CHAPTER A1 INTRODUCTION TO ISLAMIC MUAMALAT
CHAPTER A1INTRODUCTION TO ISLAMIC MUAMALATLEARNING OUTCOMESAt the end of the chapter, the candidate will be able to: A1.1Understand the concept of Islam, the objectives (maqasid) and sources of shariah.Understand the prohibitions in muamalat.Understand and explain the rules of muamalat contracts.INTRODUCTIONThe Arabic word 'Islam' simply means 'submission', and derived from the word meaning'peace'. In a religious context it means complete submission to the will of Allah (SWT)Islam is not mere religion but a “deen”, meaning „the way of life‟. It touches upon thematerial as well as spiritual dimensions of human existence.Allah (SWT) emphasized the completeness of Islam in the following Quranic verse;Meaning:“This day I have perfected your religion for you, complete My blessing on you andapprove Islam as the way of life for you”(al-Maidah: 3)1.1.1 The Concept of IslamBroken down to its bare elements, Islam comprises of aqidah (a set of beliefs), shariah (aset of laws) and akhlaq (a code of moralities).The concept of the shariah is not only to govern man in the conduct of his life in order torealize Divine will, but covers all behavior; spiritual, mental as well as physical. Thus,the shariah principles are more than law, covering the total way of life that includes faith(iman) and practices (amal), personal behavior, legal and social transaction.As such, Islam is also known as shariah al- kubra that encompasses the way of life asordained by Allah (SWT).1
Islam can be classified into the following:AqidahAkhlaqShariahFiqh IbadatFiqh MunakahatAqidah is defined as the firm belief without any wavering or doubtin Allah (SWT), His Prophets and Angels, the Hereafter, Holy Bookand predestination. It is the main foundation in Islam and a startingpoint in order to be a good Muslim. It is reflected by the activitiesdone by him. The Prophet Muhammad (saw) described Islam as abuilding where its foundation is aqidah. The foundation of aqidah inIslam is the six pillars of faith (arkan al-iman).Practice of virtue, morality, and manners in Islamic theology andphilosophy. It consists of relationship between man and Allah(SWT), man and man and man and other creatures.Shariah is the set of rules derived from both the Quran and theauthentic traditions (sunnah) of the Prophet Muhammad (saw) andthe scholarly opinions (ijtihad) based on Quran and Sunnah. Theshariah contains categories and subjects of Islamic law called thebranches of fiqh (Islamic jurisprudence).The purification ruling that governs the relationship between manand Allah (SWT) such as prayer, fasting, zakat, jihad and someother forms of worship are dealt under this heading.The ruling related to family law. This area deals with marriage,divorce, inheritance, guardianship and other related matters.2
Fiqh JinayatFiqh MuamalatIt is known as criminal law of Islam. This area deals with majoroffences like illicit sex (zina), theft (sariqah), murder, etc.The rulings governing commercial transactions between the partiesinvolved.1.1.2 Objective of Shariah (Maqasid al Shariah)Maqasid is the Arabic word for goals or purposes. In Islamic context, it can refer to thepurposes of Islamic faith.According to Imam al-Ghazali “ the objective of the shariah is to promote the well-beingof all mankind, which is safeguarding their faith (deen), their self (nafs), their intellect(a‟qal), their posterity (nasl) and their wealth (mal). Whatever ensures the safeguard ofthese five principles serves public interest and is therefore desirable.There are five maqasid (objectives) as follows:The preservation ofDescription/RemarksReligionThe preservation and protection of deen (religion) under allcircumstances.Example:Defending the Islamic faith particularly if it attacked by theenemies of Islam.LifeThe preservation and protection of life under allcircumstances.Example:In order to protect life is enacting a severe punishment forthose who kill another.LineageThe preservation and protection of descendants and honorunder all circumstances.Example:Islam prohibit it followers in committing adultery or otherimmoral behaviors.3
IntellectThe preservation and protection of intellect and mind under allcircumstances. Protection of mind requires safeguarding itfrom anything that might harm the ability and functions of thebrain.Example:The consumption of liquor or similar substances that willaffect the functions of the brain.PropertyThe preservation and protection of property under allcircumstances.Example:The pro-active initiatives and planning in safe guarding onesproperty against misfortunes or disasters.1.1.3 Classification of Benefits of the Objectives of the ShariahThe Muslims scholars have classified the entire range of masalih – cum – maqasid intothree categories in a descending order of importance:LessImportantMoreImportant1.1.4 Sources of ShariahIn general, the source of shariah is divided into two i.e. resources are agreed upon byscholars (adillah muttafaq „alaih) and the resources are not agreed upon by scholars.Resources are agreed upon by scholars is the source used by scholars to issue the rule ona matter or problems that occur. These sources are accepted by scholars without anydisagreement among them in terms of sequence or usability.4
There are four sources of law agreed by the majority of scholars are as follow:SourceDescription/RemarksQuranThe Quran is the word of Allah (SWT) revealed to ProphetMuhammad (saw) in Arabic conveyed by angel Jibril (as) The Quran isthe main primary sources of shariah. It is mu‟jizat (meaning whichmay not be understood by someone) and is immutable and preservedby Allah (SWT).SunnahAccording to muhaddithun or scholar of science of hadith, sunnah referanything which came from the Prophet Muhammad (saw) including hisacts, sayings, tacit approval as well as physical attribute.It can be divided into three categories1:a. Sunnah Qawliyyah (Sunnah by Words)Example: when Prophet Muhammad (saw) explicitly said,“Pray as you see me pray”b. Sunnah Fi‟liyyah (Sunnah by Action)This type of sunnah consists of the Prophet‟s deeds and actualinstruction, such as the way he performed the prayer, thefasting, the ritual of hajj, or the transaction he concluded suchas sale and other financial transaction.c. Sunnah Taqririyyah (Sunnah by Agreement)The tacitly approved sunnah consist of the acts and sayings ofthe companions in the Prophet‟s presence or which came to hisknowledge and on which he remained silent. The tacit approvalof the Prophet Muhammad (saw) may be inferred from hissilence, indicating the permissibility of the acts as the ProphetMuhammad (saw) would never keep silent on prohibited things.Ijma‟Ijma‟ is an Arabic term referring to the unanimous agreement amongstthe mujtahidun after the demise of Prophet Muhammad (saw).2QiyasQiyas refers to the application of an original ruling (hukm) that hasbeen established in the earlier case on the current issue on which thelaw is silent.31Aznan Hasan, Fundamentals of Shariah in Islamic Finance, pp. 29Aznan Hasan, Fundamentals of Shariah in Islamic Finance, pp. 393Aznan Hasan, Fundamentals of Shariah in Islamic Finance, pp. 4325
1.1.5 Mandatory Law (Hukum Taklifi)Mandatory law (hukum taklifi) law is the law that describes the commands, prohibitionsand the option to run or leave an activity / job. According to Islamic terminology, the actsof a Muslim must be guided by these five commandments (al-ahkam al-khamsah)classified as follows:Classification ofCommandmentWajib (obligatory)A1.2DescriptionThe term wajib means an act the performance of which isobligatory for the subject. Example: performing of prayer(solat) and fasting in month of Ramadhan. In its technicalsense, it is an act whose commission is demanded by Allah(SWT) in certain and binding terms.Mandub (recommended)Mandub is defined as a demand by Allah (SWT). for thecommission of an act without making it binding and withoutassigning any blame for its omission. The rule for mandub isthat for doing so there is reward (thawab) for the doer, whileomitting it entails no penalty such as giving charity to theothers.Haram (prohibited /unlawful)Haram is defined as one which omission is required by Allah(SWT) in binding and certain terms. An example of prohibitedact (haram) is the misappropriation of another‟s wealth.Makruh (reprehensibleor disapproved)Makruh is defined as one which omission is demanded byAllah (SWT) in non-binding terms. An example ofreprehensible act (makruh) such as debt which is notdocumented (unrecorded).Mubah (permissible)Mubah or permissible act is one in which Allah (SWT) hasgranted a choice of commission and omission, without blameor praise for omission or commission. According to thisprinciple, all contracts and transactions are permissible, unlessthere is evidence indicating otherwise.BASIC MUAMALAT1.2.1 Introduction to MuamalatThe literal meaning of the term “muamalat” (plural of muamalah) is „the transactions‟while its technical idea is any form of mutual dealings held between men to solve theireveryday needs, especially in matters relating to trade and commerce. Muamalat is asocial relationship which consists of various economic and non-economic activities.6
Basic principles that have a role in forming shariah rulings in muamalat are:4Basic PrinciplesPermissibility as aGeneral RuleDescriptionThe status of all matters other than rituals is permissible untilevidence is given that a certain matter is prohibited.Conclusion of Contractby Mutual ConsentMutual consent means that the contract entered into by theparties shall be free from any elements of coercion, fraud,misrepresentation or other illegal means.Conformity of Contractwith the Maqasid alShariahThe transaction or contract entered by individuals shall beaccordance with the maqasid al shariah.The Principle of WideCirculation of WealthWealth and property should be circulated among the generalpublic and actively transferred from one hand to another in theform of expenditures and investment.The Principle ofTransparency inCommercial DealingAll financial transactions must be conducted in such a mannerthat all the parties are clear about all the important factsincluding the terms and conditions of their dealings.Justice and Fair DealingJustice is the general principle of shariah that needs to beobserved in all Islamic transactions and contract.1.2.2 General Prohibition in MuamalatAll economic activities are legally permissible as long as these activities do not transgressany of the tenets of shariah. In line with this maxim, it is the unanimous opinion of allfour major Islamic shariah School of thought (Hanafi, Maliki, Shafii and Hanbali) thatall forms of business transactions that transgress any of the tenets of shariah areconsidered invalid.General Principles1. No contract should be made for selling or buying forbidden products such asalcohol or any other forbidden substances.The Prophet Muhammad (saw) said,Meaning:"Surely, Allah and His Messenger have prohibited the sale of wine, the flesh ofdead animals, swine and idols,"(Reported by Bukhari and Muslim)4Aznan Hasan, Fundamentals of Shariah in Islamic Finance, pp. 193 - 1997
2. Likewise, no contract should be made for any financial deal on the basis of usury(riba).Meaning:“Allah has permitted trade and forbidden usury”(al-Baqarah: 275)3. Contract involves in gambling (maisir) is forbidden in Islam.Meaning:“They will ask you concerning wine and gambling. Say: “in them is great sin, andsome benefit, for men; but the sin is greater than the benefit.(al-Baqarah: 219)4. Contract that involves major uncertainty (gharar fahish) is also forbidden andmay make the contract voidable.Meaning:“O ye who believe! Eat not up your property among yourselves in vanities, but letthere be amongst you traffic and trade by mutual good-will, nor kill (or destroy)yourselves, for verily Allah hath been to you Most Merciful.”(an-Nisaa‟: 29)Prohibited Elements1. Riba (Usury)Al-Jassas defines riba as a loan given for a stipulated period with stipulatedincrease on the principal payable by the loan-taker. Riba also defined as “anincrease that has no corresponding consideration in an exchange of property forproperty.5The prohibition of riba is deduced from the following verse:Meaning:5Aznan Hasan, Fundamentals of Shariah in Islamic Finance, pp. 1998
Those who devour usury will not stand except as stand one whom the evil one byhis touch hath driven to madness. That is because they say: "Trade is like usury,"but Allah hath permitted trade and forbidden usury. Those who after receivingdirection from their Lord, desist, shall be pardoned for the past; their case is forAllah (to judge); but those who repeat (the offence) are companions of the fire:They will abide therein (forever).(al-Baqarah: 275)It would appear that the prohibition regarding riba has two dimensions. The firstone prohibits increases arising from debts/loans (duyun), known as riba duyun,while in barter trades (buyu‟), unequal exchange of ribawi item of same kind andsame basis in is known as riba buyu‟.This can be summarized as follows:6a. Riba DuyunUnjustified increment in money lent whether in kind or cash over andabove the principal amount.TypeRiba QardRiba JahiliyyahDescriptionIncrease (interest) on the principal sum of theloan is agreed upon at the point of contractIncrease levied on the borrower for laterepayment or failure to repay the financial loan6Aznan Hasan, Fundamentals of Shariah in Islamic Finance, pp. 33 - 349
b. Riba Buyu‟Occurs in trading and exchange transactions, in which unequal exchangeof ribawi commodities of same kind and same basis.TypeRiba FadhlRiba Nasi‟ahDescriptionDue to unequal amount/quantityDue to extension of time of deliveryProphet Muhammad (saw) said,Meaning:„Gold is to be paid for by gold, silver by silver, wheat by wheat, barley bybarley, dates by dates, and salt by salt - like for like, equal for equal,payment being made on the spot. If the species differ, sell as you wishprovided that payment is made on the spot'.(Reported by Muslim)From the above hadith, gold and silver represent money while wheat,barley, dates and salts represent staple food. These items are known asribawi item.TypeGoldCurrencySilverMYRSGDWheatStaple rleyStaple FoodDatesSaltOn spot and at parOn spot onlyNo conditionBased on the above table:i. Exchange between ribawi materials of the same kind (and of thesame basis) must be with equal weight, measurement or numberand payment delivery must be made at the same time.10
If payment and delivery are made at the same time but theweights, measurements or numbers of the materialsexchanged are not equal, then riba fadhl occurs. If payment and delivery are not made at the same time butthe weights, measurements or numbers of the materialsexchanged are equal, then riba nasiah occurs.ii. Payment and delivery between ribawi materials of different kindsand of the same basis must be made at the same time, though theymay be made at different prices. Equal weights, measurements ornumbers of the materials exchanged are not required to beobserved here. If payment and delivery are not made at the same time (onspot), then riba nasiah occurs2. Gharar (Uncertainty)Gharar or uncertainty makes a transaction un-Islamic as it will result in an unjustor unfair outcome for the parties involved. It is where the quantity and the qualityinvolve in the transaction is not predetermined and known which may makes thecontract void or voidable.The prohibition of gharar can be deduced from the following verse:Meaning:“O ye who believe! Eat not up your property among yourselves in vanities, but letthere be amongst you traffic and trade by mutual good-will, nor kill (or destroy)yourselves, for verily Allah hath been to you Most Merciful.”(an-Nisaa‟: 29)Prohibition of gharar transaction is reaffirmed by the following hadith:Meaning:Abu Hurairah ra reported that Prophet Muhammad (saw) forbade a transactiondetermined by throwing stones, and the type which involves some uncertainty.(Reported by Muslim)Gharar can be categorized as follow:a. Minor (Yasir) Gharar11
Minor gharar does not render a sale contract defective because it does notaffect the principal components (arkan or essential elements) of thecontract and necessary conditions of the essential elements (e.g.requirements relating to asset, price, language of the contract etc.)b. Major (Fahish) GhararIn general terms, major gharar is an uncertainty which is so great that it becomes unacceptable; orIt is so vague that there is no means of quantifying it.Major gharar causes a contract to be invalid.3. Maisir (Gambling)The word maisir means getting something too easily or getting a profit withoutworking for it. Islam forbids all forms of business in which the monetary gaincomes from mere chance or speculation and not from work. Unlike gharar whichis tolerated to a certain degree, maisir is not accepted at all.Meaning:“O Believers! Intoxicants and gambling - and divining arrows are anabomination of Satan‟s handiwork. Leave it aside in order that you may prosper.”(al-Maidah: 90)1.2.3 Concept of Contract in MuamalatThe literal meaning of “aqad” is “join” or “tie”. It can be translated as “contract”.Barbati defined “aqad” in his kitab “Inayah „ala Fath al-Qadri”as:“Legal relationship created by the conjunction of two declarations, from which flow legalconsequences with regard to the subject matter”.The essential elements of an aqad:12
Essential ElementsSighahDescriptiona. Ijab (offer)Article 101 of Majallah al Ahkam al Adliyyah defined ijabas the word first spoken – for the making a dispositionof property and the disposition are proved by it.b. Qabul (acceptance)Article 102 of Majallah Majallah al Ahkam al Adliyyahdefined qabul as the spoken words by the second partywhen forming the disposition of property and with it, theagreement becomes complete.Aqidan (parties to thecontract)It is a condition of a valid contract that the parties possesscapacity. Capacity is a quality which makes a person qualifiedfor acquiring rights and undertaking duties andresponsibilities.13
Ma‟aqud Alaiha.Subject MatterThey are conditions to be taken into considerationaccording to Islamic jurisprudence for subject of contract: b.Should exist at the time of contract.Must be legally owned.Should bring benefit or significant result for thecontracting parties.Should have commercial value in the light ofshariah principles.Price/ConsiderationDefined as value promised to another when making acontractConditions for valid consideration: In existence (mawjud)Permissible (halal)Valid (sahih)Valuable (mutaqawwim)14
CHAPTER A2CONCEPT OF RISKLEARNING OUTCOMESAt the end of the chapter, the candidate will be able to: A2.1Understand the fundamental concept of risk.Understand the risk management process.Understand the risk handling method.Understand risk from the perspective of Islam.Understand the relationship between risk and Takaful.INTRODUCTIONThe term “risk” is generally associated with the possibility of the occurrence of harm,injury or loss. There is the element of uncertainty of the event occurring and what theoutcome will be.According to The Occupational Health and Safety Advisory Services, United Kingdomrisk is defined as “the combination of the likelihood of an occurrence of a hazardousevent or exposure(s) and the severity of injury or ill health that can be caused by theevent or exposure(s)”.In Takaful, the word “risk” refers to the likelihood of an event happening and the severityof the negative consequences. In other words, it always involves the uncertainty arisingfrom the possible occurrence of given events, the outcome of which could leave one in aworse position than one was in before the event.A2.2CONCEPT OF RISKSSince our purpose is to relate risk to Takaful, focus will be on a risk which entails thepossibility of a financial loss. Financial loss may be defined as a decline in ord
1 CHAPTER A1 INTRODUCTION TO ISLAMIC MUAMALAT LEARNING OUTCOMES At the end of the chapter, the candidate will be able to: Understand the concept of Islam, the objectives (maqasid) and sources of shariah. Understand the prohibitions in muamalat. Understand and explain the rules of muamal
Part One: Heir of Ash Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26 Chapter 27 Chapter 28 Chapter 29 Chapter 30 .
TO KILL A MOCKINGBIRD. Contents Dedication Epigraph Part One Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Part Two Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18. Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26
Islamic Grave Voodoo 57 Allah Will Grow Humans from their Graves 57 Islamic Interrogation in Graves 58 Islamic Torment in Graves 59 Islamic Rewards in Graves 61 CHAPTER 8 63 Islamic Medicine Voodoo 63 Islamic Cauterizing and Cupping 63 The Qur'an and Honey are Cures for All Illness 65
The Evolution of Islamic Banking System in Muslim countries: Before describing the evolution of the Islamic banking it is important to understand what Islamic banking is and what are its principles or features. 1.1) What is Islamic Banking? Islamic Banking is banking or financing activity that is based on Shariah (Islamic Law) and all
DEDICATION PART ONE Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 PART TWO Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 .
Director of the Center for Islamic Economics and Finance, College of Islamic Studies, Hamad Bin Khalifa University, Doha, Qatar Keywords Islamic Finance Community-Based Devel-opment Islamic Moral Economy Blended Finance Received: 15December2016 Accepted: 05 February 2017 Abstract. Contemporary Islamic Finance is seen by many as
4. Some Related Issues 71 4.1 Role of Revelation 72 4.2 The Assumption of an Ideal Islamic Society 73 4.3 General Theory of Islamic Economy 73 5. Concluding Remarks 77 Four Islamic Economics in Practice 79 1. Islamic Banks 79 2. Zak ah 81 3. Insurance 82 4. Waqf 82 5. Al-Hisbah 83 Five Hope for the Future 85 l. Introduction 85 2.
Islamic Incantations, Charms, and Spells 48 Islamic Superstitions 49 The Magical Power of Muhammad’s Blood, Urine, and Excrement 51 Muhammad’s Mojeja (Miracles) 51 Islamic Supernatural Power 52 Muhammad’s Night Journey (Isra and Miraj) 54 Islamic Heart Surgery on Muhammad 55 CHAPTER 7 57
