Rulings on Partnership of Mudharabah

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The word mudharabah is derived from "dharba on earth," which means to travel for trade or business. Allah says, "Others (making dharb on earth) traveling through the land, seeking of Allah's bounty." [74:20] This means they go from one place to another to search for or seek Allah's sustenance in trade or business. Mudharabah within Islamic law indicates the payment of a specific amount of money to a person who uses it for business and makes … [Read more...]

Property Damage

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Allah, subhanahu wa ta'aala, has prohibited aggression against the properties of other people and against taking it without rightful cause, and held as liable any person who damages other people's properties without rightful cause even if it were done by mistake. Therefore, anyone who damages the lawful property of the others without their permission will be held liable for retribution. Imam Ibn Qudamah said, "We are not aware of any … [Read more...]

Defective Contracts

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A summarized translation from the "Fiqh of Financial Contracts" by Dr. H Chouat and Dr AH Hemmish A contract can be afflicted by a number of defects that may render it invalid or incapable of generating its intended results intended for it by the shar'iah. These defects, which may inflict the will of the contractors, are generally due to four things: MISTAKES They fall into two types: 1-Internal mistake: It is an assumption in the mind of … [Read more...]

Report on the Shari’ah Compliance of Products

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I have been requested by my esteemed and respected Ustaad, Mufti Ebrahim Desai Saheb to comment on a financial contract used by a major Bank. However, as an introduction to this matter, I will present in this part certain general guidelines that apply across the board, and are not confined to the product in question. These guidelines will form the ground plan and foundation upon which this product, and others, should rest. Any financial … [Read more...]

Islamic Banking and Finance in the United States – a report

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Report by Mufti Ebrahim Desai It is Friday after Maghrib Salaat on 14 July 2006 in Musjidun Nabawiy [sallallaahu alayhi wasallam]. I am on my way to South Africa from the United States and Allah favoured me with the opportunity of visiting the Haramayn Shareefayn. I have been travelling to the United States for the past fourteen years and have witnessed a great deal of Islamisation in the past one and a half decade. I regret not having … [Read more...]

General Business Laws

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Q: What is (the definition of) a transaction of sale? A: It is the exchange of one commodity for another commodity with the (happy) consent of the transactors. Q: How is a sale contracted? A: A sale is contracted with offer and acceptances which is effected in the past tense (i.e. the words used for offer and acceptance is to be in the past tense). It will be as though one of the transactors (contractors) is saying: ‘I sold (this article) … [Read more...]