Understanding Islamic Finance - Doha Academy of Tertiary Studies

13Some Accessory Contracts13.1 INTRODUCTIONMajor contracts being used by Islamic financial institutions like Shirkah, Bai‘, Ijarah andsimilar contracts have been discussed separately in various chapters. However, there aresome ancillary contracts that are used as part of the major contracts or could be used undervarious modes. Out of these, two contracts, namely Wakalah (agency) and Ju‘alah (renderinga service against reward), are discussed in this chapter. Tawarruq (monetization or generatingcash through purchase/sale activity) basically carries the concept of Murabaha in one wayor the other, but it has taken the form of a separate mode that Islamic banks use alongwith some other major modes. Hence, it is also discussed in this chapter. Istijrar, a kind ofrepeat sale that could take place under some major modes, has been discussed briefly. Othersubcontracts like Hawalah (assignment of debt), Kafalah (guarantee) and Bai‘ al Dayn (saleof debt) have been discussed in the relevant chapters.13.2 WAKALAH (AGENCY)The literal meaning of “Wakalah” is looking after, taking custody or application of skill orremedying on behalf of others. From this, the word “Tawkeel” is derived, which means toappoint someone to take charge of something, and also to delegate any job to any otherperson. Wakalah is also a responsibility. It is therefore necessary for a Wakil to dischargehis responsibility in the way a trustee discharges his responsibility in the case of Amānah.13.2.1 Types of Wakalah• Wakil-bil-Kusoomah (to take up various disputes/cases on behalf of the principal);• Wakil-bil-Taqazi al Dayn (receiving debt);• Wakil-bil-Qabaza al Dayn (possession of debt);• Wakil-bil-Bai‘ (agency for trading);• Wakil-bil-Shira (agency for purchase).Agency or delegated authority is proved by the texts of the Sharī´ah. The holy Prophet(pbuh) himself delegated the job of purchasing a goat for him to a Companion named‘Urwah al Barqi. 1 Similarly, the fourth Pious Caliph, Hadhrat Ali, and a number of otherCompanions (Gbpwth) delegated their business to others.1 Abu Daud, 1952, cf. Mansoori, 2005, p. 62.