Good Faith, Fair-Dealing and Disclosure Requirements in Hire-Purchase Contracts in Malaysia: Islamic and conventional Perspectives

Abstract

This paper aims to analyze the importance of the element of good faith, fair-dealing and disclosure requirements in a hire-purchase contract from both Islamic and conventional financing perspectives. The application of good faith is determined at a particular time by those standards of honesty, fairness and reasonableness prevailing in a given community that are considered appropriate for formulation in new, revised rules. In the eighteenth century, the concept of fair-dealing was viewed as an essential concept and emerged as a governing principle applicable to all common-law contracts. Under Islamic Law, the elements of good faith (iÍsÉn) and fair-dealing (Ñadl) are important and highly emphasized. One of the conclusions made in this research is that good faith and fair-dealing are two crucial elements in hire-purchase contracts, both in the Islamic and conventional systems.