ISLAMIC BUSINESS TRANSACTION

Y
CHAPTER THIRTEEN

AL--WAKALAH
AL

MAHYUDDIN KHALID Y emkay@salam.uitm.edu.my

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Y DEFINITION
DEFINITION Y EVIDENCE
Y PILLARS OF AL-WAKALAH
EVIDENCE Y TYPES OF AL-WAKALAH
Y CONDITIONS OF AL-WAKALAH
TYPES Y MODERN APPLICATION

CONDITION

APPLICATION

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Y Literally
DEFINITION À Agency, representation, proxy, mandate, authorization,
delegation, empowerment etc.
EVIDENCE Y Technically:
À The appointment of someone to take over the appointer·s
TYPES affairs on his/her behalf for the purpose of accomplishment
of certain tasks
CONDITION
Y Wakalah implies a kind of delegation by a person of his business
APPLICATION
to act on his behalf.
Y It is lawful if a person appoints another as his representative for
selling or buying, letting or hiring, giving or taking a pledge for
depositing or receiving a gift, for safe keeping, for making a
compromise, and for giving an acquaintance and for making an
admission etc.

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Y Al-Quran
DEFINITION À .

EVIDENCE
À The verse indicate the assigning of agents for zakat
management (collection and distribution)
TYPES Y Hadith:
À Reported by Urwah R.A that the prophet S.A.W gave him one
CONDITION gold Dinar to buy with it (be an agent for the Prophet S.A.W) a
sheep but instead he managed to buy two sheep. He then sold
one of it for one gold Dinar and then presented the prophet
APPLICATION with both the sheep and one gold Dinar that he acquired. The
prophet S.A.W prayed for him to be given blessings (barakah)
in all his trade and transactions and mentioned that even if he
sells solid soil, he will definitely gain profit in it.
À Reported by Abi Hurairah R.A to the effect that: the Prophet
S.A.W had sent Umar R.A to be his agent in Zakat collection
À (representative in zakat collections)

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À Reported by Sulayman bin Yasar that: The prophet S.A.W
DEFINITION sent Abu Rafi· and a man of the Ansar to accept (Qabul)his
S.A.W marriage to Maimunah binti al²Harith on his S.A.W
EVIDENCE behalf while he was in Medinah before he had left for Hajj
(representative in Marriage)

TYPES
Y Ijma·:
À The ummah had came to a consensus on the legitimacy of
CONDITION
Wakalah contract since there is a great need for it, and
individuals are also not capable of catering and handling all
APPLICATION his/her needs, matters and daily affairs on their own without
having to resort for the help of other people.
À Hence, it is permitted because it is one of the types of
cooperation on good deeds and fear of God ( Ta·awun Alal
Birri Wa Taqwa ) encouraged in Islam.

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1. Wakil
DEFINITION À The authorized agent, representative, proxy, trustee
×. Muwakkil.
EVIDENCE À Authorizer, mandatory, client, principal
£. Muwakkal Bih
TYPES À Things or subject matter that is being entrusted for, or the
business deals involved
CONDITION 4. Sighah
À Ijab (Offer)
APPLICATION À Qabul (Acceptance)

 
 
  

DEFINITION

Ija (Offer)

EVIDENCE

TYPES
Muwakkil. Muwakkal ih Wakil
(Authorizer, mandatory,
CONDITION
(Things or (authorized agent,
client, principal) su ject matter) representative, proxy)

APPLICATION

Qa ul (Acceptance)

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DEFINITION

. l tl li ite A e c restricte l
EVIDENCE
A l co tr ct t t is ot restricte to
co itio s except for t ose t t re
TYPES per itte i Isl
Not co fi e to cert i circ st ces or ti e
CONDITION li it.
×. l Li ite A e c Restricte l
APPLICATION A l co tr ct t t is restricte or
co fi e wit cert i co itio s t t re
le iti ize b Isl

Bo e b speci l circ st ces or ti e

li it

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1. The agent must be someone that is capable of performing the
DEFINITION responsibility and fulfill the minimum requirement (being sane,
adult and smart)
EVIDENCE ×. The subject matter or business dealings must be clearly specified
in the contract by the authorizer.
TYPES £. It is legal to entrust certain business dealings to an agent even if
the authorizer is capable of performing the same deal himself.
4. The authorizer has the freedom to terminate the contract or the
CONDITION
service of the agent and the agent could also withdraw from the
contract
APPLICATION
À Except if the responsibility of the agent towards the other
party is still pending or his obligation towards the other party
has yet to be fulfilled.
r. The Wakalah contract ends with the accomplishment of the
entrusted tasks or mission

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 . The money or property received by the agent and has yet to be
DEFINITION handed over to the actual owner will be under the rules and
regulations of Al-Wadiah
7. It is permissible to charge some fees or commission on the tasks
EVIDENCE
and works involved in the Wakalah contract
8. It is not permissible to conduct Wakalah for physical prayers
TYPES since the objective behind these prayers are to test and act as
trials to the believers with the exception of certain prayers such
as the Pilgrimage (Hajj), slaughtering animals for sacrifice
CONDITION
(Qurban), distribution of Zakat, and fasting of Kafarah (on
behalf of the dead) as stated in the previous hadiths that support
APPLICATION the legality of Wakalah.
å. The entrusted agent will not be held responsible for any
damage or disruption of the business deal except for cases of
proven negligence or ignorance on part of the agent
10. The agent is not permitted to act beyond what he was entrusted
for by the authorizer in the first place except if it is an unlimited
agency ( Wakalah Mutlaqah ).
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Y Letter of Credit (LC)
DEFINITION Y Under the concept of al-Wakalah, the bank acts as an agent to the
customer:
EVIDENCE À The customer informs the bank of his LC requirement and
requests the bank to provide the facility.
TYPES À The bank may require the customer to place a deposit to the
full amount of the price of the goods to be purchase, which
the bank accepts under the principle of al-Wadiah Yadd
CONDITION
Dhamanah.
À The bank establishes the LC and pays the proceeds to the
APPLICATION
negotiating bank utilizing the customer·s deposit and
subsequently releases the document to the customer
À The bank charges the customer fees and commission for its
services under the principles of al-Ijarah.

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DEFINITION

EVIDENCE

TYPES

CONDITION Y
APPLICATION

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