NUR AFIQAH HANIM BINTI AMRAN (BLAL 19056108)

QUESTION A

The Prophet once said “He should tell him of his wage who hires a worker.” In the Quran
from Al Qasas in verse 26 until 27 “One woman said to him, "Oh, my dad! Hire him! Hire
him! Hire him! The strong, the credible, for the best (guy) you can hire. He said: Lo! He said!
I would marry you family with one of my two daughters provided you hirest me for (the length
of) eight pilgrimages. If 4 you complete ten, that's yours, because I wouldn't make it difficult
for you. Thou shalt find me from the upright, Allah willing.” The above verses emphasise that
something is legal and frequent in payments. According to al-Shafi'î, the foregoing passages
clearly establish that in all permitted transactions the ijarah contract is lawful s. Even the first
line shows that at the time of Moses the ijarah contract was used. On the other hand, the
Shafii and Hanbali demand that they be of legal age and of good spirit as a condition of
conclusion. They claim in this connection that leases result in transfers of property that make
sales equivalent. The Malikis decided that discernment is a precondition for sales and
leases, whereas the legal age is a precondition for enforceability. Thus, a discerning kid is
valid for the leasing of property or work, but its performance is postponed and pending the
authorisation of his guardian.

Al-Ijarah is an arabic, meaning leases, which come from the Islamic Fiqh, and literally means
leases or rents. Islamic principles allow the procurement, on mutually agreed regular rents of
personal and real estate, for subsequent leasing. The assets are rented with complete
upkeep under the concept of Ijarah. As a result, the lessor can also have repairs and
maintenance facilities as well as having an inventory of leasable assets. Thus Al-Ijarah is a
contract by which an asset, known as the lessor, is transferred from the owner to another
person known as the lessor to the agreed rent amount, and for the specified term of the rent
period. In al-Ijarah, there are two kinds. While a contract of hire buy allows hirers, assuming
that the hirer satisfied all the criteria in the agreement, to become proprietor of the object at
the conclusion of the tenure of the hire period. The renter is compelled, under the contract,
to pay a recurring rental fee that usually exceeds the value of a property's depreciation.
Depending on the precise terms of the agreement this may be a fixed amount for the entire
lease duration or variable amount. Conditions such as insurance, repair charges and leased
item protection can also be adapted to the individual needs of the parties. The use to which
the item was hired is to be made clear in Article majelle 151 in a contract of hiring. The
subject of the contract is usufruct under Article mejelle 420, in contract of hiring.

Al-ijarah thumma al-bai is a shariah permitted hiring purchasing contract, known as AITAB
transaction. AITAB denotes 'purchase and hire of products.' The Arabic terminology ijarah
muntahía bittamleek (IMB) which Muslims in the Middle East practise have a similar
significance. In accordance with the lease agreement, the option for the loaner to buy the
leased asset may be exercised during the entire lease duration or at the end of the lease
term. The customer must have the opportunity to purchase (lessee). To comply with the
shariah, the AITAB must adhere to the important aspects of the ijarah and the bai contract
and meet the required requirements of each contract and avoid the respective prohibition of
the shariah. The AITAB must respect the fundamental demands of the shariah.In order to be
a legitimate AITAB the following factors must be free: oscurity, riba, uncertainty (gharar),
haram (prohibited) and unclean things and goods of no value or use. AITAB has three
primary players in its present business: the consumer, the financial institution and the seller.
In the following: According to the Customer's order, the finance company buys a Vendor or
car dealer's automobile. For a predetermined amount of time the financial company rents the
car to the customer at a charge agreed to. For road tax and insurance cover the client (hirer)
agrees to pay. He will also be in charge of his maintenance. The Sales and Purchase
Agreement will be signed by the financial company and the client at the end of this period.

Our government needs to follow islamic transaction systems because it is comprehensive

and covers almost everything. So that the customer will be aware about islamic products.
NUR AFIQAH HANIM BINTI AMRAN (BLAL 19056108)

QUESTION B (A)

The Islamic bank and a client create a joint venture to set up and administer a project of
industry, agriculture or service. One or more banks or customers may be there. The parties
may make contributions in cash or assets like land, buildings, machinery and equipment.that
are appraised and recorded in accordance with their agreed worth, as the contribution by a
certain partner. All parties, irrespective of who paid in cash and who paid in kind, would be
the co-owner of cash and fixed property according to their ratio to the total capital. The
customer can control the relationship, with a proportion of the profit in return. The bank can
reserve the authority to oversee the administration. The bank and the customer can either
run the company jointly or designate a management body to operate the company.All
administrative forms may be selected, provided that it is agreed and approved by the parties.
The profit percentage is contractually based. The losses are allocated according to the
partners' individual stakes. Problem with the ongoing musharakah: assets might rise under
inflation while money depreciates.

A musharaka contract is signed between bank and customer, which finances specified
investment activities, a project or a property equally. Each partner contributes with a set
share to the capital of this activity. Based on the agreement, the profit is allocated among
them. It is a kind of partnership where a partner (Wa'd) agrees to gradually purchase a share
of the equity of another partner until the title is transferred entirely to that partner. A
Musharakah form in which the financial person and the customer participate in a joint
business company or property. This company is transformed both into financial and
customer ownership univocally. The financial equity is bought by the customer over a period
of time, divided into equal value units. Finally, the customer becomes the exclusive owner of
the company. This sort of cooperation is also called the musharakah decrease, in which the
bank encourages the other partner to progressively purchase the share of the bank. He
cannot, however, be compelled to purchase shares. The share price can be negotiated. It
should be based on the market price that is more or less the same or equal to the nominal
price. By profiting and the entrepreneur gets the productive company that may be built or
enlarged it can gain from such a musharakah.

QUESTION B(i)

The legal status of the contract in contracts carried out by an agent depends upon the
principal and not upon the agent as the agent speaking and contracting officer, acting on
behalf of the principal and therefore his commissioned legal representative. The school of
Islamic law shall by majority attribute the legal character of the contract to the principle
irrespective of whether the principal or officer is a contracting party. So if the non-Muslim
agent purchases wine or pork for the Muslim principal, sales are deemed as invalid since
such commodities cannot be owned by the Muslim principal.

As a principal responsible for all losses not caused by the offence or negligence of the
agent. Responsible for paying the salaries of the agent when his task has been completed,
provided such earnings are paid by that agency contract. Responsible for paying the price of
the goods bought. Any loss created by the conduct of the Agent is liable if the losses are not
due to the offence or negligence of the Agent. The principle is liable for paying the wage
when the agent complete his work if the agency contract states the agent's compensation.

A purchasing agent may be restricted, or the agent may be given full authority, to particular
criteria relating to prices or property descriptions. If a restricted agent goes beyond its
authority, the purchase of the principle is not obligatory unless it is the principle's beneficiary.
In order for the agent to sell his property to the principal, the agent should first withdraw from
NUR AFIQAH HANIM BINTI AMRAN (BLAL 19056108)

the agency contract to appoint a new agent who decides where the property should be
acquisited. The agent is entitled to withdraw the sales contract if the agent sells his property
to the principal. Hanafis, Shafies, Malikis said the principal should exercise his rights and
responsibilities if the contract is the sort of contract in which the agent should assign the
principal directly.

Asa a principal accountable for losses not caused by the offence or negligence of the agent.
Responsible for paying the salaries of the agent when his task has been completed,
provided such earnings are paid by that agency contract. Responsible for paying the price of
the goods bought. Any loss created by the conduct of the Agent is liable if the losses are not
due to the offence or negligence of the Agent. The principle is liable for paying the wage
when the agent complete his work if the agency contract states the agent's compensation.

QUESTION B(ii)

The partnership is so long established that no other company may be operated after the
conclusion of the tenure. It can be essential for a very short amount of time for partnership
and the partnership cannot be dissolved. The Hanifi think-tank allows a person, because it is
a deal and an accord should have a fixed term of time, to fix the tenure of the partnership.

Agency problems develop when the agent and the principal are conflicts of interest, which
usually happens when the agent acts purely in his/her own interests. In a relationship with a
principle officer, the principal shall be the party who lawfully appoints an officer to decide and
act for the agent. Problems with the agency come from uneven conditions of information in
which one party knows something more than the other.Thus it might have a fraud element
because the party or the agent that collect information may hide it from his principal or client.