The Sacred Law of Business, Personal Agreements, and Inheritance

Syllabus

01. Fair Sales, Legal Possession, and Returns

Allah Most High prohibits the unlawful consumption of others’ wealth and directs us to do “business based on mutual consent.” (Quran, 4:29) Hamza Karamali uses this verse to explain the importance of clear offers and acceptance, the elimination of ambiguities, what constitutes legal possession, the right to return defective merchandise, and how to apply all of these concepts to modern Internet sales.

Reliance of the Traveller: Sale (k1); The Things Exchanged in a Transaction (k2); Some Prohibited Kinds of Transactions (k4); and The Return of Merchandise Because of a Defect (k5) 

AAOIFI Shariah Standards (2017): Online Financial Dealings (SS38), ‘Arboun (Earnest Money) (SS53)

02. Money, Interest, and Trading Currencies

Allah Most High declares war against anyone who takes interest (Quran, 2:279). Why is interest and why is it prohibited? What is money, how is it created, and what does that have to do with modern interest? And what makes a currency exchange an interest-based transaction? Hamza Karamali explains.

Reliance of the Traveller, Usurious Gain (k3)

AAOIFI Shariah Standards (2017), Trading in Currencies SS(1)   

03. Loans and Islamic Banking

Every year, the gap between the rich and the poor increases because the world economy runs on debt. Hamza Karamali takes you into the world of Islamic banking and helps you imagine what an interest-free economy might look like. Learn about credit sales, collateral, murabaha financing, and the ruling of late-payment fees. 

Reliance of the Traveller: Personal Loans (k10), Putting up Collateral (k11), Guaranteeing Payment (k15) 

AAOIFI Shariah Standards (2017): Procrastinating Debtor SS(3), Settlement of Debt by Set-Off (SS(4)), Murabahah SS(S8)  

04. Bankruptcy and e-Commerce

Did you know that the money in your bank account is actually a debt? (Erase the idea that it is kept as cash in a big vault!) Hamza Karamali takes this as his point of departure, explains the rulings of debt-transfer, and then applies them to debit and credit cards. Learn about bankruptcy, the legality of sales conducted by children, and declaring insolvency in modern law.

Reliance of the Traveller: Bankruptcy (k12), Suspension from Dealings (k13), and Transferring the Right to Collect a Debt (k14)

AAOIFI Shariah Standards (2017), Debit Card, Charge Card, and Credit Card SS(2), Hawala SS(7), Insolvency SS(43) 

05. Partnerships, Modern Corporations, and the Stock Market

Partnerships enable bigger business but can lead to disagreements. Hamza Karamali explains the Sacred Law of traditional partnership contracts and then uses the AAOIFI standards to describe how contemporary scholars have applied the rules of traditional Sacred Law to modern corporations and investing in the stock market.

Reliance of the Traveller: Partnerships (k16), Pre-Empting Sale of a Co-Owner’s Share (k21), Financing a Profit-Sharing Venture (k22)

AAOIFI Shariah Standards (2017): Sharikah and Modern Corporations SS(12) and Financial Papers (Shares and Bonds) (SS21)

06. Renting, Hiring, and Islamic Mortgages

What are the rules of hiring an employee or renting a car? And how have contemporary scholars extended these rules to design an interest-free Islamic mortgage contract? Hamza Karamali introduces Islamic finance in the context of rent-to-own mortgage contracts.

Reliance of the Traveller: Joining Two Types of Transactions in One Contract (k4.12), Renting Things and Hiring People’s Services (k25) and Job Wages (k26)

AAOIFI Shariah Standards (2017): Renting and Rent-to-Own Contracts SS(9)

MIDTERM Apply your knowledge to a variety of real-life problems.

07. Islamic Finance Demystified

Hamza Karamali demystifies Islamic finance by explaining the role of “finance” in modern business, the problems of interest and ambiguity in conventional financing, the growth of the Islamic finance industry, and the development of the AAOIFI standards. He then describes the rules related to two important means of Islamic finance: (1) the forward sale (salam) and (2) the manufacturing contract (istisna).

Reliance of the Traveller: Selling Fruit and Crops (k6) and Buying in Advance (k9)

AAOIFI Shariah Standards (2017): Istisna SS(11)

08. Lending Items, Safekeeping Deposits, and Appointing a Representative 

What are often seen as personal favors—lending an item, keeping someone else’s property in one’s house, and agreeing to pick up something from the grocery store for a friend—are actually personal agreements (contracts, in other words) that entail assumptions and delegations of responsibility. Hamza Karamali explains that when things go wrong, we return to the Sacred Law to decide who owes what, not to our subjective feelings of having done someone a favor.

Reliance of the Traveller: Commissioning Another to Do Something (Wakala) (k17), Deposits For Safekeeping (k18), and Lending Something For Use (k19)

AAOIFI Shariah Standards (2017): Agency SS(23) 

09. Lost-and-Found, Returning Wrongfully Taken Property, and How Islam Ended Feudalism

Islamic Sacred Law brought property rights (and equally for men and women) a thousand years before they began to emerge in Renaissance Europe. Hamza Karamali explains the sin of usurping someone else’s property, how to return it (it’s not as straightforward as you might think!), what to do with lost-and-found items, and then shows how Sacred Law structures contracts between poor farmers and rich landowners in a way that prevents medieval feudalism and serfdom.

Reliance of the Traveller: Return of Wrongfully Taken Property (k20), Sharecropping (k24), and Lost and Found (k27)

AAOIFI Shariah Standards (2017): Irrigation Partnerships SS(50)

10. Gifts Giving, Charitable Endowments, and Islamic Insurance

Sacred Law organized Islamic societies as gift economies, i.e., economies that emphasized giving without the expectation of future rewards rather than growing personal wealth to maximize self-interest. Hamza Karamali describes the legal implications of giving gifts, how to establish a charitable endowment (such as a mosque) whose reward accrues beyond one’s lifetime, and the takaful model of Islamic insurance. He then steps back to reflect on how these rules promote the creation of caring and compassionate communities.

Reliance of the Traveller: Establishing an Endowment (k30) and Gift Giving (k31)

AAOIFI Shariah Standards (2017): Charitable Endowments (Waqf) SS(33) and Islamic Insurance SS(26)

11. Rights to the Estate and Simple Inheritance Cases

The only part of our estate that we take into our graves in our funeral shroud. The rest of our wealth is meticulously distributed by Sacred Law, which only give us the right to will a third of our wealth to someone other than the heirs designated by the Quran, and that, too, after subtracting debts, expiations, and zakat owed. Hamza Karamali explains the precedence-order of the rights to the estate and how to solve simple inheritance cases. 

Reliance of the Traveller: Bequests (L1), Bequest’s Executor (L2), Estate Division (L4), Preventives (L5), Estate Division Shares (L6), and Universal Heir (L10) 

12. Complex Inheritance Cases

Did you know that there are cases where women receive more inheritance than men? And when they do receive less, that the less is actually more when you take the entire Sacred Law into account? Hamza Karamali uses more complex inheritance cases to explain the underlying philosophy of the Sacred Law of inheritance.

Reliance of the Traveller: Estate Division Shares (L6), Those Whose Shares Are Eliminated (L7), Adjustment (L8), Redistribution (L9), and Universal Heir (L10)

FINAL Apply your knowledge to a variety of real-life problems.

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