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== Top 20 FREQUENT WORDS ==
contract 302
lessee 223
lease 215
ijarah 198
asset 188
usufruct 161
lessor 137
leased 125
rent 111
shariah 82
sale 75
price 74
ijara 70
permissible 64
ayn 63
jurists 57
maintenance 57
rental 57
ownership 54
due 50



== DOCUMENT KEY POINTS ==
*it is our pleasure to present this research on shariah provisions of ijarah and ijarah wa aliqtina which have been conducted in an attempt to develop an standard for ijarah and ijarah wa aliqtina
*introduction in the name of allah the merciful the compassionate praise be to allah the almighty and peace be upon prophet mohammad family and companions

*so in referring to the latter we concentrated on the findings of conferences and symposiums with particular reference to kuwait finance house symposium and the fifth session of the international islamic figh academy held in jeddah as well as researches prepared by islamic banks researchers and fatwas issued by their shariah boards

*studies under the name labor contract for which there are special provisions and applications
*may allah guide us through the right way

*some jurists stipulated that the usufruct from the leased asset should be intended while others explained that what is meant by it is considerable kashf al haqaig h edition mabsut first edition al umm first edition h al mughni with al sharh al kabeer and al sharh al sagheer al manar h
*one of the definitions of ijarah according to hanafi school is that it is a contract which enables possession of a particular intended usufruct of the leased asset ayn for a consideration

*description of ijarah charging ruling evidence ijara contract is permissible in principle the evidence is drawn from the quran the prophet s sunna the consensus ijmaa and reasoning as for the quran allah almighty says and if they suckle your offspring give them their recompense and said one of the al figh alaa al mazahib al arbaa al mughni with al sharh al kabeer bidayat al mujtahid surah al talaq
*while hanbali school of figh defined it as a contract for a particular permissible usufruct which is taken gradually for a particular period and a particular consideration

*damsels o my dear father engage him on wages truly the best of men for thee to employ is the man who is strong and trusty he said i intended to wed one of these my daughters to thee on condition that thou serve me for eight years but if thou complete ten years it will be grace from thee
*it is evidenced that the prophet peace be upon him and abubakr had hired a guide from bani al deal then the prophet said three people i shall be their enemy in the doomsday then surah al qasas surah al kahf narrated by al baihagai by abuhurairah narrated by ibn majah

*the evidence from reasoning is that ijarah is a means of facilitating life by helping people to get the usufructs of assets which they do not own and the need for usufructs is similar to the need for assets themselves ie the poor needs the wealth of the rich while the rich needs the poor s labor and consideration of the people s need is a basic principle in contract legislation where contracts are legislated to fulfill such needs and requirements in narrated by al bukhari in sales and ijarah sections of sahih al bukhari
*with regard to consensus there is an agreement among the ummah from the time of sahaba companions up to this day to conduct ijarah no one violated this consensus except abdulrahaman ibn al assam who opined that it is prohibited due to gharar as it is a contract on usufructs not yet found but jurists refuted his argument indicating that here gharar shall be ignored because the contract on usufructs is not possible after the existence of usufructs because they perish as time passes so a contract for them should be concluded before they come to being such as salam contract on assets

*no doubt all people need such transactions because not every one has a house and not every traveler is able to own means of transportation as well as craftsmen work for hire and since most people can not do such type of jobs or find volunteers they should hire or rent others to do such jobs n their behalf
*conformity with shariah which is considered the rationale behind such legislation

*attention shall be drawn to the fact that the usufruct is considered the subject matter of the contract since it is the object that is used or utilized in return for rent therefore it is guaranteed rather than the asset ayn so the asset ayn is not the subject of the contract yet ijarah contract sometimes encompasses it as the subject of usufruct for example i rent you the car
*pillars of ijarah according to consensus of muslim jurists jamhour ijarah has three pillars and six sub pillars a c text is constituted of offer and acceptance a c contracting party which is constituted of two parts lessor who is the owner of the asset ayn and lessee who is the beneficiary of the property

*ijarah text text of ijarah is the manner through which the will of both contracting parties is demonstrated in terms of expression or its equivalence by an offer issued by the owner the holder of the asset and acceptance issued by the would be possessor pursuant to consensus of majority of scholars jamhour whereas hanafie school of figh opines that the offer is what is issued first by either of the two contracting parties and acceptance is what is issued later by the other contracting party
*the text is stated by any expression that explains the intention of the contracting parties which is a general rule of all contracts as the expression shall show clearly the purpose and intention of tuhfat al fugha samraghandi

*so ijarah contract is concluded by any expression of ijarah whether he refers it to the asset in expression like if he says i lease you this house or refers it to the usufruct like if he says i lease you the usufruct of the house
*the contracting parties from the expressions they make which should avoid doubt suspicion and dispute as shariah did not identify or define specifically wordings and expressions of contracts on the contrary it made such expressions general and absolute in nature so that people may use the expressions and wordings that reflect their purpose and intention as well as identify the meanings which they intend

*it is a condition that for the accuracy of lease contract it should be concluded upon mutual agreement of both parties and that each contracting party should have the competence walaia to conclude the contract according to opinion of hanafie and maliki school of figh which consider competence walaia a condition for the execution of the contract
*it is unanimously agreed that the contract of ijarah is entered into only by a party who is authorized to deal in wealth

*the shafie school of figh has restricted the case of tying up ijarah to the future to the lease described on liability and not lease of a particular asset ayn where addition to the future is prohibited but if he lets the asset in the second year to the lessee of the first year before the first year elapses a in such case it is permissible according to opinion of shafie
*ijarah for a future date the ruling of jurists jamhour does not differ with regard to permissibility of relating ijarah to the future

*to tie up ijarah to occurrence of an event jurists fugha agreed that lease is not susceptible to being tied up a like sale a qadi zadah a hanafi jusrist has said ijarah is not liable to being tied up however it may come in the form of tying up but in fact it is an addition as you may say to a tailor if you tailor this cloth today i shall pay you one dirham and if you tailor it tomorrow i pay you half a dirham
*the two types of ijarah first the contract is executed for a usufruct of a particular asset ayn some one says to the other i let you this house or the contract is executed for usufruct of an asset described on liability e

*make me this box or any other type of contracting with craftsmen as the contract is made for the work provided by them though the ultimate goal of this contracting is to acquire the resultant usufructs but the subject of the contract which is composed of the work and the usufruct comes as a consequence of it akin to the case of irrigation musaqat contract where the orchard is the subject of the contract and the usufruct of fruits comes as a result
*the lease described on liability is set for a described usufruct benefit while being on liability like renting a car described on by agreed on specifications as to say it should be on your liability to rent me the car

*conditions of usufruct following are the conditions set for executing of the ijarah for usufruct first lease shall be effected on the usufruct rather than utilizing the asset ayn a matter which is agreed on unanimously
*bidait al mujtahid minhaj al talibeen and al mohazab al mughni kashaf al giaa

*usufruct identification the usufruct is defined and identified by identifying the subject matter specification of the period or may be identified by itself or may be made known by determination and pointing out such as a person who hired some one to transport this food for him to a particular location

*stipulation of the necessity to identify the subject matter of the usufruct has led to dividing the lease a as above mentioned a into lease of assets from which the usufruct is utilized from a particular asset so that if it is damaged lease shall terminate such as letting a house to live in and the lease described on liability where the usufruct is utilized from what may be fully described and if it is fully damaged after being identified the lessor replaces it by another
*also the usufruct is also identified by stating the period and duration if the usufruct is known by itself like letting of residential housing if the duration is made known then the value of the usufruct is known and the variance in the number of residents is limited according to hanafie jurists

*hanbali jurists have set one control they put a condition that the period should be made known in leasing the asset for a particular period like a house land and the human for his labor pasture sewing or tailoring because period is the controlling element of the subject of the contract by which it is identified
*shafie jurists agreed with this opinion generally but according to another opinion by them the said period should not exceed a year and pursuant to another opinion it should not exceed years

*it is conditioned that in the case of usufruct and in order to make the contract binding no excuse is established which hinders benefiting out of it according to opinion of hanafie school of figh because lease ijarah is in principle a binding contract according to consensus and shall not be terminated unilaterally only by retaining the usufruct and if benefiting of it became impossible then the contract is not binding
*al sharh al saqeer al sharh al kabeer and hashiat al dasooqi al forooq al faarq

*shafie jurists are inclined to an opinion which states that if any event occurs whereby the reason for conclusion of the contract disappears so that the contract can not be carried out in such case the contract should be cancelled as they opined that the contract is terminated since the subject of the contract can not be utilized
*al badaie al sharh al kabeer hashiat al dasooqi al mohazab almoharar

*the lease of the common property in case a usufruct is contracted for in a jointly owned asset and one of the partners is willing to lease the usufruct of his share the lease of such usufruct to a partner is permissible if they agreed so
*however leasing it to a party who is not a partner is also permissible according to consensus of jurists jamhoor al sahibain from hanfi school shafie maliki and ahmed s opinion because lease is a type of sale so the lease of the common property as well as its sale is permissible

*lease of a part which can not be utilized some times in application it is not possible to make use of the leased asset in itself as a unit and the lease is defined as deriving of a benefit from a house or vessel for example some times contracting is established for an object like reinforcement iron rods which may be used for building a house or an engine for a turbo plane
*also some applications showed that the subject of the contract was a plain lot of land which did not include any buildings or premises a matter that breaches the condition of fulfillment of usufruct benefit of the leased asset

*if the wage is of a type which can be converted into a debt described on liability like dirham dinar things estimated by measure of capacity or by measure of weight or things estimated by enumeration which closely resembles each other it is necessary that its kind description and amount be clearly stated
*al sharh al saqeer nihaiat al muhtaj al mughni al fatawa alhindiah al ikhtiar al halabi edition

*provision of rental in terms of services other usufruct consensus of jurists jamhoor has permitted rent to be a usufruct of the kind of the subject matter of the contract alshirazi said the lease of usufructs is allowed whether of its kind or not because usufructs in lease ijarah is like asset in sale since assets are allowed to be sold in exchange of each other this also applies to usufructs
*form of rental rent may be taken in different forms ie money weighed or measured objects things estimated by enumeration which closely resemble each other while stating description and the term if the rental is deferred it may also be an animal or articles of trade

*like if a person says to another if you sew me this cloth today i pay you one dirham in rent but if you sew it tomorrow i pay you half a dirham and if you use this house as a blacksmith you pay riyal in rental but if you use it as a perfumer you pay rent of riyal e

*there is a problem facing the ambitions of contracting parties in lease as regarding the changing nature of lease price while trying to keep the commitment definite during the period of contract because using promise for the whole period and then concluding the lease contract for months for example does not provide the obligatory nature of contracting

*it is clear that reverting to equal rent is applied in each lease case whose identified rent is invalidated but is it permissible not to define rent and reverts to equal rent in the first instance the equivalent rent is identified by reverting to evaluation made by appraisers is it permissible for the contracting parties to gain time and agree on a rent to be agreed by them for each term without the right of any of them to rescind the contract ie the ijarah contract remains binding
*by checking the book of al ikhtiarat ikhtiarat ibn taymiah by al baali it becomes clear that ijarah is permissible without defining the rental hence equivalent rental applies

*acknowledgement of determined rent is achieved in the lease ijarah contract if it is agreed on a specified period distributed over intervals while fixing the amount of rent for the first period and approval of the equal pay for the residual period provided that the equal pay is controlled or related to an acknowledged measure that does not permit dispute with the intention to make parties of the contract benefit from the change in the level of the rent while keeping the binding nature for all the duration of the contract
*the following shariah opinion fatwa regarding varying rental was issued by al baraka fourth symposium determination of rent by applying equal pay for following periods after commencement of contract

*speeding up in the same contract as said by the prophet peace and blessings be upon him muslims are committed to their terms and conditions the condition of speeding up is not fruitful if rental is added as per the opinion of hanafie jurists and same like the use of usufruct
*acquiring of rental and its timing hanafi and maliki jurists are of the opinion that rental is not entitled by the same contract but it is entitled by stipulation or utilization of the contracted objects and hanafi jurists added acceleration should be made kasani said rental is acquired only by three ways

*between the contracting parties to be able to utilize the usufruct even if they could not actually acquire it by delivering the leased asset or the key
*al hidayah al fatawa al badaie tuhfat al fugha by alsamarghandi

*re payment of rental profit in advance acceptance of advanced payment is permissible from shariah point of view but it should be based on the justification that it is an advanced payment of the rental value and not the profit value of lease as regarding relationship with the lessee as this consideration is an internal element which concerns the owner lessor because the lease payment is an indivisible whole a from shariah point of view a so it shall not be divided into principal and profit because profit in shariah is a result of purchase and sale of goods and the excess price is known as the profit
*however in case of lease all the payment is considered rental which may be advanced partially or wholly which is a part of the overall rental also it may be installed or deferred till the leased usufruct is used

*lessor and lessee consequential commitments lessor commitments adelivery of leased asset the lessor is obliged to enable the lessee to utilize the usufruct of the contracted asset ie by delivering the asset to him up to the end of the contract period or the distance
*defect which necessitates option is the one which results into usufruct shortage which is the subject matter of the contract even if had been due to lack of lease described on liability and also even if defect happens before the utilization of usufruct and after the contract

*if it is damaged without transgression from the latter or due to default of the agreed upon in an excessive manner or due to omission in maintenance or custody then there is no sharh aldor kashf al hagiag wa sharh al wigaiah almuhazab

*if a building is leased for the purpose of smithery and then used for trading or any other purpose which is not more harmful for the building than smithery and nevertheless part of it fell down then there is no guarantee in such case
*bif the nature of the leased asset is influenced by variance of use then it should not be used in hazardous mode and it may be used gently

*a fatwa in this respect was issued by kuwait finance house as follows the lessor position towards illegal conduct of the lessee is as follows a the lessor is not permitted to enter into an ijarah contract with the lessee which includes a condition that permits the use of the leased property in a haram business
*however the ruler has the right to punish him if he did not refrain from his misconduct and the ruler impose rent on him and compel him to evacuate

*b if the lessee did not stipulate in ijarah contract to use the leased property in a shariah non permitted haram purpose the following would be considered f if the lessor became definitely or most probably aware of the lessee intention the ijarah contract would be nonpermissible and should be rescinded
*dthe leased asset ayn is a trust in the hands of the lessee and if it is damaged without transgression of the lessee or breach of the agreed upon in an excessive manner and also without default in maintenance and custody he will not be obliged to give a guarantee

*if this happens and the lessee resides in the building he will be entitled for estimated equivalent charge and has the right to reimburse his expenses on the building and a similar expense for supervision if he has done so by his permission otherwise he would be a donor

*at the end of the lease the option may be given to the house owner either to pay repair expenses or to demolish same if possible provided that the lessor has not stipulated that he should not be reverted to in that respect

*in case of a lessee default which is considered by the lessor as a major default but not in contradiction with the purpose of contract in this case he will be considered as transgressor and he should guarantee any damages incurred by the leased asset

*th in case the lessor gave the lessee permission in the contract or afterward to make certain repairs on the asset he may undertake such repairs and may revert to the lessor to reimburse his expenses unless the latter didn t stipulated not to
*established maintenance which is described and quantified in the contract or common practice whether that maintenance is mere work or with specified parts and materials because such items are considered as rentals which are given due consideration

*the three questions are as follows the first question is it possible to categorize different maintenance works as above described to identify which of it to be borne by the lessee without contradicting with the requirements of the lease contract answer maintenance works may be divided into following categories

*all these works are the responsibility of the lessee because they are necessary for the utilization of the leased asset usufruct and not for enabling of its usufruct
*they are also necessary for optimum usufruct and not its source or origin and that is within above stated controls and based on some branches of jurisprudence in which jurists stipulated similar duties on the lessee and per common practice in this respect

*obliging the lessee to undertake the two first types of maintenance is not in contradiction of the contract requirements because the ijarah contract is considered as usufruct of the lessee of the leased asset ayn in consideration for rental

*the second question in case some of maintenance types which figh obliges the owner of the leased asset ayn to perform is it permissible for such owner to agree with the lessee to undertake such maintenance against reducing the rental answer it is permissible to stipulate that the maintenance should be the duty of the lessee as an increment above the rental specified in ijarah contract ie the lessor may inform the lessee that he has leased an equipment to him for one thousand provided that the latter maintains
*these are the rights and obligations which the ijarah contract parties may agree in a matter which satisfy their interests provided that such arrangements are not contradictory to shariah

*this is also based on some jurists opinions in that respect such as the lessor may stipulate that the lessee should perform cartain works similar to maintenance of equipment and machinery in addition to the rental specified in the contract
*these works include for example the condition to provide fodder to a leased pack animal and its expenses during the journey and refurbishment of a house if they are well described to the extent that eliminate gross ambiguity

*the former may inform the latter that he has leased the equipment to him for one thousand a year provided that he pay monthly on its maintenance as above stated that essence of contracts is properness and permissibility according to the opinion of some jurists
*along with what some jurists approved of stipulating that the lessee to equip and furnish a building out of the specified rent in the contract and also stipulation of house refurbishment and a facility renovation by the lessee

*the lessor may inform the lessee that he has leased the equipment to the lessee for one thousand provided that in consideration of maintenance the rent will be reduced to nine hundred or he has leased it for one thousand provided that it should be maintained against one hundred to be deducted out of it because some jurists approve maintenance condition on the lessee in addition to rent
*it is also natural that the lessee observes in its lease agreement with the lessor the bank the requirements of maintenance works

*since maintenance contract which is a contract of compensation could be executed independently and there is no gross ambiguity in maintenance works so the stipulation for the lessee to perform it in consideration of specific lump sum amount in ijarah contract is obviously permissible
*a group of jurists who were consulted by the bank for implementation of principles drawn by figh academy on maintenance contract approved independent contracting with the lessee or any party for maintenance works against a lump sum amount

*the third question is it permissible from shariah point of view to conclude an agreement between the lessor and lessee which oblige the lessee to insure the leased asset ayn full insurance on his account answer it is shariah permissible for the lessor the bank to stipulate that equipment lessee to insure the equipment at islamic insurance companies as we previously stated that such insurance is based on the principle of instalments donation
*the donor may stipulate to usufruct with others of what he donated if it encompasses an attribute of entitlement

*types of ijarah according to the leased asset ijarah of assets other than animals ccording to a general principle regarding ijarah any item which could be sold could be a subject of ijarah because ijarah is a sale of usufruct provided that the leased asset ayn should not be exhausted in the utilization of usufruct
*ijarah of houses and buildings the lessee may usufruct of a house or a shop at his own discretion within customary limits by himself or through others who should not bring forth extravagant harm undermine the building by specific acts such as smithery

*the statement of usufruct in ijarah of houses is to be evidenced by statement of ijara duration only because residing in a house is of unknown magnitude in itself and could not be identified without duration
*however one opinion of alshafia school consider that it is not permissible for more than one year and according to an other opinion it is not permissible for more than thirty years

*if the lessee is involved in ijarah by accessing property it will be adequate based on first contract but if he is not involved or he rescinded the contract after the first month it would be considered as rescinded

*since it is permissible to usufruct the leased asset by the lessee himself or by others he may sub lease with the same rent with which he leased even or more by the same type with which he leased it or not
*the lessor has the right to withhold the house in order to collect the rent stipulated to be paid expedietly

*consequently either party is not entitled to rescind the contract unilaterally unless based on a cause for which appropriate contracts to be rescinded such as occurrence of defect or the cease of the place of the utilization of usufruct as deduced by the verse in the holy quran ye who believe fulfil obligations
*b according to hanafia the lessor may rescind ijarah for occurrence of emergency to lessee such as to lease a shop which got ablaze by fire or to be subject of theft

*during the option period because option hampers concluding the contract as long as option is existing because the holder of the option has the right to repulse the loss inflicted on himself

*considering that the leased item in the hands of the lessee is the same as the sold item in the hands of the sellor
*however if the defect did not forfeit the intended usufruct of the contract such as the collapse of part of the building without subjecting the house to natural hazards such as severe coolness or rain

*in case the defect is cleared away before rescission ie defect cleared of the mean of transportation or the lessor took initiative to repair the building the lessee would not be entitled to return back and would lose his right to require rescission because no harm befallen on him
*al badia al mohazab al dosogi ala al sharh al kabeer al sharh al sagheer

*the contract would not be binding and may be rescinded since there is need for it in case of an excuse because if the contract would binding in this case then the excused party would bear damages for honoring a contract with which it is not bound

*the majority of jurists do not believe in rescission of ijarah for an excuse because ijarah is one of the two types of sales so the contract would be binding and since the contract was concluded by agreement of its parties it would not be rescinded unless by their agreement

*however if the lessee usufruct of the leased asset the lessor has the right to take the specified rent as a favor from him because the leased asset is intended for usufruct
*dependence of rescission on judiciary there is a trend in figh which considers rescission to be dependent on consent or judgment by judiciary due to the fact that this option had been established after consummation of contract which is similar to returning back an asset for excuse after possession

*there are consequential provisions such as commitment of the lessor to deliver the leased asset ayn to the lessee and enable him to usufruct of it and that the lessee has to preserve it
*provisions of proper ijarah if ijarah is proper it would be governed by its proper provision which is establishing possession of the lessee of its usufruct and the specified rent to the lessor

*prohibition results in no effect and the use by the lessor is not permissible and does not result in the identified rent but he shall pay the equal rent whatsoever if he receives the subject of the contract or used the usufruct or time has elapsed for the use of the asset because lease is like sale and usufruct is just like an asset and the invalid sale is like the correct one in terms of stability of the exchanged item it is so in ijarah and it is so according to opinion of shafie
*prohibition necessitates non existence of contract from shariah point of view whether prohibition is due to deficiency in the principal contract or due to a description inherent or emergent to it

*entitlement in lease jurists have differed over the entitlement of the leased asset if some one other than the lessor claimed its ownership
*some of them opine that lease is invalid others see that it is restricted to lease of the entitled

*termination of lease jurists have agreed that ijarah terminates either by the end of its term or by rescission of contract iqala or by total destruction of the particular subject of the contract
*ijarah is on an artificial land where crops are not yet collected or a vessel in the sea or a plane in the air and the term expired before it landed down

*termination of ijarah due to total destruction of the leased asset lease contract is cancelled due to total destruction of the leased asset to the extent that no benefits are drawn from it such as the vessel if destroyed entirely and became sheets of timber and the house if destroyed and turned into rubble to this extent it is agreed upon but if the benefit expired there seems to be some difference
*al mughnie almanar edition h al insaf al badiae onward alsharh al saqeer and hashiat al sas dar al marif edition minhaj al talibeen al mughni al manar edition h

*group shariah opinion fatwa on re lease first the lessee owns the usufruct and in principle any one who owned the usufruct is able to benefit from it for himself and for others so it is permissible for the lessee to re hire or re lease the leased asset
*fourth it is permissible for some one who rented the service for another to re hire it to some one else for the same lower or higher pay as lessor of the worker s service is entitled to its usufruct so he may transfer it to another

*the problem here is that the stipulation by the owner for the lessor to use the usufruct himself did not allow what is prohibited or prohibits what is permissible and the lessor has accepted it so how should there be no logic in it the said fatwa is the one stated by the consensus of muslim jurists jamhoor and comes in the context of opinions of schools of figh and their approved reference books e
*permission to re lease sublease to explain the shariah opinion fatwa as stated in the second paragraph of the third figh fatwa of kuwait finance house concerning re hire re leasing which reads no logic behind the owner of the asset to stipulate that the lessor shall use or receive the usufruct himself unless some damage occurs to the asset

*another shariah opinion fatwa by al baraka symposia stated as follow question is it permissible to conclude an agreement to purchase equipment from a company or real estate and lease it again to the same seller answer if sale agreement is completed first and then an agreement of ijarah is concluded the transaction is permissible
*another fatwa was issued which reads question is it permissible to lease some thing for a fixed rent and then lease it to other party for a higher rate resolutions and recommendations of al baraka symposia first symposium fatwa no

*if it is permissible then is it allowed to bring in a third person to share the first contract so that he becomes a partner in the difference of lease by selling his share of the usufruct ownership which entered into the guarantee of the first lessor irrespective of whether that sale price is similar to or less or greater than the rent paid it is permissible to lease a thing for a fixed amount and then lease it again to other party for similar higher or lower price unless prohibited by the first lessee or customary practice uruf
*thus hanbali school of figh stated a shariah opinion which is not ratified by other jurists al mughni to which ibn ghudammah referred it is permissible that a condition becomes correct which is one face of al shafie companions as lessor owns usufructs for the lessee side so he will not own any thing that he does not like to

*give and as he might have an objective behind allocating the usufruct to him on the other side the condition is abrogated because it contradicts contract requirements as it is bound by usufruct ownership

*concluded for one subject so as to directly benefit from the usufructs of the asset but the case here aims at investment by sale of usufructs and introduction of intermediary as a lessor between the owner lessee and the actual lessor so that the intermediary lessor obliges to pay the rent which may be advanced or deferred but his liability is stronger than the liability of the lessor who is the beneficiary of the asset

*the alternative for the cancellation of the contract is conclusion of a new lease ijarah contract and conclusion by the intermediary lessee of lease contract with the beneficiary as follows the owner concludes lease ijarah contract with the intermediate lessee is tied up with the approval of the current lessee the beneficiary of the asset usufruct with a promise by the intermediary lessee to continue the lease ijara contract signed between him and the present lessee
*this transaction is carried out through a notice sent by the owner and the intermediary lessee informing him of the intermediation made by the intermediary lessee and his promise to let the beneficiary continue benefiting of the leased asset according to the same previous specifications and concluding the notice that the elapse of a period of days without receiving a reply from the present lessee is considered an approval

*the lease assignment if takes place without the approval of the present lessee as if the disposition by the owner concerning the leased asset is actually his right to transfer it to the intermediary lessee whether the present lessee accepts or rejects so it is not permissible from shariah point of view because usufructs according to the first lease contract are owned by the current lessee and it is not permissible to involve the current lessee into a new relation with the intermediate lessee without his consent
*not include enabling the present lessee to reject thus it doe not require from him an explicit or implicit approval as he is considered granting approval within a specific period

*willingness to enabling possessing the asset after end of lease term during which the entire value of leased asset is amortized in addition to realization of reasonable return to the lessor which means that the investment objective of the lessor is realized therefore contracts include an option for the lessor to renew the lease at a lower rent or to purchase furniture for an agreed upon lower price or even without pay so lease transaction ends by the
*features of financial lease financial lease contract requires full amortization of the asset value throughout the contract term hence it is also called capital lease which means that total contracted rental payments shall cover the entire cost of the asset and produce a reasonable return into the lessor s invested capital

*types of lease ending into ownership a ijarah muntahia bittamleekthere are many types of lease ending into ownership a ijarah muntahia bittamleek a some of which are considered a result of applications which are categorized as of major and sub types

*the lessee company determines the required asset and negotiate with the producing company with respect to price and date of delivery then the company makes arrangements with the financier or the lease company specialized in purchasing the equipment or fittings from the manufacturer at the same time the lessor lease company purchases the equipment and the lessee company simultaneously executes the lease contract with the financing company
*these three parties are lessee lessor who is also the owner and the financier which is a commercial or islamic bank or financing entity or a specialized lease company

*the most distinguishing feature of this finance is that the selling company receives a high cash flow equivalent to the price of the sold item while retaining the asset for use the matter that provides the company with the liquidity required for other purposes
*a sale and lease back this type of lease is made when the enterprise owns land real estate or any other asset sells them to a financing entity and concludes a contract with it to lease the asset which is sold to it to continue using it

*hence the seller the bank and the buyer become partners in the equity of the asset on pro rata basis and in order to enable the partner use the asset the bank lets its shares in the asset real estate for example pursuant to an operational lease contract while the buyer continues to pay installments of sale price its share in the asset increases gradually thus he shall pay a lesser rent in return for the use of the partner s shares
*third gradual sale and partner s right to the lease this method is a prophet of a combination of installments sale and the operational lease where the owner lessor ie the islamic bank agrees with the lessee to sell it the owned asset according to method of sale in installments by a particular advance payment and payment of the residual asset in installments spread over the remaining period

*the outcome of lease ending into ownership ijarah muntahia bittamleek forms of lease ending with ownership may be shown on the light of the explanation made by secular law specialists for the rules of fiduciary sale and the statements of secular laws as follow first lease ending with ownership has many forms revolve around what the contracting parties agreed and their intentions of this contracting ie lease sale or lease and promise to sell and the rental they determined in case of ijarah and price in case of sale and the time of ownership transfer
*jointly owned asset whereas diminishing musharaka may take place with the intention of letting to others or manufacturing products to be sold to others and it doe not involve in its very nature or concept lease or lease to the partner in particular

*first type the contract shall be drafted as a contract of lease ending with ownership of leased asset ijarah muntahia bittamleekif the lessee wishes so a against a price represented by the amounts actually paid as rental installments for this leased asset during the specific period and the lessee becomes owner ie buyer of the leased asset automatically once the last premium is paid without conclusion of a new contract
*in this form of lease the price of sold item is the rental installments which are agreed to be paid during a specific lease term without any payment by the lessee and the ownership automatically transfers upon the payment of the last installment

*the second type of lease the contract is drafted as a lease contract which enables the lessee to use the leased asset in return for a specific rent and a particular term provided that the lessee shall be entitled to own the leased asset by the end of lease term for payment of a specific amount
*this amount is either a token price which is not equivalent to the price of the lease asset at sale or an actual price

*magazine of islamic figh academy the special session

*possessing the leased item is pending for the payment of all such lease installments so is it a suspended sale and its price is the installments which the lessee paid what obstructs this is that the installments were paid as rent for the leased asset so how can it change to a price for the leased asset by the end of lease term
*it is known that the price is either immediate or deferred at completion of sale contact what is received here under ijarah contract is the price of the usufruct received by the lessee so it was adapted or demonstrated under the contract as rent and its transfer to a price for the leased asset according to a later contract does not conform with the rules which set for each contract its rulings and effects at contracting

*some researchers stated that it is possible to draft an alternative to the lease contract ending with ownership it is a sale contract which stipulates that it is not permissible for the buyer to dispose the sold item by any type of disposition a by commutation or donation unless price is paid fully otherwise the contract is cancelled together with the payable rental installments a which are the installment payments of the leased asset if he paid installments in full then he is entitled to dispose it
*however if he paid installments in the previous period and refused to pay the remaining specified premiums this should be solved by deducting the actual rental value of the said installments which he paid during the previous period beside paying reasonable consideration for the damages incurred by the seller due to this violation as a penalty clause

*so how can he be paid for what is legally permissible for him as per the contract
*for rental even if it is not equivalent to the equal pay

*selected demonstration of shariah origins for the first type of ijarah the appropriate demonstration of shariah origins for this case is by making hibah gift contract bound with the condition of repayment of all installments agreed to be paid during this period ie hibah shall be tied up with a condition ie payment of all rental installments during the specified period and not violating its conditions
*the wording shall be as follow if you pay all the agreed premiums during this agreed period i give you this commodity as a gift and the other party accepted then gift hibah contract becomes a contract tied up with a condition which is governed by rules controlling contracts tied up with conditions in islamic figh

*mughni al muhtaj and kashaf al ghinaa al taj al mozahab al ekhtiar by almosily al eltizamat by al hatab and sharh al niel to read the theory of condition in islamic figh and hassan al shazali p

*the use of the promise method in addition to use of tying up hibah to condition which is stronger because it is a contract the lessor may promise the lessee to donate him the commodity by the end of the specified contract term and after payment of all rental payment installments agreed on during this period
*maliki jurists according to an opinion of them the promise is binding if the promissee entered into an obligation due to this promise which is the opinion of malik ibn al qasim and sahnoon

*sale contract to be concluded by the end of ijarah term a if the lessee requested so a and paid the agreed upon price the token price the ruling of this type shall accompany the ruling of the second type as there is no any significant difference between them because price amount is not restricted in the case of bargaining sale
*the type of ijarah in which an actual price is determined for the sold item this contract has also included both ijarah contract and sale contract it is an immediate lease contract connected to a canceling or terminating condition and a sale contract is tied up with a

*in this sale an actual price of the sold item is specified to be paid by the lessee the buyer by the end of the lease term hence the leased commodity becomes sold and owned by the lessee the buyer in terms of its benefit and asset and the lessee has the right of the owner over it like utilizing and disposing it off according to legal shariah dispositions after paying the agreed on price
*thus after the end of ijarah contract starts the sale contract which is tied up with the realization of the condition related to ijarah contract which here in this type of ijarah does not require any new text wording as long as it was executed by a party saying i sold and the other saying i accepted the sale and any similar wording which proves true sale and as long as the text wording does not indicate a promise to sell or a promise to purchase or a promise for both sale and purchase by both parties

*the form type in which ijarah is connected to a promise to purchase the wording in both of the two above mentioned types forms implied an absolute sale wording i sold or bought however ijarah may be tied up to a promise to sell or purchase or promise by both transactions exchanged promise here it is a bit different that in this type ijarah contract is connected tied up to a promise to sell or purchase or promise of both transactions by both parties
*also the resolution of the islamic figh academy which states that the promise should be unilaterally binding shall be observed from the side of either lessee or lessor but not both so as to refrain from resembling the contract

*the type of ijarah which includes a promise by the lessor to the lessee to opt to sale or extend lease or withdraw the leased asset by the end of ijarah lease term this type format is an ijarah contract connected to a promise to sell for specific price or as per the market rate or ijarah term or return the commodity to the lessor
*this disposition is not prohibited as it is equivalent to the type of ijarah tied up connected with a promise to sell for an actual price but here it becomes more flexible for the lessee as it empowers him to select between three choices by the end of ijarah term purchase the commodity extend ijarah lease term or return the commodity to the owner

*this form type is weak as it is not supported by any party except with regard to obligation of fulfillment of promise however since it came after the contract it is less than the condition of sale stated in the contract which was demonstrated and adapted as a promise made for a particular reason

*third to sell him the item provided that the sale shall not be executed unless the price is paid so the sale becomes tied up to the last payment of price and according to al zarghani this format type of lease is permissible and upheld by al banani while selecting the word shall not be executed instead of the contract shall not be made so that the asset is just like it is withheld for the price ie the sale is conducted but not executed and if he paid some of the price and the seller demanded to return the commodity he shall pay back the price
*fourth to sell him in an absolute sale provided that he shall not dispose off the sold item unless he pays the price so he shall be committed to it and it becomes like the hypothecated item which is not allowed to be disposed of because it is just like the mortgage if payment of price is not specified

*here we may say that we can sell the usufruct from the beginning for a price which may be parallel to the price of both the usufruct and the asset as said by consensus of jurists that the usufructs represent the very essence of the assets and in fact assets are owned by allah so the sale of usufructs is in reality a sale of the entire asset including its usufructs
*a researcher has developed another envision for shariah adaptability of lease ending with ownership a musharakah muntahia bi al tamleek or presentation of a useful shariah alternative ie the assets are composed of the corporeal property the asset and the usufructs

*however the asset remains under the possession of the owner then the asset is annexed to the usufruct after payment of usufruct price in installments spread over specific term and if payment is made the asset shall be annexed to usufructs
*hence we could have reached the ultimate end and this concept may lead us to avoid problems of conditions and violations of contracts

*he pointed out that the best reasonable method to be applied in islamic banks is that a lessee should be considered as a lessee who is promised of gradual ownership ie every year he holds ownership proportionate to what he paid the equivalent of rent after deduction of usufruct consideration out of it
*estimation of rent in ijarah wa iqtina a technical researcher has noticed during the discussion of figh academy for the subject that although he considers all payments as rent although it is actually part of the price

*one of the members of the academy in regard to the rent as being more than the estimated equivalent price opined that it is related to estimated equivalent price
*these conditions if they don t contradict the subject matter of the contract it is then approved otherwise it would be rejected and the contract itself would continue as sound and proper

*proposal for research these are examples of difference between rent and estimated equivalent price and damages inflicted on the lessee if the leased asset ayn was not possessed

*if the period of ijara is terminated before its due date for any reason for a shariah accepted excuse for rescission or by mutual consent or by violation of ijara conditions the ijara would be as such considering a just estimation of rent within the limit of estimated equivalent price
*consequently the lessee will not pay more than the equivalent of usufruct during the period of usufruct

*some examples of shariah observations in relation to some conventional ijara wa aleqtina contracts conventional contracts of ijara wa aleqtina were deduced from various provisions of ijara such as determination of rent and incurrence of the owner the lessor of the liability arising from the contract such as his obligation towards maintenance and all burdens of the ownership
*such deviations from shariah guidelines disqualified these forms of ijara from their underlying intentions and transformed them to modes comparable to usurious riba modes because they award the owner returns without shouldering the guarantee

*the cash amount paid at the time of contracting in order to confirm seriousness of the client to purchase the property is contradicting with the principle of option in figh
*this is due to the fact that the advance amount is considered in effect as trust which is permitted to dispose of so it should be returned to him as per his request

*some contracts state that in case the lessee exercised the purchase option the lessor would convey the property ownership to him without mentioning the extent of the lessee right in non exercising this option
*it should also be observed as previously mentioned that it is reasonable to link the lease contract with a promise of obligatory purchase or sale and not mere purchase option

*however if the leased asset ayn was not purchased at the time of the contract execution or it has been purchased but not yet received by the lessor who is leasing it to the lessee the lessor would not be entitled for the rent of that period until the asset is delivered or the lessee is enabled to receive it
*this contradicts with the properness of compensation moawada contracts including ijara wherein the rent should be fixed and specified in magnitude or by setting a standard which could be applied at the time of entering the contract to evade any further dispute

*some contracts include clear statement that the lessee should not expect the lessor to incur any of the responsibilities often incurred by the owner the lessor whether these responsibilities are related to maintenance or repair or providing any service to the property
*this liability of the lessor should not be disavowed and overburdened on the lessee because entitlement of rent is arising from utilizing usufruct

*in case the lessee delayed in payment of the rent the right would be given to the lessor to claim from the lessee the standard adm
*if the lessee did not exercise the purchase option is such an amount would be returned to him or not in fact an option should be without any consideration because it is a wish and desire and so there is no right to take a consideration for it

*the proper procedure in this respect either the lessee keeps the leased asset ayn in his hands and the lessor adheres with the contract for which rent is entitled for the remaining period or the lessor approves rescission of the contract and hence entitlement for the rent of the remaining period would cease
*all charges of ownership should be borne by the owner while other taxes other than property tax to be borne according to the verdict of the authority which imposed them or according to agreement of the concerned parties

*it is stated in some contracts that the lessor has the right to rescind the ijara contract in case of the lessee default and that the lessor is entitled for the rent up to the end of the remaining period of the contract and until the latter sells the property although of the rescission of ijara
*however this would not necessitate release of the lessor from his liabilities under ijara contract as such condition is not shariah accepted and it should not be stated in the contract or at least reference to maintenance should

*some contracts state that the lessee agrees that the lessor had not been liable for the contract provisions which has been entered between the lessee and the property sellor
*in these situations shariah provisions should be applied and the lessor in fact assumes that the lessee would not claim maintenance from him due to above mentianed consideration without rendering this assumption into a condition

*some contracts state that in case of expropriation or seizure of the property and obtaining any returns grants or compensations for that it would be the right of the lessee and he assigns them as per contract to the lessor to settle any due amounts to him and any excess to be used as a balance to pay the purchase price as per agreements

*this is unacceptable to shariah because if the property is sold it would be for the account of the lessor who is the owner of the property and not on the account of the lessee and the revert of the lessor on the lessee would only be within the limits of claiming compensation for the damage borne by him due to the lessee s breach of his committed promise to purchase the leased asset ayn
*the proper procedure is that contracting expenses should be borne by the two parties due to the fact that both of them participated in the contract which its usufruct would benefit both of them so one party should not bear expenses without involving the other

*the sale of the leased asset ayn to the lessee should not be linked to the future because sale should not be added ie no contract should be entered now and a date in the future fixed for realization of its consequences
*however sale contract should be effected when it is due at the end of ijara contract or they could revert to grant hiba mode which grant is dependent on completion of ijara contract and settlement of all its installments

*certain trends give certain excuses to justify above mentioned actions on the grounds of being subordinate and inferior parts of the clauses constituting the contract such as maintenance bearing leased asset ayn risks treatment of advance payments of the lessee and other ite miss in fact these are major subjects reflecting the real goal of the contract and so they are not subordinate forms as claimed by some scholars who call for their postponement
*the real meaning of ijara contract would be negated if the lessee bears maintenance or the risk of the leased asset ayn depreciation or any other ite miss some legal consultants in formulating ijara wa iqtina contracts for dealing in islamic financial institutions they consider only two requirements for the properness of the cotract

*sometimes the excuse of observing the intent of equity in contracts on which many scholars concentrate lead them only to consider that drafting of contracts should enable equity between the two parties in such a way that the lessor and the lessee bear the same risks the lessee may lose the earnest money urbon and installment payments while the lessor may lose part of his funds in case the lessee did not practice the option or purchase promise
*this conception deprives the contract of many important elements because there are many provisions and controls which need to be considered in drafting the contract to render it shariah acceptable

*the concerned section will request some of the client identification documents along with financial statements of the client to verify his ability to pay and experience in the field of the required equipment etc
*mode of lease ending into ownership practiced by some islamic financial institutions the client presents his application to the investment and fianance section of the company requesting entering into a transaction with him to provide his requirements of equipment on ijara basis

*in case of verbal acceptance of the client a written offer would be sent to the client stating the mechanism of dealing with the client mode of settlement installment amount whether monthly or otherwise and the required guarantees and documents
*as well as other settlement guarantees text of lease contract to be signed later along with the conditions put forward by the company etc the client furnishes the required guarantees which were previously agreed upon by the parties

*the rent value may be amended by increase or decrease for a further period which is not included in the contract by agreement of the two parties as per an appendix which specifies the starting date of the period its end and its rent value

*following is the mechanism of time sharing mode the right of usufruct of the asset ayn which is previously specified in terms of standard including but not limited to for example each category has an specified area of the asset required to be usufruct of in addition to the level of furnishing such an asset ayn possession period the time duration previously contracted
*sale of time sharing rights preface many offers of time sharing were floated nowadays for sites in different tourist projects

*other conditions the original owner has the right to alter the usufruct right period by increase or decrease depending on the site of ayn to be usufruct of for example if the usufructuary mistanfia is interested in residing in an area of higher in costs or higher in standard compared to what he contracted for or vice versa
*in consideration to above mentioned some finance applications are received for such type of time sharing on morabaha method ie the purchase orderer applies that the finance house to purchase time sharing for him on spot basis provided that he is committed to purchase the same time sharing on credit

*then it assigns the right to the purchase orderer and instructs the original project owner to approve the assignment of its right to the purchase orderer
*so the ownership of time sharing would be in his name for lifetime or for specific period and he may sell the right to others

*a lease in which a lessee assigns the usufruct of an asset ayn to another lessee with the approval of the original asset ayn owner considering that the contract has been rescinded between the owner and the new lessee and a new contract is entered between the owner and the new lessee
*shariah consideration in this type of ijara the lease ijara is permissible for the first lessee the finance house to enter a second lease contract with the client the so called sub lease

*the option of determination of the lessor and the lessee and the possibility of linking it with procedures and circumstances which give consideration to priority of showing interest and satisfaction of conditions instead of absolute discretion deliberation and selection
*proposed shariah modes in this respect the ijara specified on liability which states the description without determining the subject

*in case of their lease the utilization of lessee of its usufruct regarding fixing the date of usufruct should be according to the instructions put forward by the lessor or manager of property in such away usufruct would be available for all lessees according to time duration contracted for with them
*the leased asset ayn either it would be owned by the lessor but not seen by the lessee so it would be ijara for specific described asset ayn or it may not be owned by the lessor upon contracting but he will

*there is also no objection that lease to be in deferred installments against rents which are higher than those specified in the ijara contract originally entered with the owner of the asset ayn
*circumstances may require their renewal by sale in advance or later sale for agreed upon lease in accordance with the term of ijara wa aliqtina

*of assets into units or shares are not confined to lease only but are rather related to investments funds such as evaluation of units by type entry or withdrawal price or profits distribution
*change of leased assets owners on common basis while the lease contract with lessees will continue along with other items which need specification of accounting treatment

*the principle of the securitization of ijara mode has been linked with specific shariah characteristics such as f ability of the owner the lessor to dispose in his property without inflicting damage to the lessee right to obtain the usufruct of ijara contract
*ijara bonds ijara bonds are different from ijara itself because they are a set of securities having certain characteristics which identity them from shares loan bonds and other securities

*f possibility of awarding proxy for possessing the asset ayn for the benefit of others and then leasing same for them

*general precepts and provisions which should be observed in the ten conditions all ten conditions and their equivalents in meaning should be observed in all following precepts st no condition would be considered unless being stipulated in waqf deed
*th stipulation of amendment right or replacement of the endowed asset mouqouf should be effected once whether such stipulation is for the waqif himself or others unless he is awarded the right of amendment repetition at his discretion

*if the party entitled for a condition right whether from a waqif administrator or others practiced the condition for one time he has no right to repeat it unless the waqif stipulated that he may repeat it any time
*above mentioned conditions regarding amendment replacement or others are only related to waqf dispositions and not waqf guardianship wilaya

*if ijara is less than the estimated equivalent rent according to above principle and somebody offered ijara with estimated equivalent rent the person in charge mutuali ie waqf administrator may rescind the first ijara

*however in case for example it is built according to estimated instructions of waqf administrator he should not bear the increase of rent because it would be for the benefit of waqf

*table of contents no


 ''Please note, This is an auto generated summary based on sentances position in the document and other factors''
== DOCUMENT WORD ANALYSIS ==
=== Main Category ===
: AlHuda Material\islamic banking


=== KeyWords ===
contract price sale asset financing lease client purchase ijarah payment profit musharakah lessee amount commodity housing agreement contracts ownership project



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== DOCUMENT REFERENCES ==


=== Number of Pages ===
150


=== Published Date ===
2007-06-18 14:04:51


== Full Document ==


[https://www.hodhood.com/en/HodHoodDocuments/IslamicFinance/IslamicBanking/Ijarah%20by%20Dr.%20Abdul%20Sattar.pdf Read the Full Document]


[[Category:Islamic Finance]]

[[Category: Islamic Banking]]