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| Mudaraba |
Mudaraba is a partnership in profit
whereby one party provides capital (rab al-maal) and the other party provides
labor (mudarib) |
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| Sharika al-aqd : |
Sharika al-aqd (contractual partnership)
means an agreement between two or more parties to combine their assets,
labor or liabilities for the purpose of making profits. |
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| Murabaha |
Murabaha is selling a commodity as
per the purchasing price with a defined and agreed profit mark-up. This
mark-up may be a percentage of the selling price or a lump sum. This transaction
may be concluded either without a prior promise to buy , in which case
it is called an ordinary Murabaha, or with a prior promise to buy submitted
by a person interested in acquiring goods through the institution, in
which case it is called a “Banking Murabaha” i.e. Murabaha
to purchase orderer. This transaction is one of the trust based contracts
that depends on transparency as to the actual purchasing price or cost
price in addition to the common expenses. |
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| Ijarah |
This terms ijarah as used in this standard means leasing of property
pursuant to a contract under which a specified permissible benefit
in the form of a usufruct is obtained for a specified period in
return for a specified permissible consideration.
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| Ijarah Muntahia Bittamleek |
One of the forms of Ijarah used by Islamic financial institutions
is ijarah Muntahia Bittamleek. This is a form of leasing contract
which includes a promise by the lessor to transfer the ownership
in the leased property to the lessee, either at the end of the term
of the ijarah period or by stages during the term of the contract,
such transfer of the ownership being executed through one of the
means specified in the Standard.
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| Salam |
A salam transaction is the purchase of a commodity for deferred
delivery in exchange for immediate payment. It is a type of sale
in which the price, known as the Salam capital, is paid at the time
of contracting while the delivery of the item to be sold, known
as al-Muslam fihi (the subject-matter of a Salam contract), is deferred.
The seller and the buyer are known as al-Muslam Ilahi and al-Muslam
or rabb al-Salam respectively. Salam is also known as salaf (lit.
borrowing).
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| Parallel Salam |
If the seller enters into another
separate Salam contract with a third party to acquire goods, the specification
of which corresponds to that of the commodity specified in the first salam
contract, so that he (the seller) can fulfill his obligation under that
contract, then this second contract is called, in contemporary custom,
parallel Salam or Salam Muwazi. The following is an example of such a
contract. An institution on one hand buys a specified quantity of cotton
from farmers on a Salam basis and in turn, the buyer in the first Salam
contract enters into a new separate Salam contract with textile mills
so as to provide them, by means of that new Salam contract, with cotton,
the specification of which are similar to the specifications of the cotton
to be acquired under the first salam contract, without making the execution
of the second salam contract contingent on the execution of the first
salam contract. |
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| Istisna’a Contract |
Istisna’a is a contract of sale of specified items to be
manufactured or constructed, with an obligation on the part of the
manufacturer or builder (contractor) to deliver them to the customer
upon completion.
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| Parallel Istisna’a |
Another form of istisna’a,
known in modern customs as Parallel Istisna’a “al-Istisna’a
al-Muwazi”, takes effect through two separate contracts. In the
first contract the Islamic financial Institution acts in the capacity
of a manufacturer, builder or supplier and concludes a contract with the
customer. In the second contract, the institution acts in the capacity
of a purchaser and concludes another contract with a manufacturer, builder
or supplier in order to fulfill its contractual obligations towards the
customer in the first contract. By this process, a profit is realized
through the difference in price between the two contracts and in most
cases, one of the two contracts is concluded immediately, (i.e.the Istisna’a
contract entered into with the manufacturer , builder or supplier), while
the second contract (i.e. the contract entered into with the customer)
is concluded later. |
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