Combination of contracts in Islamic finance practices in light of hadith on prohibition of ‘two contracts in one contract’ (Bay’atan fi Bay’ah): A shari’ah investigation
To cater the dramatic changes in market demands, Islamic financial institutions supply various types of Islamic financial products and services. Some of them are categorized as a hybrid in nature, which combines more than one contract. Essentially this would be assumed to trigger the shari’ah com...
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| Main Authors: | , |
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| Format: | Conference or Workshop Item |
| Language: | English English English |
| Published: |
2021
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| Subjects: | |
| Online Access: | http://eprints.unisza.edu.my/4652/1/FH03-FPP-21-51933.pdf http://eprints.unisza.edu.my/4652/2/FH03-FPP-21-51934.pdf http://eprints.unisza.edu.my/4652/3/FH03-FPP-21-51935.pdf http://eprints.unisza.edu.my/4652/ |
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| Institution: | Universiti Sultan Zainal Abidin |
| Language: | English English English |
| Summary: | To cater the dramatic changes in market demands, Islamic financial institutions supply various
types of Islamic financial products and services. Some of them are categorized as a hybrid in
nature, which combines more than one contract. Essentially this would be assumed to trigger
the shari’ah compliant issue because, in more than one narration, the Prophet (SW) prohibits
the combination of two contracts in a single agreement. As reported in many sources, the
Prophet (SW) prohibited two sales in one sale (bay’atan fi bay’ah) and two agreements in one
agreement (safqatan fi safqah). Also, he prohibited the combination of sale and loan contracts
(bay’ wa salaf) in a single arrangement. Thus, this study investigates the shari’ah status of
Islamic financial hybrid products in light of these prophetic narrations. This study is qualitative,
and a method of document analysis, both classical and contemporary, has been followed to
achieve the study's objective. The study concludes that the combination of more than one
contract in a single arrangement is not prohibited in general; it shall be subject to the nature
and essence of the contracts instead. A combination of partnership with the lease contract is
not prohibited as both contracts are not inconsistent with each other. While a combination of a
loan contract with another contract that begets benefit for the loan is not permissible as such
combination converts the arrangement into a usurious transaction. |
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