#14033 - Islamic Contract Law Plan - Islamic Law

Islamic law – contract law

1. Explain what is meant by the term ‘Takaful’.

2. Discuss the position that Islamic Law takes on Insurance contracts.

3. Discuss the rules that need to be established for a legally binding agreement in Islamic Law.

4. Focussing on the Murabahah contract explain how it avoids falling into the prohibition rules with regard to interest.

5. Riba and Gharar in an Islamic contract will mean that the contract is invalidated. Discuss the validity of this assertion.

Q4. PLAN: -

Refer to what a contract is, refer to murabaha and explain what it is and how it works. Define what Riba is, and explain how a normal credit works and exactly what is not allowed then refer to murabaha

There’s two parts to this question: - you need to look at the product, what is the product and how it works but implicit with this question is the need to explain what riba is because murabaha is a product specifically defined to circumvent riba. Therefore you must explain what riba is. Structurally start off with riba. Refer to what is considered to be riba, what are the conditions. Look at the categorisations, the different category’s of riba you must refer to them.

What are these rules? Start off with unjust enrichment, talk about the rationale and the notions that form among unjust enrichment are affirmer to Islamic doctrine. Then explain what riba is: - excess, and the reason behind the prohibition of riba, which is distributive justice and that all scholars agree that it is wrong but then there’s a difference among some scholars about exactly what this riba is, is it any form of riba or is it what? Discussion about excessive interest – there’s a body of opinion that argues that there’s excessive interest but mainstream opinion argues that any form of excess is prohibited.

There are references in the quran and in hadith – also mention

Categorisations – this needs to be referred to in any question, its how you apply to the question that’s being asked. What is this categorisation? 2 types, riba al nasiah and riba al fadhl and what do they mean? There s benefit that is derived as a result of the delay for example, it can be with a commodity and it can be with monetary exchange and there’s a difference here – transactions that involve the exchange currency value? Salam and it could be in the case of commodities – particular hadith which refers to 6 items and theres a debate about whether it just confines to those 6 or more.

Riba al nasiah – a benefit derived through a delay of some kind. Somebody gives you something over a period of time, that period of time allows you or one of the parties to benefit and it is that benefit that refers to riba al nasiah. It is often combined with riba al fadhl, often it envolves an excess of some kind.

So explain riba al nasiah and explain riba al fadhl – don’t assume that the reader knows wha it is

Riba al nasiah= delay

Riba al fadhl = excess

But because of the delay, someone can charge a extra amount so they are often involved in the same transaction.

Once you’ve mentioned the categorisations. Then you can refer to the conditions of riba – nabeel gave us four conditions, present a comprehensive picture and refer to all the requirements – this categorisation is used by professor niazi in his book on Islamic jurisprudence.

Give corporation by referring to the hadith and the sunnah and quraniv ayas – there’s only 4 references in the quran specifically dealing on interest but theres a body of refrences to this in the hadith.

Move on to murabaha contract – mention there are certain conditions and prerequisites for the contract to be legally binding. But you need to be able to explain mostly the essence of the murabaha contract. Murabaha contract = sale of a commodity for example dates, wheat and so on. So long as you’ve got the...