Issues of Khiyar in contract: A case study of the housing statutory standard sale and purchase agreements in the Housing Development (Control and Licensing) Regulation 1989 in Peninsular Malaysia

• Main Author: Md Dahlan, Nuarrual Hilal
• Format: Conference or Workshop Item
• Language: English
• Published: 2012
• Subjects: K Law (General)
• Online Access: http://repo.uum.edu.my/6541/1/Nuu19.pdf; http://repo.uum.edu.my/6541/; http://www.uii.ac.id/content/view/1945/309/

It is well entrenched in Islamic Law that khiyar is an inherent right of the contracting parties in a contract. This right provides the contracting parties with a right of option to void the contract they entered into if the subject matter of the contract does not comply with the specifications, terms and conditions of the contract. In Peninsular Malaysia, all house purchasers who wish to buy houses built by the licensed housing developers who are subject to the Housing Development (Control and Licensing) Act 1966 (Act 118) and subject to control of the Ministry of Housing and Local Government (MHLG) are required to use the prescribed housing statutory standard sale and purchase agreements as contained in Schedules G, H, I and J ('the said agreements').However after a close scrutiny over the said agreements, there is no term of khiyar provided. Thus, due to the absence of term of khiyar in the said agreements, the said agreements, it is submitted, are null and void under Islamic Law. Likewise, it follows that due to this nullity, the subsequent housing transactions involving loan agreements, effected through Bay' Bithaman al-Ajil (BBA), Musharakah Mutanaqisah, Ijarah Thamma al-Bay' and Istisna' used by Islamic Banks, may also be affected and void.This academic paper is a fruit of a completed research undertaken by the author. Its objective is to discuss and explore the issues of khiyar in the said agreements, particularly when the housing projects are abandoned.The author used qualitative legal research methodology to unravel the issues of khiyar in the said agreements.This paper contends that due to the absence of khiyar in the said agreements, the said agreements have not complied with the requirements under Islamic law and could cause the housing transactions and the subsequent loan transactions entered into by the purchasers/borrower. developers and Islamic banks, void too. This paper also provides certain proposals to improve the current terms and conditions in the said agreements in order to render them harmonious with the spirit and intent of Islamic Law.