Bai Bithaman Ajil A contract of sale and purchase for the financing of an asset on a deferred payment and installment

basis with a pre agreed payment period. The sales price includes a profit margin. Bai Inah A financing facility involving two separate contracts. In the first contract a financier sells an asset to a customer on deferred payment terms. Immediately after, the financier repurchases the same asset from the customer on cash terms at a price lower than that of the deferred payment sale. It can also be applied vise versa where a financier buys an asset from a customer on cash terms. Immediately after, the financier sells back the same asset to the customer on deferred payment terms at a price higher than that of the cash sale. Bai Dayn efers to the buying and selling in the secondary market of debt certificates, securities, trade documents and papers that conform with the !yariah. The trade documents are issued by debtors to creditors as evidence of indebtedness. "nly documents evidencing real debts arising from bona fide merchant transactions can be traded. Bai Istijrar A contract between a supplier and a client whereby the supplier supplies a particular item on an ongoing basis on an agreed mode of payment until they terminate the contract. It is also applied between a wholesaler and a retailer for the supply of a number of agreed items. Bai #u$ayadah A sale of an asset in public through the process of bidding among potential buyers and the asset is sold to highest bidder. Bai %afa& A contract with the condition that when the seller pays back the price of the property sold, the buyer returns the property to the seller. It is a Bai in form but a pledge in substance. Bai !alam A purchase contract for the delivery of an item on a certain future date with the full payment of the purchase price in cash at the point of contract.

Bai Istisna& A purchase order contract where a buyer orders a seller or contractor to manufacture an item according to specification in the purchase contract to be delivered on a certain future date. The settlement of the purchase price is according to the agreement between the two parties. Dhaman or 'afalah A contract of guarantee where a person underwrites any claims or obligations that should be fulfilled by a debtor, supplier or contractor in the event that the debtor, supplier or contractor fails to fulfill his obligation. (harar An unknown fact or condition. In a commercial transaction, the fact or condition of either of the contracting parties or the item in the contract or the price of the item is not known giving rise to an uncertain status or result of the contract, i.e. whether it is valid or void. An e)cessive gharar makes a contract null and void. (hish, ghurur *heating, fraud, deception. Both are prohibited by the !hariah. +a, #aliy A right on a financial asset. -)amples of rights are ha, dayn .right to the claim of a debt/ and ha, tamalluk .right of ownership/. +ibah (ift, something given to a person without e)change. +iwalah A contract of transferring a debt obligation from the debtor to a third person. Ibra& (iving up of a right. In a commercial transaction a creditor gives up part or all of his right to a debtor usually for early settlement of the debt. Ijarah A sale or purchase of usufruct. A sale or purchase of the use of another person&s property. The ownership of the property remains with the lessor while the lessee only owns the

right of the use of the property. Ijarah Thumma Bai efers to an Ijarah .leasing0renting/ contract to be followed by a Bai .purchase/ contract. 1nder the first contract, the hirer leases the property from the owner at an agreed rental over a specified period. 1pon e)piry of the leasing period, the hirer enters into a second contract to purchase the property from the owner at an agreed price. Ittifa, Dhimni An agreement between parties concerned on the sale price and repurchase price of an asset prior to the e)ecution of the sale and repurchase contracts for the purpose of bidding process in Bai& #u$ayadah .bidding or auction/. 2u&alah A unilateral contract promising a reward for the accomplishment of a specified task. 'hilabah A form of fraud, either in words or deed by a party to a trading contract with the intention of inducing the other party to make a contract. This is prohibited by the !hariah. 'hiyanah A breach of trust, betrayal or treachery. It is prohibited by the !hariah. #aisir (ambling. Any activity the involves betting money or an item on the outcome of an unpredictable event. The bet is forfeited if the outcome is not as predicted by the bettor and the person against whom the bet is made takes the bet. This activity is prohibited by the !hariah. #al A thing which is naturally desired by man, and can be stored for times of necessity3 it has use and it is permissible by the !hariah to enjoy its benefit. #udharabah .trustee financing/ An agreement between a provider of fund who provides 4556 capital for the financing and an entrepreneur who manages the business applying his e)pertise3 profit is to be shared between them according to an agreed ratio, while loss is to be borne solely by the

provider of capital. #u,asah Debt settlement by a contra transaction3 setting off. Bai #urababah .cost plus/ A sale based on cost price where the cost price, the profit margin and other costs to the seller are stated at the time of the contract. The settlement of the price is normally made on deferred lump sum payment terms. #usharakah .joint venture/ An agreement between two or more parties whereby all parties contribute capital either in the form of cash or in kind to form a company to carry on commercial activities. The profit is shared based on e,uity participation or as agreed between the parties3 loss is shared according to e,uity participation. 7abadh 7abadh means taking possession. (enerally ,abadh follows urf, vi$. the common practices of the local community where it varies from one kind of good to another recogni$ing the way the possession of a good takes place. 7ardh +asan It is a benevolent loan, i.e. a loan contract between two parties with no e)tra payment over and above the loan. Any e)tra payment imposed by the lender or promised by the borrower is prohibited. +owever the borrower is permitted to pay e)tra on payment at his absolute discretion as a token of appreciation. ahnu #aking a property a security for a debt or a right of claim, the payment in full of which is permitted from the sale of the property in the event of default by the debtor. It is also used as a name for a kind of borrowing with collateral. iba

In lending, it is the e)tra payment imposed by the lender or promised by the borrower over and above the loan. In trading it is mostly the difference in weight in the e)change of gold of different measures of purity, e.g. 45g. of 895 gold with the :g. of :;9 gold3 or the difference in time between payment and delivery in foreign currency e)change, e.g. payment of #45,555 at 45.55 a.m. and delivery of 1!D;,:55 at ;.55 p.m on the same date. !arf A contract of e)change between two currencies. !hariah !hariah means fi,h or Islamic <aw comprising the whole body of rulings pertaining to human conduct derived from the rulings& respective particular evidences. The respective particular evidences are the sources of the !hariah, the primary sources being the 7uran, the !unnah, ijma& and ,iyas, the secondary sources being the method of reasoning applied by #uslim jurist in their ijtihad .personal reasoning/ !hariah re,uirement It is a general phrase or e)pression which generally means abstinence from prohibition and fulfillment of essential elements and necessary conditions in performing a human act. !uftajah Bill of -)change !ukuk =lural of sok. It is being used as singular. It is a document or certificate evidencing an undivided pro rata ownership of an underlying asset3 a capital market financial instrument tradable in the secondary market. Ta&widh A compensation agreed upon by the contracting parties as a payment that can be claimed by the creditor when the debtor defaults in the payment of his debt. Tadlis al>?aib An act of a seller intentionally hiding the defects of goods3 it is prohibited by the !hariah. Takaful It is a protection plan based on !hariah principles. It is Islamic insurance. A person

becomes a participant by undertaking a contract of tabarru& and paying a participative contribution .tabarru&/ to a common takaful fund whereby he allows his contributions to be used to help other participants whenever they suffer defined losses. The commercial contracts of #udharabah and %akalah are incorporated into tabarru& contracts to increase the si$e of the takaful fund. Tanajush A conspiracy between a seller and a buyer wherein a buyer purchases an item from the seller at a price higher than that of the market thereby enticing other buyers to buy the items at a price higher than the market price. The seller thus makes a big profit. This act is prohibited by the !hariah. 1jrah A payment for manfaah, usufruct on the use of another&s property. Another term related to ujrah is ajr .plural ujur/, which is a payment for a service. It is also applied to salary, wage, pay, fee.s/, charge, enrolment, honorarium, remuneration, reward, etc. 1,ud Ishtirak *ontracts of participation or partnership 1,ud #u&awadat *ontracts of e)change 1,ud Tabarru&at *ontracts of gift or donation 1rbun A deposit or earnest money paid as an installment to confirm contract. If the contract continues to its conclusion the seller reali$es it as part of the selling price. If the contract fails the seller forfeits it as penalty for the breach of the contract. %adi&ah !afe custody. "riginally safe custody is %adiah @ad Amanah, i.e. trustee custody where according to the !hariah the trustee custodian has the duty to safeguard the property held in trust. %adiah @ad Amanah changes to %adiah @ad Dhamanah .guaranteed custody/ when the trustee custodian violates the conditions to safeguard the property. +e then has to guarantee the property.

%akalah A contract of appointment of an agent where a person appoints another as his agent to act on his behalf. Aakat A religious obligation of alms>giving on a #uslim to pay B.96 of certain kinds of his wealth annually to one of the eight categories of needy #uslims. The principles and precepts of Islamic !hariCah governing commercial and financial transactions are both e)traordinary comple) and also elegantly simple. The e)istence and doctrinal enunciations of different schools of Islamic jurisprudence render it challenging to summari$e those principles and precepts in a succinct fashion. To familiari$e the reader of these materials with the terminology used in Islamic Dinance transactions, however, we are providing brief and generali$ed summaries of the key concepts .primarily embodied in certain Arabic words/ that describe the structures and philosophy underlying modern Islamic Dinance. %e also set forth a few abbreviations for organi$ations that are currently prominent in the field of Islamic Dinance. AA"IDI means the Accounting and Auditing "rgani$ation for Islamic Dinancial Institutions. Adl .pl. is adlan/ means a trusted person selected by the parties to the transaction to serve as a type of trustee>arbitrator. Arboon .also Arbun or Arboun or Bai al Arboon/ means a sale involving a down payment in respect of the purchase price and complete performance of the contract at a future date. The down payment will be applied in respect of the purchase price, if the purchaser shall subse,uently consummate the sale, or forfeited, if the purchaser shall not subse,uently consummate the sale .including as a result of an election by the purchaser/. Bai Dayn means debt financing. Dayn means debt. *ertain schools of Islamic thought prohibit the sale of debt .baiC al> dayn/ e)cept where the purchase price does not reflect a discount from the face value of the debt. Datwa .pl. is fatawa/ is an opinion or pronouncement on Islamic law issued by an Islamic scholar or !hariCah !upervisory Board.

Di,h means understanding or human comprehension of the divine law .!hariCah/. Different schools of Di,h developed over time within Islam, and these schools often have varying views on whether a particular action is permitted under !hariCah. (harar means uncertainty and ambiguity and, separately, can also include elements of deceit. 1nder !hariCah, parties may not enter into an agreement that is subject to e)cessive uncertainty and ambiguity. +alal means lawful under !hariCah. +awala is a transfer agreement whereby an obligation is transferred from one person to another3 bill of e)change, remittance. +aram means unlawful under !hariCah. +issas means e,uity shares or ownership interests. IDB means the Islamic Development Bank. ID!B means the Islamic Dinancial !ervices Board. Ijara .also Ijarah/ means lease or leasing of assets or services. In Islamic finance transactions, a financial institution or a special purpose entity receiving financing may purchase an asset and lease it to the customer at an agreed rental and for an agreed term. Ijara wa i,tina means a lease of an asset couple with a right in the lessee to purchase the asset at the end of the lease term. This arrangement is often ,uite similar, structurally, to a conventional Ehire0purchaseE scheme, in which the lessee0customer has the right to buy an asset at the end of the assetCs lease term. Ijtihad means, literally, EeffortE or legal reasoning or the making of a legal decision by independent interpretation of the usul al>fi,h, particularly the revealed sources.

Islamic finance refers to investment and financing that are structured to comply with the re,uirements of the !hariCah. IstisnaCa .also Istisna/ is variously referred to as a commissioned manufacture and sale, a commissioned future sale and purchase0sale transaction in which a buyer0customer places an order for the construction or manufacture of an object to be delivered at a future date .which can range from something as simple as an item of jewelry to something as large as a li,uefied natural gasification project/ at a pre>agreed price. #asnou means that which is manufactured or constructed pursuant to an istisnaCa arrangement or contract. #aysir .also maisir/ means gambling. #udaraba is a type of joint venture in which one venturer .the investor, or rabb ul>maal/ provides capital to another .the working or service venturer, or mudarib/ in order to undertake a business activity. =rofits are shared at a pre>determined ratio, but losses of capital are borne by the investor. #udarib .also #udareb/ means the joint venturer providing services in a mudaraba and who manages the mudaraba. #urabaha means Ea profitable saleE, a cost>plus sale. In modern financial practice involving bank mediation, it has come to mean a mode of financing whereby the financier purchases a specific asset0commodity chosen by the financierCs customer and re>sells it to that customer at a predetermined price. The selling price is higher than the purchase price, and the difference between the financierCs ac,uisition price and resale price is the financierCs profit .i.e., the reward for the financierCs risk/. The customerCs payment obligation can become due and payable at the time of the financierCs transfer of the asset0commodity or can be deferred and paid over time. #usharaka .also #usharakah or #ushara,ah/ is a joint venture .fre,uently a partnership/ in which each of the joint venturers contribute capital to a particular business undertaking. The joint venturers share profits as they may agree, but the losses must always be shared in accordance with the contributed capital of the respective joint venturers. #usharaka #utana,isa means a musharaka in which sharing of one joint venturer

diminishes over time with performance by the other joint venturer and is fre,uently referred to as a Ediminishing partnershipE. #ussallam means the purchaser of the commodity or item to be delivered on a deferred basis pursuant to a salam contract. #ussallam fiihi means the commodity or item that is the subject of a salam contract. #usallam ilayhi means the seller of the commodity or item to be delivered on a deferred basis pursuant to a salam contract. #ustasneC means the purchaser under an istisnaCa arrangement. 7urCan .also 7uran or 'oran/ is the holy book of Islam as revealed to the =rophet #ohammad .sawf/. 7ard hassan means a benevolent loan in which the lender is afforded no monetary return, and in current parlance fre,uently refers to an interest>free loan. abb ul>maal means the venturer providing funds in and to the mudaraba and will not have the right to manage the mudaraba. ahn means a mortgage .with respect to real property/ and pledge .with respect to personal property/. iba means, literally, EincreaseE and is used to connote an unjustified increase in capital3 the term is often used to refer to interest, usury or unjust enrichment/. A key tenet of !hariCah re,uires that participants in a commercial transaction undertake a risk in the endeavor. A borrowerCs obligation to pay interest in a conventional loan transaction is viewed as assuring a ErisklessE return on the financierCs investment, and thus is not permitted under the !hariCah. !alam is a sale agreement in which the seller undertakes to supply the buyer with specific goods at a future date in e)change for, and as a liability against, full payment in advance at the current time.

!aneC means the seller who agrees to supply the item to be manufactured or constructed pursuant to the istisnaCa arrangement or contract. The saneC may or may not be the entity or person that actually manufactures or constructs that item. !hariCah .also !hariCa or !haria/ means the perfect, immutable, divine Islamic ElawE as revealed in the 7urCan and the !unna. !hariCah !upervisory Board .also !hariCah Board or !hariCah *ommittee/ is a body of Islamic scholars that reviews Islamic financing transaction documents and approve them as being compliant with the !hariCah. !harika means a partnership .or similar joint venture/ or a contract between two or more parties pertaining to capital and work .management/ for the purpose of making a profit. !harika al>masrafiyya means, in current usage, musharaka. !harikat ul>amwaal means a property partnership or property joint venture. !ukuk .pl. of sakk or saak/ are capital market instruments which may be EIslamic bondsE, EIslamic asset securiti$ationsE or EIslamic whole business securiti$ationsE. The sukuk holder is granted a fractional undivided ownership in the assets or business being financed. AA"IDI recogni$es 4F categories of sukuk. !unna means the practices and traditions of the =rophet #ohammad3 the binding authority of his dicta and decisions. Takaful means Eguaranteeing each otherE and the sharing of risk on a cooperative basis and mutual assistance .taCawun/. It is an Islamic insurance system that is based on mutual co>operation and assistance among groups. !uch Islamic insurance has been devised to avoid fundamental prohibitions under Islamic !hariCah such as riba, gharar and maysir. Tandeed means conversion of musharaka assets into money. Ta,lid means EimitationE in the following of precedent and is particularly relevant to the period of Islamic history .appro)imately G95 H 4G55 .possibly 4G85/ *.-./ during which

it is said that there was a Eclosing of the gate of ijtihadE. 1sul al>fi,h means the Eroots of the lawE, which are .a/ the 7urCan, .b/ the !unna, .c/ the ijma, or EconsensusE of the community of Islamic scholars, and .d/ the ,iyas, or analogical deductions and reasoning of the Islamic scholars with respect to the foregoing. The 7urCan and the !unna are often referred to as the ErevealedE sources. %akala is an agency agreement or arrangement. %akil .also %akeel/ is the agent in a %akala relationship. adadiyyah .pl. Iadadiyyat/ *ountables i.e. things which are measured in individual units rather than by volume, weight, or length. An e)ample of Iadadiyyat are eggs which are customarily purchased in unit, .half do$en, do$en, etc./ rather than by weight. Iadl IAdl is a general term which conveys the meanings of justice, e,uity and fairness. Iamil "ne who performs a task, an agent. "ne who deserves compensation for some task which he does, such as the mudarib .manager/ in a mudarabah contract or a $akat collector. Ia,ar eal estate3 Immovable property such as land, buildings, trees and so forth. Ia,d IA,d is a central term in Islamic financial law, which essentially means, Econtract.E Iard <and. Iarif An e)pert who is consulted in situations which re,uire an impartial, informed decision, such as the appraisal of property.

Iariyah A contract in which one party loans another the use of some item for an indefinite period of time. Ariyah is generally used to refer to the neighborly lending of small articles.

Iayn IAyn is term used by the classical jurists to refer to currency or ready money. The term Iayn refers to gold, silver, coins, notes and any other form of ready cash. IAyn is often contrasted with dayn. Iinah A sale in which a purchaser buys merchandise from a seller for a stipulated price on a deferred payment basis and then sells the same merchandise back to the original seller for a price lower than the original purchase price. Ajr (enerally ajr means compensation or wage. In an ijarah .lease/ contract, the ajr is the price paid by the hirer to the hired party in e)change for the services which the latter renders.

akl al>suht 1nlawful ac,uisition of wealth.

al>ajir al>khas A hired>worker who is contracted to perform a specific task in a specific amount of time by one party, such as a cook or a servant. al>ajir al>mushtarak A worker, such as a tailor, who offers his services to many and thus may be contracted by several clients at once. al>ajr al>mithl The prevailing rate3 the price which is normally paid for a given service. al>akl bi l>batil 1nlawful ac,uisition of wealth.

al>amin al>Iamm "ne who has been entrusted with the property of another for a reason other than safe>keeping .wadiIah/, such as a tenant who rents an apartment or the mudarib in the mudarabah contract.

al>amin al>khas "ne who has been entrusted with the property of another and is responsible for it, as is the case in the wadiIah .safe>keeping/ transaction.

al>amwal al>ribawiyah The si) kinds of substances .gold, silver, dates, wheat, salt and barley/ which, when e)changed in kind, must be e)changed in e,ual measure and with immediate transfer of possession. If these conditions are not met, then the e)change is considered to be riba .interest/. al> kharaj bildaman The Islamic legal principle that means entitlement to revenue follows assumption of responsibility. =rofits, therefore, are based on the ownership of, and responsibility for, capital.

al>hajjah al>asliyyah <itJ Basic needs. TechJ In relation to the law of $akat, the shariah has e)empted those assets which are re,uired to fulfill oneCs basic needs. Also spoken with regard to economic role of the Islamic state. The Islamic state is responsible to provide for the basic needs of all citi$ens, should some of them fall short of the means. amanah Trust, with associated meanings of trustworthiness, faithfulness and honesty. As an important secondary meaning, the term also identifies a transaction where one party keeps another&s funds or property in trust. This is in fact the most widely understood and used application of the term, and has a long history of use in Islamic commercial law. By e)tension, the term can also be used to describe different financial or commercial activities such as deposit taking, custody or goods on consignment. arbun -arnest money0Down payment3 a non>refundable deposit paid by the client .buyer/ to the seller upon concluding a contract of sale, with the provision that the contract will be completed during the prescribed period. ayah The term refers to a passage from the +oly 7urCan. bai al>dayn !ale of debt or receivables. bai al>Cinah A loan in the form of a sale, called Cinah .facade/ because it is a sale in

appearance only. This is accomplished by oneCs buying back what one has sold for a lower price than that for which one originally sold it. The difference, ostensibly profit, is actually a loan. bai al>wafaC A sale with the right of redemption, literally, a sale of honour. Typically, such a sale takes place when a commodity is sold on the condition that the seller be allowed to redeem the commodity upon paying its price3 and the buyer agrees to honour the condition. bai al>bithaman ajil Deferred>payment sale, credit sale. batil Koid, invalid. !aid of a transaction, a contract which governs a transaction or an element in a such a contract when they are null and void. opp. sahih. bayI !ale3 an agreement between two parties .the seller and the buyer/ to the effect that the ownership of the sale item is transferred from the seller to the buyer in e)change for a price.

bayI Iajil bi>ajil <it.Delayed>for>immediate sale. A type of sale in which the sale price is paid immediately and delivery of the sale item is delayed. !yn. bayI al>salam. bayI al>kali bi>kali .<it. !ale of a debt for a debt/ BayIal> kaliC bi>kaliC is a type of sale which is prohibited. Islamic jurists use this term to describe several different types of debt>for>debt e)changes. The most well>known of these is the e)change in which a lender e)tends his debtorCs debt repayment period in return for an increase on the principal i. e. interest. The term kaliC is a synonym for debt. bayI al>muCajjal Deferred payment sale, credit sale3 a sale in which payment is delayed and delivery of the contracted goods is immediate

bayI al>salam Deferred delivery sale3 A type of sale in which the sale price is paid immediately and delivery of a specified sale item is deferred for a stipulated period. !yn. salaf.

bayI bi>thaman ajil Deferred payment sale. !ome Islamic banks carry out a transaction of this name in which goods are re,uested by a client, purchased by the bank and then sold to the client at an agreed upon price which includes the bankCs mark>up profit. "ften the client is offered the option of paying in installments. This is essentially identical to the murabahah financing used throughout the Islamic banking sector. !yn. bayI Iajil bi>ajil and bayI al>muCajjal. bayIatan fi bayI <it. Two sales in one. A type of transaction, which was e)plicitly prohibited by the =rophet. The meaning of the e)pression Etwo sales in oneE is e)plained by the fu,ahaC in various ways. Also called Esafa,atan fi safa,ah.E bayt al>mal The treasury of the #uslim *ommunity3 historically, the bayt al>mal as an institution was developed by the early *aliphs but which soon fell into disrepair. The funds contained in the bayt al>mal were meant to be spent on the needs o the 1mmah e. g. supporting the needy. daman esponsibility for financial coverage in the case of destruction or damage. daman0kafala (uaranty or surety darura "verriding necessity dayn Debt3 some form of wealth which one is re,uired to pay back to another. dhimmah Dhimmah is a basic term in fi,h al>muIamalat which roughly corresponds to the concept of liability. A debt is said to be Eestablished in someoneCs dhimmahE if he is in debt to someone else. The fu,ahaC also speak about a personCs dhimmah Ebeing occupied E and Ebeing cleared.E The concept of dhimmah may be likened to a virtual liability container which it may be said that every responsible person has. These containers, it may be imagined, are constantly being filled with rights and obligations>>such as the obligation to repay someone. dinar A gold coin used by #uslims throughout Islamic history. The standard mass of the dinar which is referred to in Di,h is 4 mith,al .app. F.B9 grams./ fa,ih #uslim jurist3 A #uslim who is an e)pert in Di,h3 a #uslim who is knowledgeable

of the rules of the !hariIah and knows how these rules are related to the source te)ts upon which they are based. fa,ir .pl. fu,araC/ A poor person.

faskh 1ndoing, dissolving, cancellation. Daskh is a term used by the classical fu,aha to refer to the dissolution of a contract or agreement. It has been described as the cancellation of a contract, such that affairs return to the state in which they were before the closing of the contract, without any addtition or subtraction. #any of the classical fu,ahaC apply the term faskh to instances in which a previously valid .sahih/ contract is cancelled voluntarily by the contractual parties>>such as in i,alah, khiyar al>Iayb .option to return in case of a defect/ and khiyar al>shart .stipulated option of return/>>and use the term infisakh for cancellations which occur outside of the will of each of the contractual parties>>such as the cancellation of a sale contract when the sale item is destroyed, before the seller can hand it over to the purchaser or the dissolution of certain partnerships .see shirkah/ upon the death of one of the participating parties.

fatwa .pl. fatawa A formal response issued by an e)pert fa,ih, called a mufti in response to a ,uestion.

fatwa An authoritative legal opinion based on the !hariCa .Islamic law/

fi,h =ractical jurisprudence, or human articulations of divine rules encompassing both law and ethics. As such, fiah may be understood as the juristsC understanding of the !hariCa, or juristsC law.

fi,h al>muCamalat Islamic commercial jurisprudence, or the rules of transacting in a !hariCa compliant manner

fuduli A party is described as EfuduliE whenever it transacts .e. g. sells, rents, etc./ with someone elseCs property without the permission of the !hariIah .e. g. wakalah/. !uch is the case when a party does not own the property with which it transacts and is not the wakil .authori$ed representative/ or wali .guardian/ of the true owner. Dor e)ample, if a person were to negotiate and EcloseE a deal with a buyer in which he sold some machinery without the owner of the machinery having made him his wakeel .authori$ed representative/ the EsellerE would be described as fuduli.

fu,aha pl. of fa,ih, ,ualified specialists in fiah, or jurists.

gharar 1ncertainty in a contract of e)change as to the e)istence of the subject>matter of the contract and deliverability, ,uantity or ,uality of the subject>matter. It also involves contractual ambiguity as to the consideration and the terms of the contract. !uch ambiguity will render most contracts void.

gharim .pl. gharimun/ "rig. A debtor who does not possess the funds with which to repay his debt. According to the +anifi jurists, a gharim is one who whose funds, after repayment of his debt, would not e,ual the nisab. The !hafiIi and #aliki jurists divide the gharimun into two typesJ 4/ those whose debts were incurred in their own benefit and B/ those whose debts were incurred benefiting others. The gharimun are one of the eight groups mentioned in the 7urCan as legitimate recipients of $akah funds.

ghasb The wrongful appropriation of property by force.

habal al>habalah A type of sale practiced by the Arabs during the 2ahiliyyah, in which the essence of the agreement between the two transacting parties, depended on a pregnant she>camel giving birth to a female calf which would subse,uently become pregnant itself. The habal al>habalah transaction was prohibited by the =rophet, according to several well>known reports, ostensibly because of the e)treme uncertainty .see gharar/ in the

essence of the contract, given that neither of the contractual parties can be even remotely certain that a pregnant she>camel would successfully give birth to a another she>camel, which would subse,uently mature and become pregnant itself.

hadith .pl. ahadith/ A successively transmitted report of an utterance, deed, affirmation or characteristic of the =rophet #uhammad. The ahadith are the source te)ts by which the !unnah is preserved.

halal =ermissible, lawful3 said of a deed which is not prohibited by Allah, opp. haram.

halal lawful3 one of the five major !hariCa a categori$ations of human acts

hamish gedyyah security deposit. An amount of money paid by the purchase orderer upon re,uest of the seller to make sure that the orderer is serious in his order of the asset. +owever, if the promise is binding and the purchase orderer declines to purchase the asset, the actual loss incurred to the seller shall be made good form this amount.

ha,, lit. truth, right. Al>+a,,, the Truth, is one of the names of Allah. In the Di,h of financial transactions, the term ha,, signifies a right which a party possesses, for e)ample the creditors right to payment.

haram Impermissible, unlawful, opp. halal.

hawalah Bill of e)change, promissory note, che,ue, draft. TechJ A debtor passes on the responsibility of payment of his debt to a third party who owes the former a debt. Thus

the responsibility of payment is ultimately shifted to a third party. hawalah is a mechanism which can be usefully employed for settling international accounts by book transfer. This obviates, to a large e)tent, the necessity of physical transfer of cash. The term was also used, historically, in the public finance during the Abbaside period to refer to cases where the state treasury could not meet the claims presented to it and it directed its claimants to occupy a certain region for a certain period and procure their claims themselves by ta)ing the people. This method was also known as tasabbub. The ta)es collected and transmitted to the central treasury were known as mahmul .i.e. carried to the treasury/ while those assigned to the claimants or provinces were known as musabbab.

hawl The term hawl is used by the jurists to describe the amount of time which must pass before a #uslim in possession of funds e,ualing or e)ceeding the e)emption limit .nisab/ must pay Aakah on his wealth. In the case of cash, gold and silver it is one Islamic year i.e. a lunar year of app. ;9F days.

hibah (ift, donation. TechJ Transfer of a determinate property .mal/ without any material consideration. #uslims have been e)horted by the =rophet to donate gifts to others. This is one of the important values of a #uslim society. It is intended to cultivate love and co> operation among citi$ens rather than rivalry and competition.

hisbah +isbah is a term used by the classical jurists, among them Ibn Taymiyyah, to describe the function of regulating the market place which is to be carried out by the Islamic authority .often called the muhtasib in this sense/. +isbah includes taking whatever steps may be needed in order to maintain a fair and orderly market place. +istorically, various Islamic rulers have undertaken the duty of hisbah by supervising activities ranging from the inspection of eateries for sanitary conditions to the investigation of fraud. The basis of hisbah is the =rophetCs customary inspection of the marketplace of #adinah.

hukm .pl. ahkam/ In Di,h, the !hariCah ruling .e. g. obligatory, recommendable, neutral, reprehensible, or forbidden/ associated with any action.

husah .lit. pebbles/ A type of sale practiced by the Arabs in the 2ahiliyyah and prohibited by the =rophet #ohammed in which the sale was determined by the casting of pebbles. *lassical commentators mention three forms of the husah saleJ 4/ the seller would say to the would>be purchaser, Ewhen I throw the pebbles in my hand, then the deal is closed and binding on you,E B/ the seller would say to the would>purchaser, EI shall sell you the commodity which your pebbles hitE or ;/ in a land sale, the seller would say, EI shall sell you the plot of land whose dimensions are defined by the e)tent to which you throw this pebble.E The husah sale>>like the habal al>habalah sale was ostensibly prohibited because of the gharar .uncertainty/ which characteri$ed the contract which governed it.

ihtikar +oarding3 the prohibited practice of purchasing essential commodities, such as food and storing them in anticipation of an increase in price.

ijara Ijara is a form of leasing in which there is a transfer of ownership of a service for a specified period for an agreed upon lawful consideration. Instead of lending money and earning interest, Ijarah allows the financial institution to earn profits by charging rentals on the asset leased to the customer.

ijarah wa>i,tina <ease>and>purchase transaction3 a financing instrument used by practitioners of contemporary Islamic finance in which a financier purchases reusable merchandise .e.g. airplane, buildings, cars/ and then leases them to clients in return for an agreed upon rental fee .to be paid for the length of the lease period/ and an agreement that the client will purchase the merchandise at the end of the lease period.. There are similar transactions of various names, among them al>ijarah al>muntaha bi>tamlik.

ijmaI .lit. consensus/ The unanimous consensus of the #uslim 1mmah on a given issue, usually as represented by the agreement of the jurists. IjmaC has traditionally been recogni$ed as an independent source of law, along with the 7urCan, !unnah and 7iyas .analogical deduction/, by most of the jurists.

ijtihad .<it. effort, e)ertion, diligence/ The process by which a ,ualified Islamic jurist .called a mujtahid/ endeavors to arrive at the correct ruling on a given issue by reflecting on source te)ts from the fundamental sources of the !hariIahJ the 7urCan and !unnah.

ikhtikar #onopoly

ikhtilaf Divergence of opinions among jurists

iktina$ +oarding wealth by not paying $akah on it.

iman *onviction, faith or belief3 the acceptance and affirmation of Allah, +is Books, +is #essengers, +is Angels, the +ereafter and Divine Decree.

Infa, !pending, normally in the path of Allah. Among the various praiseworthy types of infa, are spending on oneCs family, spending in preparation for jihad and feeding and clothing orphans and other underprivileged individuals.

i,tisad <it. moderation. The term is used in modern standard Arabic to denote the field of economics.

Islam .<it. submission to Allah/ The religion of Allah .(od/ i. e. the worship of Allah alone. Islam is .4/ shahadah i. e. testifying that there is no god but Allah and that #uhammad is the #essenger of Allah, .B/ establishing !alah i. e. prescribed prayer, .;/ paying Aakah i. e. giving a portion of oneCs wealth to the needy, .F/ the !awm of

amadan i. e. fasting during the Gth month of the Islamic calendar and .9/ +ajj i. e. making pilgrimage to the sacred precincts of #akkah .#ecca/ in Arabia once in a lifetime if one is able. A person whose religion is Islam is a #uslim. A person becomes #uslim by declaring the shahadah i.e. E Ashhadu an la ilaha illallah wa ashhadu anna #uhammadan rasulullahE .EI tesify that there is nothing rightfully worshipped e)cept Allah and I testify that #uhammad is the #essenger of AllahE/.

Islah eform

Islamic banking Dinancial services that meet the re,uirements of the !hariah, or Islamic law. %hile designed to meet the specific religious re,uirements of #uslim customers, Islamic banking is not restricted to #uslimsJ both the financial services provider and the customer can be non>#uslim as well as #uslim. Also called Islamic finance or Islamic financial services.C

Istihsan 2udicial preference for one legal analogy over another, usually in view of the public welfare

istisnaCa A contract of sale of specified goods to be manufactured, with an obligation on the manufacturer to deliver them upon completion. It is a condition in istisnaCa that the seller provides either the raw material or cost of manufacturing the goods

jahala <ack of knowledge or ambiguity in the terms of contract.

jahiliyyah .e)p. ayyam al>jahiliyyah lit. the days of ignorance/ The so>called Epre>Islamic period.E The period between the =rophethood of IIsa bin #aryam .2esus/ and the =rophethood of #uhammad. 2ahiliyyah is the term #uslims use to refer to the era just before the coming of the =rophet #uhammad and more generally to the state of affairs

which characteri$ed this era, which was plagued by shirk .the crime of associating partners with Allah/, infanticide, tribal strife, etc.

jiCalah !ervice fee3 a fee paid for any service rendered, also known as juCl.

kafalah Assumption of the responsibility for debt repayment3 a standard Islamic financial transaction in which L .the kafil/ agrees to assume responsibility for the debts of @ .the makful Ianhu/. !imilar but not identical to hawalah.

khiyar .lit. "ption, choice/ the option e)tended to one or more of the parties in a sales contract to rescind the sale, upon the appearance of a defect, for e)ample. The jurists have traditionally recogni$ed several different types of khiyar, including khiyar al>ruIyah, khiyar al>Iayb, khiyar al>shart, khiyar al>majlis.

khiyar al>shart An option in a sale contract concluded at the time of signing the agreement, giving one of the two parties to the contract a right to cancel the sale within a stipulated time.

madhhab .lit. way of going, pl. madhahib/ A fi,h school or orientation characteri$ed by differences in the methods by which certain source>te)ts are understood and therefore differences in the !hariIah rulings which are deduced from them. There are four well> known madhahib among !unni #uslims whose names are associated with the classical jurists who are said to have founded them .+anafi, #aliki, !hafiIi and +anbali/.

makruh <it.detested3 technical term used by the fu,ahaC to classify actions with regard to their desirability. #akruh is said of an action which one is rewarded for avoiding, but not punished for committing.

mal %ealth, money, property3 any valuable thing which can be possessed.

manfaIah .lit. benefit/ The yield which a utili$able property produces. The term is often used by the fu,ahaC to describe the usufruct associated with a given property, especially in leasing transactions. In an automobile lease for e)ample, the term manfaIah might be used to describe the benefit which the lessee derives from the use of the car for the duration of the lease .as opposed to the actual ownership of the vehicle/.

ma,asid the general objectives of Islamic law

ma,asid al>!hariIah .lit. The objectives of the !hariIah/. The term ma,asid al>shariIah refers to a juristic>philosophical concept developed by the later generations of the classical jurists, who attempted to formulate the goals and purposes of the !hariIah in a comprehensive manner to aid in the process of investigating new cases and organi$ing previous e)isting rulings.

maysir (ambling, a game of chance. "riginally a game of chance played by the Arabs before Islam, maysir came to refer to any game of chance "ne of three fundamental prohibitions in Islamic finance .the other two being riba and gharar/. The prohibition on maysir is often used as the grounds for criticism of conventional financial practices such as speculation, conventional insurance and derivatives.

miskin A poor, indigent person. The miskin is mentioned in the 7urCan as one of the recipients of $akah.

muIamalah A financial transaction. Di,h al>muIamalat is the traditional Islamic discipline concerned with the jurisprudence of financial transactions.

mudaraba A #udarabah is an Investment partnership, whereby the investor .the ab ul #al/ provides capital to another party0entrepreneur .the #udarib/ in order to undertake a business0investment activity. %hile profits are shared on a pre>agreed ratio, loss of investment is born by the investor only. The mudarib loses its share of the e)pected income.

mudaribJ The mudarib is the entrepreneur or investment manager in a mudarabah who invests the investorCs funds in a project or portfolio in e)change for a share of the profits. Dor e)ample, a mudarabah is essentially similar to a diversified pool of assets held in a Discretionary Asset #anagement =ortfolio.

mufti A highly ,ualified jurisconsult who issues fatawa .sing. fatwa, informed legal pronouncements/, usually in response to ,uestions posed to him.

mugharasah A type of agricultural contract in which a land owner and a worker agree that, in return for the workerCs planting and tending of fruit>bearing trees on the land ownerCs field, the landowner will assign to him a share of the orchardCs harvest. Both +anafi and +anbali jurists .the latter also call the transaction munasabah/ discuss mugharasah in their fi,h works. Two valid forms of the contract have been mentionedJ 4/ The landowner supplies the necessary materials .e. g. twigs/ and bears related e)penses .e. g. fi)ture transportation/ while the worker tends the trees for a fi)ed period. After the e)piration of this period, the worker receives a fi)ed wage or a fi)ed portion of the orchard. B/ The worker supplies the materials and bears related e)penses and receives a share of the harvest. The second more closely resembles mu$araIah.

mujtahid <egal e)pert, or a jurist who e)pends great effort in deriving a legal opinion or interpreting the sources of the law.

murabahah .phr. bayI al>murabahah/ "riginally a term describing any sale in which the seller sells his merchandise for more than the price at which he ac,uired it, the term murabahah is now used in contemporary Islamic finance to describe a financing scheme in which a financial institution agrees to purchase merchandise for a client provided that the client promises to purchase it from the financial institution at an agreed upon mark> up. This transaction, called simply murabahah or murabahah financing, is widely used in contemporary Islamic finance.

murabaha =urchase and resale. Instead of lending out money, the capital provider purchases the desired commodity .for which the loan would have been taken out/ from a third party and resells it at a predetermined higher price to the capital user. By paying this higher price over instalments, the capital user has effectively obtained credit without paying interest.

musa,ah A type of partnership in which the owner of an orchard agrees to share a stipulated portion of the produce of the orchardCs trees with a worker, in e)change for the latterCs irrigation of the garden.

musharakah =artnership. A standard Islamic transaction in which two or more parties enter into any one of several related types of partnerships .see shirkah, mudarabah, musa,ah, mu$araIah/. In a typical musharakah agreement, two or more parties agree to provide capital .raCs mal/ towards the financing of a commercial venture, share profits according to a stipulated ratio and share losses on the basis of e,uity participation.

mu$abanah -ssentially, mu$abanah is a transaction in which the owner of fruit trees agrees to sell his fruit for an estimated e,uivalent amount of the dried fruit, such as palm fruit for dates or grapes for raisins. #u$abanah was an agricultural practice known to the people of #adinah and prohibited by the =rophet .see hadith of 2abir b. IAbd Allah/, ostensibly because of the strong element of gharar present in such a transaction. The special case of araya .see entry/ was e)empted from this prohibition. !ome fu,ahaC, particularly #aliki jurists, use the term mu$abanah to describe any sale in which the

weight or volume of the e)change items is unspecified.

mu$araIah !hare>cropping3 an agreement between two parties in which one agrees to allow a portion of his land to be used by the other in return for a part of the produce of the land.

najash The prohibited practice of deceiving and inciting a potential buyer during the course of pre>sale negotiations or bidding by egging him on, either through insincere bidding on the part of a spectator .such as bidding with no intention of buying and merely in order to have the would>be buyer raise his bid/, or false statements on the part of the seller himself .such as the seller claiming that the commodity is of greater value than its true worth/.

nisab The e)emption limit for the payment of $akah. A #uslim who possesses wealth below the nisab is e)empted from paying $akah, while a #uslim who possesses wealth at or above this e)emption limit is obliged to pay $akah. The nisab differs depending on the type of wealth in ,uestion.

=<! =rofit and <oss !haring. The term is used to describe any one of several financial schemes .but particularly the banking system of =akistan/ based on the principle of interest>free lending and featuring the use of mudarabah and musharakah .see entries/ as financing instruments.

,abd .lit. sei$ing/ taking possession of the e)change commodity in an e)change transaction, such as the e)changer taking possession of the silver which he traded for his own gold. Its being immediate is a necessary condition for the validity of currency e)change.

,ard hassan a loan per amore in which there is no interest. In Islamic law, all loans are gratuitous contracts

,imar A type of prohibited arrangement in which the ac,uisition of property is contingent upon the occurrence of an uncertain event, as is the case in gambling.

,irad 7irad is a synonym for mudarabah.

7urCan the Book of Divine evelation that was delivered to humankind by the =rophet #ohammed, peace be upon him.

raCs al>mal *apital. The money or property which an investor .rabb al>mal/ invests in a profit>seeking venture, often in a partnership .musharakah/ such as a mudarabah or shirkah arrangement.

rabb al>mal In the mudarabah, the investor.

rahn *ollateral3 a pledge or the transaction which governs such a pledge.

riba .lit. increase/ any increase in a loan or sale transaction which accrues to the lender, seller or buyer, without the provision of an e,uivalent counter>value to the other party. In Islam, riba is one of the most abhorrent of all sins and is absolutely prohibited. iba encompasses various types of illict gain, of which banking interest is one e)ample.

riba al>fadl The riba of e)change surplus. Any commodity>for>commodity e)change transaction .i. e. barter/ in which the e)changed commodities are of the same type but of une,ual measure, or the delivery of one commodity is postponed.

riba al>nasiCah =ostponement riba. iba al>nasiIah is one of the two categories into which riba .see entry/ is often divided by the fu,ahaC, the other being riba al>fadl .see entry/. iba al>nasiCah takes place when two ribawi substances .see al>amwal al>ribawiyyah/ are e)changed, one immediately and the other with a delay. An e)ample of riba al>nasiCahJ two parties agree to e)change 45 kilos of gold for B kilos of silver such that the former is handed over immediately and the latter is to be delivered B weeks from the date the contract is signed. Another e)ampleJ two traders e)change 4 metric ton of wheat for B metric tons of barley such that the latter is delivered after one year.

rishwah Bribery.

rukn .lit. pillar, pl. arkan/ In fi,h, an integral part of an act, such as a transaction, without which the act can not be said to have been performed.

sada,ah .pl. sada,at/ *haritable giving.

sahih .lit. sound, healthy, correct/ said of a valid contract, opp. of bMtil. A hadith of the highest level of authentication.

salah itual prayer3 the second pillar of Islam after the shahadah.

salam A type of sale in which the full price of the goods is paid in advance and the goods are delivered at a specified date in the future.

salam A contract for the purchase of a commodity for deferred delivery in e)change for immediate payment according to specified conditions

sarf *urrency e)change.

shahadah Testimony to the fact that Allah has the uni,ue right to be worshipped to the e)clusion of anything or anyone else and that the =rophet #uhammad is the #essenger of Allah by declaring, EAshhadu an la ilaha illallah wa ashhadu anna #uhammadan rasulullahE .i.e. EI testify that there is no one or thing rightfully worshipped e)cept Allah and that #uhammad is the #essenger of Allah/.

!hariahJ Islamic law as revealed in the 7uran and through the e)ample of =rophet #uhammad .=B1+/. A !hariah compliant product meets the re,uirements of Islamic law. A !hariah board is the committee of Islamic scholars available to an Islamic financial institution for guidance and supervision in the development of !hariah compliant products.

!hariah advisor An independent professional, usually a classically trained Islamic legal scholar, that advises an Islamic bank on the compliance of its products and services with the !hariah, or Islamic law. %hile some Islamic banks consult individual !hariah advisors, most establish a committee of !hariah advisors .often know as a !hariah board or !hariah committee/.

!hariah compliant An act or activity that complies with the re,uirements of the !hariah, or Islamic law. The term is often used in the Islamic banking industry as a synonym for EIslamicENfor e)ample, !hariah compliant financing or !hariah compliant investment.

shart .pl. shurut/ A necessary condition, something which needs to e)ist or be present in order for something .like a transaction/ to be valid. Also a condition or stipulation in a contract.

shirkah Any contract between two or more persons in which they agree to jointly enter into a financial enterprise whose profits will be divided between them. syn. musharakah.

shufIah The right of pre>emption in sale transactions, for e)ample, a real estate sale in which some party possesses the right to force the seller to sell him all or part of the real estate in the event of a sale.

sighah .sighat al>Ia,d/ !ighah is a term used by the fu,ahaC to refer to the formal e)change which takes place between the contractual parties indicating their willingness to enter into the contractual agreement and therefore constitutes the contract itself. The sighah is a rukn .integral element/ of the Islamic contract and essentially consists of a proposal .ijab/ on the part of one contractual party and an acceptance .,abul/ on the part of the other, either of which may be verbal, written or even gestural, depending on the circumstances under which the contract is closed. An accepatable sighah in a sale contract, for e)ample, may consist of a purchaser saying to a seller, Edo you agree to sell me this merchandise for this priceHE followed by the seller replying E@es.E The ijab and ,abul may be reversed so that the seller proposes and the purchaser accepts. !igning a written contract which details the conditions of the transaction which it governs, constitutes acceptance on the part of the signer.

suftajah ."rig. =ersian/ A debt transfer transaction, practiced in Islamic societies since the IAbbasi period in which A, a debtor authori$es his agent .wakil/ or someone who owes him a debt, to pay a given amount to * to whom A owes a debt. !uftajah is related to and may be considered a special case of the standard Islamic debt transfer transaction known as hawalah .see entry/.

sukuk !imilar characteristics to that of a conventional bond with the difference being that they are asset backed, a sukuk represents proportionate beneficial ownership in the underlying asset. The asset will be leased to the client to yield the return on the sukuk.

!unnah The actions, deeds, affirmations and characteristics of the =rophet #uhammad. The customary practice of the =rophet which informs the life of a #uslim.

takaful Islamic insurance. !tructured as charitable collective pool of funds based on the idea of mutual assistance, takaful schemes are designed to avoid the elements of conventional insurance .i.e., interest and gambling/ that are prohibited by Islamic law.

tawarru, everse murabahah. As used in personal financing, a customer with a genuine need buys something on credit from the bank on a deferred payment basis and then immediately resells it for cash to a third party. In this way, the customer can obtain cash without taking an interest>based loan

1lema pl. of Calim, !hariah a scholars or jurists.

1mmah The #uslim *ommunity.

urboun -arnest money. It is the amount paid by the client .orderer/ to the seller after concluding a contract of sale, with the provision that the contract is completed during the prescribed period. The urboun amount will be counted as part of the price3 otherwise the urboun will be kept by the seller if the buyer fails to e)ecute the contract.

usul al>fi,h Islamic legal theory.

wadia !afe>keeping0resale of goods with a discount on the original stated cost

wadiIah .lit./ !afe>keeping deposit. The standard Islamic financial transaction in which L entrusts property to @ for safe>keeping. %adiIah refers to the deposited property.

wakalah Agency3 a standard Islamic practice wherein L .the wakil/ acts as the agent of @. In this capacity L may e)ecute the affairs of @. %akalah is a widely applicable phenomena in Islamic practice which is often used in financial transactionsJ whenever a party cannot personally supervise a given affair, it deputi$es another party to e)ecute it on its behalf.

wa,f pl. .aw,af/ lit. cessation3 A standard Islamic transaction in which one Cfree$esC his property such that it is considered to have been arrested in perpetuity and can neither be sold, inherited or donated. The term wa,f fre,uently refers to the property itself. The use of a wa,f .e.g. a park/ is often dedicated to the relief of the poor, the public at large or other charitable ends.

wasiyyah %ill, testament, be,uest. The statement of a #uslim in which he details the manner in which his wealth is disposed of after his death.

$akah literally, it means blessing, purification, increase, or cultivation of good deeds. In !hariah, it is an obligation in respect of funds paid for a specified type of purpose and for specified categories. It is a specified amount prescribed by Allah the Almighty for those who are entitled to Aakah as specified in the 7urCan. The word Aakah is also used to indicate the amount paid from the funds that are subject to Aakah. 4. CA,d *ontract B. BaiC !ale ;. BaiC Bithaman Ajil A contract of sale and purchase of an asset in which the payment of price is deferred and paid in installment within an agreed period of time. The selling price includes profit F. BaiC Dayn !ale of debt that is created under !hariah compliant business activities 9. Bai& ?Inah O A contract of sale and purchase of an asset whereby the seller sells to buyer in cash and subse,uently buys back the asset at a marked up deferred price O A contract of sale and purchase of an asset whereby the seller sells to buyer at a deferred price and subse,uently buys back at a lower cash price P. BaiC #aCdum Buying and selling something that does not e)ist 8 BaiC #uaCtoh A contract of sale and purchase of an asset in which the contracting parties agreed on the e)change of the asset and the price without verbal or written ijab and ,abul :. BaiC #u$ayadah !ale by auction G. BaiC !alam efers to an agreement whereby payment is made immediately while the goods are delivered at an agreed later date. It is e,uivalent to an advance payment 45. BaiC !arf efers the buying and selling of foreign currencies 44. Dalil -vidence, indicative legal te)t 4B. Dayn Debt 4;. Dharurah Qecessity 4F. Datwa Decree, religious edict from a ,ualified scholar 49. Di,h #uamalat Islamic *ommercial <aw 4P. Du,ahaC Islamic jurist 48. (harar -lement of uncertainty and0or deceit 4:. +adith =rophetic tradition 4G. +alal <awful B5. +a, ight B4. +awalah Debt assignment contract BB. +ibah

(ift. An act of transferring of ownership of an asset or usufruct without an e)change of counter value during the lifetime of the transferor B;. +ukm !hariah ruling BF. IbraC ebate. %aiving partially or totally a right to claim a debt B9. Ijarah <easing contract. A contract between a lessor and a lessee in which the lessor being the owner of the property allows the lessee to enjoy the usufructs of the property at agreed terms on the rental and period of lease BP. Ijarah Thumma al>BaiC A contract of lease which subse,uently followed by a sale contract B8. IjmaC *onsensus of Islamic scholars and jurists B:. Ijtihad easoning by ,ualified scholars to obtain legal ruling from the sources of the !hariah BG. CIllah *ause ;5. Istihsan 2uristic preference, disregarding a hukm backed by a dalil and supported by another hukm that is sounder ;4. IstisnaC !ale and purchase by order ;B 2ahalah Ignorance or lack of knowledge ;;. 'afalah A contract of guarantee in which one party guarantees the fulfillment of a claim or performance of an obligation which is due to another party in a case of default. !ynonymJ Dhaman ;F. #al Asset or property ;9. #aslahah *onsideration of public interests ;P. #a$hab !chool of thought ;8. #uamalah .singular/ 0 #uamalat .plural/ Transaction.s/ ;:. #udharabah A partnership in profit whereby one party provides capital .rabb al mal/ and the other party provides labour .mudharib/ ;G. #u,asah !ettlement of debt by set off F5. #urabahah *ost plus profit sale F4. #usyarakah =artnership FB. #usyarakah #utana,isah A form of partnership in which one of the partners promises to buy the e,uity share of the other partner gradually until the title to the asset is completely transferred to him F;. Qas -)plicit legal te)t FF. 7abd Taking possession and having control of purchased asset F9. 7iyas Analogy FP. 7ardh Islamic loan F8. ahn =ledge or *ollateral F:. iba 1sury FG. !add AariCah Blocking the means to something .evil/ 95. !ahibul #al *apital =rovider 94. !ahih Kalid or authentic 9B. !arf *ontract of currency e)change

9;. !ukuk Dinancial notes0documents whose value is backed by certain assets 9F. TaCwidh *ompensation charged to a debtor for late payment 99. Tawarru, An arrangement that involves a purchase of an asset based on #usawamah or #urabahah and a subse,uently sale of the same asset to a third party in order to gain cash money 9P. 1jrah !ervice fee 98. 1lamaC Islamic scholars 9:. C1rbun -arnest money, down payment 9G. 1rf *ustomary practices P5. C1,ud muCawadat -)change contracts P4. %aCad =romise PB. %aCad #ul$im Binding promise P;. %adiCah yad Dhamanah A guaranteed safe keeping contract PF. %akalah A contract where a party authorises another party to act on behalf of the former as long as he is alive