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WAKALA A LEGAL

RELATIONSHIP BETWEEN AGENT


AND PRINCIPAL

DEFINITION
Literally
Agency, representation, proxy, mandate,
authorization, delegation, empowerment etc.

Technically:
The appointment of someone to take over the
appointers affairs on his/her behalf for the
purpose of accomplishment of certain tasks

Wakalah implies a kind of delegation by a


person of his business to act on his behalf.
It is lawful if a person appoints another as
his representative for selling or buying,
letting or hiring, giving or taking a pledge
for depositing or receiving a gift, for safe
keeping, for making a compromise, and
for giving an acquaintance and for making
an admission etc.
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EVIDENCE

Al-Quran

The verse indicate the assigning of agents for zakat


management (collection and distribution)
Hadith:
Reported by Urwah R.A that the prophet S.A.W gave
him one gold Dinar to buy with it (be an agent for the
Prophet S.A.W) a sheep but instead he managed to buy
two sheep. He then sold one of it for one gold Dinar and
then presented the prophet with both the sheep and
one gold Dinar that he acquired. The prophet S.A.W
prayed for him to be given blessings (barakah) in all his
trade and transactions and mentioned that even if he
sells solid soil, he will definitely gain profit in it.
Reported by Abi Hurairah R.A to the effect that: the
Prophet S.A.W had sent Umar R.A to be his agent in
Zakat collection (representative in zakat collections)
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EVIDENCE
Reported by Sulayman bin Yasar that: The prophet
S.A.W sent Abu Rafi and a man of the Ansar to accept
(Qabul)his S.A.W marriage to Maimunah binti alHarith
on his S.A.W behalf while he was in Madinah before he
had left for Hajj (representative in Marriage)

Ijma:
The ummah had came to a consensus on the legitimacy
of Wakalah contract since there is a great need for it,
and individuals are also not capable of catering and
handling all his/her needs, matters and daily affairs on
their own without having to resort for the help of other
people.
Hence, it is permitted because it is one of the types of
cooperation on good deeds and fear of God ( Taawun
Alal Birri Wa Taqwa ) encouraged in Islam.
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PILLARS OF ALWAKALAH
1. Wakil
The authorized agent, representative, proxy,
trustee

2. Muwakkil
Authorizer, mandatory, client, principal

3. Muwakkal Bih
Things or subject matter that is being
entrusted for, or the business deals involved

4. Sighah
Ijab (Offer)
Qabul (Acceptance)
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FLOWS OF AL-WAKALAH
Ijab
(Offer)

Muwakkil.
(authorizer, mandatory,
client, principal)

Muwakkal Bih
(Things or
subject
matter)

Qabul
(Acceptance)
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Wakil
(authorized agent,
representative, proxy)

TYPES OF AL-WAKALAH
1.

Wakalah Mutlaqah Unlimited Agency/ Unrestricted


Wakalah
A Wakalah contract that is not
restricted to any conditions except
for those that are permitted in Islam
Not confined to certain
circumstances or time limit.

2.

Wakalah
Muqayyadah

Limited Agency/ Restricted Wakalah


A Wakalah contract that is restricted
or confined with certain conditions
that are legitimized by Islam
Bounded by special circumstances or
time limit

CONDITIONS OF ALWAKALAH

Conditions related to contracting parties


The agent must be someone that is capable of performing
the responsibility and fulfill the minimum requirement
(being sane, adult)
The authorizer has the freedom to terminate the contract
or the service of the agent and the agent could also
withdraw from the contract. Except if the responsibility of
the agent towards the other party is still pending or his
obligation towards the other party has yet to be fulfilled.
Principle should know the agent, either by name or
physical appearance, vice versa.
It is legal to entrust certain business dealings to an agent
even if the authorizer is capable of performing the same
deal himself.
The Wakalah contract ends with the accomplishment of
the entrusted tasks or mission
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CONDITIONS OF ALWAKALAH

Conditions related to the object of agency contract


The subject matter or business dealings must be clearly specified in the
contract by the authorizer.
The object of an agency contract should be eligible for legal authorization. It
is not permissible to conduct Wakalah for physical prayers since the
objective behind these prayers are to test and act as trials to the believers
with the exception of certain prayers such as the Pilgrimage (Hajj),
slaughtering animals for sacrifice (Qurban), distribution of Zakat, and
fasting of Kafarah (on behalf of the dead)
The entrusted agent will not be held responsible for any damage or
disruption of the business deal except for cases of proven negligence or
ignorance on part of the agent
The agent is not permitted to act beyond what he was entrusted for by the
authorizer in the first place except if it is an unlimited agency ( Wakalah
Mutlaqah ).

MODERN APPLICATION
In the contemporary application, wakalah
contract is widely used in structuring
various Islamic banking, capital market
and takaful fee-based products.
Application of wakalah contract includes:
Wakalah bi al-istismar (agency for
investment)
Sukuk
Letter of Credit (LC)
Murabaha
Takaful
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Mudarabah model

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