Understanding Islamic Finance - Doha Academy of Tertiary Studies

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viiiUnderstanding Islamic Finance2.5.3 The Factors of Production 352.5.4 Restrained Individual Freedom 372.5.5 Liberalism versus State Intervention 382.6 Summary 413 The Main Prohibitions and Business Ethics in IslamicEconomics and Finance 433.1 Introduction 433.2 The Basic Prohibitions 433.2.1 Prohibition of Riba 443.2.2 Prohibition of Gharar 573.2.3 Prohibition of Maisir/Qimār (Games ofChance) 613.3 Business Ethics and Norms 643.3.1 Justice and Fair Dealing 643.3.2 Fulfilling the Covenants and PayingLiabilities 673.3.3 Mutual Cooperation and Removal ofHardship 683.3.4 Free Marketing and Fair Pricing 683.3.5 Freedom from Dharar (Detriment) 693.4 Summary and Conclusion 704 The Philosophy and Features of Islamic Finance 734.1 Introduction 734.2 The Philosophy of Islamic Finance 734.2.1 Avoiding Interest 744.2.2 Avoiding Gharar 754.2.3 Avoiding Gambling and Games of Chance 764.2.4 Alternative Financing Principles 764.2.5 Valid Gains on Investment 784.2.6 Entitlement to Profit – With Risk andResponsibility 814.2.7 Islamic Banks Dealing in Goods not in Money 824.2.8 Transparency and Documentation 834.2.9 Additional Risks Faced by Islamic Banks 844.3 Debt versus Equity 854.4 Islamic Banking: Business versus Benevolence 864.5 Exchange Rules 874.6 Time Value of Money in Islamic Finance 894.7 Money, Monetary Policy and Islamic Finance 904.7.1 Status of Paper Money 914.7.2 Trading in Currencies 914.7.3 Creation of Money from the Islamic Perspective 924.7.4 Currency Rate Fluctuation and Settlementof Debts 944.8 Summary 96
ContentsixPART II CONTRACTUAL BASES IN ISLAMIC FINANCE 995 Islamic Law of Contracts and Business Transactions 1015.1 Introduction 1015.2 Māl (Wealth), Usufruct and Ownership 1015.2.1 Defining Various Related Terms 1035.3 General Framework of Contracts 1055.4 Elements of a Contract 1065.4.1 Offer and Acceptance: Form of the Contract 1065.4.2 Elements of the Subject Matter 1085.5 Broad Rules for the Validity of Mu‘āmalāt 1105.5.1 Free Mutual Consent 1105.5.2 Prohibition of Gharar 1105.5.3 Avoiding Riba 1115.5.4 Avoiding Qimār and Maisir (Games of Chance) 1125.5.5 Prohibition of Two Mutually Contingent Contracts 1125.5.6 Conformity of Contracts with the Maqasid of Sharī´ah 1135.5.7 Profits with Liability 1135.5.8 Permissibility as a General Rule 1145.6 W‘adah (Promise) and Related Matters 1145.6.1 Token Money (Hamish Jiddiyah) and ‘Arbūn 1165.7 Types of Contracts 1175.7.1 Valid Contracts 1185.7.2 Voidable (Fāsid) Contracts 1205.7.3 Void (Batil) Contracts 1235.8 Commutative and Noncommutative Contracts 1245.8.1 Uqood-e-Mu‘awadha (Commutative Contracts) 1245.8.2 Uqood Ghair Mu‘awadha (Tabarru‘) or Gratuitous Contracts 1255.8.3 Legal Status of Commutative and Noncommutative Contracts 1255.9 Conditional or Contingent Contracts 1265.10 Summary 1276 Trading in Islamic Commercial Law 1296.1 Introduction 1296.2 Bai‘ – Exchange of Values 1306.3 Legality of Trading 1316.3.1 Trade (Profit) versus Interest: Permissibility versus Prohibition 1326.4 Types of Bai‘ 1336.5 Requirements of a Valid Sale Contract 1336.5.1 The Object of the Sale Contract 1356.5.2 Prices and the Profit Margin 1386.5.3 Cash and Credit Prices 1396.6 Riba Involvement in Sales 1426.7 Gharar – A Cause of Prohibition of Sales 1436.8 Conditional Sales and “Two Bargains in One Sale” 1446.9 Bai‘ al‘Arbūn (Downpayment Sale) 1456.10 Bai‘ al Dayn (Sale of Debt) 146
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1. Ownership of commodities and wea
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The Main Prohibitions and Business
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5Islamic Law of Contracts and Busin
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Part IIIIslamic Finance - Products
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10Forward Sales: Salam and Istisna
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Forward Sales: Salam and Istisna‘
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12Participatory Modes: Shirkah andi
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Participatory Modes: Shirkah and it
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13Some Accessory Contracts13.1 INTR
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GlossaryAhādith: Plural of Hadith,
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Glossary 487Bai‘ bil Wafa: Sale w
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Glossary 489Hukmi (Qabza): Construc
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Glossary 491Khiyar al-Shart: A righ
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BibliographyEnglish SourcesAAOIFI (
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English Sources 499Hasanuz Zaman, S
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English Sources 501Somerville, H. (
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