The Extent to which E-commerce Contracts are Compatible with Islamic Law with Special Reference to Saudi Law: A Comparative Study

Abstract

A move to e-commerce is urgently needed to keep up with societal changes, and this need has raised questions and concerns among Muslims about whether e-commerce transactions are allowed from the perspective of Islamic law. This paper presents an overview of e-commerce and electronic contracts and how, specifically, Saudi law applies. The e-commerce contract has two key aspects in common law: an offer and an acceptance. Additional contractual elements required for validity and enforceability are capacity, intention to make a contract, consensus ad idem, value consideration and legal purpose. Islamic contracts consist of three pillars: form (offer and acceptance), contracting parties (mutual consent, legal capacity) and subject matter (the object of the sale). Sharia law also emphasises the importance of avoiding prohibited (haram) elements in contracts, such as usury (riba), deceit or fraud, gambling (maysir), duress (ikrah) and uncertainty (gharar). To meet these terms and conditions, e-commerce contracts face challenges, such as advertisements and display of goods in e-commerce platforms. Other challenges include determining whether an offer is valid, and whether something that is considered an invitation to treat under common law is a promise or obligation under Islamic law. Another issue is the ability to meet legal capacity during contract negotiation by electronic means. The suggested solutions are credit card payment, creation of a customer identification number and date of birth attestation. The final legal issue is payment with a credit card if the card charges interest, which must be avoided by those of the Islam faith because it is considered riba. This barrier might be avoided by using an interest-free credit such as card debit card a pre-paid card.