G Harwood & Son

April 28, 1934
This classic case concerned the duty a negligent person owes to someone who acts to rescue a victim of the negligence. The claimant, Thomas John Haynes, was a Metropolitan police constable. On August 24, 1932, a two-horse van belonging to the defendants was left unattended in Paradise Street, Rotherhithe. The driver had put a chain on one of the wheels (which was afterwards found broken), but for some reason, possibly because of a stone having been thrown at them by a boy, the horses bolted along the street, which was frequented by children. Constable Haynes was on duty inside the local police station. Seeing the runaway horses with a van attached coming down the street, he rushed out and eventually stopped them, sustaining a severe injury. It was decided that the defendants’ employee was guilty of negligence in leaving the horses unattended in a busy street and that the constable’s injuries were the natural and probable consequence of their negligence. He won £350 in damages.
Duncan v Jones

October 17, 1935
In depressed economic times and with growing social discontent, the law dealt firmly with people wanting to exercise free speech. This case curtailed the extent of freedom of speech for decades. On May 25, 1933, Katherine Duncan addressed a meeting in Nynehead Street in London’s New Cross, opposite the entrance of an unemployed training centre. The meeting led to a disturbance at the training centre and the superintendant called the police. A year later, about 30 people including Duncan held another meeting in the same street. Duncan was about to mount a box placed in the roadway when the chief constable told her that the congregation had to move to another street 175 yards away. She ignored him and began to step on the box to address the meeting; she was swiftly arrested and prosecuted for unlawfully and wilfully obstructing the police officer when in the execution of his duty. There was no obstruction of the highway except for the box and the presence of the people surrounding it. Neither Duncan nor any of the persons present at the meeting had either committed, incited or provoked a breach of the peace. Nevertheless, Duncan was convicted and fined. Her appeal was dismissed.
Sim v Stretch

July 23, 1936

Although resembling a vivid 1930s theatrical farce, this case decided an important point of defamation law, clarifying how much can be read into certain types of communication. Herbert Stretch’s housemaid left his service and returned to work for another man, Sim, for whom she had previously worked. She re-entered Sim’s service on April 12, 1934. On that date, Sim sent a telegram to Stretch informing him that “Edith has resumed her service with us today. Please send her possessions and the money you borrowed, also her wages to Old Barton.” Stretch claimed these words were defamatory and that Sim was insinuating he had money troubles that forced him to borrow from his housemaid. It was held that the words complained of were not reasonably capable of a defamatory meaning and he lost the action.
Warner Brothers Pictures Inc v Nelson

October 20, 1936
This case formulated an important part of contract law. It said that an injunction will be granted to stop someone breaking a contract and going to work for a rival company if the term in their contract was not so severe as to face them with starvation unless they kept the contract. Before she was famous, the film star Bette Davis (original name Bette Nelson) signed a contract with Warner Brothers for one year. The studio had the option of extending it and Davis agreed she would not undertake other film work without its written consent. When she tried to make a film with another company, Warner sought an injunction. The court granted an injunction for the remainder of the contract or for three years, whichever was the shorter. Davis wasn’t faced with the option “work for Warner or starve” because she could work for other companies so long as she didn’t make films. In other words, the contract was not too oppressive, so she was bound by it.
Associated Provincial Picture Houses Ltd v Wednesbury Corporation

November 11, 1937

This was a landmark case in the development of judicial review. A local council had granted a licence to the claimants for them to open their cinema on Sundays. But the council imposed the condition that children under 15 were not to be allowed in. The company said that was “unreasonable” and therefore beyond the powers of the council. The Court of Appeal found that the condition was reasonable — however, Lord Greene, the Master of the Rolls, stated that in certain circumstances courts could declare administrative or governmental actions as unauthorised or unreasonable. His words crystallised into a hallowed and frequently cited proposition. He said the courts couldn’t simply substitute their own opinion for that of the public body or official but they could invalidate a decision if it had been made in an unreasonable way. To be unreasonable, the decision would have to be one in which an authority had “taken into account matters which it ought not to take into account”, or, conversely, has “refused to take into account or neglected to take into account matters which it ought to take into account”. The number of judicial review cases has risen dramatically from just a few a year in the 1950s, through 500 a year in the 1980s, to about 6,000 a year now.
Liversidge v Anderson

November 4, 1941
A graphic instance of a legal decision being influenced by the social environment in which it takes place. A ministerial power to make subjective judgments about a citizen’s freedom was permitted in this controversial House of Lords’ decision. During the Second World War, Robert William Liversidge of St James’s Close in London’s Regents Park, who was in Brixton Prison at the time of the action, challenged the legality of his incarceration. There was a defence regulation providing that a Secretary of State could make orders for the detention of people whom he had “reasonable cause” to believe were “of hostile origin or associations” and in need of subjection to preventative control. Liversidge was such a suspect. The regulation was interpreted as establishing a subjective test of reasonableness. In other words, it all depended on what the minister thought was reasonable, not what an outside, objective person might think. To establish the invalidity of a detention order, a detainee would have to prove that the Secretary of State did not genuinely believe he had reasonable cause. The case is also famous for a very powerful and florid dissenting speech from Lord Atkin, who said that even during war a minister should not have uncontrolled powers of imprisonment: “In this country, amid the clash of arms, the laws are not silent.”
Young v Bristol Aeroplane Company

July 29, 1944
This case was originally about a man, Young, who lost three fingers in an industrial injury involving unfenced machinery. But the judgment is important because it explains the circumstances in which the Court of Appeal can go against one of its earlier decisions. In addition to saying something about how factory machinery should work, the case sets the law on how the legal machinery should work. It decides, for example, that the Court of Appeal is not bound to follow a previous decision of its own if there are two earlier Court of Appeal decisions inconsistent with one another. The Master of the Rolls, Lord Greene, said the court is not bound to follow a decision of its own if it is satisfied that the decision was “given per incuriam [through an error], for example, where a statute or rule having statutory effect which would have affected the decision was not brought to the attention of the earlier court”.
Joyce v The Director of Public Prosecutions

February 2, 1946
This case settled a key point in the definition of the oldest statutory offence in England: treason. William Joyce broadcast fascist propaganda on the radio from Germany. He was popularly known as “Lord Haw-Haw”. The phrase had been used by Daily Express radio critic Jonah Barrington to describe the nasal tone of another broadcaster of propaganda, but eventually came to be associated with Joyce. He was an American citizen who moved to Ireland, then England and who got a British passport by falsely stating he was born in Britain. During the war, Joyce was captured by the British, brought back to England and charged with high treason. The charge said that, while owing allegiance to the Crown, he had “adhered to the King’s enemies”. But did Joyce remain under a duty of allegiance to the Crown as alleged? The jury said yes and so did the House of Lords. He was hanged at Wandsworth prison.
Hibbert v McKiernan

April 23, 1948

An early 17th-century proverb had it that “possession is nine points of the law”. This case is a good illustration of those important property disputes arising in every age that require clarification of the law. Harold Hibbert trespassed on some golf links owned by the Reddish Vale Golf Club and helped himself to some abandoned golf balls. In this appeal, it was held that he had been rightly convicted of larceny (the old name for theft) by the magistrates at Stockport. As owners of the land, members of the golf club had a prioprietary right to goods left on the course.
Bolton v Stone

May 11, 1951
On August 9, 1947, Miss Bessie Stone was hit by a cricket ball while standing near her front gate on Beckenham Road in Manchester, 100 yards from the neighbouring cricket pitch fence. She sued the cricket club and lost. Balls had been hit over the 17-foot-high fence only about six times in the previous 30 years and never hit anyone. The House of Lords said that to get compensation for an injury, it had to be caused by something that could be anticipated by a reasonable man, whereas the risk taken by the club was limited and not unreasonable. The law requires citizens to be careful toward one another but cases such as this have been helpful in determining just how far we are permitted to take risks.
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd

July 17, 1952, February 6, 1953

Changes in the economy require the law to adapt to suit new circumstances. This case is a classic instance of adaptation. The advent of supermarket-style shops mean that it became necessary to determine where in the shop a contract of sale was finalised: when a customer places goods in their shopping basket or at the till? The Boots store in Edgware, London had been accused by the Pharmaceutical Society of selling prescription medicines to the public without the supervision of a registered pharmacist, as was legally required. On April 13, 1951, two people (acting for the Pharmaceutical Society) bought medicines containing a tiny amount of strychnine and codeine. That would have been an illegal sale if not supervised by a pharmacist. Was it in fact supervised? The Pharmaceutical Society said it wasn’t supervised as the customers bought the products when they put them in their wire baskets. But the Court of Appeal ruled that the point of sale was at the till rather than when the customer puts something in their basket or trolley. As there was a registered pharmacist at the till, Boots had committed no offence.
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June 22, 2008
DR. ZULKIFLI HASAN
The cases that changed Britain: 1870-1916 (Part II)
From Times by Gary Slapper (Note: Please refer to the article dated 18th June 2008, The Cases That Changed Britain: 1785-1869)
Gorris v Smith

April 23, 1874
Statute law can only be applied to do what Parliament passed it to do. In this case, a ship owner agreed to take the claimant’s sheep from Hamburg to Newcastle, but some of them were washed overboard. The owner of the sheep sued. He argued that no pens had been provided on the ship, in breach of a statutory duty under the Contagious Diseases (Animals) Act 1869, which required pens to be installed on the decks of ships used to transfer animals. If there had been pens on the decks, the sheep would have survived. However, the court ruled that the claimant could not claim damages on such grounds because the object of the statute was to protect animals from contagious disease, not from falling into the sea. The case is often cited by anyone seeking to show that once a law has been made for a particular purpose, it would be wrong to apply it for another.
Dickinson v Dodds

April 3, 1876
This was a classic decision that informed millions of commercial and contractual negotiations since. It says that if you make an offer you can withdraw it at any time before it is accepted. The case concerned the sale of a property by the defendant, John Dodds. Initially, Dodds agreed to sell it for £800 to George Dickinson, giving him a couple of days to accept. But Dickinson’s letter of acceptance wasn’t received until it was too late, and in the mean time Dodds sold the property to another man. Dickinson sought a court order to force Dodds to sell him the property but the court refused. It held that anyone making an offer was entitled to retract it at any time before it was accepted. By selling the property to someone else, Dodds had retracted his offer.
Seaman v Netherclift

December 16, 1876
In order to get the fairest and truest results from cases, it is very important that expert witnesses should speak freely and fearlessly. This case, in an era in which the use of expert witnesses was growing significantly, was a good illustration of how the courts were careful to give protection to witnesses against defamation actions. The defendant was a handwriting expert. He had given evidence in a case that a signature on a will was a forgery, though his view was not shared by the court. Later, in another case, also about a witness contesting a will, he expressed his opinion again during cross examination that the signature in the earlier case had been a “rank forgery”. That led to one of the attesting witnesses to that earlier will suing for slander. However, this case of slander was dismissed, as the remark was uttered in court while giving expert evidence and was therefore “privileged”.
Cundy v Lindsay

March 4, 1878
This landmark judgment upheld the principle that you can’t pass on what you don’t own. Lindsay & Co was a linen manufacturer based in Belfast. Alfred Blenkarn, a resident of Cheapside in London, wrote to Lindsay proposing to buy a quantity of goods. He gave his address as “37, Wood Street, Cheapside” and signed the letters without using an initial or first name so that his signature appeared to read “Blenkiron & Co”. Lindsay knew there was a respectable firm, W Blenkiron & Son, based at 123 Wood Street, so it sent the goods. But Blenkarn didn’t pay, and instead sold the goods to the defendant. Lindsay sued the defendant for the value of the goods. The House of Lords held that because of the trick no contract had been concluded between Lindsay and Alfred Blenkarn. And because Blenkarn didn’t legally own the goods, he couldn’t legally transfer them to the defendant. Consequently, the defendant was ordered to pay Lindsay for the full value of the goods. Needless to say, as news of the decision percolated out into the commercial world, in which capitalism was rapidly developing, commercial buyers began to get very particular about ensuring sellers actually owned the goods they were selling.
Sturges v Bridgman

July 2, 1879
In a drama that sounds more like a story from an old British film comedy, this case formulated an important principle in the law of nuisance. A confectioner and physician occupied adjoining premises in London. Dr Octavius Sturges lived at 85 Wimpole Street and Mr Bridgman at 30 Wigmore Street. As part of his business activity, for more than 20 years, the confectioner used two large mortar and pestles. The noise and vibration hadn’t seemed to the physician to be a nuisance until he built a consulting room at the end of his garden, against the wall of the confectioner’s kitchen, in which the mortars and pestles operated. Dr Sturges sought an injunction to stop the noise and won. The court decided that the confectioner, Bridgman, could not claim that long usage of the equipment had established a right to make such a noise. Rather, the nuisance had only begun when the new consulting room was — quite lawfully — built close to the source of the noise.
Munster v Lamb

May 9, 1883

For justice to be achieved, it is important that lawyers are uninhibited in their courtroom advocacy. The principle was illuminated in this case, made especially vivid by the fact that both the claimant and defendant were themselves lawyers. Munster was a barrister. During the trial of people accused of burgling his Brighton home, the defendants’ solicitor, Lamb, suggested that Munster kept drugs in his home for immoral purposes. Munster later sued him for defamation. However, it was decided that Munster wasn’t entitled to damages as Lamb’s statement was made by a lawyer within the bounds of the privilege extended to advocates.
R. v Dudley and Stephens

November 7, 1884; December 10; 1884
This was one of the most famous and gruesome cases in English law. Can necessity ever be recognised as a reason for killing someone? The defendants, Thomas Dudley and Edward Stephens, were shipwrecked 1600 miles from the Cape of Good Hope along with another man and a cabin boy, Richard Parker. After 18 days adrift in an open boat, for seven of which they were without food, Dudley and Stephens decided to kill Parker and eat him. The other man refused to take part in the plan but on the 20th day adrift, Dudley and Stephens cut Parker’s throat. They lived off his flesh and blood for another four days before they were picked up by a passing ship. Dudley and Stephens were arrested and tried. The court ruled that the killing Parker was an act of wilful murder; even the extreme situation they found themselves in was no defence. Both were sentenced to death, but there was another twist to the story: out of compassion, their sentences were later commuted to six months.
Robinson v Kilvert

March 16, 1889
This case decided an essential point of law about what happens when, in an action for nuisance, it is clear that the claimant has only suffered because he or his goods are unusually sensitive. There is no nuisance if the claim has more to do with the claimant’s sensitivity than the conduct of the defendant. Robert Henry Robinson occupied the ground floor of the defendant’s premises in Garden Street, Manchester, for the purposes of storing brown paper. The defendant, a paper box maker, operated a boiler in the basement. After the boiler ruined Robinson’s brown paper — even though it wouldn’t have harmed any other paper and did not inconvenience his employees — he sought an injunction to restrain its use. But the court refused, holding that a man who carries on “an exceptionally delicate trade” cannot complain if it is spoiled by his neighbour doing something lawful in his property if it wouldn’t harm an ordinary trade.
R v Tolson

May 13, 1889
An exemplary instance of an appeal court using the common law inventively to prevent a manifest injustice. Martha Tolson received word that her husband, who had deserted her, had been lost at sea during a voyage to America. Five years after she last saw him, believing him to be dead, she remarried. But her first husband later returned from the US very much alive and she was prosecuted for bigamy. Under Section 57 of the Offences Against the Person Act 1861, which defined the crime, she did not have to have committed bigamy knowingly or intentionally for it to have been a crime. On the face of it, it was enough for a conviction for her to have remarried within seven years of her husband having deserted her. However, her conviction was quashed. The appeal court said that despite the absence of words such as “knowingly committing bigamy” or “intentionally committing bigamy”, which would have excused her, Ms Tolson was saved in this situation by an old common law rule. An “honest and reasonable belief” in the existence of circumstances that, if true, would make the accused’s acts innocent, was a proper defence, the court ruled.
R v Halliday

December 16, 1889
A decision that shaped a key principle of criminal law. James Halliday terrified his wife and daughter with threats of violence. His wife, in order to escape, began climbing out a window but her daughter grabbed her. Halliday shouted, “Let the bugger go”; the daughter did, and his wife fell and broke her leg. The appeal confirmed convictions against Halliday for an assault occasioning actual bodily harm and for maliciously inflicting grievous bodily harm. The law was expressed in this way: if someone creates in another person’s mind “an immediate sense of danger” causing that terrified person to try to escape, and in doing so the person sustains an injury, “the person who creates such a state of mind is responsible for the injuries which result”.
Christie v Davey

December 7, 1892
Everybody needs good neighbours. At what point the law can intervene when neighbours are not good is a matter of some importance; this case clarified the law in a way that has settled millions of disputes since. The case concerned a property at in Brixton. Holder Christie, the claimant, lived at the address with his musical family. His wife gave music and singing lessons; his daughter taught piano and violin; and his son played the cello until 11pm at night. In the adjoining semi-detached house, Fitzer Davey, an engraver, became irritated by the din. He described singing that resembled “the howlings of a dog” and dreadful “catgut vibrations”. To get his revenge, he maliciously blew whistles, shrieked and knocked on trays during the music lessons. The court held that such sabotage could be restrained by an injunction. The malice in Davey’s behaviour made his conduct unreasonable and a nuisance.
Carlill v Carbolic Smoke Ball Company

December 8, 1892

This was a hugely influential decision that went right to the heart of contract law. It is still cited every year in law exams and essays by thousands of law students. During a flu epidemic, Elizabeth Carlill, a writer and lawyer’s wife, bought a “smoke ball” from the Carbolic Smoke Ball Company. The company claimed its product — a small rubber ball with a tube attached, filled with carbolic acid that was flushed into the user’s nose — could cure the flu. Its adverts promised to pay £100 to anyone who used the ball but still got sick. Mrs Carlill bought a smoke ball, used it, and caught a cold. She successfully sued the company. Her case confirmed many modern contract principles. Incidentally, Mrs Carlill died 50 years later, aged 96, from influenza.
Wilde v John Sholto Douglas, Marquis of Queensbury

April 5, 6, 1895
In 1895, The Times reported on three trials of Oscar Wilde. It was the celebrity scandal of the century. The Marquis of Queensbury, who thought his son was being corrupted by Wilde, sent a card to Wilde’s club saying: “To Oscar Wilde posing Somdomite” [sic]. Wilde sued for criminal libel. Queensbury pleaded justification, accusing Wilde of soliciting more than 12 boys. The case had many marvellous episodes, particularly when Wilde was cross-examined:
COUNSEL: Have you ever adored a young man madly?

WILDE: I have never given adoration to anybody except myself.

Wilde lost after a fatal slip in cross-examination in which he seemed to say he hadn’t kissed a boy not because he was a boy but because he was ugly. Soon after, he was arrested for indecency. Wilde was eventually convicted after a second trial — the first jury failed to agree on most of the charges — and sentenced to two years with hard labour. The case included many shocking travesties of justice. For example, it came to light that throughout the proceedings, the young men who were testifying against Wilde were each being paid £5 a week by the police, an enormous sum at the time. Nevertheless, Wilde’s courtroom wit was bountiful. Asked by the seasoned 44-year old prosecutor Charles Gill whether he exalted youth, Wilde said he did and added, to courtroom laughter: “I should enjoy, for instance, the society of a beardless, briefless barrister quite as much as that of the most accomplished QC.” He was asked later whether his habit of giving cigarette cases to working class youths was not strangely expensive. Wilde replied that it was “less extravagant than giving jewelled garters to ladies”.
Salomon v Salomon

November 17, 1896
Salomon v Salomon was an important case in clarifying the legal definition of a company. Aron Salomon, a boot manufacturer and leather merchant, set up a company in which he held nearly all the shares and was managing director. He loaned the company his own money and received debentures in return. He was therefore entitled to a sum of the company’s assets. After the company later went into liquidation, Salomon sought to be treated as a “secured” creditor and to have his claim settled before those of other creditors. The House of Lords upheld his claim. It ruled that a company is separate from the individuals that compose it.
Wilkinson v Downton

May 10, 1897
The law against harming people is of immense importance in a civilised society. In defining a civil wrong in a new and clear way, this case was innovative. It created a tort of intentional infliction of mental shock. Thomas Wilkinson was a pub landlord on St Paul’s Road in east London. One day, while he was at the races, a regular named Downton decided to play a practical joke on his wife, Lavinia. Downton “falsely, fraudulently and maliciously” told Lavinia that her husband had had a “smash up” and was lying injured at the Elms Public House in Leytonstone. On hearing this, Lavinia experienced a violent nervous shock. Even after the truth became apparent, she experienced weeks of suffering and incapacity. The court ruled that she was entitled to damages as the defendant had wilfully, calculatedly, caused her distress.
Percival v Wright

June 24, 1902
This case shaped company law for decades by limiting the legal power of shareholders. It involved a group of shareholders in a colliery company called Nixons Navigation that wrote to the company secretary offering to sell their shares. The chairman and two other directors bought the shares at a favourable price. They quietly rubbed their hands with glee, knowing that an offer was soon to be made by a third party for a substantially higher price. Shareholders later discovered their dubious behaviour and applied to the court to cancel the sale. They argued that the directors should have acted in a trustworthy way. However, the shareholders lost the case because the duty owed by the directors was to the company, not to them. The ruling curtailed shareholder power for much of the 20th-century, though shareholders can today sue in such circumstances.
Nash v Inman

March 6, 1908

A case loved by law students for its archaic language of social class. It is a nice illustration of how the social axioms of an era become embedded in law. The action was brought by a Savile Row tailor for £145 for clothes supplied to the defendant while he was an undergraduate at Trinity College, Cambridge. The son of an architect who had a town house in Hampstead and a country house near Havant, the defendant was legally a minor at the time and therefore only legally liable for contracts that were for “necessaries”. The clothes supplied included, among other things, eleven fancy waistcoats at two guineas each. It was shown that the defendant already had a good supply of clothes suitable to his status in life so the new ones were not “necessaries”. That meant the tailor lost his claim.
Walters v WH Smith & Son

October 30, 1913
How far people other than the police have the power to arrest each other is an intriguing question. This case set the rules for decades. A private shop detective arrested the claimant on suspicion that he had stolen a book from one of the defendant’s shops. It turned out he hadn’t. It was held that a citizen can make an arrest after an offence has been committed but the arrest will be lawful only if the accused was guilty and the arrester had “reasonable and probable cause” for his suspicion. That wasn’t so in this case and the claimant was awarded £75 damages for false imprisonment. Today, you can make a citizen’s arrest only if you satisfy a string of requirements, including that that there were reasonable grounds for your suspicion and that you had reasonable grounds for believing that it was necessary to prevent injury, property damage or loss.
De Keyser’s Royal Hotel v Spicer Bros

January 24, 1914

There is nothing like noise nuisance to get people resorting to the law. The law here hinges on that most assuring and magical word: reasonable. This case sent soothing news to the sleep-deprived and sent reverberations through the construction industry. The defendants used a steam pile-driving machine during the night on a building site near the claimant’s hotel. It was held that in conducting building operations it is not reasonable and proper to operate a pile-driver at night if it means residents in an adjoining building cannot sleep. Such conduct was liable to be restrained by injunction. The injunction was granted to stop the work between 10.00pm and 6.30am.
R v Casement

July 19, 28, 1916
Sir Roger Casement, it is sometimes said, was hanged by a comma. This was a rip-roaring case about war, treason, syntax, punctuation, an ancient document and the noose. Casement was convicted during the First World War of conspiring with the Germans to further an Irish insurrection. The contentious punctuation mark appeared in some but not all versions of the law under which Casement was prosecuted, the Treason Act 1351. Ultimately, the comma allowed the definition of a traitor to include someone whose treachery, such as Casement’s, was committed outside the realm. In this case, Casement had made his plans in Germany. Before the final decision, two judges went to the Public Record Office to check with a magnifying glass what was on the original Statute Roll and Parliamentary Roll. Casement’s appeal was rejected and on August 3, 1916, he was hanged at Pentonville prison.
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June 20, 2008
DR. ZULKIFLI HASAN
Oil giants return to Iraq: Shell, BP, Exxon Mobil and Total set to sign deal with Baghdad
Quoted from the Independent By Patrick Cockburn
Nearly four decades after the four biggest Western oil companies were expelled from Iraq by Saddam Hussein, they are negotiating their return. By the end of the month, Royal Dutch Shell, BP, Exxon Mobil and Total will sign agreements with the Baghdad government, Iraq’s first with big Western oil firms since the US-led invasion in 2003. The deals are for repair and technical support in some of the country’s largest oilfields, the Oil Ministry in Baghdad said yesterday. The return of “Big Oil” will add to the suspicions of those in the Middle East who claimed that the overthrow of Saddam was secretly driven by the West’s desire to gain control of Iraq’s oil. It will also be greeted with dismay by many Iraqis who fear losing control of their vast oil reserves.
Iraq’s reserves are believed to be second only to Saudi Arabia in the Middle East, but their exploitation has long been hampered by UN sanctions, imposed on Iraq after Saddam Hussein invaded Kuwait in 1990.The major oil companies have been eager to go back to Iraq, but are concerned about their own security and the long-term stability of the country. The two-year no-bid agreements are service agreements that should add another 500,000 barrels of crude a day of output to Iraq’s present production of 2.5 million barrels a day (b/d).
The companies have the option of being paid in cash or crude oil for the deals, each of which will reportedly be worth $500m (£250m). For Iraq, the agreements are a way of accessing foreign expertise immediately, before the Iraqi parliament passes a controversial new hydrocarbons law.But they mean that the four oil companies, which originally formed the Iraq Petroleum Company to exploit Iraqi oil from the 1920s until the industry’s nationalisation in 1972, will be well-placed to bid for contracts for the long-term development of these fields. The oilfields affected are some of the largest in Iraq, from Kirkuk in the north to Rumaila, on the border with Kuwait. Although there is oil in northern Iraq, most of the reserves are close to Basra, in the far south.
Since the US invasion, Iraqis have been wary of foreign involvement in their oil industry. Many are convinced that the hidden purpose of the US invasion was to take over Iraqi oil, but the Iraqi Oil Minister, Hussein Shahristani, has said that Iraq will hold on to its natural resources. “If Iraq needs help from international oil companies, they will be invited to co-operate with the Iraqi National Oil Company [Inoc], on terms and conditions acceptable to Iraq, to generate the highest revenue for Iraq”.Inoc’s technical expertise has deteriorated sharply during the long years of sanctions. Iraq is currently exporting 2.1 million b/d and is expecting to have oil revenues of $70bn this year, but its government administration is too dysfunctional and corrupt to rebuild the electricity or water supply systems. The government has $50bn in the Federal Bank of New York.
Mr Shahristani has been highly critical of the Kurdistan Regional Government (KRG) for auctioning off oil concessions in Iraqi Kurdistan without reference to the oil ministry in Baghdad. In an interview with The Independent last year, he said Inoc would never do business with any oil company that signed up with the KRG, and he also doubted if the oil could be exported without pipelines. “Are they going to carry it out in buckets?” he asked.Several of the small oil companies who have signed contracts in Kurdistan are hoping that in the long term there will be an agreement between the Kurds and the central government and they will then sell out to the majors at a large profit.
The technical support agreements, as the service agreements are known, may open the door to Iraq for the majors. Mr Shahristani has said that Iraq will open up the same fields for bidding for long-term development projects soon. “We’re going to announce the first licensing round by the end of this month or early next month,” he said.The high price of oil means that Iraq is not under immediate pressure to maximise its oil revenues. The Iraqi parliament has suspected anything which looks like giving foreign companies ownership of Iraq’s oil through a production sharing agreement. The nationalisation of Iraq’s oil is one the few acts of Saddam Hussein’s long years in power which is still highly popular, and Iraqi members of parliament are fearful of anything that looks like back-door privatisation in the interests of foreigners.
Big four have history of control. For the four oil giants, the new agreements will bring them back to a country where they have a long history. BP, Exxon Mobil, Total and Shell were co-owners of a British, American and French consortium that kept Iraq’s oil reserves in foreign control for more than 40 years.

The Iraq Petroleum Company (once the Turkish Petroleum Company) was formed in 1912 by oil companies eager to grab the resources in parts of the Ottoman Empire.The company was formalised in 1928 and each of the four shareholders had a 23.75 per cent share of all the oil produced. The final 5 per cent went to Calouste Gulbenkian, an Armenian businessman.In 1931, an agreement was signed with Iraq, giving the company complete control over the oi fields of Mosul in return for annual royalties. After Saddam’s coup in 1958, nationalisation came in 1972.
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June 19, 2008
DR. ZULKIFLI HASAN
My Story
Last wednesday, I presented a paper entitled the Stakeholders Model of Corporate Governance in Islamic Economic System in the Workshop of Islamic Economic, Finance and Business at the School of Government and International Affairs (SGIA), University of Durham. Alhamdulillah, my supervisor was happy with the presentation and gave positive comments on the overall contents of my paper. In fact, he recommended to me to present another paper in the coming Islamic finance Seminar jointly organized by the SGIA, University of Durham and Kyoto University, Japan. Interestingly, the paper presented will be edited by Professor Kosughi and published by international publisher, Routledge.
Next week, I’ll attend the Conference of Malaysian Study on Islam at the University of Wales, Lamperter and present a theoretical paper of Islamic Corporate Governance in Islamic financial institutions. This conference will be held from 28-29th June 2008 and it is jointly organized by the Malaysian Student Department and the University of Wales.
Soon after the conference of Malaysian study on Islam, I have to return to Durham to attend the Islamic Finance Summer School from 30th June-4th July 2008. Here I have an appointment with Dr. Basil Mustafa of the Oxford Centre of Islamic Studies (OXCIS) to discuss on his offer to joint Islamic finance team in the OXCIS for 3-6 months.
Before the end of Islamic finance summer school, I have to immediately go to Imperial College, London to attend another conference on Money, Economy and Management organized by the World Banking Institute, 3rd-4th July 2008. My paper in this conference will be published in the Journal of Banking and Business Policy Research.
My schedule is very tight and I’ll remain in London until 6th July 2008. This is due to the invitation by Postgraduate Society of the London School of Economics (LSE) to present an abstract of my research at the LSE Dissertation event. I have already been booked by a few postgraduate students of the LSE to be interviewed after the academic event.
Finally, on 6th July 2008, I’ll return to Durham. My work schedule does not stop at this stage because on the next day I have to present a paper in the Islamic finance Seminar at the SGIA, University of Durham. This seminar is jointly organized with Kyoto University.
I admit that it is a lot to write about my story in this weblog but before it becomes too long and irrelevant, I prefer to end my writing here.
Cheers
ZULKIFLI HASAN

UNIVERSITY OF DURHAM
My Story
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June 18, 2008
DR. ZULKIFLI HASAN
The cases that changed Britain: 1785-1869 (Part I)
From Times By Gary Slapper
It is a question to excite the repressed student in every lawyer: which cases have most shaped British law over the past 200 years? To celebrate the launch of The Times Archive, we asked Gary Slapper, Professor of Law, and director of the Centre for Law, at the Open University and long-time Times Law columnist, to trawl through more than two centuries of Times Law Reports  and to pull out the 100 most important, influential and colourful cases since the newspaper began publishing in 1785.
Davies v East

January 8, 1788
This decision was a classic early example of the courts holding someone to the terms of a commercial bargain over goods whose quality he had inspected and accepted. The action was in Westminster, the defendant a cabinet maker who had agreed to purchase 13 mahogany logs for £18. The seller argued that the wood should be paid for as agreed but the buyer said that the batch of logs was worthless, as it differed from some of the samples he had inspected. There were holes in it “so great that you might put your head into them”; according to one wood expert, it was the “worst he ever saw”. But the verdict went in favour of the claimant, who was entitled to be paid the agreed price of £18 by the cabinet maker because the sale batch was, in general, the quality of wood he had agreed to buy.
Ormond v Payne

July 9, 1789
This colourful case involving a butcher and a prince’s coachman embodied the metropolitan bustle of the age; it was also notable in the development of personal injury actions. It concerned an ordinary man who was injured by a royal carriage. The claimant, George Ormond, was a butcher who lived in Turnham Green, West London. The defendant, Don Payne, looked after the affairs of the Prince of Wales at Carlton House. The butcher sued Payne after the Prince’s coachman, George Smith — for whom he was legally responsible under civil law — drove into the butcher’s cart, breaking his leg. The coachman, according to Ormond’s claim, was in a terrible hurry and “in liquor”. The moment the horses were harnessed and he had mounted the box, he had “called for a glass of gin, drank it, threw the glass violently upon the pavement, flogged his horses” and sped away at a gallop. The jury found that Payne was liable for the coachman’s actions and awarded £100 damages.
The King v Dodd

May 30, 1808
In the early 18th-century, investors poured money into the South Sea Company on the strengths of its hopes of a great trade with South America. In 1720 it collapsed. Many other companies failed around the same time, and joint stock organisations — whereby a company’s capital comes from shareholders — were discredited and eventually banned under the so-called “Bubble Act”. In 1808 the Act was used controversially against a businessman named Dodd. He had published a couple of prospectuses hoping to raise £50,000 by issuing shares but Lord Ellenborough, the Lord Chief Justice, ruled that such a scheme was unlawful. He said he hoped others would not engage in similar “mischievous and illegal projects”. In other words, commercial activity in 1808 was restricted to unincorporated partnerships, under which each partner is liable for all the business. Companies as we know them did not really become popular until the Companies Act 1844.
R v Burdett

November 28, 1820
The defendant, Sir Francis Burdett, was charged with seditious libel after he wrote a letter containing strong expressions about the conduct of the Government in dispersing the “mutiny” at St Peter’s Fields in Manchester on August 16, 1819. The letter claimed that unarmed men and women had been “inhumanly cut down, maimed and killed by the King’s Troops”. On the direction of Mr Justice Best that the letter was a poisonous libel, the defendant was found guilty, fined £2,000 and sentenced to three month’s imprisonment. It was upheld on appeal.
Collins v Godefroy

January 18, 1831
Collins, a London lawyer, agreed to testify in a civil trial on behalf of the defendant, Godefroy, in exchange for a fee of six guineas. A subpoena was issued. After the trial, however, Godefroy said he did not need to pay as Collins was legally obliged to attend once the subpoena was issued. The court agreed, finding that Collins would have given no value (known in legal terms as “consideration”) in return for the promised fee.
Vaughan v Menlove

August 2, 1836
In this case, heard on the Oxford circuit, a man sued his neighbour after two cottages burnt down because of a fire that started on the neighbour’s property. The neighbour had been told that a hayrick was a fire risk but ignored the advice. The court held that the claimant was entitled to compensation for his two cottages because the neighbour had been negligent. The case was notable for the test of negligence it used, which was to later become very influential. Mr Justice Patteson told the jury that they must decide whether the defendant, the hayrick owner, had acted as a man of “ordinary skill and judgment” would have acted under the circumstances.
Priestly v Fowler

January 17, 1837
In this case, a butcher was sued by an employee who broke his thigh and collarbone after he was thrown off a van loaded with meat. The court ruled that the employer was not liable under common law for an injury done to an employee because of the negligence of a fellow employee. The injured worker was presumed to have entered into his contract of employment with the full knowledge of the risks involved. This doctrine of “common employment” set the legal scene for the entire Industrial Revolution and prevented millions of negligently injured workers from suing. It was not abolished until 1948.
Attwood v Small

March 27, 1838
This case established an important point on the principle of misrepresentation in contract law. Mr Small purchased a mine and ironworks in Staffordshire from Mr Attwood. The sale went through after the property had been inspected by Small’s own experts. Six months later, he discovered that he had been misled. He sought to rescind the contract on the ground of misrepresentation. The House of Lords held that the action must fail because Small had not just relied on the statements of the defendant but on the reassurance of independent reports he had commissioned.
M’Kinnell v Robinson

May 1, 1838
The defendant borrowed £30 from the claimant. In lending it, the claimant knew that the money was to be used in playing Hazard, an illegal game of chance. It was held that the claimant could not recover this sum as it was lent for the express purpose of a violation of the law. The decision consolidated the principle that the law will not enforce a contract for an illegal purpose.
Stockdale v Hansard

April 26, 1839
This case was important for the way it clarified the powers of Parliament. Stockdale, who published an explicit medical book, sued Hansard, the publisher of Parliamentary proceedings, for defamation. He claimed he had been libelled in a prison inspector’s report published by Hansard that said his medical text was “disgusting and obscene”. Hansard said it was entitled to publish the inspector’s report as it was protected by parliamentary privilege. The court held that such a protective privilege did not exist. Publication of the report in question was not authorised by an Act of Parliament but merely by a vote of the House of Commons. In other words: an Act is supreme and can create law, but a simple resolution from the House of Commons, such as in this case, does not bind the courts.
Inquest into death of Bridget Groke

January 4, 1840
This coroner’s case is a vivid example of the sort of deprivation common to the era. Headed “Horrid case of destitution”, this harrowing inquest looked at the death of a three-year-old girl who had died in Sandgate, London. The verdict of the jury was one of “death by natural causes”, although a number of factors were cited in the case including the general and social conditions at the time and the behaviour of an “inhuman mother”. Something of the flavour of the story can be gathered from the opening paragraph: “It is almost impossible to convey the slightest idea of the retched hovel in which the decreased child was found . . . The room was low and naturally dark; and the light of a fire sent an unearthly glare around the place where the author of the recently published Fortunes of Godolphin [Nicholas Michell] might have gained many an idea, which might have enabled him to make the Sepulchre more descriptive where the gypsy was entombed alive.”
R v St George

August 10, 1840
At a trial for attempting to fire a loaded firearm, the court considered whether, by pointing an unloaded pistol at someone, a common law assault had been committed. George Hanbury St George had been indicted for pointing the pistol at Bruce Ernest Darant and attempting to pull the trigger with intent to murder him. The court decided that it was an assault if the weapon had the appearance of being loaded (thus causing “fear and alarm”) and the range was such that it would have endangered life if it had been fired.
Merry v Green

February 13, 1841
Finder’s keepers? Not in this case. The claimant purchased a bureau at a public auction sale and afterwards discovered a secret drawer that, unknown to anyone at the time of the sale, contained a considerable sum of money. The Court held that lawful possession of the money had not passed to the claimant.
Quarrier v Coulson

January 28, 1842
This case arose from the gambling of an army captain who was alleged to be “of intemperate habits” and addicted to gambling “when in a state of intoxication”. Money was lent to him for the purposes of gaming at public tables in Germany, where it was lawful. The court held that his debts could be recovered in the English courts as such an action could have been maintained successfully in Germany.
Foss v Harbottle

March 27, 1843
This was a ruling of major significance in company law. The law has since been revised but this case is necessary to understand many company cases as it is always referred to. Two shareholders in the Victoria Park Company brought an action against the company’s directors for fraudulently acquiring, at inflated prices, property in which the directors had a personal interest. They were also sued for making false statements at company meetings. What this case decided was that when a director of a company acted in breach of his duty, only the company — and not individuals — could be the claimant in an action to secure a remedy. A similar rule applies today, although there are now, under the Companies Act 2006, circumstances in which individual shareholders can pursue actions against directors for some breaches of duty.
R v Millis

February 24, April 4, 1844
In this dispute over whether a marriage was valid, the House of Lords ruled that a marriage must be contracted per verba de praesenti. That means by words exchanged as an agreement in the present tense as opposed to in the future tense. The betrothal words had to be in phrases such as “I take thee to be my wife” and “I take thee to be my husband” — not “I will take thee”. That had been recognised before but in this case the Lords decided that for a valid marriage such betrothals also had to be done in front of a priest.
R v Hall (alias Rollins)

April 3, 1845
Thomas Hall, alias Rollins, “a poor man not possessed of a farthing, or a farthing’s worth in the world”, was indicted for bigamy. His first wife, Mary Ann, had robbed him then “sallied forth” with their child and set up another family with another man. Hall went to try to have her apprehended but was beaten up by Mary Ann’s new lover. Hall gave up trying to get her back and eventually remarried, but without divorcing Mary Ann first. In an unusually sardonic judgment, Mr Justice Maule, sitting at Warwick, said his later marriage was understandable but that Hall should have procured a divorce in the way a rich man would — by going to the House of Lords and ecclesiastic courts and spending up to £600. Being poor was not an excuse, the judge said. He hoped the four months hard labour he gave Hall would be a warning about the dangers of trifling with matrimony.
Hartley v Ponsonby

June 5, 1857
If you want to sue over a contract, you must prove you have given the other party something of value, as this ruling demonstrates. The facts were these: 19 out of 36 of a ship’s crew deserted, leaving it short of hands to complete its voyage safely. In order to persuade the rest of the crew to keep going, the master promised to pay each an additional £40. When the ship was safely back in port, the master refused to pay, saying the seamen had merely done their jobs. But a court held that the men were entitled to the money. Their original agreement didn’t require them to sail the ship if it became unseaworthy, therefore the master’s promise constituted a new contract.
Pearce v Brooks

April 18, 1866
Another landmark case demonstrating that the courts will not enforce contracts that have been made for an unlawful purpose. A firm of coachbuilders supplied a prostitute, Miss Brooks, with a brougham, a closed carriage. She did not pay the hire charge, so they sued her. But the court decided that the claimant’s action must fail: the contract was void because, in supplying the brougham in the knowledge that it was to be used for prostitution, the firm had contributed to an immoral act.
Foster v Mackinnon

December 15, 1868
This was a key decision in illustrating the idea that someone can’t be held to an agreement if he was tricked into entering it. To be held to a contract you must have made it freely and voluntarily. In this case, an old and feeble man was induced into signing his name on the back of a bill of exchange, believing that he was signing a guarantee. The court decided that because he signed without knowing it was a bill of exchange and hadn’t been negligent in signing, he should be released from liability.
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429 Too Many Requests

nginx


Islamic Banking, Islamic Banking, TakafulTakaful

and Al and Al RahnuRahnu

LCA4562LCA4562

DR. ZULKIFLI HASANDR. ZULKIFLI HASAN

IntroductionIntroduction

�� As for evolution of Islamic law of contract, it As for evolution of Islamic law of contract, it

starts with starts with alal--QuranQuran which already prescribes which already prescribes

several types of nominate contract as well as several types of nominate contract as well as

certain general contractual maxims. certain general contractual maxims.

Thereafter, the traditions or Thereafter, the traditions or alal--SunnahSunnah
supplement the supplement the QuranicQuranic groundwork as a groundwork as a

support or additional explanation to its support or additional explanation to its

general provision. general provision.

�� The Muslim jurists in all Islamic school of The Muslim jurists in all Islamic school of

law later developed the principles of contract. law later developed the principles of contract.

ContCont……..

�� In In alal--QuranQuran, there are only over forty verses out of , there are only over forty verses out of

6666 verses on a dozen types of commercial 6666 verses on a dozen types of commercial

contract. contract.

�� Performing contract which enjoins believers to Performing contract which enjoins believers to

keep faith to contracts (Alkeep faith to contracts (Al--QuranQuran: : SSurahurah alal--
MaidahMaidah, , verse 1), three verses with a common verse 1), three verses with a common

theme of keeping promise (Altheme of keeping promise (Al--QuranQuran: : SSurahurah alal--
IsraIsra,, verse 34) and there are few verses which verse 34) and there are few verses which

reveal a relatively advances stage of commercial reveal a relatively advances stage of commercial

contracts, such as sale and hire, charges or contracts, such as sale and hire, charges or

personal guarantee as (security) and fiduciary personal guarantee as (security) and fiduciary

contracts such as deposit. contracts such as deposit.

UqudUqud or Contractor Contract

�� ‘‘UqudUqud or contract technically means as an or contract technically means as an
expression of the matching between a expression of the matching between a
positive proposal made by one of the positive proposal made by one of the
contractors and the acceptance of the other contractors and the acceptance of the other
contractor in a way which has an impact on contractor in a way which has an impact on
the subject of the contract.the subject of the contract.

�� The The MejelleMejelle defined contract as little defined contract as little
contracting parties obligating themselves contracting parties obligating themselves
with regards a given matter and binding with regards a given matter and binding
themselves together with the same as a themselves together with the same as a
result of connecting an offer with an result of connecting an offer with an
acceptance acceptance

VARIOUS CONTRACTSVARIOUS CONTRACTS

�� UqudUqud TamlikatTamlikat-- AlAl--MuaMua’’wadhatwadhat and and
AttabaruaAttabarua’’tt

�� UqudUqud IsytirakIsytirak-- mudharabahmudharabah, , musyarakahmusyarakah and and
muzaraamuzaraa’’,,

�� UqudUqud TawsiqatTawsiqat--KafalahKafalah, , RahnuRahnu and and
HawalahHawalah,,

�� UqudUqud ItlaqatItlaqat-- wakalahwakalah and and tauliahtauliah

�� UqudUqud TaqyiydatTaqyiydat-- taflistaflis..

�� UqudUqud IsqatatIsqatat-- ibraibra’’, , muqasahmuqasah andand

�� UqudUqud HifzHifz-- refers to refers to wadiahwadiah..

Contracts classified into unilateral Contracts classified into unilateral

and bilateral contract. and bilateral contract.

�� Unilateral ContractUnilateral Contract-- Gratuitous in natureGratuitous in nature

�� IsqatatIsqatat (waiver), (waiver), ibraibra’’ (rebate), (rebate),

�� muqasahmuqasah (off(off--set of the debt), set of the debt),

�� will (will (wasiyyatwasiyyat), ),

�� endownmentendownment (fund) and (fund) and

�� loan (alloan (al--QardQard). ).

Bilateral ContractBilateral Contract

�� Require consent of both partiesRequire consent of both parties

�� ‘‘uquduqud TamlikatTamlikat (contract of ownership) or (contract of ownership) or
‘‘uquduqud alal--MuaMua’’wadhatwadhat (exchange), (exchange), ‘‘uquduqud
IsytirakIsytirak (contract of partnership) either (contract of partnership) either
mudharabahmudharabah (passive partnership) or (passive partnership) or
musyarakahmusyarakah (active partnership), (active partnership), ‘‘uquduqud
TawsiqatTawsiqat (contract of security) either (contract of security) either
KafalahKafalah ((suretyshipsuretyship) or ) or RahnuRahnu (pledge), (pledge),
‘‘uquduqud ItlaqatItlaqat (contract pertaining to do a (contract pertaining to do a
work) either  work) either  wakalahwakalah (agency), or (agency), or hiwalahhiwalah
(debt transfer), (debt transfer), ‘‘uquduqud TaqyiydatTaqyiydat (contract of (contract of
restriction) and restriction) and ‘‘uquduqud HifzHifz (contract of safe (contract of safe
custody) or custody) or wadiahwadiah (safekeeping)(safekeeping)

Primary modes or equity financingPrimary modes or equity financing

�� The primary modes refer to The primary modes refer to mudharabahmudharabah, ,
musyarakahmusyarakah and shares of joint stock and shares of joint stock
companies (combination of companies (combination of musharakahmusharakah and and
mudharabahmudharabah term of financing. term of financing.

�� This is the most encourages mode of This is the most encourages mode of
financing in Islam as it provides greater financing in Islam as it provides greater
reliance on equity and profit loss sharing. reliance on equity and profit loss sharing.
Here, the profit or return is not being Here, the profit or return is not being
determined upfront and it depends much on determined upfront and it depends much on
the effort, business risk and viability and the effort, business risk and viability and
also to the ultimate outcome of the venture. also to the ultimate outcome of the venture.

MudharabahMudharabah

�� an agreement made between a capital an agreement made between a capital
provider and another party (entrepreneur), provider and another party (entrepreneur),
to enable the entrepreneur to carry out to enable the entrepreneur to carry out
business projects, based on a profit sharing business projects, based on a profit sharing
basis, of a prebasis, of a pre--agreed ratio. In the case of agreed ratio. In the case of
losses, the losses are borne by the provider losses, the losses are borne by the provider
of the funds. On the basis of a contract of of the funds. On the basis of a contract of
mudharabahmudharabah, financial institution may , financial institution may
provide financing to entrepreneurs who want provide financing to entrepreneurs who want
to perform certain project in retail or to perform certain project in retail or
corporate financing.corporate financing.

MusyarakahMusyarakah

�� a partnership or joint venture for a specific a partnership or joint venture for a specific

business, whereby the distribution of profits business, whereby the distribution of profits

will be apportioned according to an agreed will be apportioned according to an agreed

ratio. In the event of losses, both parties will ratio. In the event of losses, both parties will

share the losses on the basis of their equity share the losses on the basis of their equity

participation. participation.

Secondary Modes or Debt FinancingSecondary Modes or Debt Financing

�� murabahahmurabahah (cost plus service charge), (cost plus service charge), ijarahijarah

(leasing), (leasing), ijarahijarah summa alsumma al--bay or bay or ijarahijarah wawa iqtinaiqtina

(hire purchase), (hire purchase), hiwalahhiwalah (debt transfer), (debt transfer), salamsalam

(forward delivery contract), and (forward delivery contract), and istithnaistithna’’

(contractual production) (contractual production)

�� These modes mostly concern on the trading or These modes mostly concern on the trading or

selling and buying transaction through different selling and buying transaction through different

mode of payment either cash sale, lump sum, mode of payment either cash sale, lump sum,

deferred payment, deferred delivery sale and etc.deferred payment, deferred delivery sale and etc.

MurabahahMurabahah

�� the sale of goods at a price, which includes a the sale of goods at a price, which includes a

profit margin as agreed to by both parties. Such profit margin as agreed to by both parties. Such

sales contract is valid on the condition that the sales contract is valid on the condition that the

price, other costs and the profit margin of the price, other costs and the profit margin of the

seller are stated at the time of the agreement of seller are stated at the time of the agreement of

sale. Under this mode of financing the sale. Under this mode of financing the

entrepreneur may approach any financial entrepreneur may approach any financial

institution to provide his financing for working institution to provide his financing for working

capital. capital.

IjarahIjarah

�� an arrangement under which the an arrangement under which the lessorlessor leases leases

equipment, building or other facility to a client at equipment, building or other facility to a client at

an agreed rental against a fixed charge, as agreed an agreed rental against a fixed charge, as agreed

by both parties. by both parties.

�� AlAl--IjarahIjarah ThummaThumma alal--BaiBai’’ (leasing and (leasing and

subsequently purchase) refers to a contract to be subsequently purchase) refers to a contract to be

followed by purchase. Under the first contract, the followed by purchase. Under the first contract, the

hirer leases the goods from the owner at an agreed hirer leases the goods from the owner at an agreed

rental over a specified period. Upon expiry of the rental over a specified period. Upon expiry of the

leasing period, the hirer enters into a second leasing period, the hirer enters into a second

contract to purchase the goods from the owner at contract to purchase the goods from the owner at

an agreed price. an agreed price.

SyariahSyariah Issue on Issue on IjarahIjarah

�� 1. Term Charges under HPA 19671. Term Charges under HPA 1967-- InterestInterest

�� EgEg. RM100K X 5 years x 10% BLR Fixed by . RM100K X 5 years x 10% BLR Fixed by

the the GovtGovt ..

�� This is against the This is against the SyariahSyariah

�� 2. Penalty Charges2. Penalty Charges--

�� IB can not impose penalty. It only can ask IB can not impose penalty. It only can ask

for compensation.for compensation.

SyariahSyariah Issue on Issue on IjarahIjarah

�� 3. Ownership risk and maintenance is upon 3. Ownership risk and maintenance is upon

the the LessorLessor..

�� EgEg road tax, maintenance, services, road tax, maintenance, services,

�� This duty is shifted to insurance companies This duty is shifted to insurance companies

and to the lessee.and to the lessee.

�� 4. Call Option and Put Option4. Call Option and Put Option

�� COCO-- Buy the asset POBuy the asset PO-- Sell the assetSell the asset

�� Whether it is lawful in Whether it is lawful in syariahsyariah-- Lawful Lawful

HiwalahHiwalah

�� Transferring a debt from one debtor to Transferring a debt from one debtor to

another and another and wakalahwakalah refers to agency refers to agency

principle. A combination of principle. A combination of hiwalahhiwalah and and

wakalahwakalah on certain financing facility is on certain financing facility is

suitable for revolving credit, overdraft or suitable for revolving credit, overdraft or

credit line facility. credit line facility.

BaiBai’’ alal--SalamSalam or or salamsalam

�� an agreement whereby payment is made in an agreement whereby payment is made in

advance for delivery of specified goods in advance for delivery of specified goods in

the future. the future. SalamSalam is valid, subject to the is valid, subject to the

condition that the quality and the nature of condition that the quality and the nature of

the subject matter, time, place of delivery the subject matter, time, place of delivery

and the price are clearly stipulated at the and the price are clearly stipulated at the

time of the contract. time of the contract.

�� to acquire any asset for working capital by to acquire any asset for working capital by

advance payment at a discounted price and advance payment at a discounted price and

subsequently sells the asset upon delivery. subsequently sells the asset upon delivery.

IstithnaIstithna’’

�� a contract whereby a party undertakes to a contract whereby a party undertakes to

produce specific goods and services, and produce specific goods and services, and

made according to certain agreedmade according to certain agreed--upon upon

specifications at a determined price and for specifications at a determined price and for

a fixed date of delivery. a fixed date of delivery.

�� The main objective of the The main objective of the IstithnaIstithna’’ mode of mode of

financing is to promote manufacturing and financing is to promote manufacturing and

construct construct

BaiBai’’ alal--DaynDayn (debt trading) (debt trading)

�� the buying and selling in the secondary the buying and selling in the secondary

markets of debt certificates, securities, trade markets of debt certificates, securities, trade

documents and papers which are documents and papers which are ShariahShariah

compliance. compliance.

�� Only documents evidencing real debts Only documents evidencing real debts

arising from arising from bona fidebona fide merchant merchant

transactions can be traded. transactions can be traded.

Issue on Bay Issue on Bay DaynDayn

�� HanafiHanafi mamadhdhhabhab -- selling of debt to a third selling of debt to a third

party is not permissible because of the risk party is not permissible because of the risk

cannot be overcome in the context of debt cannot be overcome in the context of debt

selling. selling.

�� ShShafiafi‘‘ii mamadhdhhabhab-- selling of the debt to third selling of the debt to third

party was allowed if the debt was guaranteed party was allowed if the debt was guaranteed

and was sold in exchange for goods that and was sold in exchange for goods that

must be delivered immediately. When the must be delivered immediately. When the

debt is sold it should be in cash or tangible debt is sold it should be in cash or tangible

assets as agreed. assets as agreed.

BaiBai’’ alal--InahInah (sell and buy back)(sell and buy back)

�� a contract which involves sell and buy back a contract which involves sell and buy back

transactions of an asset by a seller to the transactions of an asset by a seller to the

customer. The seller will sell the asset on customer. The seller will sell the asset on

cash basis but the customer will buy back cash basis but the customer will buy back

the asset on deferred payment at a price the asset on deferred payment at a price

higher than the cash price. higher than the cash price.

Issue on Bay Issue on Bay InahInah

�� ShafiiShafii-- The contract is valid provided The contract is valid provided

that it complies with all conditions of that it complies with all conditions of

contractcontract

�� JumhurJumhur-- The contract is invalid. The contract is invalid.

Considered as back door to Considered as back door to ribariba..

BaiBai’’ IstijrarIstijrar (supply contract) (supply contract)

�� an agreement between the client and the an agreement between the client and the

supplier, whereby the supplier agrees to supplier, whereby the supplier agrees to

supply a particular product on an on going supply a particular product on an on going

basis, for example monthly, at an agreed basis, for example monthly, at an agreed

price and on the basis of an agreed mode of price and on the basis of an agreed mode of

payment. payment.

Debt Financing Debt Financing vsvs Equity FinancingEquity Financing

�� EconomistEconomist-- Criticize the players for Criticize the players for

depending much on the instrument based depending much on the instrument based

on debt financing.on debt financing.

�� Not truly Islamic. It does not represent Not truly Islamic. It does not represent

actual difference with conventional banking actual difference with conventional banking

system.system.

�� Practitioners, Legal and Practitioners, Legal and SyariahSyariah ScholarsScholars--

Both represent their functions and meet the Both represent their functions and meet the

market needs. market needs.

WadiahWadiah YadYad DhamanahDhamanah

�� goods or deposits, which have been deposited with goods or deposits, which have been deposited with

another person, who is not the owner, for another person, who is not the owner, for

safekeeping. safekeeping.

�� As As wadiahwadiah is a trust, the depository becomes the is a trust, the depository becomes the

guarantor and, therefore guarantees repayment of guarantor and, therefore guarantees repayment of

the whole amount of the deposits, or any part the whole amount of the deposits, or any part

thereof, outstanding in the account of depositors, thereof, outstanding in the account of depositors,

when demanded. when demanded.

�� The depositors are not entitled to any share of the The depositors are not entitled to any share of the

profits but the depository may provide returns to profits but the depository may provide returns to

the depositors as a token of appreciation. the depositors as a token of appreciation.

KafalahKafalah (guarantee) (guarantee)

�� Refers to a contract of guarantee by the Refers to a contract of guarantee by the

contracting party or any third party to guarantee contracting party or any third party to guarantee

the performance of the contract terms by the performance of the contract terms by

contracting parties. contracting parties.

Range of IB ProductsRange of IB Products

MudarabahSpecific investment account-

i

MudarabahSpecial investment account-i

MudarabahGeneral investment account-

i

Wadicah Yad

Damanah/Mudarabah

Savings account-i

Wadicah Yad

Damanah/Mudarabah

Current account- i

Applicable Concepts
Products / Services

(Deposit)

IjarahLeasing-i

Bayc Bithaman AjilLand financing-i

Bayc Bithaman Ajil / Istisnac

/Variable Rate Ijarah

Home/house financing-i

Ijarah Thumma BaycHire purchase-i

Bayc Bithaman AjilFixed asset financing-i

Bayc Bithaman AjilEquipment financing-i

Murabahah / Bayc Bithaman Ajil

/ Bayc cInah

Education financing-i

Bayc Bithaman AjilComputer financing-i

Bayc cInah / Bayc Bithaman Ajil

/Murabahah

Cash line facility-i

Applicable ConceptsProducts / Services (FinancingFinancing)

UjrForeign exchange

Bayc cInahSell and buy back agreements

(Repo-i)

MudarabahNegotiable instrument of

deposit-i

Bayc Bithaman AjilNegotiable debt certificate-i

Applicable Concepts

Products / Services

(Treasury/ Money Market

Instrument)

Wakalah/MurabahahTrust receipt-i

KafalahShipping guarantee-i

Wakalah/ Murabahah

//Ijarah/Bayc Bithaman

Ajil

Letter of credit-i

Murabahah/ Bayc DaynExport credit

refinancing-i

KafalahBank guarantee-i

Murabahah / Bayc DaynAccepted bills-i

Applicable Concepts
Products / Services

(Trade Financing)

UjrDebit card-i

Bayc cInah/Bayc Bithaman

Ajil

Credit card-i

QardCharge card-i

Applicable Concepts

Products / Services (Card

Services)

UjrTelebanking

UjrATM service

UjrStanding instruction

UjrDemand draft

UjrCashiers' order

UjrTravellers' cheques

UjrTT/funds transfer

UjrStockbroking services

Applicable Concepts
Products/Services

(Banking Services)

Structure of the documentationsStructure of the documentations

�� Letter of OfferLetter of Offer

�� Facility Facility

AgreementAgreement

�� PPAPPA

�� PSAPSA

�� Letter of OfferLetter of Offer

�� PPAPPA

�� PSAPSA

�� Facility Facility

AgreementAgreement

�� Letter Of OfferLetter Of Offer

�� PPAPPA

�� PSAPSA

Third StructureThird StructureSecond StructureSecond StructureFirst StructureFirst Structure

Legal IssuesLegal Issues

�� 1. S 66 BAFIA. Bank cannot acquire shares 1. S 66 BAFIA. Bank cannot acquire shares

of immovable property.of immovable property.

�� IB involves with buying and selling of IB involves with buying and selling of

properties.properties.

�� SolutionSolution-- S 116 (2) (a)S 116 (2) (a)-- BNMBNM’’ss supervision supervision

�� BNM issued BNM/GP3 Guideline. BNM issued BNM/GP3 Guideline.

Legal IssueLegal Issue

�� 2. S 55 of the IBA 1983. IBA prevail over 2. S 55 of the IBA 1983. IBA prevail over
Companies Act.  Companies Act.

�� What about other acts?What about other acts?

�� The IBA silent on this aspect.The IBA silent on this aspect.

�� 3. Court Jurisdiction3. Court Jurisdiction

�� Banking under the federal listBanking under the federal list

�� Only person profess IslamOnly person profess Islam-- ShariahShariah CourtCourt

�� IB is a company established under the Co. IB is a company established under the Co.
Act.Act.

Legal IssueLegal Issue

�� 4. Real Property Gains Tax Act.4. Real Property Gains Tax Act.

�� Any transfer of ownershipAny transfer of ownership-- pay the tax.pay the tax.

�� EgEg. BBA transaction will trigger double . BBA transaction will trigger double
taxation since it involves 2 transactions. taxation since it involves 2 transactions.

�� The The govtgovt amended the RPGTamended the RPGT-- One taxation One taxation
onlyonly

�� 5. Stamp Duty5. Stamp Duty--

�� Every Every transfrtransfr of propertyof property-- Stamp Duty.Stamp Duty.

�� The The govtgovt ammendedammended the stamp duty act the stamp duty act
1949.1949.

ShariahShariah IssuesIssues

�� 1. The issue of attestation1. The issue of attestation--

�� In 2:282. Debt+ in writing+ 2 male In 2:282. Debt+ in writing+ 2 male

witnessesswitnessess

�� The requirement of 2 male witness is just  The requirement of 2 male witness is just

attestatorattestator and not considered as witness.and not considered as witness.

�� It is not compulsory but Islam encourages It is not compulsory but Islam encourages

it.it.

SyariahSyariah IssueIssue

�� 2. Underlying Asset2. Underlying Asset--

�� LawfulnessLawfulness-- Q= Building is Islamic but the Q= Building is Islamic but the

purpose of constructing it is not Islamicpurpose of constructing it is not Islamic

�� Free from any encumbrancesFree from any encumbrances

�� 3. Two parties transaction.3. Two parties transaction.

�� Bay Bay InahInah--

�� Backdoor to Backdoor to ribariba..

SyariahSyariah IssueIssue

�� 4. Clause on Right to Recall the Facilities4. Clause on Right to Recall the Facilities

�� Event of defaultEvent of default-- Bank may recall or Bank may recall or
terminate.terminate.

�� Permissible= Muslim is bound by his Permissible= Muslim is bound by his
promisepromise

�� 5. Compensation for late payment5. Compensation for late payment--

�� Prior 1998Prior 1998-- Cannot impose compensationCannot impose compensation

�� Post 1998Post 1998-- Can:Can:-- i.  La i.  La DararDarar WaWa la la DirarDirar ii. ii.
AlAl--DararDarar YuzalYuzal iii. Fatwa Aliii. Fatwa Al--ZarqaZarqa’’: Bay Al: Bay Al--
ArabunArabun iv. Based on economic loss.iv. Based on economic loss.

Thank YouThank You

Zulkifli Bin Zulkifli Bin HasanHasan

Faculty of Faculty of SyariahSyariah & Law& Law

EE--mail: mail: zulkiflih@admin.kuim.edu.myzulkiflih@admin.kuim.edu.my

EE--mail: mail: zul361977@yahoo.comzul361977@yahoo.com..

Tel. No: 06Tel. No: 06--79885417988541

H/Phone No: 019H/Phone No: 019--6698514 6698514