Legal-Jurisprudential Analysis of Conditional Sale Option in Relation to Transactions with Right of Restitution

There is divergence of opinions on contracting or pledging in optional sale. Imamiyah jurists endorse the act and consider it as an instance of sale in nature. Sunni jurists identify optional sale as bay’ al-Wafa or buyback sale, associating it with a pledge (rahn) contract. The conditional sale can be analyzed in two ways: First, the conditional sale involving the contractual relationship between mortgagor (seller) and mortgagee (buyer) stipulated in Article 34 of the Law on Registration of Deeds; Second, the conditional sale that does not govern the contractural relationship between the seller and buyer, and it is a real sale under articles 485-462 of the Law. The conditional sale governing the contractural relationship between the mortgagor and mortgagee is an instance of transaction with the right of restitution (Article 33 of the Law). This is why the law has considered the request for registration of the property in conditional sale as a right for the debtor, because in this type of conditional sale the buyer does not intend to conclude a contract of sale. Any negligence of this criterion will raise ambiguities: First, any conditional sale will be taken as the one with the right of restitution, whereas it is otherwise. Second, the real conditional sale has been well stipulated in Article 399 of the Civil Code; therefore, all sales stipulated in Article 399 of the Civil Code must be considered as the transactions with the right of restitution. It is clear that the existence of the element of option in a sale contract does not mean it is an instance of transaction with the right of restitution. Articles 33 and 34 of the Law on Registration of Deeds are not exclusive to provisions of Article 459, because this article is not about the conditional sale governing the contractual relationship between the mortgagor and mortgagee, whereas articles 33 and 34 of the Law govern such relationship.