Understanding Islamic Finance - Doha Academy of Tertiary Studies

Some Accessory Contracts 353An offeror can specify a time for accomplishment of a job, after which the worker willnot be entitled to any reward except any stipulation or adjustment otherwise. For example,parties can agree that if work on the job is at an advanced stage but remains incomplete dueto any genuine problem, the completion time may be increased with mutual consent.13.4.3 Execution of a Ju‘alah ContractJu‘alah can be concluded by an open or informal offer to the public. In this case, any personwho hears or receives the offer and is interested to do the job may do so, either himself orthrough the assistance of another person. However, if a Ju‘alah contract is concluded witha specified worker, such a worker is obliged to perform the work himself.Conclusion of a Ju‘alah contract does not require a counter acceptance by another party (asis required in Ijarah), because the requirement of counter acceptance in Ju‘alah is practicallyunattainable, except when it is concluded with a specific worker who is obliged to performthe work himself.As against Ijarah/Ujrah, the claim to the reward is not enforceable until the completionof the required work. (In Ujrah, the worker who had agreed to work for a stipulated timeis entitled to a wage if he has worked for the settled time, irrespective of the work beingcompleted or not.) However, the worker is entitled to the reward prior to the completion ofthe work in the following situations:1. When it is found that the worker has worked to realize a result in respect of a propertythat does not belong to the offeror and a legal decision to that effect has been issued.2. When an accident that was not due to the negligence or misconduct of the worker causesimpairment of the value of the subject matter of the contract; here, the worker is entitledto the full reward.The worker is not entitled to a reward if Ju‘alah is terminated unilaterally by either partybefore the commencement of work. However, when the contract is terminated by the offerorafter the work is commenced, the former is obliged to pay to the worker the common marketremuneration.13.4.4 Parallel Ju‘alah ContractsA bank, after taking work, can get it done by others on the basis of a Parallel Ju‘alah. Thetwo contracts will be independent of each other. The bank may play the role of the workerby signing a Ju‘alah contract. It may carry out the work itself or through another parallelcontract with a third party, provided the first Ju‘alah contract does not require it to do thework itself.It is also possible for the bank to play the role of the offeror for performance, irrespectiveof whether it needs the work for its own benefit or for the fulfilment of its obligation in aParallel Ju‘alah contract, taking into account that the two contracts remain independent.13.4.5 Practical Process in Ju‘alah by Islamic BanksJu‘alah can be used by Islamic banks for a number of services, directly or through a ParallelJu‘alah contract with the following process (see Figure 13.1):1. The customer negotiates with the bank for performance of uncertain work in a specifiedtime for an agreed reward.