Application of Talfīq in Modern Islamic Commercial Contracts

Author(s): Ghazala Ghalib Khan

Source: Policy Perspectives , 2013, Vol. 10, No. 2 (2013), pp. 133-159
Published by: Pluto Journals

Stable URL: https://www.jstor.org/stable/42909314

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 Application of
Talfìq in Modem Islamic
Commercial Contracts*
G haza la G ha I ib Khan*

Abstract

[Contemporary Islamic Finance has evolved over the recent past to meet economic
financing challenges faced by the Muslim societies, and to regulate the Islamic ban
system under Shari* ah. Islamic Banks are practicing and introducing various product
instruments such as mushãrakah, mudãrabah, murãbahah, iß rah, saiam and istisnã',
innovations of classical fiqh contracts molded into complex banking products. Islamic b
standardize their products with the help of their faíãuã committees. This is somet
criticized as talfíq, a mere patchwork rather than a proper integration of juristic opin
The paper argues that Talfìq by "qualified jurists" in "issues pertaining to the interest
people and their happiness", is categorized as permissible. - Editors.]

Introduction

The terms ' talfìq ' and *takhayyur' have gained prominence in
Islamic legal discourses as tools of legal reasoning in fatãwã , espe
in Islamic Finance. Increasing use of related legislation, in
contemporary Islamic Finance has led to an intense debate regarding
their legitimacy.

Talfìq is the merging of the opinions of several schools of

thought into one conclusive issue which is often dissimilar to all.
Apparently a tool of ijtihãd, it is used as a conclusive legal ruling where
no such ruling exists; or when a divergent opinion exists amongst
jurists. It is indeed ua jurisprudential principle that suggests that a
jurist adhering to a particular school of law should abandon the
jurisprudence of that school on a particular matter and adopt a
competing point of view offered by another school if the latter is more
practical and conforms most to the need of the time"1. Thus, the jurist
merges together various selected opinions to formulate an entirely new
ruling, dissimilar from existing ones.

This article is drawn from thesis of the author written for LLM, Islamic Commercial
Law, from International Islamic University, Islamabad.
*Ms. Ghazala Ghalib Khan is Lecture in Law at International Islamic University
Islamabad.

^ansoori, Dr., Mohammad Tahir, "Islamic Banking: Debate on Sharï'a/7 Legi

of Islamic Banking Practices in Pakistan", Towards Revisiting the Debate on
Prospects and challenges for Pakistan, (Pakistan: Iqbal International Institu
Research & Dialogue IIUI, 2010) p. 62.
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 Policy Perspectives

Talfiq is applied in ijtihãd as the four major sunni schools of

thought are treated as a common heritage; thus opinions are freely
selected best serving the purposes of law. Since it eliminates the
restraints proposed by taqlTd shakhsi, it is disapproved by the
proponents of taqlid shakhsi. And therefore we find various fatãwã
declaring invalidity of talfiq and changing of madhãhib.2

With merging of opinions approved, diverging opinions are

Talfiq is the
L, the
L, the

schools Of thought into including

one conclusive issue
. is(•nf»)- referred toto
referred If done
as patching
patchingmechanically ( talfíqy it
( talfíqy ,
Which IS Often which is according to the
dissimilar to all. contemporary scholars of Fiqh in

Development of Islamic Laws on Banking and Finance

Islamic commercial law, currently in its developing stages, has its

founders and regulators making all-out endeavors to build it on SharTah
principles. However, scholars are divided on this. The divergence of
opinion is largely based upon developing the rules for their products
and services. To analyze this, we have to look into the sources of
Islamic law and whether the contemporary practice of SharTah
standardization for IFI products are in accordance with the SharTa.

In Islamic jurisprudence, a new law/ruling can only be derived

from two sources: the Divine Revelation, i.e., the Qur'än and the
Sunnah; and when the laws are not explicitly mentioned therein, then
through fair reasoning. The latter includes the sources based on
SharTah and deduced through human reasoning ( ijmã ') and deductive
analogy ( qiyãs ) categorized as primary and secondary sources in that
order. Hence, if SharTah texts address a law, there is no room for
human reasoning. For instance, ribã- based transactions are explicitly
prohibited in the Qur'än 4 and ahãdith, hence no man-made laws can
legalize ribã.

2By Mufti Mahmood Hasan Gangohi, http://blog.darulislam.info/node/91 (Accessed

August, 2009); A similar view is propounded by Mufti Taqi Usmáni that in cases of
dire need of Muslims, a jurist may select the opinion of any school of thought, to
facilitate the people. "Under no conditions is the practice of talfiq permissible, which
is to use the fatwa offered by one ímãm in one issue and following another Imam in
the same unit of ibãdah The Legal Status of Following a Madhab,
www.everiastingknowiedge.org (Accessed August 2009) p.58.
3Vogel, Frank E. and Samuel L. Hayes, Islamic Law and Finance: Religion, Risk and
Return, (Netherlands: Kluwar Law International, 1998), p. 37.
4The Qur'än, 2: 275-281.
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 Application of Talfíq in Modern Islamic Commercial Contracts

Talfíq - A Consequence of Compound Taqlid?

Before exploring the concept of talfíq, it is important to elaborate on

taqlïd as the phenomenon of talfíq has originated from the concept of
taqlid. Some writers define talfíq as compound taqlïd.5

The concept of taqlïd closes the door of ijtihãd,6 making it

incumbent upon every Muslim to adhere to the doctrines of one of the
four original schools of thought. However, 'mere blind following' is not
favored and 'following the opinion of a credulous mufti or jurist' as an
expert opinion is supported. Hence it is recommended for a lay-person
to seek counsel of a trustworthy jurist in matters of a probable {zanni7)
nature. On the other hand, in the matters holding a definitive ( qaťf)
proof from Sharï'ah, there is no room for blind following as it is based
upon knowledge of the five pillars8 of Islam and prohibitions9 regarding
transactions.

Jurists trace the origin of taqlïd to 2nd century hijri. Al-Shawkã

who places its evolution just after the sahaba, tâbi'ïn and taba ' tâbi'ïn
stresses that the conception of following one of the four established
sunni schools of thought, developed after the period of the four Imams,
paid no heed to taqlïd and the four schools of thought were established
without their permission.10

A contemporary jurist elaborates that taqlïd emerged gradually,

its outset found in the era of the tabi'ün, and synchronized into three
stages: first there appeared a general tendency of the masses towards

5AI-'Utaybí, GhãzT ibn Murshid, "Al-Talfíq bayn al-Madhãhib al-Fiqhiyyah wa

' Ilãqatuhu bi Tayslr ah Fatwa". p. 10. (http://www.minshawi.com/node/ 713)
(Accessed July 2009.)
6Schacht commenting on the theory of "closing of the door of ijtihãd" emphasized the
emergence of this phenomenon in the early 4th century Hijra (about A.D. 900), when
a sort of consensus developed amongst the jurists that virtually all the issues relating
to law had been resolved, and it was considered that the coming generations may
not be able to exercise ijtihãd owing to lack of expertise in Islamic jurisprudence.
Therefore, legislative efforts would need to be "confined to the explanation,
application, and, at the most, interpretation of the doctrine as it had been laid down
once and for all". This phase necessitated the practice of taqlïd "... a term which had
originally denoted the kind of reference to Companions of the Prophet that had been
customary in the ancient schools of law, and which now came to mean the
unquestioning acceptance of the doctrines of established schools and authorities."
(J. Schacht, An Introduction to Islamic Law ; (Oxford, 1964), pp. 70-71.)
7The former category of rulings require neither ijtihãd nor taqlïd. On the other hand,
probable issues need to be interpreted and ruled by the mujtahid which thereafter
assumes the status of law for those cases.
The five pillars of Islam include: Testimonial of Muslim faith ( Shahadah ), prayers
five times a day ( Salãh ), obligatory alms giving ( Zakãh ), fasting in Ramadan ( Sawm )
and one-time pilqrimaqe (Haii).
Prohibition of riba, gharar, qimar, maysir, combining two inconsistent transactions
and bay'al-ma'düm, etc.
1 Al-Shawkãni, Muhammad ibn AIT, Al-Qawl al-Mufïd fï Adillat al-Ijtihad wa al-Taqlïd,
(Kuwait: Dar al-Qalam, 1396 A.H), p.45.
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 Policy Perspectives

dependence upon opinion of learned jurists, which followed through an

abandonment of urge for learning and finally the stage of complete
hardening of the hearts.11 This final phase is characterized by a total
abandonment of juristic efforts to conduct ijtihãd and people just relied
upon previously established doctrines of established schools of thought.

Juristic discourses on principles of Islamic jurisprudence usually

discussed the concept of taqlTd in detail; elaborating its meaning,
SharTah appraisal, viewpoints along with arguments of various schools
of thought, on this issue. A brief discussion over the subject issue is
reproduced below:

Taqfíd - Definition; Al-Jurjãni defines taqlTd "as a person's

following of other's words and actions, believing them to be based upon
truth, and without having an insight into their legal evidence, in such a
way as if the follower has braided the words or actions of the other as a
necklace around his/her neck. It is accepting the words of others
without legal authority or evidence."12

Another generally cited definition suggests that "taqlTd is to act upon

the words of another without legal evidence ( hujja )." 13 ( Jj»í J«Ji
W

Thus, it excludes a sort of following which is exercised in th

cases mentioned underneath:

• A person who follows the enjoining of Holy Prophet (SAW) or,

• Anyone's acting upon a consensus or,
• A layperson seeking consultancy of a mufti (juris-consult) in his
personal issues, and thereby acting upon his verdict, and
• A judge's credence of the evidence of a trustworthy witness.

In all these instances one's acting upon the words or statements of

other people is based upon legal proofs as per Islamic jurisprudence.
A more encompassing definition provided by Kamäl Ibn al-Hammãm
states, "Without any evidence, acting upon the words of one, whose
words are not (regarded as) proof. 14( ^ ¿y )
Referring to the principles of Islamic jurisprudence, a va
permissible form of taqlTd denotes either:

• a following whereby a lay-person acts upon the opinion

"AI-'Alwani, Sheikh Tãhã Jãbir, "Taqlïd and Stagnation", Issues in Contem

Islamic Thought, (UK: IIIT, 2005), p. 76.
"Al-Jurjãni, AIT ibn Mohammad ibn Ali, Al-Trifãt, (Beirut: Dãr al-Kitâb al-Arabî,
1405), p. 90.
13AI-Ghazalî, Abu Hamid Mohammad ibn Mohammad, Al-Mustsfa min Ilm ai-usui,
(Beirut: Mu'ssassät al-Risãlah, 1997) p. 2/462; Al-Shawkãni, Irshãd al-Fuhül, p.442.
"Ibn Amir Al-Hãjj, Muhammad ibn Muhammad, Al-Taqrir wa al-Tahbir fi Ilm ai-usui,
(Beirut: Däral- Fikr, 1996), p.453/3.
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 Application of Talfíq in Modern Islamic Commercial Contracts

qualified scholar; or
• whereby an expert scholar (in any specific area of law only)
seeks guidelines from a high caliber scholar.

It is emphasized by the majority of jurists that, in two cases

mentioned above, people should seek guidance of experts on the
subject. Al-Qarãfi quotes the opinion of Imam Malik and that of the
majority's viewpoint stating it as mandatory upon lay-persons to follow
mujtahidQn in their legal rulings, just as it is obligatory upon
mujtahidOn to explore the sources of law through exercise of ijtihãd.
Whereas an opposite viewpoint is maintained by the Mu'tazilites of
Baghdad, and Al-Jibãl viewed it permissible in ijtihãdi cases only.15

Juristic Viewpoints on TaqlTd: The followers are not considered

to be the people who possess faculties of logical reasoning. Therefore a
muqallid (the lay-person who follows a jurist) can never be a jurist.
Islamic jurisprudence appreciates rational thinking and understanding
for deduction of SharTah rulings in modern issues of law. On the other
hand, mere following without reason is condemned. The jurisprudential
perspective of taqlîd may be analyzed through two broader categories
of matters, as discussed underneath:16

Taqlîd in Fundamental Principles of Creed ('aqidah): Majority of

the jurists denounce blind taqlîd in one's beliefs in the existence and
unity of Allah and in obligatory religious rituals, etc.17 No jurists allow
taqlîd in fundamentals of creed except Hanãbalah. Whereas Abu Ishäq
calls it a condemnable act if someone believes in a dogma without
knowing its source {dalli). To him such people do not qualify for the
merits of faith.18

Taqlìd in Branches of Islamic Law ( furù '): In issues of Islamic law,

there exists a difference of opinion amongst jurists. Two significant
viewpoints are: The first opinion is that Taqlîd in furď is permissible19
While second opinion is that taqlîd in furu' is prohibited.20

Juristic Appraisal of Taqlîd Shakhsi : Having established the need to

follow a learned jurist, fiqh treatises discuss the controversy on
following a specific (established) school of thought in its entirety,
termed taqlîd shakhsi. The proponents allege it to be obligatory.
Thãnawí categorized the status of taqlîd shakhsi as wãjib bi al-ghayr

15AI-Qarãfi, Shihab al-Dïn( Sharh Tanqih al Fusul lil Qarãfi, (Al-Maktabah al-Shamilah)
d. 465.

16AI-Mawsü'a al-Fiqhiyya al-Kuwaitia, (AI-Kuwait: Wizãrah al-Awqãf wa al-S

Islamiyyah.1988), 2nd. Edn. 160/13
17Ibid.
WAI-Qaräfi, Sharh Tanaih al Fusul Iii Qarãfi, OD.cit. d.466.
19AI-Shawkânï, Al-Qawl al-Mufìd fi Adillat al-Ijtihãd wa al- taqlîd, (Kuwait: Dãr al-
Qalam. 1396 A. H.) p. 39
20AI-Shawkânï, Irshãd al-Fuhül, op. cit. p. 447.
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 Policy Perspectives

(extrinsically obligatory), which he explains to be the second kind of

'obligation' and includes such acts to be regarded as obligatory, non-
fulfillment of which hinders the fulfillment of obligatory.21 Thus, the
proponents do not claim it to be obligatory in itself for accomplishment
of wajib bi al-dhãt (obligatory per se).

However, a middle course adopted by the majority of the jurists

postulates: it is not obligatory to
~ : 77": follow any specific school of thought
I nere IS notmncj (taqlïd shakhsi), emu
mandatory exceot concessions (rukhas) and resolutions
which mandatory aJ and exceot His
Messenger (SAW) usually asserted it to be 'allowed' for
have enjoined to be believers but it is not at all
, . 'mandatory' because for an act to be
mandatory. such, there must be Shari
obliging it.

Juristic Viewpoints on Switching Schools of Thought: In this

regard, Al-Qarãfi mentioned the opinion of Yahya Zannati who views
permissible to follow any schools of thought; and considers switchin
from one to another only under three conditions:

• To avoid joining opinions of two or more schools of thought in a

way that ijmã' is opposed/ for instance, allowing a marriage
without dower money, guardian and witnesses;
• To adopt the opinion of another school of thought for a better
legal evidence; and
• To avoid following the concessions of various schools of
thought.23

Thereafter, he acknowledges rectitude of all worthy schools of

thought by mentioning them paths to heaven and channels towards
virtue. In other words, a random shift from one opinion to another
without there being any legal cause, is never approved by the jurists.

On the other hand, if one adopts the opinion of another school

of thought for a better evidence without violating the spirit of SharTah,
then it is the recommended path.

Ibn al-Qayyim on Taqlld Shakhsi: The controversy over

taqlîd shakhsi is extensively discussed by Ibn al-Qayyim in his treatise

"ThãnawT, Maulãnã Ashraf AIT, al-Iqtisãd fi al-Taqlîd wa al-ijtihãd, (Karachi: Qadîmî

Kutub Khana, undated) p.33. For detail see treatise of Mufti Taqi Usmáni.
"Amîr Bãdshah, Mohammad Amin, Tayšir al-Tahrir, (Beirut: Dãr al-Fikr, undated)
p. 247/4
23AI-Qarãfi Al-Qarãfi, Sharh Tanqih al Fusöl III Qarãfi, op.cit., p. 468.
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 Application of Talfíq in Modem Islamic Commercial Contracts

regarding legal rulings ( fatawa ), in which he expressed not only his own-
viewpoint but also refutes the claims of proponent on this issue. He
explicates his viewpoint by mentioning two contradictory views of
jurists regarding the issue of taqlïd; and further denouncing the notion
of taqlïd shakhsi with arguments.

According to the first viewpoint, a lay-person is not obliged to

follow any specific school of thought. Ibn al-Qayyim regarded this
opinion to be absolutely accurate for these reasons:24

• There is nothing mandatory except which Allah and His

Messenger (SAW) have enjoined to be mandatory.
• We do not find even a single precedent from early Islamic
generations who might have adopted this practice.
• A layperson can never be obliged to adhere to the doctrines of
any specific school of thought because does not have sufficient
knowledge to evaluate them. A mere claim to belong to a
specific fiqh does not entitle one to act like a jurist, a
grammarian, or a writer while in real sense one is not so. The
claim to adhere to any specific fiqh would only be rightful if one
had the real knowledge of all the doctrines.
• This phenomenon is an abominable innovation and was never
proposed by any of the great Imams.
• The claim to follow any 'ãlim or jurist is despairingly critical.
Even more desperate is the doctrine of adhering to any one of
the four established schools of thought. How can it be just to
abandon the doctrines of the Companions of Prophet (SAW),
and then those of the tâb'ïn and the rest of the jurists and
scholars of Islam, and to follow only four specific schools of
thought?

The assertion of the second view, claiming the necessity to

follow a specific school of thought for a layperson, is criticized on
several counts. According to this group a layperson follows a particular
school of thought, believing in its truthfulness; therefore, he must
wholeheartedly adopt all its doctrines. It is argued that believing this
claim to be true leads to various undesirable consequences. For
instance:
• A layperson would always be prohibited to refer his case to any
jurist; except the one belonging to his own school of thought.
• It develops a feeling of superiority for one's own Imam
exclusively, hence creating a sort of prejudice against all other
jurists.
• A worse consequence: a follower would have to desolate the
Qur'an and Ahadith, if they contradicted the verdicts of one's
Imam.

24Ibn al-Qayyim al-Jawziyah, Mohammad ibn Abi-Bakr, I'lam al-Muwaqqi'in 'an Rab
al-'Alamîn (Egypt: Maktabah al-KullTyat al-Azharlyah, 1968) p. 261/4.
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 Policy Perspectives

The Notion of Talffq

Definition: Talfiq means 'amalgamation' and 'piecing together' of

something. It connotes different meanings such as sewing together
different fabrics together or beautification of a hadïth by diluting it with
something false.

In the legal sense, since the notion of talfiq methodology is a

contemporary phenomenon, we do not find its consolidated definition
by classical jurists'. The modern scholars, such as Sheikh Muhammad
Sa'ïd al-Bânï, defines the term comprehensively: "talfiq is adoption of a
practice (fashion/pattern) not propounded by any mujtahid (
Jjïj v)."25 It denotes fusing together the opinions of two or more
mujtahids in an issue. It is carried out in compound transactions,
comprising different interrelated elements, each carrying specific
SharTah rulings. Difference of opinion among jurists exists in such
rulings and the follower adopts the opinion of one jurist in one element
(of that transaction) and for others he adopts the opinion of others and
the whole transaction is carried by fusing opinions of two or more
jurists.26

Some commonly quoted illustrations of prohibited talfiq are as follows:

Marriage contract without legal guardian and witnesses: Marriage by

an adult, sane girl without the consent of her legal guardian is legal in
Hanafi fiqh while Maliki and Shafi'es do not approve of that.

• Malikis allow marriage without the presence of witnesses

although they necessitate presence of legal guardian.

Long-term lease of Waqf property without examining it: Where an

individual takes a waqf (trust) property, on ijãrah (lease), for ninety
years, without examining the property, he is, in fact, following the two
divergent opinions of various jurists:

• By taking the lease of waqf property for a long term, he follows

Imãm ShãfT and Imam Ahmed who allow long term of lease of
waqf property (although they do not allow ijãrah without
examination of the property).
• On the other hand, concluding lease contract without examining
the property, he follows the opinion of Imãm Abu HanTfa
(though ijãrah of waqf property for a longer term than three
years is not permissible in Hanafi school of thought). 27

"Al-Bãni, Mohammad Sa'ïd, 'Umdah al-Tahqìq fì al-Taqlîd wa al-Talfiq, (Damascus:

Dãr al-Qãdri, 1997) 2nd. Edn. p. 183.
26AI-ZuhaylT, Wahbah, Usui at Fiqh al-Islãmi, (Damascus: Dãr-e-Ehsan, 1997).
p. 1141.
27Ibid

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 Application of Talfîq in Modem Islamic Commercial Contracts

The transaction is concluded by fusion of several contradictory

legal opinions.

The Scope: The scope and application of talfíq is limited to cases

subject to ijtihãd, SharJ'ah Appraisal of Talfíq:Talfíq is a controversial
doctrine. Scholars differ on the legality of defining Islamic law by the
fusion of legal opinions. Among the detailed divergence on this issue,
two opinions are of most vital significance:

(1) That talfíq is absolutely invalid as propounded by a great

majority of Ulama. (Al-Saffârïnï)28
(2) That designing laws through talfíq is valid with certain
prerequisite conditions. Different jurists mention different conditions for
validity such as:

• Talfíq of legal opinions is valid only if there is no willful adoption

of concessions. (MarT al-Kärmi)29
• Talfíq should not breach any consensùs ( ijmã ). (al-Qarãfí and
al-Shâtibï)
• Talfíq should be acceptable in cases where one has not followed
the opinion of any jurist ( taqlid ). (Ibn-e- Hamam)30
• Talfíq is permissible only in cases of dire need ( al-Hãjah wa al-
dururah). (Shafshawani)31

Opinion of Mohammad Sa'ïd al-Bãnl: AI-BãnJ has comprehensively

discussed the substance of talfíq. His opinion may be briefly
comprehended as follows:

He mentions two broad categories of talfíq:

A. Prohibited: Talfíq , which is prohibited in Islamic jurisprudence

may be of two types:32

Intrinsically Void {talfíq bãtil li-dhãtihi) : Merging an illegal

(harãm) act into legal ( halãl ), hence void intrinsically. Thus .
whenever a legal ruling is adopted on the basis of one's desire and
caprice, it results in intrinsically void talfíq.33 For instance a
marriage concluded through merger of various opinions whereby
legal guardian and witnesses are not present is prohibited according
to all of the schools of thought.

28AI-Bãni, Mohammad Sa'Td, 'Umdah al-Tahqiq fi al-TaqlJd wa al-Talfia, od. cit. d. 197.
29Ibid. d. 194.
30Ibid. p. 212.
31Ibid.
"Ibid., p. 224.
Mansoori, Islamic Banking: Debate on SharJ'ah Legitimacy of Islamic Banking
practices in Pakistan, op. cit. p. 62.
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 Policy Perspectives

Extrinsically Void ( talfiq bãtil lil ' wãridh ): Though intrinsically

valid, it becomes invalid due to any external factor, including the
following three circumstances:

• Deliberately adopting concessions ( rukhas ) without any valid

excuse; for instance, for the sake of one's pleasure or in fun;
and adopting weak legal opinions to gratify one's desires and
whims.
• Talfíq which postulates rescission of a hakim's (ruler/judge)
order is void, because the order of a hakim removes differences
amongst the parties, hence avoiding anarchy and confusion
from society.
• Talfíq which necessitates abandonment of a course of action
which one had already performed by way of taqlld.

B. Permissible: This talfíq requires detailed interpretation. Therefore

it is not appropriate to attribute an absolute ruling in all the cases of
amalgamation. For a better understanding of this issue we have to
analyze it from two perspectives:

1. Hukm of Talfíq with Regard to Various Mukallifün

Those having higher degrees of knowledge do not have to follow other

jurists; they need to explore the legal rulings themselves. Conversely,
those who are not experts in Islamic law are bound to seek the help of
experts. Hence, talfíq from a layperson is not appreciable but it is
allowed for jurists to mix and combine the opinions of several schools of
thought as they are capable of evaluating different opinions without
frustrating the spirit of law. Such mukallifin include:

Qualified Jurists ( Mujtahidün ): Those who absolutely possess

the qualifications of a mujtahid.

The Jurist cum Follower: Those who are considered jurists in

matters within the scope of their expertise, and followers for other
issues (ahi al-tarjïh wa al-takhrïj).

Other Legal Scholars and Laypersons: Those who have a way

into the issue of talfíq. They are required to adopt that course of
action which is suggested by their mufti to them.

2. Hukm of Talfíq in Various Branches of Fiqh {furüJ al-fiqh )

It is not allowed to extend talfíq in matters of religious rituals Jurists

have categorized such issues into three classes34:

34Mohammad Al-Sallâbî, Usama_ Mohammad, Al-Rukhas al-Shaťia Ahkãmuhã wa

Dawãbituhã, (Alexandria: Där al-ïmân, 2002) p. 108.
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 Application of Talfíq in Modern Islamic Commercial Contracts

1. Issues necessitating "easiness and permissiveness":

Rituals may be of two kinds: either including acts of pure
worship like prayers or fasting; issues relating to such acts
admit to talfíq because the purpose of worship is submission to
the will of Allah. On the other hand, the second type includes
acts of worship involving monetary obligations, like zakah. Such
matters are emphasized more specifically to safeguard the
rights of destitute people. Therefore neither is the alms-giver
allowed to take benefit of the weaker opinions of schools of
thought to evade his/her obligation, nor can he merge such
opinions to forfeit the share of deserving groups.35
2. Issues requiring "piety and caution": This category involves
prohibitions and requires that such matters be dealt with care
and caution because nothing is prohibited by Allah (SWT) except
for its detrimental nature. Therefore talfíq is not permissible
regarding these matters except in cases of dire need, for
"necessities allow prohibitions". The holy Prophet (SAW) insists
on refraining from manipulating the prohibitions: "Avoid the
things which I proscribe to you, and whatever I order you to do,
perform it as per your capacity."36 In talfíq, one may try to
justify a misconduct or transgression, thus combining opinions
which are just not permissible in this context.
3. Issues involving "interests of the people and their
happiness": These include social (such as marriage laws)
contracts, financial transactions and hudud laws; their prime
objective being human happiness and tranquility. Thus if such
an exalted purpose demands talfíq in some cases, it may be
permitted. The laws aim to facilitate humans and are allowed if
they do not violate the Sháďah.

Juristic Differences on Legality of Talfíq

The controversy over legality of talfíq relates back to the

controversy over changing religious schools of thought ( madhhab ) in
any specific issue. Thus, scholars who proscribe departure from one's
own adopted school of thought in seeking legal ruling on any issue,
forbid talfíq as well. On the other hand, scholars who allow changing
madhhab favor talfíq. Their rationale is further elaborated by the
arguments presented:

Arguments of the Opponents

The opponents of talfíq present the following arguments:

• If formulation of laws by way of talfíq is permitted, it would lead

"ibid.
36Muslim Ibn al-Hajjâj, Al-Qashîrî, Al-Nïsabûri, Sahih, Kitãb al-Haj, Bãb Furidha al-Haj
Marratãn fìal-Umur, Hadïth, 2380, (Tunisia: Dãr Sahnün, 1992) 2nd. Edn. p. 975/1.
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 Policy Perspectives

to frustrate the principles of the Shari'ah. Consequently, all the

forbidden things would be legalized by merging different
opinions. AI-SaffãrTnT37 exemplifies this situation with the case of
a person who wants to commit adultery and finds his way by
merging legal opinions of various schools of thought. Thus by
following the opinion of Imam Abu Hanifa and Imam Malik in not
necessitating the consent of the legal guardian and not even the
presence of two witnesses, he would be legalizing adultery for
himself. Al-Saffârïnï has contextualized upon the legal maxim:
" What leads to forbidden things should itself be forbidden".
Hence it is apprehended that by way of talfiq the Shari'ah
injunctions would be manipulated in such a manner that many
prohibited things would be converted into permissible.
• As the legal principle provides, truth is one and indiscrete before
Almighty Allah. Therefore, if a person follows a specific school of
thought, he is to believe its entire principles to be truth-based,
and should reject the opposing opinions as based upon
misconceptions; however, the notion of talfìq emphasizes upon
the belief in accuracy of all jurists, which in itself is a
contradictory belief.
• There is no proof in the Shari'ah for validity of talfìq.38

Arguments of the Proponents

The scholars who allow talfiq assert that:

• There is no legal proof {dalli shar'i) to disprove the validity of

talfiq. In fact, nothing is found in the Qur'än, Sunnah, ijmã or
even qiyas which can prove its invalidity.
• Al-Bäni in his Umdah reproves even the argument of Hajr al-
Haythami (d. 1566) who asserted consensus upon invalidity of
talfìq.
• Another argument in favor of talfiq is that the notion of
formulating legal rulings by talfiq existed during the early
periods of development of fiqh and was not objected to until the
end of the fourth century.39 The classical jurists never forbade
anyone from adopting the legal opinions of other jurists in
matters of probable (zanni) nature.

Talfìq as a Source of Legislation

A significant aspect of debate on talfiq is to sort out whether Islamic

jurisprudence appreciates mixing of legal opinions for law-making. A
keen observation of modern Islamic laws reveals that the methods of

37Abü al-'Awn Muhammad al-Saffârînî (b. 1702), a Hanball jurist, wrote a treatise
"Al- Tahqiq fi Butlãn al-Talfíq". (Kraweitz, op. cit., p. 17)
38Kraweitz, op. cit. 18
39Kraweitz, op. cit. 29.
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 Application of Talfìq in Modem Islamic Commercial Contracts

talfiq and takhayyur are applied at various levels in the modern Islamic
legislations.

Firstly, in a moderate form of talfíq whereby the opinions of

another school of thought are borrowed and merged to fill up some
deficiency of one's adopted school of thought. In such cases of talfíq
and takhayyur, the allegiance with the previously adopted school of
thought is not abandoned altogether.40 For instance, the family law of
Egypt is primarily based upon the Hanafi doctrine, nonetheless it
contains provisions from other schools of thought as well. Likewise, in
Pakistan, the Dissolution of Muslim Marriages Act of 1939 is an example
of this form of talfíq whereby Malîki legal opinions have been adopted in
an effort to find most workable solutions for a desperate woman
seeking dissolution of her marriage on various grounds.

Secondly, in an intense form of talfíq the norms of ìaqlìd are

altogether abandoned in a way that jurists tend to construct legal
rulings upon the most feasible opinions of all established schools of
thought. In fact, all the established schools of thought are considered
as providing a broad legal heritage
out of which feasible opinions are T1_ ; . , , ,
adopted freely to serve the Th6 T1_ laws provided
purpose.41 The contemporary fíqh the Shdďsh ar

pfttem'for solving "cortempora^ kinds: defin

legal issues particularly those probable.
relating to Islamic banking and

finance. Indeed such academies are

playing the role of mujtahid for resolving the contemporary iss
law. It is more appropriate to consider their methodology as takh
or ijtihãd intiqãl rather than mere talfíq , which is detestable for
contemporary jurists.

The discussion above may be concluded as follows:

• The laws provided by the SharTah are of two kinds: definiti

probable. The former is not subject to interpretations and a
upon them as provided. However, those who do not know a
such laws are obliged to ask the experts.
• The probable rulings require interpretations through ijtihãd.
Therefore laypersons should not try to manipulate such rulings
by interpreting them haphazardly.
• In the second class of cases, it is mandatory to seek expert
opinion, technically termed as taqlîd. Jurists are unanimously
agreed upon the obligatory nature of this kind of taqlîd though

40Coulson, N.J., A History of Islamic Law, (Edinburg: University Press, 1964) p.185;
Vikor, Knut.S., Between God and Sultan:A History of Islamic Law, (UK: C. Hurst &
Co. Publishers, 2005) p. 233.
"ibid

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 Policy Perspectives

blind, irrational following is never recommended.

• TaqlTd takes the form of precedent law if the law is already
deduced by the mujtahids in any given set of facts; thus later
generations are bound to follow those precedents.
• In case of divergent opinions over an issue, one must seek the
counseling of muftis to adopt the appropriate ruling for him/her.
• The muftis may evaluate the various opinions and adopt lenient
opinion of any school of thought to alleviate the burden of
people without impairing the objectives of the Sharl'ah.
• Talfiq is permissible in transactions if exercised by qualified
jurists following the requirements of ijtihãd.

Methodologies in Contemporary Islamic Finance

The august Islamic academies have applied several methods of

developing and elaborating new legal rulings in Islamic finance42; su
as

• Interpretation by way of Ijtihãd ;

• Eclecticism ( Takhayyur );
• Necessity ( Al-durûrah al-Shari'a) -,
• Permissible Stratagems ( Makhãrij );

Interpretation by way of Ijtihãd : Modern trends in the Islamic Financiai

Sector indicate that the Islamic finance industry has frequently made
use of ijtihãd in either of the two forms: (1) Ijtihãd Inshãí (creative
deduction of laws); and (2) Ijtihãd Intiqãl (selective deduction of legal
rules)43.

Ijtihãd Inshãl refers to creating an absolutely new law for an

issue for which no precedence could be found in classic fiqh treatises.44
creative ijtihãd is more appropriate and advisable in developing entirely
new financial products for the Islamic banking sector but SharJ'a
experts are usually disinclined to devise entirely innovative
instruments. So far ijtihãd methodology is not been utilized to invent
entirely new innovative products, rather it is merely used to shape up
and qualify present conventional banking products according to SharTa
parameters. Thus the procedure of ijtihãd has more likely transformed
into comparative research findings, whereby jurists try to compare
conventional banking products with Islamic norms.45 For instance, the
ruling on option contracts is not found in classic fiqh treatises; therefore
it required a fresh appraisal, through the tool of ijtihãd. An option
contract allows a party to retract from his promise to buy or sell a
specified commodity at a prescribed price, within a specified duration of
time. The Islamic Fiqh Academy of Jeddah ruled against the

42Vogel & Hayes. Islamic Law and Finance- Religion, Risk and Return, op. cit. p. 34.
43AI-Qaradâwï indicates two forms of ijtihad (Al-Qaradâwï, Dr. Yousaf, Al-Ijtihad fi ai-
SharTah ai- Isiamiyyah, (Al-Maktabah Al-Shãmilah), p.74.
44Ibid., p. 86.
45Vogel & Hayes, op. cit.
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 Application of Talfiq in Modern Islamic Commercial Contracts

permissibility of such a transaction on the basis that "since the object of

the contract is neither a sum of money nor a utility or financial right,
which may be waived, then the contract is not permissible in Shaďa."46

El-Gamal discussed modern juristic trends towards ijtihãd rather

critically. Thus he asserted the standpoint of sunni scholarship who
have agreed to limit the scope of ijtihãd tools to merely qiyãs
(reasoning by analogy), which is a preferred tool of ijtihãd in the Shafi'T
school of thought. Indeed the use of all other tools like istihsãn (juristi
equitable preference) by Hanafis, istisiãh or maslahãh mursalãh
(considering public interest) by Mâlikïs, and 'urf (custom) as a source of
legislation were outlawed by the Shâfi'Ts as sources for human
lawmaking. In his view, a mere use of analogical deductions based
upon fiqh nominates contracts for structuring the Islamic financial
industry, has resulted in developing an inefficient industry. While
classical juristic trends of ijtihãd reveal an inclination towards
consideration of public interest or utilitarian choice, much more than
analogy. Therefore, the Islamic financial industry should also be guided
by utilitarian choice in the process of formulating the products and
services.47

Another aspect of debate on modern ijtihãd trends is worthwhile

noting that the institution of so'o-ijtihãd seems to be extinct. Rather, it
has been substituted by a new initiation termed "group ijtihãd". This
methodology is usually employed in resolving problems of a complex
nature, whereby groups of scholars join together and deliberate upon
complex issues of law, to eventually concur upon resolutions. Indeed,
as indicated earlier, contemporary fiqh academies are utilizing the
subject methodology for resolving contemporary issues of public
nature. Numerous such academies have resolved to adopt it as their
methodological tool. For instance, the Islamic Fiqh Academy of India, in
its 12th fiqh session, rendered group ijtihãd as more preferable to sort
out complex issues of law.

Eclecticism ( Takhayyur ): Modern trends of ijtihãd in Islamic finance also

exhibit that sometimes legal rulings are arrived through the method of
choice, amongst various opinions of classical jurists. The phenomenon
of choice renders authority to the newly adopted opinion from a
classical precedent. This method is employed for diverse rationalities:

1. Foremost consideration is given to the fact that an opinion provides

best interpretation of the SharTa texts.
2. Choice is also made amongst various opinions within the same
school of thought, on the basis of "stronger" and "weaker" views.

46Resolution (63/1/7), 7th. Session, 1992 (Concerning Financial Markets), Resolution

and Recommendations of the Council of The Islamic Fiqh Academy 1985-2000, op.
cit. d. 131.
47EI- Gamal, op. cit. 28.
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 Policy Perspectives

3. Choice on the basis of maslahãh (utilitarian choice48) or common

well-being of the society.
4. Another subcategory of choice includes talfiq. In compound
transactions, the opinions of various schools of thought are
systematically merged together to formulate a new legal ruling. A
modern jurist employing these sub methods of choice for a new legal
ruling is in fact conducting ijtihãd, which requires a deep understanding
of legal reasoning provided by classical jurists. If such a process is
carried out roughly and without sophistication, it would lead to
prohibited talfiq. Vogel and Hayes claimed that the Islamic banking and
finance industry has frequently employed the method of choice, though
the modern scholars usually claim to practice only utilitarian choice
while selecting opinions of various schools of thought.

Necessity ( al-durürah al-Shari'a ): Necessity is a specific

nomenclature used in Islamic Fiqh to denote a condition, whereby a
person in extreme stress is permitted to adopt even such legal rulings
which expressly contradict an unqualified Shari'a enjoining. The basis of
this principle is derived from the Qur'an, whereby a person in dire
necessity is permitted to use even prohibited substances to save
his/her life.49 However, it is emphasized that 'the need to be fulfilled'
must be real and genuine, i.e., the need to an extent that had that
forbidden substance not been used, the person would die. The
relaxation is available in such cases where no other legal solution is
forthcoming. Moreover, the use of relaxation should not result in
violating the basic rights of others.50

"Another version of this doctrine holds that a mere 'need' If it

affects many, may be treated like a dire necessity affecting only one."51
On the basis of this doctrine, contemporary Islamic Finance adopted a
relaxed viewpoint in certain inevitable circumstances, whereby even
prohibited transactions are ruled to be permissible. For instance, the
ruling of the Indian Fiqh Academy regarding permissibility of
commercial insurance in favor of Indian Muslims on the basis of dire
need. Although commercial insurance is not approved by majority of
contemporary Muslim jurists,52 yet keeping into consideration the
vulnerable environment for Indian Muslims, due to rampages and
communal conflicts affecting their lives and properties, the academy
ruled such permissibility.53 Likewise, permissibility of mortgage finance
for the Muslims residing in Western countries is an example of need-
based ruling. House financing through the tool of mortgage finance,

48Voapl. nn.rit.
49Qur'ãn, 2:173
50Mansoor¡, Shaďah Maxims on Financial Transactions, (Islamabad: International
Institute of Islamic Economics, 2007) p. 83-85.
51Vogel and Hayes, op. cit.
"It involves elements of gharar, riba and gambling. (Mansoori, Dr. Mohammad Tahir,
Islamic Law of Business Transactions, op. cit.)
"Mansoori. loc. cit.
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 Application of Talfíq in Modem Islamic Commercial Contracts

being a prohibited transaction due to its riba-based structure, is made

permissible for those Muslims who live abroad due to their limited
sources of income they are unable to purchase their own homes. The
council of North America, realizing the need of the general public, made
it permissible.

Critical Analysis

Islamic banking may be defined as "banking in consonance with the

ethos and value system of Islam and governed, in addition to the
conventional good governance and risk management rules, by the
principles laid down by Islamic Shaďah"54. Akin to the conventional
banking system, Islamic banking is also involved in the process of
Financial Intermediation- collecting surplus savings from SSUs55 and
distributing them to SDUs56, who are in need of goods and services for
consumption and production processes. Indeed Islamic banking or
"Islamic financing is a name for providing factors of production, goods
and services for which payment is deferred."57 The process of
production requires the supply of goods, machinery, instruments and
raw material etc. to be used by the manufacturers and producers for
such processes. The Islamic banking industry is involved in the process
of furnishing the required materials and equipments on a deferred
payments basis. For this purpose various modes of financing (Figure
3.1 below) are offered by Islamic banks such as: Mark-up sale for the
purchase orderer ( Murãbahah lil ãmir bish- shirã'), Saiam, Istisnã, etc.
It also offers instruments of investment to provide legitimate ways of
earning profits through participatory modes in risk sharing, in the form
of Equity Partnership ( Mushãrakah ) and Entrepreneurship ( Mudãrabah ).
The distinctive characteristic of these financing modes is their non-
involvement in debt financing (which involves entirely a riba- based
structure), something which Conventional Finance facilitates its
customers with.58

The current debate on Shaďah compliance of Islamic banking

instruments reveals various trends of the modern jurists to analyze it.
In this regard two vital approaches are frequently observable: Either to
verify the product compliance through the "principle of permissibility"59;
or to undertake a test of valid and permissible talfíq, where the product

"islamic Banking Department, Handbook of Islamic Banking Products & Services,

(Pakistan: State Bank of Pakistan), http://www.sbp.org.pk/ibd/Handbook-IBD.pdf
(Accessed April, 2011) d. 1.
"Saving Surplus Units.
"Savina Deficit Units.
"Monzer Kahf, Islamic Banking and Development: An Alternative Banking Concept
http://monzer.kahf.com/papers/english/Isbnk_and_dev_alternative_banking_conce
t.pdf (2005) Accessed March 2011, p. 8.
^®( ¿i »■ nÌLi «-I jiJI)

59Iqbal, Munawwar, A Guide to Islamic Finance, (London: Risk Books, 2007), p. 52.
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 Policy Perspectives

appears to be a hybrid of various transactions.60 The first approach is

usually proclaimed by Islamic Financial experts, who view principle of
permissibility as the major governing rule in the law of Islamic Finance.
According to this viewpoint, instead of assessing the compatibility of
contracts with that of classically interpreted modes, it is more viable to
check the prohibition test. The prohibitions61 regarding transactions are
clearly found in the texts of Shaďah. Thus the newly designed
transactions should pass the test of inviolability of Shari'ah prohibitions.

It is further emphasized under this viewpoint that the approach

usually taken to fit a contract into the mould of one of the classical
modes is not very fruitful. It requires a radical change in the attitudes
of Islamic jurists, who try to examine whether a contract is mudãrabah
and hence fulfills the conditions of a classical mudãrabah contract or
ijãrah and hence complies with ijãrah conditions and so forth. Most
modern contracts are hybrid and involve departures from classical
conditions. Those conditions were set by jurists to suit the conditions of
their time. They can be changed in view of the changed circumstances.
What is important to ensure that any contract does not violate any
conditions established in the basic sources of Islamic Law. Within these
limits, variations on classical contracts should be acceptable.62 In t
age of financial engineering, this viewpoint assists in development of
new Islamic financial products, to meet the requirements of the
industry, without compromising prerequisites of Shaďah.

The second approach usually discusses jurisprudential

methodologies employed in development of IFI products. The modes of
financing and participation are sometimes blamed for the use of wrong
structural methodologies to be imperfect on the basis of amalgamation
( talffq ) and use of stratagems ( hiyal ) etc.63 As per this viewpoint each
product is assessed and compared with its classical counterpart. If any
term and condition contradicts or even differs from early contracts, as
interpreted by various schools of thoughts, it is deemed to be an illegal
product.

In the view of these two approaches, a brief analysis of one

mostly criticized banking product, Murãbhah lil ãmir bish-shirã' is given
below:

60Rufaqa Dãr al-Ifta', Murawwija Islãmi Benkãri- Tajziyãti Mutâli'S, Shañ JS'iza, Fiqhi
Naqd-o-Tabsira, op.cit.; Nyazee, Imran Ahsan Khan, Murãbhah and the Credit Sale,
(Pakistan: The Federai Law House, 2009), p.4. www.nyazee.org; Hagazy, Walid,
Fatwas and the Fate of Islamic Finance, Islamic Finance: Current Legal and
Regulatory Issues, (Cambridge, Massachusetts: Harvard Law School , ILSP, Islamic
Finance Project, 2005) p. 143.
"Riba, Gharar (uncertainly), Gambling etc.
"iqbal, op.cit.
"Hegazy, p. 143.
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 Application of Talfiq in Modern Islamic Commercial Contracts

The product analysis reveals that it is a combination contract, bunching

up three distinguishable transactions64:

1. A master Murãbahah agreement defining the whole nature and

structure of transaction. Along with it a unilaterally binding
"promise to purchase' by the client, upon the bank's acquiring
required asset for him/her.
2. A separate agency agreement, whereby in cases of dire need,
the bank may appoint the client as its agent to purchase the
asset.
3. The Murãbahah sale contract concluded at a stage when the
asset comes into the ownership of the bank.
4. Another added step may be the bank's facility for the client to
pay the price on a deferred payment basis.

A critical analysis of this product needs to be viewed under the

two approaches above.

The permissibility test would require testing the components of

this product and if they are in violation of the SharTah norms, the
product needs to be rejected. A perusal of this banking product reveals
that it is an innovation made through the use of a //g/j-nominate
contract which is different from the original Murãbahah transaction.

Since being a hybrid contract, its legality is questioned by many

contemporary scholars. Hegãzy, while discussing the role of fatwa in
developing Islamic finance, points out towards the fatãwa legalizing
Murãbahah lil ãmir bish-Shirã' , as "an example of contemporary
talfiq".65 A similar viewpoint is presented by Imran Ahsan Khan Nyazee,
in his latest commentary on Murãbahah and credit sales. Apparently,
Murãbahah lil ãmir bish-Shirã' is an attempt to undertake talfiq, which
is the creation of a new contract from different types of contracts. The
presumption is that if the opinions concatenated are lawful separately,
the new contract they give rise to is lawful too. The contract appears to
have been structured from the basic form of murãbahah, baý al-'inah
(buy-back agreement) and wa'd (unilateral promise)

been considerable disagreement among scholars over the validity of the

hybrid contract. The major arguments have been that this is similar to
baý al-'inah and is similar to interest based transactions in
conventional banks. A major disagreement has centered around the
concept of wa'd or binding promises.66

MAyub, Mohammad, Understanding Islamic Finance, (England: John Wiley & Sons
Ltd. 2007) p. 224.
65Hegazy, Fatwas and the Fate of Islamic Finance: A Critique of the Practice of Fatwa
in Contemporary Islamic Financial Markets, op. cit. o. 147.
66Nyazee, Murãbhah and the Credit Sale, op.cit. p.4.
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 Policy Perspectives

These contentious observations, highlighting doubts and shadows

on legality of this financial product, have been rebutted by the other
group with a few arguments:

• AI-ZuhaylT refutes the blames of talfìq on the subject product,

by virtue of the arguments of those who recommended the
legality of this transaction from the text of Imam Al-Shafai (Al-
Umm), according to which: If A shows B any article and
requests him to purchase that for him, for which he offers him a
stated profit; and in response to that offer B purchases it, such
a kind of transaction is valid, in the opinion of Imam Al-Shafai.
Moreover, it is also valid if A retains an option for himself for
concluding the sale or to withdraw the transaction. Thus, it is
observable from the argument of Imam Al-Shafai that the
transaction is fundamentally valid provided the bank receives
the purchased items. As for making the promise to purchase the
item, once the bank acquires it, binding on the ultimate buyer,
we may take a ruling by Ibn-Shabramah from the MalTki school
that any promise, that does not result in permitting that which
is forbidden or forbidding that which is permitted, is binding.
The MalTkies use this principle to make promises binding,
especially if the promise leads another entity to undertake a
financial obligation. After presenting the supporting arguments,
for each component, AI-ZuhaylT further analyzes the issue of
talfìq stating that this synthesis ( talfìq ) of two rulings from two
different school of jurisprudence is not the forbidden type of
talfìq, since the two rulings pertain to two very different issues.
In this regard, there is no harm in following one Imam on one
issue, and another Imam on the other.67
• In any case, it is an irrefutable fact that being a contemporary
issue, it also passes the test of legality from eminent fiqh
academies of the world. As previously mentioned the fatãwã
emerging from platform of fiqh academies take the form of
collective ijtihãd, endorsed by groups of scholars. Thus, any of
the recommendations coming from such academies assumes the
status of dalïl shaťl, for further legislations.
• We also find latest literature by Justice Usmáni, justifying the
validity of this hybrid contract. As per his explanations, this
transaction is not an invalid mode of sale, rather it is
permissible in all of the sunni schools of thought. Thus, he
presented various arguments for the validity of Murãbahah
mu'ajjatah. First of all, he proves the validity of increase in s
price in case of deferred sale (öa/ mu'ajjal) mode, through a
tradition of Ibn Abi Hatim, in which he interprets the context o
Qur'änic verse... (W Ul) Verily, sale is alike interest... In
his opinion this verse is contextualized upon a specific

67AI-Zuhaylî, Al-Fiqh AI-IslamT wa Adillatuh, op. cit. 420/5; El-Gamal, Financial

Transactions in Islamic Jurisprudence, op. cit. 353/1.
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 Application of Talfíq in Modern Islamic Commercial Contracts

background. In fact, in those times when people used to

transact on the basis of deferred sale with an increase in sale
price, due to deferment, it was considered legal, without there
being any prohibition from the Holy Prophet (SAW). If the buyer
was unable to pay the price at the time of maturity, he was
asked to raise the amount further for another deferment, which
was prohibited by the SharVah. The non-believers raised the
objection that when on initial deferment raising of price is legal,
why it becomes illegal at giving another deferment... Indeed
sale is just like riba, as in both the cases amount is raised due
to provision of deferment. Allah (SWT) replied them that He has
permitted the aforementioned kind of deferred sale while
interest on loans is prohibited. (L*^ j ^ J^j) Thus the
tradition proves that from the times of Holy Prophet (SAW) an
increase in price due to giving time facility was prevalent, thus
legal. Moreover, the verses themselves prove the validity of
such kind of transaction. 68 Secondly, Justice Usmáni also
proved the validity of Muräbahah mu'ajjalah from Islamic
history, stating it a legal mode of sale for fourteen hundred
centuries, without there being any evidence against its
permissibility from four sunni Imams. He quotes its such a
frequent practice in Ottoman Empire, that the word Muräbahah
was always meant to suggest Muräbahah mu'ajjalah. Moreover,
the state officials used to announce a maximum mark up rate
for such sales, just like present day central bank mark up
rates. 69 Thus it proves that present structure of Muräbahah to
the purchase orderer, involving repayment through deferred
sale mode, is quite similar to the one practiced in Ottoman
Empire.

At the end, it may be concluded that though the current

product, Muräbahah to the purchase orderer of Islamic Banks, is
criticized by many contemporaries, yet its foundations are sharl'ah
compliant on above stated grounds. At one hand, it is a financial
transactions which is governed by the principle of permissibility, thus
any modification in its classical counterpart should be accepted by the
law. On the other side, even if we need to analyze its methodological
basis, still it proves its legality, for it has been approved by the modern
fiqh academies of the world, who approve the products after a due
process of deduction.

Recommendations

The legality of contemporary Islamic commercial contracts, as

by Islamic finance is a heated debate in the Islamic academic sector.

68Usmani, Mufti Mohammad Taqi, Islami Benkãri- TãrJkh o Pas-e-Manzar aur Ghalat
Fehmiyon ka Izala h, (Karachi: Al-Afnän, 2009), p. 39.
oyIbid.

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175.139.178.169 on Wed, 10 May 2023 03:08:18 +00:00
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 Policy Perspectives

However, the matter is not as simple as to merely declare the illegality

of these contracts, for these contracts are developed through the
process of Islamic Financial Engineering after appraising their legality
status by qualified jurists and other stakeholders. Mixing of juristic
opinions for synthesizing new contracts or talfìq in Islamic finance' is
one such issue, raised by religious scholars. This study revealed certain
vital realities, regarding the issue of talfìq in such transactions, such as:

• It is a matter of fact that the fiqh nominate contracts are simply

interpretations of early jurists and usually based upon
customary practices of that period. Contemporary commercial
contracts, developed by Islamic finance experts, are indeed
innovations of early contracts, to adapt to the needs of present
time. However, there are groups of scholars who contest the
legality of present contracts by comparing them with their
conventional counterparts. Nevertheless, an adaptable character
of the SharTah is an incontestable reality, thus any sort of
variations in early contracts need not be viewed as a prejudicial
act, as long as such variations are within the parameters
prescribed by SharTah.
• The domain of financial transactions is treated by the SharT'ah,
as governed under the 'principle of permissibility', rather than
strict interpretations of law. Thus, new developments in such
contracts are welcomed, so long as the SharT'ah norms are not
violated in such process.
• Islamic finance products are not devised by laypersons, whom
are prohibited to synthesize the laws by a process of talfìq,
rather they are outcomes of efforts of fiqh academies in the
form of group ijtihãd. As far as the permissibility of talfìq in
group ijtihãd is concerned, it is stated that, talfìq by "qualified
jurists" in "issues pertaining to the interests of people and their
happiness", is categorized as permissible talfìq so long as it
does not contradict Shari'ah restrictions regarding it. Moreover,
the theory and practice of fiqh academies have shown that they
have adopted the methodology of takhayyur or more technically
stating the method of selective ijtihãd, rather than just random
application of talfìq.
• The " Shari'ah Standards" by AAOIFI has been an effectual effort
to standardize these products, for it has complied with the
norms of Shari'ah in their development. There is a need to
adopt these standards as regulatory principles for Islamic
countries, to eliminate the differences of theory and practice.

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 Application of Talfíq in Modern Islamic Commercial Contracts

• A full-fledged system of Islamic finance can never be attained

until and unless masses feel a need for such a system.
Regrettably, those discussing the legality, viability and
potentiality of this

segment oTsociety' The lslamic finance products

general public is usually are not devised by lay-
such
such not concerned
issues, owingwith to persons, whom are
to r,

their ignorance prohibited

regarding prohibition of the laW

address Inthe 0flaws in talfiQ>
theory or practice of outcomes
islamic banking, there academ
is a need to launch an
comprehensive 9^up Ijtlhdd.
awareness program to
make the public cautious about the curses of riba on one hand,
and to develop an urge for giving up all riba- based activities on
the other hand.

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 Policy Perspectives

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