Waad in Shariah

Topics: Sharia, Islamic banking, Fiqh Pages: 14 (5577 words) Published: May 14, 2013
Introduction to risk management
islamic financial institutions

waad from the Shariah perspective

Table of Contents
The definition of waad3
Pillars of waad4
Term, conditions and prohibitions of waad5
The difference between waad and aqad5
Scholars opinions6
Applications and issues of waad in modern Islamic financial transactions and its importance10
Effects of waad from Islamic financial institutions perspective11

Humans sometimes obligate themselves with voluntary matters, which requires them to meet these obligations in the future, because the practical life of individuals and groups require them to, and because the individual is a member of the society, he must extend links between him and the community, some of which social and economic links. Contracts are divers images, known and common among members of the community, comes from it obligations to be fulfilled. One of the faces of civil and rural socity, meeting the obligations of its members various promises and covenants, in old times, one would promise his brother what would be beneeficial for both parties. And the promise is achieving benevolence to a man by another. Promise is like a project to fix the society and the individual, there is no doubt that fulfilling and accomplishing it, has a great impact on social relations, positive or negative. The area of Islamic banking and finance has naturally received the most attention by Islamic economists and jurists, in view of the direct outcome of the prohibition on the payment and receipt of interest. Alternative Islamic modes of finance have thus been developed, their comparative advantages assessed and their applicability to various sectors and operations considered. One of the modern day additions to the original Islamic mode of business transactions is the series of "promises" initiating from both parties, i.e. bank and customer. As a result, Waad plays a central role in the transactions such as Murabaha, Ijara Wa Iqtina or Sukuk used by the modern Islamic financial system. More specifically, one can argue that, without re-defining and re-restructuring the boundaries of the nature and status of Waad in Murabaha, Ijara Wa Iqtina or Sukuk transactions as well as in other contracts of the Islamic financial system, the whole Islamic financial system would collapse or, at least, would be irreparably damaged. At the same time, given that Islamic law is meant to apply to every aspect of a human's life, including the financial system, in all ages, consequently, the principle of Shariah must evolve and grow, so that it may be able to cater to the demands of the changing times. The definition of waad

According to Islamic law, Al- Waad means promise. It is a promise which applies to an expression of willingness of a person or a group of persons on a particular subject matter. In a commercial transaction, a promise has a dual meaning. This is because, in a unilateral contract, the offer of the offeror is known as promise, while in a bilateral contract, the acceptance of the offeree is known as promise as well. The application of promise can be seen in several Islamic transaction concepts for example in sale and purchase, murabahah, syirkah mutanaqisah, ijarah, takaful etc. The promise or al waad has no specific definition of its own however, it can be explained as a commitment made by one person to another to undertake a certain actual or verbal disposal beneficial to the second party or a verbal proposition made by someone to undertake something to the benefit of another person. In traditional concept, Al- waad is unilateral in nature, and binds the maker only. For example, A makes a promise to sell his house to B amounting RM 70,000. This promise is unilateral in nature and does not bind B to accept the offer. It will only be binding upon both parties after the aqd al- bay is concluded. The definition of promise in...
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