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ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
ISB540 - Chapter 2
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ISB540 - Chapter 2

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  • 1. ISLAMIC BUSINESS TRANSACTION CHAPTER TWO MUAMALAH MAHYUDDIN KHALID  emkay@salam.uitm.edu.my
  • 2. CONTENT  MuamalatMUAMALAH  The Concept of Buying and Selling  Legal Evidence: EVIDENCES  Quran  SunnahTRANSACTIONS  Categories of Transaction  Classification of ContractsCONTRACTS 2
  • 3. MUAMALAT  Muamalat is plural and the singular word is muamalah.MUAMALAH Muamalah is from the verb - aamala  Literally EVIDENCES  Dealings, social intercourse, behaviour, transaction; to interact. Muamalat means interactions or transactions.  TechnicallyTRANSACTIONS  Sharia rules which pertain to widely life  Rules pertain to the action of people and their dealingsCONTRACTS among themselves as in sale, mortgage, hire disputations, evidences, judgment and the like.  Fiqh Muamalat  Knowledge of the rules of conduct pertaining to commercial transactions that has been derived by the jurist from specific evidences in the Quran and Sunnah.  Commercial transactions are concluded through contracts which are permitted by the Shariah as evidenced by the Quran, the Sunnah and other sources of Islamic Law. 3
  • 4. THE CONCEPT OF BUYING AND SELLING  Trade or al-Bay’ in Islam, is an exchange of property (mal) or theMUAMALAH  exchange of goods with certain procedures  Bay’ means: EVIDENCES  Literally: Buying and selling or both in the same time  Technically: the transfer of a definite use of property inTRANSACTIONS perpetuity in exchange for a price  The exchange of property for property by means of mutualCONTRACTS consent  An exchange of mal or tangible property for similar property 4
  • 5. LEGAL EVIDENCE  QuranMUAMALAH EVIDENCESTRANSACTIONSCONTRACTS 5
  • 6. LEGAL EVIDENCE  SunnahMUAMALAH  No one has ever eaten better food than what he eats as a result of the labour of his hands (Sahih al-Bukhari) EVIDENCES  The merchants will be raised up on the Day of Judgement as evil-doers except those who fear Allah are honest and speakTRANSACTIONS truth (Sunan Ibn Majah)  The Prophet (s.a.w) also declares to the effect: The merchants who speaks the truth and honest is in the same place with theCONTRACTS Prophets, the Sincerers (lovers of truth) and Martyrs (Sunan Ibn Majah)  Ijma’  The Muslims are in agreement uninamously that sale is permitted.  Conducting sales is the natural right of the people 6
  • 7. CATEGORIES OF TRANSACTIONS  Categories of Transactions In GeneralMUAMALAH  Barter Trading (Muqayadah)  Cash Trading ( Bay’ Mutlaq) EVIDENCES  Currency Trading (Bay’ al-Sarf)TRANSACTIONSCONTRACTS 7
  • 8. BARTER TRADING (MUQAYADAH)  Direct exchange of goods for other goods, without use of moneyMUAMALAH  2 concurrent conditions for barter trade that involved Ribawi items: EVIDENCES  Time Factor: the exchange must be on the spot  Quantity Factor: must be equal regardless of qualityTRANSACTIONS  Barter trade not encouraged in Islam because of:  The least eficient and least practical method of exchangingCONTRACTS goods and merchandise  (hard to match the needs and consume a lot of time)  Justice and fairness are difficult to achieve in this transaction  (difficulties to evaluate the real and fair value and possibility of injustice) 8
  • 9. CASH TRADING ( BAY’ MUTLAQ)  Exchange of goods or property for cashMUAMALAH  Sale of goods for the equivalent price in money  The use of cash money preferred as it comes almost close to the EVIDENCES requirement when barter of the same commodity is involved  to avoid any occurance of ribaTRANSACTIONS  Money provides a standard for real and just exchange of value of various commodities and curb the chances of injusticeCONTRACTS 9
  • 10. CURRENCY TRADING (BAY’ AL-SARF)  The exchange of one currency with a similar or another currencyMUAMALAH  Include sale of gold or silver for an article of the same kind  2 rules to avoid riba: EVIDENCES  Time factor  Quantity factorTRANSACTIONS  2 condition of bay’ al-sarf:  If the exchange is between the same type of currency it mustCONTRACTS fulfil these conditions  equal quantity or weight regardless of quality and must be on the spot  If the exchange is between 2 different type of currencies  quantity or weight can differ but the exchange must be on the spot 10
  • 11. BARTER TRADE & BAY’ AL-SARF  The differences between barter trade & bay’ al-sarf:MUAMALAH Barter trade Bay’ al-sarf EVIDENCES The exchange of a commodity or The exchange of one currency toTRANSACTIONS goods with another goods or another currency or the trading of commodity rather than exchanging local currency too a foreignCONTRACTS it for money currency 11
  • 12. AQAD (CONTRACT)  Literally:MUAMALAH  Tying tightly, as in tying a rope. It also means to make covenant and to give an oath. EVIDENCES  Thus, the word aqd carries the meanings of covenant and fulfillment.TRANSACTIONS  Technically:  An engagement and agreement between two persons in aCONTRACTS legally accepted, impactful and binding manner 12
  • 13. CLASSIFICATIONS OF CONTRACTS  Contract Of Exchange/ Transfer Of Property (Aqad Al-MUAMALAH Muawadat)  Contract Of Security (Aqad Al-Tawthiqat) EVIDENCES  Contract Of Partnership (Al-Shirkah)  Contract Of Safe Custody/ Investment (Al-Wadiah)TRANSACTIONS  Contracts Pertaining To Utilization Of Usufruct (Uqud Al- Manfaah)CONTRACTS  Contracts Pertaining To Work/ Services 13
  • 14. CONTRACT OF EXCHANGE/ TRANSFER OF PROPERTY  Contract of exchange/ transfer of property (Aqad al-Muawadat)MUAMALAH  Transfer the ownership of goods and merchandise  Exchange of a commodity for another commodity or money, EVIDENCES or money for money  Eg: BBA, Bay’ Salam, Bay’ al-Istisna’TRANSACTIONSCONTRACTS 14
  • 15. CONTRACT OF SECURITY  Contract of security (Aqad al-Tawthiqat)MUAMALAH  Provision of securities to protect the interest of the parties to the contract EVIDENCES  These contracts are meant to secure debts for their owners and  guarantee creditors of debts owing to them. These are guaranty,TRANSACTIONS assignment of debt and mortgage.  Eg: Kafalah, Rahn, HiwalahCONTRACTS 15
  • 16. CONTRACT OF PARTNERSHIP  Contract of partnership (al-shirkah)MUAMALAH  2 or more parties jointly venture into project by sharing in the capital contribution, management of the capital, profit & EVIDENCES liabilities  Eg: Musyarakah (PLS) and Mudharabah (profit sharing)TRANSACTIONSCONTRACTS 16
  • 17. CONTRACT OF SAFE CUSTODY/ INVESTMENT  Contract of safe custody/ investment (al-Wadiah)MUAMALAH  Involved owner of the property deposited his property in custody of another for safekeeping or investment EVIDENCES  Not intended to transfer any property or utilize the usufruct or to do a workTRANSACTIONS  Eg: WadiahCONTRACTS 17
  • 18. CONTRACTS PERTAINING TO UTILIZATION OF USUFRUCT  Contracts pertaining to utilization of usufruct (Uqud al-Manfaah)MUAMALAH  Transfer the right to use the usufruct of a property from the owner to the user for or without a consederation EVIDENCES  Eg: Ijarah, ‘Ariyah, Isti’jar, QardTRANSACTIONSCONTRACTS 18
  • 19. CONTRACTS PERTAINING TO WORK/ SERVICES  Contracts pertaining to work/ servicesMUAMALAH  Transaction in which one of the contracting parties is requsted to do a work whether with a consideration or not EVIDENCES  Eg: Wakalah, Ju’alah, Istisna’TRANSACTIONSCONTRACTS 19
  • 20. GRATUITIOS CONTRACTS  Gratuitios contracts (Uqud al-Tabbaru’at)MUAMALAH  Unilateral in nature and fovour the recipient  Eg: Hibah, Wasiyyah, Waqf, Ibra’ EVIDENCESTRANSACTIONSCONTRACTS 20
  • 21. END OF CHAPTERMUAMALAH EVIDENCESTRANSACTIONSCONTRACTS  21

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