31 Pages Posted: 11 Nov 2013
Date Written: 2013
This paper examines the concept of a promise, an essential tool for Islamic financial transactions that has facilitated the development of structured Sharī‘ah-compliant financing arrangements and mitigated much of the risk that Islamic financial institutions encounter. The study explores jurists’ opinions regarding the extent that unilateral and bilateral promises are religiously binding and enforceable in a court of Islamic law. It classifies bilateral promises (muwā‘adah) into non-binding non-enforceable promises and binding enforceable promises, and contends that the latter category takes the constructive ruling of a contract (fī ḥukm al-‘aqd). The paper argues that Islamic contracts can be added to a future time or made contingent upon the fulfillment of a condition so long as they meet some general guidelines.
Keywords: unilateral promise, bilateral promise, contract, wa‘d, binding, Islamic finance
JEL Classification: K12, L14, P34, F30, G3, P4, P43
Suggested Citation: Suggested Citation
Ginena, Karim and Truby, Jon M., Deutsche Bank and the Use of Promises in Islamic Finance Contracts (2013). Virginia Law & Business Review, 7(4), 620-649, 2013. Available at SSRN: https://ssrn.com/abstract=2352770