The presentation contains about sharia contract called aqd and its classification. This is one of Islamic Finance slides.

1. Sharia Finance
Contract in Sharia Finance Transaction
Gito Wahyudi
CEO of Cartenz Group
gito.wahyudi@cartenz.co.id
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2. Table of Contents
• Aqd – The Definition
• Aqd Classifications
• Type of Shariah Finance Contract (Aqd)
• Tabarru’s – The Definition
• Type of Tabarru’ Contracts (Aqd Tabarru’)
• Tijarah – The Definition
• Type of Tijarah by Certainty Return Level
• Validity and Execution of Contract (Aqd)
• Contract (Aqd) Strength

3. Aqd- The Definition
• An Arabic term synonymous with the word "contract" in its many cognates in modern law, i.e., a
contractual relationship between two or more people (natural and/or legal) to some underlying
effect.
• Under shari'a contract law, a contract doesn't necessarily require the agreement of all the parties
concerned, because, on some occasions, 'aqd may involve a unilateral action that is binding and
effective even without the consent of the other parties. For example, a gift contract is valid
though it may initiate unilaterally, and it doesn't require the acceptance of the other parties.
• An 'aqd or contract under shari'a covers all types of obligations in all walks of life: commercial
obligations, religious obligations, political obligations, etc. This fact is explicitly expressed in the
following Quranic verses: "O you who have believed, fulfill [all] contracts" (verse 5:1), and "fulfill
the covenant of Allah when you have taken it, and break not your oaths after you have confirmed
them" (verse 16:91).
• Most shari'a scholars define an 'aqd in its generality as "offer and acceptance", in spite of the
discrepancies among different schools of thought (mazhahib) over its elements (arkan) and
essentials.

4. Aqd Classifications
Execution
of Aqd
Validity
of Aqd
Objective
of Aqd

5. Type of Sharia Finance Contract (Aqd)
Aqd (Contract)
Tabarru’
No Profit
Wadiah, Wakalah,
Kafalah, Hiwalah,
Qardh, Hibah,
Wakaf
Tijarah
Certainty Profit
Murabahah, Salam,
Isthisna, Ijarah
Uncertainty Profit
Mudhorabah,
Muzaro’ah,
Muzaqah, Syirkah

6. Tabarru – The Definition
• Tabarru’ is derived from the word tabarra’a which carries the meaning of
contribution, gift, donation or charity.
• Technically, tabarru’ is a unilateral declaration of intent, which is
considered to be a contract under Islamic commercial law. The purpose of
this type of contract is to give favor to the recipient without any specific
consideration in return.
• Unlike the exchange contract, this type of contract is valid and enforceable
in Islamic commercial law even without consideration.
• Tabbaru’ does not need “qobul” from receiver. It needs only giver with his
“ijab”.
GIFT OR DONATION WITH NO RETURN

7. Type of Tabarru’ Contracts (Aqd Tabarru’)
Tabarru’
Giving Something
Shadaqah
Hibah
Hadiah
Waqaf
Lending
Something
Lending Money
Qardh
Rahn
Hiwalah
Lending Service
Wakalah
Nisbah
Wali
Wadiah
Kafalah
Kafalah Bin Nafs
Kafalah Binl Maal
Kafalah bit Taslim
Kafalah al
Munjazah
Kafalah Al
Mullaqah

8. Tijarah – The Definition
Buying something with the intention of selling it for profit, whether the
profit is realized or not. This is distinct from bai‘, which involves
exchange of a valuable (mal) with another valuable, not necessarily
with the intention of making a profit. But both the terms are often
used interchangeably to denote sale transactions.
TRADE ORBUSINESS

9. Type of Tijarah by Certainty Return Level
Tijarah
Natural Uncertainty
Contract
Musyarakah
Muzara’ah
Musaqah
Mukhabarah
Natural Certainty
Contract
Bai’
Al Bai’ naqdan
Al Bai’ Muajjal
Al Bai’ Taqsith
Salam
Istishna
Ijarah
Ijarah
Ijarah Muntahia
Bittamlik
Natural Uncertainty Contracts is a mixing theory based on
the mixing object and the time of the mixing activities.
Where the real asset (‘Ayn) is in goods and services, and
financial assets (Dayn) is the form of money or securities,
as the difference in natural uncertainty contracts.
Natural Certainty Contract is a form of contract or
business co-operation which provides certainty in the
payment, both in terms of quantity and also the payment
time. In this transaction, there is an agreement about
certainty in the beginning of the transaction between
both parties. Some certainty criterias are the certainty in
terms of the object exchange, the amount, quality, price
and delivery time. As an example of these transactions,
there are transactions about trade, pay-paid, and lease
transaction. From these types of contracts, business
transactions are conducted, do not have the capital to
build business ventures to share profits and risks.

10. Validity and Execution of Contract (Aqd)
Shohih
•Nafiz is Valid
•Mauwquf
•A contract (aqd) which is contingent
on a specified event or action.
More specifically, aqd mawquf
becomes effective only if some
event takes place or if some
condition is met. Likewise, the
effectiveness of such a contract
may be suspended until an action is
taken by either party or both
parties to the contract. Fuqaha
define aqd mawquf as all actions
that are initiated by a competent
person who is not authorized to do
so. As such, the contract has no
legal effect until authorization is
given to the initiator. Accordingly,
aqd mawquf is a valid contract (aqd
sahih) though not effective as long
as authorization is withheld.
Fasid
•for unsound, invalid, voidable, not
viable, foul, or corrupt. It is usually
used to describe an act
or aqd(contract) that includes an
impermissible term or condition
rendering it invalid. For example, the
sale of dates to be delivered when
ripened is fasid as it is embedded
with an invalid stipulation. Fasid
contracts can be, and must be,
annulled unilaterally, i.e., without the
consent of either party.
Bathil
•Contain one or some activity that is
prohibited by Islamic sharia

11. Contract (Aqd) Strength
• Aqd Lazim
• refers to a valid and effective contract (aqd) that is also binding on both
parties to the contract. In other words, none of the parties has the unilateral
right to revoke the contract without the consent of the other party unless the
contract has an embedded optional condition (khiyar al-shart)
• Aqd Ghyar Lazim
• refers to a valid and effective contract (aqd) that is also nonbonding
(revocable) on the parties to the contract. In this contract, any of the parties
has the right to revoke it unilaterally (without the consent of the other party).
Also, this contract can be terminated by mutual consent (faskh). Contracts of
a specific nature might be nonbinding or revocable, i.e., both parties to the
contract are allowed to revoke it unilaterally.