Part 14

UD ey Ql abl Jel, “Allah has permitted trade and forbidden riba” (al-Bagarah 275).

This is not actual the difference between compound and simple interest but such is what is stated in the text —JZ

Topic Two: The Doors That Islam Opens to Freedom from Riba

Islam has opened many ways to bring about the end of riba and make people not in need of resorting to it. These include the following types of dealings:

(1) Islam allows mudhaarabah companies. These are companies in which the capital is provided by one person while another person provides the labor. The profit from the venture is divided between the two of them according to the division they have agreed upon. If any losses occur, they fall solely on the capital provider. The one who provided his work and effort does not face any other loss other than losing his time and effort.

(2) Islam allows salam purchases. This is where one pays for something now but its delivery is in the future. Ifa person is in need of cash, he may sell the product of his work at a reasonable price for future delivery. However, the stipulations that are discussed in the books of fiqh must be met for this type of transaction to be valid.

(3) Islam allows purchases with deferred payments wherein the price of the good is increased over what it would be if the item were paid for with cash. Islam has permitted this to make it easier for people to meet their needs and in order to give them a way of escaping from interest.

(4) Islam encourages the establishing of institutions that will give loans, interest-free and for the sake of Allah, regardless of whether these loans be at the level of individuals, organizations or the government. This is in fulfillment of the principle of social security and support among the Muslim nation.

(5) Islam has also legislated the giving of zakaat to those debtors in need, to the poor who do not have possessions,

to the stranger who is cut off from his wealth and so forth. This is all meant to satisfy their needs, improve their condition and raise their position.

These are some of the most important means Islam opens to all individuals of society to fulfill their needs and to preserve their nobility as humans. By such means, also, they may attain their noble goals of fulfilling their needs and allowing their deeds and investments to prosper.

Al-fawaaid [the Arabic term used for the interest paid by modern-day banks] is the plural of “benefit”. It is used by economists to refer to the additional money that is paid by the bank to those who have savings accounts or what the bank receives when they lend money. It is a type of riba. Indeed, it is the essence of riba in itself, even though they may use a different name for it. There is no doubt that it is from the riba that is forbidden in the Quran, sunnah and consensus.

It has been narrated that there is a consensus that it is forbidden to stipulate any increase payments for a loan. In fact, what they are offering is not really a loan [from the Islamic perspective]. As the mufti of the land of Saudi Arabia, Shaikh Muhammad ibn Ibraaheem said, “In reality, what they calla loan is not a loan. This is because what is meant by ‘loan’ [from the Islamic perspective] is a goodly loan and assisting loan. Although on the surface these loans look like that, in reality they are a sale of dollars for other dollars on credit with the profit known and stipulated. By this it is known that the interest that is taken by the banks on the loans they give out and which they give to holders of savings accounts is completely equivalent to interest. Both of them are of the

meaning of ‘an increase.’ It is proper to call one the same as the other.”

This chapter is composed of an introduction and the following two topics:

Tjaarah (8 )\>r\) refers to a contract for the usufruct of a permissible, known thing for a specified time period.

It is permissible and is a contract binding upon both parties.

Ijaarah is a way of exchanging benefits between humans. Humans are in need of tools for work, houses in which to live, animals, cars, modes of transportation and so on. Permitting ijaarah makes things easier for people and allows them to meet their needs.

(1) Renting a specific item, such as, “I rent this house or car to you.”

(2) Hiring someone for work, as in hiring someone to build a house or work the land and so forth.

Topic One: Conditions Required for Leasing and What is Being Hired or Leased

(1) It must be let out by one who has the right to deal in the item being leased or rented.

(2) The usufruct or service must be specifically identified, such as living in a house, serving a person or teaching some knowledge.

(4) The usufruct or service must be something permissible, such as a house to live in. Such a contract is not valid if it is for something forbidden, such as for prostitution, singing, making a building into a church, selling alcohol and so on.

Riding in a car, plane or ship or giving one’s clothing to a tailor for shortening or sewing or renting some mode of transport without first making a contract is considered permissible because it is something known and done customarily [therefore, the details of it are understood and

need not be stated]. The customary practices in those and other similar matters take the place of some specific statement [or agreement].

The conditions for the article or service being hired are that it must be known, either by sight or description, the contract is for its use and not its parts, the lessee has the ability to hand over the item, it meets the need for which it is intended, and the lessee either owns it or has permission to lease it.

It is acceptable to lease an endowment. If the lessee dies, the endowment passes on to those after him and the contract is not dissolved. The lessee shall have his portion of the wages.

Anything that is forbidden to sell is also forbidden to lease out or hire except for an endowment, a free person and a slave who has given birth to a child for her master.

The lease contract is nullified if the article being leased is destroyed and its use comes to an end.

It is permissible to receive wages for teaching, building mosques and so forth. However, receiving wages for performing hajj [on another’s behalf] is allowed only in the case of need.

If the Imam, caller to prayer or teacher of the Quran receives a stipend from the public treasury or receives remuneration without conditions, such is permissible for them.

The lessor does not have to pay for the loss of an item if it is destroyed while in his possession as long as he was not negligent or did not himself cause any harm to the item.

The right to payment becomes obligatory when the contract is signed; one must make the payment when the item leased is handed over. However, it is permissible if the two parties agree on a delayed payment or payment over time. The worker deserves his wages as soon as he finishes his work.

This chapter has an introduction and a discussion of the following three topics:

Topic 3: The difference between an endowment and a bequest.

Lexically, wagf (—45 5) is a verbal noun whose plural is auqaaf. One says, “waqafa shai” if something is retained or withheld. In legal terms, it refers to retaining a property or source while distributing its proceeds or returns.

The basis for the legality of endowments is in the confirmed sunnah of the Messenger of Allah (peace be upon him) as well as in the consensus of the Muslim nation.

As for the sunnah, al-Bukhari and Muslim record that Umar said to the Messenger of Allah (peace be upon him), “O Messenger of Allah, I received wealth in Khaibar and I have never received any wealth more dear to me. What do you order

me to do with it?” The Messenger of Allah (peace be upon him) replied,

“If you wish, you may retain the property while giving [its proceeds] away in charity.” Umar did so on the condition that its property would not be sold, given as a gift or inherited. [Recorded by al-Bukhari.] Umar gave the proceeds in charity to the poor, his relatives, slaves buying their freedom, warriors fighting for the sake of Allah, travelers and visitors. There is no sin upon the person who is in charge of the endowment if he eats from it according to what is customary or if he feeds a friend an amount which is not great.

Endowments are something that are particular to the Muslims. Jaabir said, “None of the Companions of the Prophet (peace be upon him) would ever be of means except that he would establish an endowment.” This shows that what most people do today is the opposite of what was known during the time of the Companions. Today, people only know bequests and they are ignorant about endowments.

(1) Those to whom Allah has been most generous by bestowing upon them riches and ease are hereby encouraged to increase their acts of obedience and acts getting them closer to Allah by specifying a certain portion of their wealth [to be used as a charitable endowment]. [This property will then] stay and the proceeds will continue to be produced [and given away], so that one does not have to fear that after his death the wealth may pass on to one who will not preserve it or keep it properly, making his efforts go to ruin and his descendents needy and in hardship. In order to prevent all of those possibilities and in order for the person himself to participate

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in the good deeds, the concept of the endowment has been sanctioned in the lifetime of the person so that he may himself be part of it and put it where he wants so that its proceeds will continue to be beneficial after his lifetime as they were during his life.

(2) Endowments are a main cause of the establishment and maintenance of mosques, schools, hospices and similar other good deeds. Most of the mosques throughout history were established as endowments. In fact, all of the items that a mosque needs—of carpets, cleaning and sustenance for those maintain it—were and still are supported by the endowments.

Some words for stating an endowment are explicit, such as, “I endow this,” “I keep this for such and such purpose.” Others are less explicit and more figurative, such as, “T give this in charity,” “I give this forever,” and so forth.

The figurative terms indicate an endowment in one of three ways:

(1) The intention, if spoken and intended by one of those figurative terms, becomes an endowment.

(2) Ifthe figurative terms are used in conjunction with other explicit or figurative terms [making the matter clear], such as, “I give this in charity as an endowment,” or, “permanently,” and so on, [there is an endowment].

(3) A description of something as having the characteristics of an endowment, such as saying, “This is forbidden [for anyone to dispense with], it cannot be sold or given as a gift,” [indicates an endowment].

In the same way that endowments may be made by one’s clear or figurative speech, they may also be made by one’s actions, as in the case where a person sets up a mosque on his land and announces to the people to come and pray in it.

Topic One: The Types of Endowments and What May Be Given as Endowments

With respect to who receives the first benefits of the endowments, endowments may be divided into two types: charitable and familial.

(1) Charitable endowments: This is where the first benefits of an endowment go to a charitable cause, even if only for a limited time period. After that time period, the benefits may be toa specific person or specific people. An example of this nature would be someone giving his land for a hospital or school and then after some time the land reverts to his children. ,

(2) Familial endowments: This is where the person, at the outset, may designate the proceeds to go to himself or another specific person or people and then, at the end, to charitable causes. For example, he may make an endowment for himself and then for his children and, after them, for general charitable causes.

There is a consensus that existing wealth that has a value to it [from the Islamic perspective], made up of immovable property, such as land or buildings, may be given as endowments. Movable property such as books, clothing, animals and weaponry may also be given. The Messenger of Allah (peace be upon him) said,