A condition / contractual stipulation that renders the contract (aqd) in which it was stipulated a defective contract (i.e., though in essence a valid contract, but it lacks legal sufficiency due to incorrect or incomplete set of elements or requirements). For a contract to be valid, it must meet specific requirements (contract requirements) and be conforming to those requirements. It must also be based on legal precedent or be accepted by convention. Therefore, any condition that doesn’t meet all these four criteria will be deemed defective. The same holds for contracts in which is stipulated that one of the parties obtain extra benefits at the expense of the other. Examples of defective contracts include:

• A contract in which a commodity is purchased on condition that the seller will process it (convert it from its original state into a new one). This could be the case when buying wheat while stipulating that the seller will crush it.
• A contract in which a commodity is purchased on condition that the seller keeps it in his stores for a specific period of time (after possession has been constructively taken by the buyer).
• A sale contract with a condition that the buyer will lend the seller an amount of money or render him some service or favor.

All the above sales incorporate additional benefits to one counterparty without commensurate benefits to the other. Accordingly, these sales are defective and any disproportionate benefits conditioned therein are considered outright riba.

Shart fasid is an Arabic term that denotes “defective condition or stipulation”.