Gharar (Deception)

Literally: risk; its original meaning is reduction; it is what is pleasant on the surface but unpleasant underneath.

Technically: what has a hidden result. Some said: something for which the probability of getting it and not getting it are about the same. Some said: something whose acquisition is uncertain and its true nature and quantity are unknown. It has three forms: huge, moderate and slight.

↑ Back to Top


Hawalah (Debt Transfer)

Literally: derived from tahwil: to shift something from one place to another; the reflexive form, tahawwala, means to move oneself from one place to another.

Technically: assignment of debt from the liability of the original debtor to the liability of a third person so that the original debtor becomes free of liability; for example, Party A owes Party B 100 dinars, but at the same time Party C owes Party 100 dinars. Party A may refer Party B to Party C for payment. Party A is called the muhill (transferor); Party B is the muhal (referred); Party C is the muhal 'alayhi (transferee); and debt is called muhal bihi (transferred).

↑ Back to Top


Hibbah (Gift)

Literally: to give something to another without compensation, whether the thing is wealth or not.

Technically: to immediately transfer possession without compensation. Some said: to transfer possession of a tangible asset for free or without compensation, for the lack of compensation is a condition for this classification. Gifts are legal according to the Qur'an, the Sunnah and ijma' (consensus). Contingent factors may make it prohibited, if the intent is disobedience to Allah or to facilitate injustice or to bribe persons in positions of authority. A gift could also be disliked if the intent is to show off or to compete with others in generosity or to develop a reputation for generosity.

↑ Back to Top


Hilah (Stratagem)

Literally: cleverness and astuteness in handling and discharging matters by secret methods. The plural is hiyal. One who uses a stratagem is called muhtal.

Technically: it is used in the same sense. Stratagems are divided it into two types: 1) legal stratagems are used in order to carry out the orders of the Lawgiver and avoid His prohibitions; 2) illegal stratagems are used to indulge in forbidden acts or escape from legal duties.

↑ Back to Top


Ibra' (Discharge)

Literally: from bara'ah: to be free, exonerated, dissociated from.

Technically: to free a person from his liability. With regard to its comprehensiveness, it is of two types: general discharge and special discharge. With regard to its cause, the Hanafis divided it into withdrawal discharge (ibra' isqaÏ) and discharge of fulfillments (ibra' istifa').

↑ Back to Top


Iflas (Bankruptcy)

Literally: that a person runs short of money; it can also be used for running out of money (and wealth) totally.

Technically: when the debts of the debtor exceed his assets. The bankrupt person may have no money at all, or he may possess some but not enough to his debts.

↑ Back to Top


Ijarah (Lease)

Literally: the reward given for service rendered.

Technically: a contract for transfer of ownership of usufruct for compensation. Some said: sale of a known usufruct for a known compensation. Thus, the lease contract belongs to contracts of financial exchange.

Scholars agree that leasing is a lawful contract. The majority of jurists rules that a lease is a binding contract, and they stipulated as a condition for its validity that the usufruct and the compensation must be known. With regard to the time that lease contracts become effective, they are classified into three categories: immediately effective leases, leases effective from a future date, and leases made contingent upon a future event.

↑ Back to Top


'Inah (Sale and Repurchase)

Literally: an option to something, delayed payment and loan.

Technically: when one sells a commodity for a delayed payment and then buys it from the buyer for a lower price in cash. Some said it is a loan in the form of a sale, to legitimize the excess. The majority of jurists have forbidden this sale, but al-Shafi'i and Ibn Hazm permitted it with conditions.

↑ Back to Top


Istisna' (Manufacturing Contract)

Literally: a request to have something manufactured.

Technically: requesting a manufacturer to make a particular good to particular specifications. The manufacturer is called the sani', the buyer the mustasni', and the item ordered ordered is the masnu'. Such a contracts is lawful. It is an exception to the general prohibition of contracting for a non-existent item, the reason being that there is widespread need for it. Scholars are unanimous about its legality. In order for a manufacturing contract to be valid, the type, variety and specifications of the product should be thoroughly described, and the time of delivery should be stated.

↑ Back to Top


Kafalah (Guarantee)

Literally: kafalah is assurance, its original meaning is related to joining and commitment.

Technically: Jurists differed about the definition of guarantee based upon their differing opinions on its resulting effect. The majority of Hanafis defined it as: joining the liability of the warrantor to that of the principal in claims regarding personal injury, debts or material assets. A second definition of theirs: joining the liability of the warrantor to the liability of the principal for a debt. They consider the first definition to be more valid. The Malikis, the Shafi'is in their most famous opinion, and the Hanbalis define a guarantee as: the commitment by an adult of sound mind to make sure that a person who is required to appear in court does so. Guarantees are divided into two types: a guarantee of money, and most jurists call it kafalah ad-daman; or it could be a guarantee of a person, which some call it; kafalah al-badan (guarantee of body) or kafalah al-wajh (guarantee of face). It is in general legitimate, based upon the Qur'an, the Sunnah and the consensus of Muslim jurists.

↑ Back to Top


Khiyar (Option)

Literally: khiyar (option) is the noun derived from ikhtiyar (the act of choosing); in this case, choosing whether to conclude the sale contract or cancel it.

Technically: the right of either party to conclude the contract or to cancel it due to a legitimate justification or a contractual agreement.

↑ Back to Top


Source: ISRA Compendium for Islamic Financial Terms Arabic - English, 1st edition, Kuala Lumpur: International Shariah Research Academy for Islamic Finance (ISRA), 2010