CHAPTER 3BUSINESS IN ISLAM

INTRODUCTION

BASIC OF BUSINESS IN ISLAM Business is the exchange of goods with goods or

money to the items involving the sellers and buyer.

Business in Islam is also regarded as the most abundant source of livelihood. The Prophet has said in a hadith says: "9/10 provision is coming from the business." (Riwayat by Tirmidhi).

It also able to get profit based on ability, skill, intelligence and efficiency.

BASIC OF CONTRACT IN ISLAM

Definition of sale :

Trading is the exchange of goods with goods or money to the items involving the sellers and buyer.

TRADING LAW Trading is permissible and lawful by the

words of Allah

Transaction is considered null and void if not prefect rule of sale and purchase

Transaction is considered valid when all the pillars of trading carried out properly

> SELLER He must be capable of taking responsibility- Has attained the age of puberty (baligh)- Has attained majority ( rasheed / 18 years old)

He must not be prohibited from dealing with his property- Not bankrupt- Not wastrel (safih)

There is no coercion exerted him

> BUYER He must be capable of taking responsibility- Has attained the age of puberty (baligh)- Has attained majority ( rasheed / 18 years old)

He must not be prohibited from dealing with his property- Not bankrupt- Not wastrel (safih)

There is no coercion exerted him

SUBJECT MATTER • It must exits

• It must owned by the seller- It is legally owned by the seller. - The goods of other people can not be sold

• It must capable of being delivered- Free from encumbrances

• It must have some use

• It must be of pure substance.

• It must not be of any of the following substance:- Dogs and pigs- Any intoxicating liquid- Carcasses- Blood, pus, and vomit- Droppings and urine- Milk of animals not eaten by men.

PRICE- It must be know in currency and absolute

amount.

> OFFER AND ACCEPTANCE (SIGHAH)

CONCEPT AND METHODS OF BUSINESS IN ISLAM

1. MUDHARABAH• Is a contact when the owner of capital entrusts his funds to

an entrepreneur who contributes skills in a business and the profits generated is to be shared between them.

Rule Mudharabah:- The owner of the capital- Businessman- Capital- Work / business - Profit- Sighah : ijab / qabul

Types of mudharabah• Mudharabah mutlaqah / free• Mudharabah muqaida / limited

Muamalat function in mudharabahoTrustee of the capital received from the landlord.oSubjected under the law wadi’ah.oRepresentative of the landlord and subject to the law

wakalah oShared hosting partners and subject to the laws of capital

musyakarah

2. AL-MUSYARAKAH Musharakah is a general partnership whereby two are

more parties into a contract to exploit their labour and capital jointly and to share the profits and losses of the partnership.

Rule Musyarakah:• Shareholders• Capital• Project• Sighah : ijab / qabul

Types of Musyarakah

- Company al-‘Inan:A partnership of two or more to contribute the capital to finance a project

and to share the profit between them

- Company al-mufawadhah: An equal partnership between two or more, where each contributes the

same amount of capital and to share the same amount of profit and work.

- Company al-wujuh: A partnership of two or more without contributing capital.

- Company al-abdan

3. AL-MURABAHAH Refers to the sale of an item at a price that includes a profit

margin as agreed by both parties.

Rule Murabahah- Seller- Buyer - Goods sold`- Price- Sighah: ijab / qabul

Provided murabahah- Trust the sellers to state the actual capital goods to be sold to the buyers.- Both sides agree on the rate of profit in addition to the actual cost.

4. AL-BAI’BITHAMAN AJIL A sale with the payment of the selling price deferred to an

agreed later date.- The merchandise exists at the time of contract.- The Shariah does not require that the cost price be known to

the buyer.

• Pillars of Al-Bai’Bithaman Ajil- Seller- Buyer- Assets/Goods- Price- Sighah

5. AL-BAI’ SALAM

Purchase price payments made with cash (earlier) and article submission hold forth to the future.

Trading rule bai’ul salam:- Seller / receiver order- Buyer / booker- Goods- Price- Sighah : contract ijab / qabul with salam words

Specific conditions of sale bai’ul salam- Contract shall be referred to with the word salam- Price submission immediately (first)- There is no reason to prohibit deferment of syariah (ribawi

items)- The agreed price of goods- Goods delivered at the time and place fixed Delayed

submission goods on time- Stocks sales only for goods deemed accurately in terms of

shape, number, measure, weight, type, quality and others.

6. AL-WADIAH• Definition:

Al-Wadiah is an agreement between the owner of the goods to keep belongings with others as the item in order to be kept and cared for her safety.

• Specific condition of Al-Wadiah:- Owner of the property- Custodian of the property- Property of safe keeping- Ijab and Qabul

AL-QARDHU HASAN

In giving Qardh Hasan the two following matters must be observed:

i. The lender must not impose any extra payment in the contract.

ii. The borrower must not promise in the contract to pay anything extra.

AL-RAHN

Agreement between the chargor goods by the receiving party chargor charges which produce a valuable item as collateral for the party receiving the charge.

Purpose ar-Rahnu- Assure that the rights of a debt or loan given would be lost if

the parties are unable to settle a debt owned.

Rule ar-Rahnu- Mortgage - Charge- Pledge- Charge of debt obligations - Sighah : ijab / qabul

Law ar-Rahnu- From Shariah perspective, it must be bought and sold items

AL-IJARAH• A sale of the use of another’s property.- The property rented belongs to the lessor- The lessor has the right to repossess the property on default of the

lessee

Ijarah- Seller – lessor- Buyer – lessee- Asset – asset- Price – benefit (use or usufruct)- Contract- rental- Contract

AL-WAKALAH

Agreement between the appointed representative of a party with representatives from the other.

Money or properly received by a representative called wadiah Representative can take his wages for service execution