Enforceability of Certain Promises, Particularly Unilateral and Pre-Closing Promises: Secular and Shari'ah Concepts
2017 Proceedings of Accounting and Auditing Organisation for Islamic Financial Institutions Shari'ah Board Conference
63 Pages Posted: 24 Oct 2017
Date Written: October 23, 2017
The purpose of this paper is to introduce, preliminarily explore, and generate discussion regarding select issues relating to enforceability of, primarily, unilateral promises and pre-closing promises. General principles applicable to unilateral and pre-closing promises in common law and Shari'ah-based systems are considered, including in the project finance context.
The paper explores elements, factors, and principles relevant to making a determination as to whether to enforce a particular unilateral promise (wa'd) under Islamic shari'ah, and whether secular law doctrines (such as promissory estoppel, quantum meruit, and others) can assist in the necessary analysis.
The paper explores a range of pre-closing discussions, promises, offers, and documents across the entire continuum of pre-closing negotiations. Documents that are considered include term sheets, general terms and conditions, letters of intent, agreements in principle, memoranda of understanding, letters of understanding, heads of agreement, agreements to agree, understandings, agreements, and contracts.
A case study of a complex project financing of a electricity generation project is presented for illustrative purposes. The case study involves multiple parties (governmental and commercial) from multiple jurisdictions and contracts governed by the laws of multiple jurisdictions. The contracts involve a bilateral investment treaty, an investment preference agreement, governmental support agreements, a framework agreement, an implementation agreement, letters of support, and customary input and off-take agreements, including intermediary term sheets that were course-of-negotiation predecessors to the foregoing agreements.
Keywords: Contracts, Unilateral Constracts, Shari'ah, Islamic, Pre-closing, Project Finance, Infrastructure Finance, Letters of Intent, Term Sheets
JEL Classification: K12, K33, F21, F34
Suggested Citation: Suggested Citation