What are the elements of Islamic contracts?

What are the elements of Islamic contracts?

Elements of Contract in Islamic Law: Majority is of the view that the essential elements of a contract are four: (a) Sighah the form i.e. (offer and acceptance); (b) the seller; (c) the buyer and (d) the subject matter (ma`qud `alayh).

What are essential elements of a valid contract in Islamic law?

Essential conditions of contractual validity To enter into a valid contract there are certain conditions which have to be met. There are six elements which need to be fulfilled: (i) the offeror and the offeree; (ii) offer and acceptance; and (iii) the subject matter and consideration.

What are the conditions of istisna any 3?

A contract of Istisna is binding on the contracting parties provided that certain conditions are fulfilled, which include: • Specification of the type, kind, quality and quantity of the subject-matter to be produced. Price of the subject-matter must be known and the delivery date must be determined.

What are compensatory contracts?

A compensation contract is a supplemental document to an employment contract in the sense that it does not replace it but changes certain details about employee compensation based on new circumstances.

What are the major contracts in Islamic finance?

Some of these include Mudharabah (profit sharing), Wadiah (safekeeping), Musharakah (joint venture), Murabahah (cost plus finance), Ijar (leasing), Hawala (an international fund transfer system), Takaful (Islamic insurance), and Sukuk (Islamic bonds).

What is Sahih contract?

Al‑’aqd al‑sahih, under the Islamic law, involves an agreement (mutual when two or more parties are involved), and or a sole decision (when the choice is unilateral, e.g., divorce). Page 3.

What are the basic principles of Islamic finance?

Principles of Islamic Finance Islam considers lending with interest payments. Interest is found in the income statement, but can also as an exploitative practice that favors the lender at the expense of the borrower. According to Sharia law, interest is usury (riba), which is strictly prohibited.

What are the uses of istisna contract?

For example, the istisna contract can be used for house financing. If the client seeks financing to construct the house at his open land, the Islamic bank may undertake to construct the house on the basis of istisna contract.

Where can I find the Islamic underpinning of istisna’?

The Islamic underpinning of istisna’ can be found with the following two ahadith: 1. Sheikh Muhammad Taqi Usmani, An Introduction to Islamic Finance. 1. Meezan Bank, Istisna’. 3. Istisna’ in Islamic banking: Concept & Application. 4. Islamic Banking and Finance, 2009 (Spiramus Press Ltd).

What documentation is involved in istisna?

There are three sets of documentation involved in istisna’: 1. Master Istisna’ Agreement. The agreement is signed between the Bank and the Customer, outlining the terms and conditions of the production of goods, including: cost price, delivery location, quantity and quality.

What is istisna’ in Islamic finance?

In Islamic finance, istisna’ is generally a long-term contract whereby a party undertakes to manufacture, build or construct assets, with an obligation from the manufacturer or producer to deliver them to the customer upon completion. In practice, the key advantage of an istisna’ contract is that it can provide flexibility to the customer,…