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Ijarah came from the root word أجرwhich means compensation or .عوضIt also means the sale of usufruct. Legally it is defined as a contract to use the usufruct of a thing or the services of a person in return for compensation. The subject matter of the Ijara contract is the usufruct or the service that is rendered by an employee. In rent the right to use the property is transferred to the tenant and not the ownership of the property. Although the usufruct or the service is non-existent at the time of the conclusion of the contract it gradually comes into existence and is accumulated. Although Ijarah is the sale of the usufruct, it is distinguished from the sale by the fact that Ijarah, unlike sale, is for a limited time.
Things which if used could be consumed can not be hired. For instance fruit, food or, money cannot be rented as they are considered perishable properties. Usufruct is derived from usable properties while service which also comes under the category of usufruct is rendered by persons who are employed to do a certain well-defined job. Similarly it is not allowed to rent a cow for its milk or a tree for its fruit because the milk and fruits could not be classified as usufruct as they are tangible things. Usufruct, on the other hand, refers to abstract and intangible benefit that is derived from a certain property such as the shelter from a house or a lift from a horse or car, or service rendered by an employee or the labour from a cow.
و رفعنا بعضهم فوق بعض درجات ليتخذ بعضهم بعضا سخريا.” 43: 32 و إن أردتم أن تسترضعوا أولدكم فل جناح عليكم إذا سلمتم ما اتيتم بالمعروف “If you decide on a foster-mother for your off spring there is no blame on you. ورحمت ربك خير مما يجمعون “Is it they who would portion out the mercy of thy Lord? It is We Who portion out between them their livelihood in the life of this world: and We raise some of them above others in ranks.Legality of Ijara أهم يقسمون رحمت ربك. provided you pay (the mother) what you offered. walking bashfully. so that some may command work from others. engage him on wages: truly the best of men for thee to employ is the (man) who is strong and trusty. my (dear) father.” 6 :65 الطلق فجاءته إحداهما تمشى على استحياء قالت إن أبي يدعوك ليجزيك أجر ما سقيت لنا “Afterwards one of the (damsels) came (back) to him. She said: “My father invites thee that he may reward thee for having watered (our flocks) for us. on equitable terms. But the mercy of thy Lord is better than the (wealth) which they amass.” Hadith: أعطوا الجير أجره قبل أن يجف عرقه 52 .” 2: 233 فإن أرضعن لكم فأتوهن أجورهن And if they suckle your (offspring) give them their recompense. نحن قسمنا بينهم معيشتهم في الحياة الدنيا. إن خير من استأجرت القوي المين “Said one of the (damsels): O.” 25 : 28 القصص قالت إحداهما يا أبت استأجره.
” Types of Ijarah Ijarah or lease could generally be divided into two: Lease for the usufruct and lease for the service. on the other hand. No one can stop them from working for others. They are: 1. He is employed for a known period and a well-defined service. The Pillars of Ijarah Accrding to the Hanafiis Ijarah has two pillars of offer and acceptance. through he can determine his own method or performance in so far as the terms of his contract permit. A general employee is entitled to payment based on his work. 53 . and cloth. However. a general employee must provide what he has contacted to provide in the way of work or services. jewellery. الجير العامpublic or general employee. a dentist. is his own master and works for himself. Expression صيغةwhich includes both offer and acceptance.“Give a servant his fee before his sweat dries up. Ijarah has four pillars. During the period of the contract he is not allowed to work for another employer. a butcher. They may work for more than one employer. Lease for the service is also divided into two: Special employee الجير الخاص who works for one employer for a specific wage. a carpenter. To the majority however. Lease for the usufruct could be both for movable assets such as car. A tailor. He is completely subject to the control of his employer as to what he does and now he does it. or a consultancy firm are examples of general employees. a physician. It can also be for immovable asset such as house.” من استأجر أجيرا فليعلمه أجره “He who hires a person should inform him of his fee. and buildings. a shoe-maker.
payment. Ijarah is not valid when a person is under obligation to render a certain service. This is possible when the leased asset is seen and the usufruct or the service is clearly defined and the duration is clearly mentioned. 3. 2. it is permissible to employ a wet-nurse to breast-fed and provide care to the child. These are jobs which she is legally bound to do. This is to avoid conflict. أجرا َ usufruct.2. For instance employment in haram industries is not allowed. The usufruct should be permissible and be used for lawful purposes. a house that is not suitable for stay or a car that cannot be driven cannot be rented as it is not possible to derive any benefit or usufruct from these properties. salary. However. The usufruct should be attainable. Thus. 54 . The manfa’ah should be known. Similarly. it is also not allowed to rent a house for gambling. Similarly. 4. it is not allowed to rent money or perishable properties from which usufruct cannot be obtained. Consequently. Since it is impossible to deliver the manfa’ah. The parties العاقدانwhich include both the landlord /Employer مؤجراand the ََّ tenant/employee . 3. Anyone who does an action which is obligatory on him is not rewarded for that action or service. For instance. The service should not be obligatory on the person who rendered it. أجرة. service منفعة Conditions for the منفعةUsufruct/Service 1. but not her mother if she is not divorced. 4. the asset from which the manfa’ah is derived should be delivered. 5.مستأجرا َ compensation. a wife cannot demand wages for doing household jobs or for breast-feeding the child.
المسلمون عند شروطهم If there are no conditions about payment whether advance or later. if the Ijarah is for a certain period it is then necessary to pay at the end of that period. . 55 . a house is rented for one month. If the Ijarah is for a certain work the payment has to be made when the work is done. The payment could be made in advance or postponed to the end of the leasing period. The usufruct could also be shared among a number of lessees provided the asset is used for the same purpose. Conditions for the Wage 1. The service rendered should not benefit the employee. Such a partner-employee becomes an employee for himself as he is also a partner in the same partnership.b. The Hadith of the Prophet p. That the payment ( )أجرةshould be declared to the employee and known clearly in the contract.u. The usufruct should be used for the same purpose for which the asset is rented.6. a partner may not lawfully be employed by other partners to manage the partnership. For instance. It is also possible to make partial payment. may receive a higher percentage in the profit compare to other partners who do not contribute to the management. however. The Hadith of the prophet states that Muslims are bound by the lawful conditions. The payment has to be made at the end of that month.h.أن ل ينتفع الجيلر بعملله Ijarah is not allowed where an employee has his own interest in the work done. 7. For instance. states: من استأجر أجيرا فليعلمه أجره “Anyone who employs an employee should make known to him his salary”. He.
صحيح Maintenance of the Leased Asset The lessor has to bear the risk of loss and un-deliberate destruction of the asset. They do not consider this Hadith as Sahih . These Schools rely on the Hadith of the Prophet p. argue for the permissibility of paying the employee from the proceeds of his work provided the payment is known. Similarly.h. كون الجرة جزء من المعقود عليهThe majority of the Fiqh Schools are of the opinion that Ijarah becomes void if a person is employed with the condition that he would be paid a certain part of the produce in which he is working. He also has to bear all capital expenditure (depreciation) and other insurance instalments related to that asset while the lessee should bear current expenditure that may be necessary for utilizing the asset during the leasing period. If the lease asset is not in good working conditions and has a defect. 56 . It is void because there is the possibility that there may not be enough earning on a particular day as a result of which the driver may be paid less or not paid at all. He may not need the fruit and has to sell it in most probability for a lower price.u. The principle is: القاعدة : تعين الجر مما يعمل فيه الجير مفسد للعقد The Malikis. For example.b. The Hadith states: نهى رسول ال صلى ال عليه و سلم عن قفيز الطحا ن The Hanafiis have derived a general principle from this Hadith. on the other hand. and Hanbalis. if an employee who is picking up fruit is being paid in fruit.2. it is not allowed if the owner of a taxi employs a driver for RM 100 to be paid from his daily earnings.
except when it is established that he has transgressed or wasted and damaged the property. however. If the asset is not capable of giving the usufruct. 5. he has the right to rescind the contract. rights. However. If the asset is destroyed. if the purchaser is not aware of the lease. According to the Hanafiis if either of the parties dies. 3. In such a case he is liable to replace the property. By the mutual agreement of the parties or Iqalah. If the مستأجرtenant fails to pay the rent or adhere to other conditions. will continue until its stipulated time. Sale of Leased Asset It is permissible to sell the leased subject provided the purchaser knows and agrees to the continuity of the lease as the leasing contract is considered irrevocable. Termination of ijarah 1. After the end of the lease period. They argue that usufruct is not property and as such cannot be inherited. The lease contract. 57 . employee or tenant. and liabilities agreed upon in the lease contract will be transferred to the new owner. The majority of the Schools consider usufruct a form of property and allow the Ijarah to continue until its stipulated time. 2. All terms and conditions.the lessee has the option to cancel the contract or to continue with it. 4. the lessee is under obligation to return the asset to the owner. There is no liability on a lessee.
At the end the bank may choose to scrap or dispose the asset . Operational Lease. Hire-purchase-Financial Lease 58 . Operational lease is suitable for assets which are expensive and their purchase requires a great amount of money such as aeroplanes. Islamic Banks and Lease Islamic banks use the lease for the usufruct as an instrument of financing. 1. The lessee also benefits from the transaction as it meets his immediate need and saves him from buying the asset at a much higher cost. It is due to these factors that there is increasing demand for leasing these assets. industrial equipments and agricultural machineries. For example if the contract is for one year it is terminated at the end of that period. The bank rents these assets to other parties on terms and conditions agreed upon for a specific time. The bank purchases the asset and rents it out to the customer in return for rental. Lapse of the appointed time. The bank then leases the same asset to a new lessee. In addition it takes longer time to manufacture these assets. The bank uses two models of Ijara: Operational lease and Lease-purchase (hire-purchase). The bank purchases and maintains assets which have a high degree of marketability. The bank bears the risk of recession or diminishing demand for these assets.6. 2. ships. The bank benefits from the transaction by retaining the ownership of the asset while at the same time gets a return by leasing it. After the termination of the period the asset is returned to the bank.
as is the case in operational lease. and the period of financing. 59 . If a lessee chooses to buy the asset a new contract will be concluded. The customer promises to own the asset through lease. All the lease rentals previously paid will constitute part of the price. but will be bought by the lessee.It refers to a type of ijarah that ends with ownership. The asset will not be returned to the bank at the end of the lease period. amount of rent. Operational lease is different from financial lease in a way that the former does not offer an option to the customer to buy the leased asset at the end of the lease period while in the latter the option is offered. Here the bank purchases the asset based on a promise from a customer. The rental is calculated based on the value of the asset which is financed.
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