Premium
The combination of contracts in Shariah : A possible mechanism for product development in Islamic banking and finance
Author(s) -
Arbouna Mohammed Burhan
Publication year - 2007
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.20147
Subject(s) - ambiguity , mechanism (biology) , islamic finance , product (mathematics) , islamic banking , business , islam , economics , accounting , computer science , philosophy , geometry , theology , mathematics , epistemology , programming language
The combination of contracts is a potential mechanism of product development in Islamic finance. However, this concept encounters legal issues due to ahadith that prohibit two contracts in one deal. The article argues for the validity of combining two or more contracts to structure Shariah‐compliant products. It discusses many aspects of combination of contracts, including terminologies and purposes of the con‐tracts, the degree of uncertainty and ambiguity, and the nature of the bargain in the contracts combined. If the contracts combined pass the tests established by legal prin‐ciples, there will be no legal objection to combine such contracts into one deal. © 2007 Wiley Periodicals, Inc.