Selling after a verbal agreement
My father put up a plot of land for sale. A buyer came forward and after we agreed on the sale we recited Surat Al-Fatiha together. The next day, this same man came with another buyer to show him the land and on the third day he came with yet another one. We realized that he was a broker and my father and brother told him that the agreement had been revoked and the sale is not effective unless he makes a down payment; he left without making one and did not return. Afterwards, another buyer approached us and we signed the contract after he made a down payment. The sale contract included a penalty clause of 100, 000 L.E.
- Is the first buyer entitled to the plot of land?
- To what extent is the second contract valid?
- Do we bear any consequences for having recited Surat al-Fatiha with the first buyer who was informed of the sale's revocation if he does not make a down payment?
Definition of a contract
It is a bilateral agreement that gives rise to manifest results concerning the item in question. To be binding, a contract is not concluded except if there is a firm conviction as to its bindingness. If not, it is merely a promise of ratification and promises are not binding according to the opinion of the majority of scholars.
According to the most correct opinion, the penalty clause is neither completely forbidden nor permitted. It is valid in case actual harm arises and estimated according to the extent of the harm and not according to what the parties to the contract have actually agreed upon.
- The words of the inquirer's father to the first buyer were merely a promise of sale and Surat al-Fatiha was recited to confirm this promise.
- Reciting Surat al-Fatiha does not render the agreement more than a mere promise of sale.
- The transaction between the inquirer's father and the second buyer is a valid contract that has been effected by mutual consent, and documented in writing and by the exchange of money. Consequently, the first buyer is not entitled to anything, especially since the inquirer's father stipulated that their agreement is revoked if the buyer does not make a down payment.
- The second contract is valid and the penalty clause is estimated according to the extent of the harm, if any.
Allah the Almighty knows best.