B

 Islamic Economic Glossary

Incorporated on 7 March 1979, operations began on 22 November 1979. Authorized capital, BD23 million. Subscribed capital, BD11.5 million, and paid-up capital, BD5.75 million.

 

A contract of sale. Tech: Sale of definite goods or property with the free consent of parties for a definite price. It involves proposal (ijab) and acceptance (qabul).It has many types.

 

Sale of something to be delivered later for a price to be paid immediately. Tech: It is an alternate term for bai al-salam.

 

Sale of something to be delivered immediately for a price to be paid later. Tech: This is an alternate term for bai al-muajjal.

 

A sale in which some trees in the garden are donated by the owner to the poor who can get fresh fruit off these trees in exchange for the dry ones for household consumption and not for further sale. It is also known as bai al-araya.

 

Sale of idols, including the earnings of a sculptor.

 

Sale over the sale of another person. Tech: Attempts of a third person to sell his produce while the sale deal is in the process of being concluded between two persons. The intention of the third person is to upset the bargain. This is done usually by quoting a lower rate or pointing out defects in the goods being sold by the other seller.

 

A contract of sale in which a seller offers to sell for a certain price on cash but for a higher price on credit. It also applies to a situation in which a person sells merchandise for a certain price cash on the condition that the buyer will sell it back to him at a higher price on credit. Thus the first seller borrows a certain amount of money to be paid back with an increment (riba) sometime after. It is one of the contrivances to legitimize riba.

 

Sale of whole bales of goods on the basis of their description in an accompanying catalogue or list of contents (barama) without actually unfolding the goods. This was in vogue in Medina and other Islamic cities in the first century A.H. and was treated as permissible by the fuqaha; otherwise wholesale trade would have been impossible.

 

An agreement of sale which is unlawful in respect of its substance and description. For example, an agreement of sale concluded by a lunatic or a minor is batil since it does not possess the substance of the agreement which is the proposal and acceptance by a sane or major person. Similarly, an agreement to sell a dead body or alcohol is not lawful since it involves exchange of mal for something valueless (ghair mutaqawwam).

 

Lit: Sale of a debt for a debt. Tech: A person agrees to sell a commodity to be delivered later for a price which he already owes to the intending buyer. Thus both the price as well as the product are in the form of debts.

 

A sales contract in which the buyer agrees to buy for a certain price whatever a diver will bring out from the bottom of river or ocean.

 

Hiring of a camel to cover a she-camel.

 

An agreement of sale which is lawful in its substance but unlawful in respect of its description. The substance of the agreement refers to proposal, acceptance and the article of sale. The description refers to characteristics other than the substance, such as the price of the article of sale. If an agreement of sale for a definite article is concluded by proposal and acceptance but the price is not settled, the agreement would be fasid although it is enforceable (munaqad) so far as its substance is concerned.

 

An agreement of sale concluded by someone on the property of another without the permission of the latter.

 

A sale involving a risk. Aleatory sale. Tech: It is to sell a thing which one does not have in one's possession nor one expects to bring it under one's control, such as fish in the river or birds in the air. Possession is one of the basic conditions for a valid contract of sale. One cannot sell a thing which is not in one's possession; it involves risk for the buyer. Bai al-gharar is also a general term for all such sale deals which do not specify the commodity of sale or price or time of sale or where the ability of the seller to deliver the commodity is absent.

 

A type of business transaction prevalent in pre- Islamic Arabia where the unborn child of a camel was sold while it was still in the womb.

 

Sale by the urbanite for the nomadic. Tech: A type of business practice in the days of the Prophet whereby some people worked as agents of the grain-sellers from rural areas and all grain was sold through these agents. These agents earned profit both from the seller and the buyer and often deprived the cultivator of his just profit and the buyer of a just price.

 

A type of business transaction in pre- Islamic Arabia where the contract was concluded by the buyer throwing pebbles towards the merchandise, the one hit by the pebble becoming the object sold. (alternate term Bai' bi ilqa al-alhajar)

 

A contract of sale where a person sells an article on credit and then buys back at a lesser price for cash. Example: A asks a loan of $10 from B. B, instead of asking for interest on this loan applies a contrivance. He sells an article to A for $12 on credit and then buys back from him the same article for cash at $10.

 

A sales contract in which a person agrees to pay in lump sum in advance and receives the commodities gradually in instilment

 

A contract of sale in which the sale price is settled by accepting unquestionably the statement of the seller (regarding cost, etc.).

 

A contract of sale in which a supplier (craftsman or manufacturer) is asked to supply goods of definite specifications at agreed rates, place and time of delivery.

 

A postponement or delay in the payment of a debt. Tech: A type of credit sales in which on the date of the discharge of the debt the debtor seeks extension with the promise to pay something in addition. In fact the amount of debt is sold to the debtor for some profit. What is meant by this is, a man's buying a thing on credit for a certain period and when the period of payment comes and he does not find anything to pay, he says to the creditor: sell it to m_ on credit for a further period for something additional. On this the creditor sells it to him. It may also refer to a man who pays money for wheat or the like, to be given at a certain time and when the time comes the debtor says, 'I do not have wheat, etc., but you sell your debt to me on credit for a certain period with an increment'.

 

Sale of alcoholic drinks. It includes the preparation, filtration, carriage, storage and all allied activities, including the sale of containers and utensils of alcoholic drinks.

 

Conditional sale. A sales contract which provides an option to the buyer to annul it. See al-khiyar.

 

A sales contract which has no concealment of facts, dishonesty or doubt.

 

Sale of the contents. Tech: A sales contract in which a package is sold without specifying the contents.

 

Sale of the embryo or sale of what is in the womb of the female.

 

An agreement of sale which is lawful in substance and description but is concluded with the consent of a third party who does not have an absolute right of ownership over the property of the buyer or the seller. For example, bai al-fuduli.

 

A credit sale. Tech: A financing technique adopted by Islamic banks. It is a contract in which the seller allows the buyer to pay the price of a commodity at a future date in a lump sum or in installments. The price fixed for the commodity in such a transaction can be the same as the spot price or higher or lower than the spot price.

 

To purchase a thing when its owner is compelled under stress of want to dispose of it.

 

A type of business transaction whereby grains in ears are sold for dry grain.

 

An alternate term for bai al-gharar.

 

A form of sales contract prevalent in the days of the Prophet in which the buyer or the seller used to touch a piece of cloth and this very act of touching finalized the sales deal.

 

A contract of sale prevalent in the days of the Prophet in which the seller or the buyer would throw a piece of cloth towards the other and this very act of throwing finalized the sales deal.

 

An enforceable contract of sale. Tech: A contract to exchange mal when one party proposes and the other accepts it. It can be of four types: sahih, fasid, najidh or mawquf.

 

Selling a commodity for another commodity. Barter exchange.

 

Sale on profit. Tech: A contract of sale in which the seller declares his cost and profit. This has been adopted (with certain modifications) as a mode of financing by a number of Islamic banks. As a financing technique, it involves a request by the client to the bank to purchase a certain item for him. The bank does that for a definite profit over the cost which is settled in advance. Many people have questioned the legality of this financing technique because of its great similarity with riba.

 

Haggling, bargaining. Tech: Sale of goods at a price on which the buyer and seller agree after haggling without mentioning the cost of the seller.

 

It is the exchange of fresh fruits for dry ones in a way that the quantity of the dry fruit is actually measured and fixed but the quantity of the fresh fruit to be given in exchange is guessed while it is still on trees.

 

A public sale through auction in which the deal is struck with the highest bidder. Tech: A form of sale of merchandise in which more than one seller is interested, and before the deal is finalized some of the prospective customers start bidding up the price without the intention of buying it.

 

A contract of sale which does not involve any right of the third party. It is of two types: lazim (binding) and ghair lazim (nonbinding). The lazim is a contract of sale which has no options (to rescind) for any of the parties and the ghair lazim is a contract of sale which may have at least one option for any of the parties.

 

Credit sale with a fixed term to pay up the agreed price. This method of bai bil nasiah usually resulted in riba dealings in the pre-Islamic days and caused multiplication of the original price if not paid back at the stipulated time.

 

A contract of sale which is final and binding in all respects.

 

A sales contract prevalent in pre-Islamic Arabia in which the merchandise was sold with reference to certain mark or sign on it without the buyer knowing its exact quantity.

 

A contract of sale which is lawful in its substance and description. The substance of an agreement refers to proposal, acceptance and the article of sale (mabt).

 

It is defined as advance payment for goods which are to be delivered later. According to normal rules no sale can be affected unless the goods are in existence at the time of the bargain, but this sort of sale forms an exception to the general rule provided the goods are defined and the date of delivery is fixed. The objects of this sale are mostly fungible things and cannot be gold or silver because they are regarded as monetary values. Barring this, bai al-salam covers almost all things which are capable of being definitely described as to quantity, quality and workmanship. One of the conditions of this contract is advance payment; the parties cannot reserve their option of rescinding it but the option of revoking it on account of a defect in the subject matter is allowed. It is also applied to a mode of financing adopted by Islamic banks. It is usually applied in the agricultural sector where the bank advances money for various inputs to receive a share in the crop (which the bank sells in the market).

 

Sale through documents. Tech: To buy certain goods without taking possession except through transferring of papers of entitlement. This was common in the early days of Islam and is also prevalent in the modern times in futures markets. Sale deals are concluded without physical possession of goods from one party to the other, from second to third and third to fourth, and so on. At each stage margins are added without adding any utility to the products. They are all covered under bai al-sikak. Similarly, selling only licenses and permits issued by the government is also covered by this.

 

A form of sales contract in which a heap of food grains (or any other commodity) is sold without measuring or weighing.

 

A contract of sale in which the payment has been deferred.

 

A sales contract which is contrary to what it appears. Tech: It is a simulated sale in which the seller pretends to have sold his property when in fact he has not. For example, a person may show that he has sold his property to his son so that the state may not confiscate it. In recent times this phenomenon was observed when in certain Muslim states the feudal lords transferred their lands to their relatives to avoid confiscation under land reforms regulations. It also refers to delaying tactics of a defaulting debtor in which he transfers his property or assets apparently to a third party for fear of creditors claiming a right on those assets against their debts. In fact the assets are not transferred to anyone but it is posed as if they have been transferred. The third party whose name is used is also made to testify such a transfer though the claim is untrue.

 

A sales contract whereby the buyer picks up the goods and the seller accepts the price without any explicit bargain. It is also termed as bai al muatah.

 

A contract of sale in which the seller agrees to sell a product at his cost.

 

It is getting a thing against a nominal advance on the condition that if the bargain is struck, the advance will be adjusted and if the bargain is cancelled, the seller will not return the advance. The advance being nominal, the buyer had practically no liability. He will abide by the contract if he finds it advantageous to him and will withdraw from it otherwise. The modern day options contracts in the stock exchange are covered by bai a/-urban.

 

A sales contract in which a seller informs the buyer his actual cost and then gives a further discount on it. Thus it is a sale at a loss.

 

A sales agreement in which the buyer agrees to return the goods at the same price once the agreement is concluded. It is permissible if the clause for returning the goods is not instituted before-hand. But if the said clause is the essence of the contract the agreement becomes void.

 

Public treasury. Tech: An institution of early and mediaeval Islam, it functioned as the central bank of the state, state insurance company and controller of domestic and foreign trade. The bait al-mal had two main categories: bait al mal al-ammah, the ordinary revenues of the state and bait al mal al-khassah, revenues accruing to the ruler from crown domains (diya al-khassah). The khalifah or his wazir would re-appropriate funds from one category of the bait ai-mal to the other. The diwan bait al-mal kept the accounts and was subject to audit by diwan al-zimam. The head of bait al mal was known as sahib bait al-mal. The sahib had the right to inspect diwan al-kharaj. Besides central bait al-mal, there were buyut al-amwal at the provinces. The khazin connected to these buyut al-amwal was responsible for taxes paid in kind and stored at other financial centers.

 

Private treasury of the caliph to cover his personal, family and executive expenditure. It seems that the bait al-mal al-khassah did not appear until the caliphate of Muawiyah had become more distinct under the Ottoman empire.

 

Public treasury of the Muslims for collecting and disbursing charity and waqf funds. Usually, it was administered by the chief qadi of the state. The funds were kept in the mosque under safe custody. The chief qadi was responsible to administer these funds strictly in accordance with the shariah.

 

Too little, too low, very low (price). Tech: Quranic term for exploitative decrement in value to others by traders in contracts of sale. The people of Madyan during the life-time of Prophet Shuaib used to exploit the strangers by colluding with each other and declaring genuine money (coins) of the strangers as false or spurious. The stranger would, thus, sell those coins to them at a low price. Thus they would deprive the ignorant stranger by collusion and deceit.

 

Relating to the law of ushr, trees which fetch their moisture from land (without any rainfall). Ushr is levied on the produce of these trees. See ard at-bal.

 

Relating to the law of zakat, a cow or bull engaged in tilling of land.

 

Incorporated on 21 February 1984. Authorized capital, US$2 million. Paid-up capital, US$ ..50 million.

 

Blessings. Tech: God's blessing or bounty in relation to one's worldly pursuits. It refers to qualitative growth in one's possessions.

 

al-Barakah International is a licensed deposit taker and the first Islamic Bank in Britain within the framework of the Banking Act of the country.

 

Tech: A measure of distance equivalent to 4farasikh, 4,800 dhira or 22.176 kilometers. Also used for the beast of burden which carries the mail and for the postman who used to ride that animal.

 

Futile, false, vain, invalid, void. Tech: A juristic expression about something which is unlawful in its substance as well as its description) (was] ). The Hanafite jurists distinguish between batil and fasid, the latter denoting something which is not inherently void but has conditions or characteristics which has made it void. Other jurists do not distinguish between batil and fasid.

 

Relating to the nisab for zakat, a camel that has reached eight years old and entered into the ninth year.

 

A form of quasi-agency in mediaeval trading. It involved a merchant who, unable personally to attend to a business affair, hands over some of his property to another party for the latter to take care of it for him. Upon completion of his task the outside party, without receiving any commission, profit or compensation in any other form returns the proceeds of the transaction to the merchant whose bidding he has done. All parties to a partnership or mudarabah contract are endowed with the right to exercise this practice freely because it is one of the accompaniments of trade. It is often practiced on reciprocal basis by the merchants for each other.

 

Bank Islam Malaysia Berhard, established on 1 July 1983. First Islamic Bank of Malaysia.

 

Relating to the nisab for zakat, a she camel in her third year.

 

Relating to the nisab for zakat, a she-camel in her second year.

 

Reverence, piety, kindness, charitable gift. Tech: To adopt a generous attitude in interpersonal and inter-institutional dealings. See also al-ihsan.

 

Used in the model of interest-free banking based on mudarabah, it is the ratio of the interest-free loans given by the central bank to the member banks and interest-free loans of the member banks to the public.

 

Bankers Ratio of Profit-sharing. Percentage share of the bank in the entrepreneur's profits on finance taken on the basis of mudarabah. It is an Islamic alternative to the interest on credit obtained by entrepreneurs.

 

A mode of financing adopted by banks in Pakistan. According to this agreement the bank purchases moveable or immovable property for the client with the agreement that the client would buy it back from the bank at a higher price, to be paid later by the client.