Options to Revoke Contracts Due to Incomplete Performance — practice questions

Correct answer: B. Clause 2/2: The option to revoke due to defect requires a material defect (one that renders the item defective by custom, unfit for purpose or of diminished value), which cannot be repaired except at a cost; that the buyer was unaware of the hidden defect at contracting, irrespective of whether the seller knew of it; that there is no clause excluding the seller’s liability for defects; and that the defect was not caused by the buyer.

Correct answer: D. Clause 2/2/4: The option to revoke for defect is excluded where the contract contains a clause excluding the seller’s liability for defect (Bay’ al-Bara’ah, an ‘as is, where is’ sale), but it is prohibited for the seller to exclude liability for defect in Ijarah and Istisna’a contracts. In Murabahah, the Institution may stipulate freedom from responsibility for defects (Shari’ah Standard No. (8), Clause 4/9).

Correct answer: A. Clause 2/5: The buyer may revoke and return the item or continue with the contract. If he chooses to return it after taking delivery, revocation is effected by mutual consent or court order. If he has not yet taken delivery and was aware of the defect before delivery, he may revoke unilaterally by notice to the seller and is entitled, on revocation, to a refund of the whole price by mutual consent or court order.