Revocation of Contracts by Exercise of a Cooling-Off Option — practice questions

Correct answer: D. Clauses 1 to 4: The Standard covers the stipulated revocation of valid and binding contracts, defined as termination by virtue of a contractual stipulation giving a party the option to revoke. It does not cover expiry at the end of the term or nullification for absence of a Shari’ah condition. The option may be stipulated in any form indicating it, without any specific word, and the parties may agree an option for one or both of them in specified situations, without violating Shari’ah rules.

Correct answer: B. Clauses 5 and 6: The option is triggered by the occurrence of a situation stipulated in the contract. For revocation to be valid, the triggering cause must exist at the time of revocation, there must be no impediments, the owner of the option must notify the other party according to custom, and the option must be exercised by its owner. Neither a court order nor the other party’s consent is required.

Correct answer: A. Clause 7: Revocation cannot take place where the sale item is destroyed by a natural disaster after delivery, where it is destroyed by the buyer before or after delivery, where conduct transfers ownership and creates third-party rights (such as selling or gifting the item), or where the period specified for exercising the option has expired. A fall in value or the other party’s objection is not an impediment.