Islamic Contract Law: Examples of Nominated and Non-Nominated Contracts

1. Nominated Contracts

Nominated contracts are contracts that are already recognised in classical Islamic jurisprudence and have established names, rules, and legal effects.

Examples include:

• Bay‘ — sale contract
• Example: Ahmad sells a laptop to Ali for RM2,000.
• Ijarah — lease or hiring contract
• Example: Fatimah rents a house for RM1,500 per month.
• Hibah — gift contract
• Example: A father gives his daughter a car without asking for payment.
• Qard — loan
• Example: Ahmad lends Ali RM1,000, and Ali must return RM1,000.
• Wakalah — agency
• Example: Ahmad appoints Ali to sell his car on his behalf.
• Musharakah — partnership
• Example: Two people contribute capital to start a business and share profit according to agreement.

Nominated contract = a recognised contract with an established name and established Shariah rules.

2. Non-Nominated Contracts

Non-nominated contracts are agreements that do not fall exactly under one traditional named contract.

They may be newly created or modern arrangements designed to meet contemporary commercial needs.

They are not automatically prohibited simply because classical jurists did not give them a specific name.

They may be valid if they do not violate Shariah principles.

Example 1: Modern Service Subscription

Suppose a company offers:

“Pay RM50 per month and receive access to our online business software, cloud storage, and customer support.”

This exact modern arrangement may not have existed as a classical named contract in the same form.

However, it can be structured using general Shariah principles relating to services and benefits.

Example 2: Combined Maintenance Agreement

A company sells machinery to a customer and separately agrees to provide:

• Regular inspection
• Repair services
• Technical support

for a fixed annual fee.

The whole commercial arrangement may not correspond to one classical nominated contract by itself.

Instead, it may combine recognised contractual elements in a modern structure.

Example 3: Modern Membership Arrangement

A business offers annual membership for RM300.

Members receive:

• Access to certain facilities
• Discounts
• Priority booking
• Other agreed benefits

The agreement may not have a single classical contract name, but it may still be permissible if:

• The benefits are clear
• The payment is clear
• There is no prohibited uncertainty
• The arrangement does not involve riba or unlawful activities

Main Difference

Nominated Contract

Has a recognised classical name and established legal rules.

Example:

Buy a car for RM50,000 = bay‘

Non-Nominated Contract

A newer or customised arrangement that does not fit exactly into one classical named contract.

Example:

Annual membership giving access to several services and benefits

The key question is not merely whether the contract has a classical name.

The important question is:

Does the agreement comply with Shariah principles?

Easy Way to Remember

Nominated = already named and recognised in classical fiqh

Non-nominated = newly designed or customised agreement that must still comply with Shariah