ISLAMIC BUSINESS SCHOOL, COLLEGE OF BUSINESS

UNIVERSITI UTARA MALAYSIA

No. Information on Course

1. Course Name : CONTRACT IN ISLAMIC FINANCE & BANKING

2. Course Code: BWSS2093

3. Name(s) of Academic Staff:

 PROFESSOR DR ASMADI MOHAMED NAIM

4. Rationale for the inclusion of the course in the programme:

This is a compulsory course for BIFB students

5. Offered Every Semester

6. Total Student Learning Face to face Online SLPA TLT

Time (SLT) Learning

TL = Traditional Lecture SCL

TL T P A OL OA
/O
T = Tutorial
P = Practical
SCL/O = Student Cantered
Learning/Others
A = Assessment
OL= Online Learning
13 0.00 0.00 21 3.52 8 1.51 72.97 120
OA = Online Assessment
SLPA= Self Learning
Preparation and
Assessment
TLT = Total Learning Time

8. Credit Value: 3

9. Pre-requisite (if any):

1
 NIL

Objective(s) of Course:
10.
On completion of the course, students are expected to:
1. Acquire a comprehensive understanding of the theoretical and practical aspects
of Islamic financial contracts.

2. Acquire knowledge on various types of contracts in Islamic commercial law

3. Understand Islamic financial institutions practices in applying Islamic financial

contracts.
Course Learning Outcomes:
11.
Upon completion of the course, students are able to
1. Describe the mechanics of contracts in Islamic law (C2, A1, P1, PLO1).

2. Differentiate the Islamic financial practices from its conventional counterpart (C4,
A3, P1, PLO4).

3. Identify suitable mechanism to Structure simple financial products based on

Shariah contractual requirements. (C1, A4, P1, PLO2).

4. Discuss current issues related to Islamic financial system development (C2, A2,
PLO7).
12. Transferable Skills:
Practical, values, leadership and lifelong learning skills.

13. Teaching-learning and assessment strategy:

Mixed method between teacher-centred and student-centred. For the assessment
strategy it is a continuous assessment.

14. Synopsis:
The aim of this course is to provide a complete understanding of the conceptual
framework and the contracts in Islamic law. It covers the modus operandi of Islamic
financial contracts based on the major Islamic schools of thought, i.e. Hanafi, Maliki,
Shafei and Hanbali. Thorough study on the mechanics of the contracts will help
students to apply and explain the practices of Islamic finance and banking.

15. Mode of Delivery:

Traditional Lectures, discussion & Presentation

Assessment Methods and Types:

16.
Coursework – 60%
- Test 1: 5%
- Role Play: 10%

2
 - Article review: 10%
- Presentation: 10%
- Participation: 5%
- Final Assignment: 20%

Examination – 40% (Final Examination)

17. Mapping of the course/module to the Programme Aims

Course Learning Outcomes

Programme Aims
1 2 3 4

The program aims to produce highly ethical

and knowledgeable graduates in Islamic
finance and banking to fulfill national higher / / / /
education aspirations and contribute to the
industry and society.

21. Mapping of the course/module to the Programme Learning Outcomes

Course Learning Outcomes

Programme Learning Outcomes

1 2 3 4

Identify and explain the concepts and

theories related to finance and banking (1. /
Knowledge).

Apply Islamic concepts, tools and

techniques in solving Islamic financial
problems faced by companies in realizing
/
profits and accountability (2. Practical
skills).

Work effectively in team and show

interpersonal skills (3. Social skills and team
skills).

Formulate Shari’ah professional ethical code

of conduct in the Islamic financial discipline /
(4. Ethics, professionalism and humanities).

Carrying out ethical responsibility and

3
 possess practical and communication skills
(5. Communication skills).

Portray leadership skills in handling issues

related to Islamic finance and banking (6.
Leadership skills).

Integrate and synthesize issues and evaluate

potential solution in the broader context of /
the society (7. scientific methods, critical
thinking and problem solving skill).

Update and integrate knowledge on Islamic

finance and banking for career development
on a continuous basis (8. Lifelong learning
and information management).

Identify current and future challenges in

managing innovation and developing
entrepreneurial skills in the field of Islamic
finance and banking (9. Entrepreneurship
and managerial skills).

25. Content outline of the course/module and the SLT per topic

Face to Face OL SL TLT

Learning
Topics/Weeks
Outcomes
SCL
TL T P
/O

1. Introduction to the theory of contracts in

1 1 2 3 6
Islamic muamalat
 Definition
 Differences between few
terminologies related to the contract-
transaction, contractual intention, and
obligation.
 Types of contract- contract of
exchange, charitable contract,
tauthiqat contract, isqatat contract,
etc.

2. Element of contract in Islamic muamalat-

4
Sighah al-‘Aqd
1, 2 1 0.5 1.5 3 6
 Ways of contract- Verbal contract,
written contract, or signal (isharah).
 Conditions related to the validity of
the contracts.

3. Element of contract in Islamic muamalat-

2,3 1 2 3 6
Parties involved in contracts:
 Issues of contractual competency-
ahliyah
 Necessity competence (Ahliyah al-
wujub)
 Accomplishment competence
(Ahliyah al-Ada)’
 Issues of authority (wilayah) and
agency (wakalah).

4. Element of contract in Islamic muamalat-

contracted item 2, 3 1 2 3 6
 Conditions of contracted items

5. Element of contract in Islamic muamalat-

2,3 1 2 3 6
Maudhu’ al-Aqd (Objective of the contract).

6. Contractual intention in contracts

2, 3 1 2 3 6
 Limitation of contractual intention in
contracts.
 Limitation of contractual intention in
stipulations.
 Defection of contractual intention:
 Coercion (ikrah).
 Mistake (ghalat).
 Fraud (tadlis)
 Injustice (ghabn)

7. Conditions of Contract
2, 3 1 0.5 1.5 3 6
 Conditions of assembling (shurut al-
in’iqad)
 Conditions of validness (shurut al-
sihhah)
 Conditions of effectuate (shurut al-
nafaz)
 Conditions of Conditions of
implication (shurut al-luzum)
 Consequences of contracts.

5
Division of contracts
 Voidable contract (batil)
 Valid contract (Sahih)
 Fasid contract (Defective contract)
 Mauquf contract
Types of forbidden contract

8. Options (Khiyarat) in Islamic financial

contracts 2, 3 1 2 3 6
 Khiyar majlis
 Khiyar Ta’yin
 Khiyar Shart
 Khiyar ‘Aib
 Khiyar Ru’yah
 Khiyar naqd

9. Key financial contracts

2, 3 1 0 2 3 6
 Sale-purchase or bay’ contracts
including:
i. salam,
ii. istisna’,
iii. sarf,
iv. inah,
v. tawarruq,
vi. jazaf,
vii. murabahah,
viii. Ijarah
ix. Wakalah & Jualah

10. Key financial contracts

2, 3 1 2 3 6
 Musyarakah
 Mudarabah

11. Key financial contract for agriculture

2, 3 0 0 3 3 6
 Muzara'ah
 Musaqat
12. Key charitable contracts
 Qard
3 1 2 3 6
 Hibah
 Wadiah
 I’arah
 Kafalah
 Hiwalah
 Rahn & Ibra’

6
13. Wa'd (promise) & muwa'adah
3, 4 1 2 3 6
 Wa'd (promise) & muwa'adah as a
suplementary instrument (obligation
and not a contract) in structuring
Islamic financial products: Definition
of wa'ad and muwa'adah. Shari'ah
view of al-wa'd & muwa'adah.
Pronouncement regarding al-wa'ad &
muwa'adah. Few financial products
which apply al-wa'd.

14. Shariah issues in Islamic finance

4 1 2 3 6

13 0 0 21 8 42 84

Student Learning & Online Online

Face to Face SLPA TLT
Assessment Learning Assessment

Course Delivery and

34.0 8.0 42.0 84
Preparation

Coursework
1.0 1.5 19.9 22.4
60%

Final Examination
2.5 0.0 11.0 13.6
40%

Total Notional Hours 37.5 8.0 1.5 73.0 120

Credit Hours 3.00

Main References:

ISRA, (2016). Islamic financial system: Principles & operations, 2 nd Edition, Kuala Lumpur: ISRA
Zuhayli, Wahbah (2003). Financial Transaction in Islamic Jurisprudence. (Translated by: Mahmoud A. El-
Gamal). Beirut: Dar al-Fikr al-Mu'asir

Additional References:

AAOIFI (2014). Shariah Standards. Bahrain: Dar al-Istithmar. Amman: Dar al-Nafais.

7
Asmadi Mohamed Naim (2006). Nazariyyah faskh al-‘uqud fi al-fiqh al-Islami.
Asmadi Mohamed Naim. (2007). 'Methodology of Hukm Deduction for Islamic Finance between the
Practices Adopted in Malaysian and Middle Eastern Financial System'. The Journal of Shariah. Petaling
Jaya: Akademi Pengajian Islam Universiti Malaya
Billah, M. M.(2001). Principles and Practices of Takaful and Insurance Compared. Malaysia: GECD Printing
Sdn. Bhd
Hasan, A. (2011). Fundamentals of shariah in Islamic finance. Kuala Lumpur: IBFIM
Kamali, M. Hashim (2000). Islamic commercial law. Cambridge: Islamic Texts Society.
Kuala Lumpur: Dinamas
Mohammad Hashim Kamali (1998) Principles of Islamic Jurisprudence. Kuala Lumpur: Ilmiah Publishers Sdn.
Bhd.
Nyazee, Imran Ahsan Khan (2003). Islamic Jurisprudence (Usul al-Fiqh). Petaling Jaya: The Other Press.
Saiful Azhar Rosly (2005). Critical issues on Islamic banking and financial markets:
Shubair, Muhammad Uthman (2001). Al-muamalat al-maliyah al-mu’asirah fi al-fiqh al-Islami. Amman: Dar
al-Nafais.
Thani N. A. et al, (2003), Law and practice of Islamic banking and financial system, Sweet & Maxwell:
Malaysia