Question 1

a) The divergence of opinions in matters of fiqh is inevitable since it is a nature of

shariah, man. And universe. It is a nature of shariah because shariah does not
provide everything in a definitive term except for a few principles and
commandments. The rest is stipulated in such a way that requires human
involvement in determining the meaning. It is also nature of man. Man is created with
different capabilities and inclination. Men have unanimous agreement on something
rather difficult. Divergence is also nature of the universe. Undoubtedly differences are
the inherent nature of the universe. Everything is created differently in terms of
needs, functions and contribution. Secondly, Divergence of opinions in matters of fiqh
is a blessing. Shariah intentionally revealed in such a way that opens room for
disagreement.

b) One of the most controversial Islamic financial product is considered to be Tawarruq.

There are conflicting views of different scholars for its permissibility. While Hanbali
and Shafi Schools of view permit it, Ibnu Tamiyya and Ibnu Al Qayyim prohibit it as
the real purpose of a tawarruq transaction is not to obtain the goods, but rather trade
the item to obtain cash. Interestingly, Tawarruq is the ‘magic lamp’ in the Islamic
financial sector in Malaysia and has earned harsh criticisms from the Middle East
scholars due to the indulgent approach of Malaysian scholars towards Tawarruq.
Tawarruq in its original form is a process of purchasing a commodity on credit by
Mutawarriq (seeker of cash) and selling it to a third party at a lower price on spot
basis for the purpose of liquidity management. The conflict arises from where the
organized Tawarruq creeps into this definition and its application by the Islamic
financial institutions.

c) Hanafis school of law ruled that the asset of hibah must be in existence during the
time of hibah. The asset being given in hibah should be available at the place where
the hibah is being made or the document pertaining to the asset available to the
donee or the trustee and the donee takes possession of the property with the
permission of the donor. However, malikis argued that the gharar would not affect the
validity of hibah. Hence, the malikis allow hibah for runaway animals, unripe fruits
and etc. Secondly, it must be subjected to ownership and not property for communal
use or not valuable. The shafi’i and hanbalis agreed with the hanafis on the general
rule that whatever can be sold also a gift. However, malikis disagree to this opinion
and permit the giving of non-sellable items as gift such as runaway animals, unknown
items, unripened fruits and usurped objects.
 As for the qabd, he must be a person who is competent to receive the gift and must
be in existence at the time of hibah. The malikis permit hibah to unborn child
provided that he is born alive.

Question 2

a) There are three categories of wakalah. Firstly, contracting parties, which are
muwakkil (principle) and wakil (agent). secondly, subject matter of wakalah. For
example, specific responsibility of wakil and wakalah fee. Lastly, ijab and qabul which
is offer and acceptance.
b) Ibra’ belum belajar lagi kot

c) The issues of the application of murabahah is the difference in pricing for cash and
credit sales. Murabahah is usually on differed payment basis. The longer the maturity
of the murabahah payment, the higher the price. Thus, the price in murabahah
contract is normally higher than the market price. Secondly, rebate in case of early
payment. Some earlier jurists (from shafi’is and hanbalis) have held to its
permissibility, but the majority of the muslim jurists including malikis sternly
disapprove it and do not allow remission. Some jurists opine that if the early payment
is tied to discount, it is not permissible. However, if the rebate is not an attraction for
pre-payment and is not taken to be a condition for earlier payment and the bank
gives an allowance voluntarily, it may be permissible under shariah. Thirdly,
rescheduling for additional payment. In conventional banking, loan rescheduling is
accompanied by additional interest charge for the timing differences. This is not
possible in murabahah payments. In Murabahah such rescheduling is not allowed as
no additional amount can be charged for the same. But if the installments are
rescheduled, no additional amount can be charged for rescheduling. The amount of
the murabaha price will remains unchanged. Some banks attempt to circumvent this
by changing the unit of currency. Needless to say, this is not permissible.They
proposed to reschedule the murabahah price in other than a currency in which initial
transaction effected.

Lastly, imposing penalty on default payment. In the Islamic system where the
Murabahah price is fixed at the outset, no increase may take place in the liability of
the client due to delay in settlement.The financier is entitled to claim only the original
Murabahah price,irrespective of when it is paid. This could result in some clients
purposely delaying settlement in order to avail of free credit period. This situation
could be easily overcome in a place where all financial institutions provide only
 Islamic facilities, as clients who habitually default could be blacklisted and deprived of
further facilities. However, this could be done only with the cooperation of all banks.
When this is not the case, can the financial institufion require compensationfrom
defaulting clients after providing sufficient warning, when it is assured that defauking
was deliberate and was not due to poverty? The majority of thecontemporary
scholars answer in the negative, based on the clear Shari'ah principle that any
additional amount charged from the debtor is Riba. Such compensation has no
parallel in Islamic Shari'ah.

Question 3

a) Uqd al-ishtirak means partnership contract. it is an equity-based contract that

involves joint venture ship of two or more parties. Literally, it is derived from word
sharaka which means sharing or intermingling or the conjunction of two or more
estates, in such a manner that one of them is not distinguishable from the other.
Technically, it means the union of two or more persons in one concern. There are two
examples under the contract of uqd al-ishtirak, which are musharakah and
mudarabah.
b) Literally, waqf means to stop, to hold, to restrain, to detain, to prevent or preventing
from disposition. Technically, waqf means irrevocable dedication of a portion of ones
wealth for the purpose of expanding its usufructs to legitimate causes or charitable
and righteous ends with the overriding objectives of getting closer to Allah.
c) The first basic rules of rahn is the pawned object must be a valued property and
permissible item. It must exist at the time of contract and deliverable. The creditor
must have possession to the object, non-fungible property and be pawned together if
the object is naturally connected. Secondly, in terms of debt/liability, it must be
established, binding and enforceable one through a loan, sale or damages in the
torts against property. It must be known and defined to both contraction parties.
Underlying debt must be liable/likely to be paid off so usufruct cannot be pledged.
As for the conditions, after the valuation of the collateral asset, bank and customer
will enter into loan contract. Customer is required to place the asset as collateral to
the loan extended by the bank. The asset is kept by the bank on the basis of wadi’ah
ad yad dhamanah. A storage fee for safekeeping of the asset is charged to the
customer. The loan is paid in full together with the safekeeping fee at the maturity
date and the bank must return the asset to the customer.
d) Ijarah means lease. It is a contract by which the owner of the land or a building
allows another person to use it for a specific time, usually in return for a rent. Ijarah
 also means a lease contract as well as a hire contract. Meanwhile, kira’ in literal
meaning is rent of land. Technically, it means lease of land against wheat, whether produced
on this land or procured otherwise by the tenant.

Question 4

a) Literally, bay’ istisna’ derived from the Arabic verb istisna’s which is mean to request
someone to manufacture an asset. Technically, bay’ istisna’ is defined as a
contractual agreement with manufacturer to produce items with specified description
at a determined price and manufactured from his own materials with his own effort.
The example of bay’ istisna’ is house financing.
b) The literal meaning of Musharakah is sharing. The root of the word “Musharakah” in
Arabic is Shirkah, which means being a partner. It is used in the same context as the
term “shirk” meaning partner to Allah.Technically, shirkah al-inan is a partnership
agreement in which the partners may have equal equity but unequal rights to profit,
unequal equity with equal rights to profit or unequal equity and unequal rights to
profit.
c) Literally, wadi’ah means to leave, lodge or deposit. Technically, wadi’ah means the
act of keeping or the property that is being kept. The example of wadi’ah is
safekeeping. Party A owns an asset and places the asset for safekeeping with Party
B. Party B accepts the asset and the responsibility for safekeeping without charging
any fee. Party A can ask for the asset back without any conditions at any time.
d) Literally, ijarah is derived from the noun al-ajr which means compensation, reward,
consideration, return or counter value against the use of an object. Technically, it
means to give something or rent. It is a contract where the financier (bank) buys and
leases equipment or other assets to the business owner (customer) for a fee or more
often called rental income. The example of ijarah is when someone is looking for a
shop for their business. Then, they meet someone willing to rent out the property.
After observing the building from the outside to the inside, the tenant agrees to the
property being leased.
e) Muqasah belum belajar

Question 5

a) In this situation, the contract involved is sharikah al-mudharabah. However, the

situation is invalid because all loses will be borne by muaz alone. As for the
corrective measure, the profit earn is shared between them on mutually agreed ratio.
 In the case of loses, it must be borne by the capital provider which is muaz and the
mudharib which is munir will lose his effort.
b) In the situation, the contract involved is wadiah yad dhamanah (guaranteed safe
custody). However, the situation is invalid as it requires interest payment which
equivalent to riba’. As for corrective measure, the bank and customer are not allowed
to promise and request benefits or return upfront. Any promise or request is
equivalent to riba’ which is strictly prohibited in islam. However, the bank at its sole
discretion may award the customer with a certain amount of returns as hibah (gift) or
token of appreciation for depositing with the bank.
c) (jawapan tak pasti)
In this situation, the contract involved is bay’ al-mutlaq which is general sale.
However, it involves elements which is not permissible according to shariah. Firstly,
selling unripen fruit is not permissible as it has the element of gharar or uncertainty. It
is now allowed as the fruit has the possibility to be damaged before it is ready.
Secondly, if faith sells it at discount price because he wants to cheat, since the fruit is
not ripe yet, it is not permissible.
d) (jawapan yang ni pun tak pasti)
The contract involved in the situation is bay’ istisna’. it is a valid contract as its
contractual agreement with manufacturer to produce item with specific description at
determine price, made by manufacturer own expertise. Since the manufacturer does
not provide material, the contract is considered a lease contract.