Khiyar

Khiyar refers to the right of option or choice that a party to an Islamic contract may exercise to confirm or cancel a transaction within a stipulated period. Classical Fiqh al-Muamalat recognises several types of Khiyar: (1) Khiyar al-Shart (Stipulated Option) — a contractual right to rescind within an agreed timeframe, functioning similarly to a conventional option period; (2) Khiyar al-Aib (Defect Option) — the right to return goods that are found to have hidden defects not disclosed at sale; (3) Khiyar al-Majlis (Session Option) — the right of both parties to rescind before they physically part after concluding the contract verbally; and (4) Khiyar al-Ru'yah (Inspection Option) — the right to inspect goods before confirming a sale of unseen items. AAOIFI Shariah standards incorporate Khiyar provisions particularly in Salam, Istisna, and Murabaha contracts. Khiyar al-Shart is significant in distinguishing Islamic financial contracts from conventional options: the former is a rescission right over an underlying commercial contract, while conventional options are standalone speculative instruments which may involve Gharar and Maysir. In modern Islamic banking, Khiyar al-Aib is the Shariah basis for consumer protection mechanisms, product warranties in Murabaha financing, and dispute resolution in trade finance. The IOF contract engine enforces Khiyar windows in applicable contract types with automated expiry tracking.