"WAAD" AND ISLAMIC CONTRACTUAL FRAMEWORK?

‘WAAD’ OR PROMISE: WHY IT IS INCONSISTENT WITH ISLAMIC CONTRACTUAL FRAMEWORK

In one of the previous posts, we raised up an issue pertaining to the use “waad” or promise in Islamic finance and how it seems that this concept has been widely employed to achieve some objectives aimed at helping one party but denying justice to the other side in a transaction. For a start, Islamic law right from the outset has recognized a distinction between a promise and a contract (‘aqd) where a contract has been viewed more important than a promise at least in the context of external binding effect. However even in the case of contracts, Islamic law does look at the nature of the contracts concerned when it comes to the question of their external binding effect  that will define whether the court will enforce the ensuing obligations or not.

CHARGING FEES FOR FINANCIAL GUARANTEE: THE BASIC ISSUE

GUARANTEE FEES AND ISLAMIC FINANCE: WHAT IS THE BASIC ISSUE??

Islam prohibits charging of interest for money lending if such is contractually made compulsory on a borrower and as such has made it very clear that payment and receipt of interest made compulsory based on contracts between the two parties is prohibited. However the borrower is allowed out of his own accord without compulsion to pay more than what he had borrowed from the lender as a token of gratitude for the kindness rendered. Money lending must always be treated as a benevolent contract in Islam that its shall carry no interest charges.

CRISIS IN ISLAMIC FINANCE EDUCATION

Islamic finance as practiced today is a new phenomenon that is very interesting to look at not because it is related to the so-called growth  rate that is so impressive according to many reports of late. True that to a certain extent,  the figure normally quoted to support this claim of impressive growth is there to be appreciated but the basic question to ask is whether such an achievement is truly an achievement worthy of celebration.