Kafalah Flashcards
Fiqh muamalat 2
En. Khairul guaranteed Aidil’s RM30,000 study financing from Bank Barakah, but due to an accident and permanent disability, Aidil cannot work and relies on his family for life.
Bank suruh En. Khairul Repays Financing Aidil sbb
* En. Khairul is the guarantor of Aidil.
Definition of al-Kafalah contract: literally:
guarantee, security, bail, warranty, surety
Kafalat al-Dayn:
commitment to established rights for others.
Definition of al-Kafalah Contract Technically:
Contractual Commitments in Islamic Law
Kafalat al-badn/wajh
a contract that promises to bring a person who has rights for others
Kafalat al-’ayn:
delivery of subject matter to another party.
BNM PD
guarantor-guarantor joint in assuming liability.
Shariah Rulings Al-Kafalah is
permissible (mubah) for the guaranteed party (makful ‘anhu) and beneficiary (makful lahu).
Shariah Rulings: It is also recommendable (mandub) if the guarantor (kafil) has the
capability and reliability to carry out the commitment.
Conditions of permissible debt
- Shariah-compliant purpose.
- Intention to repay.
- Payment is based on expected future income.
Nature of Kafalah Contract
- Considered one of three security contracts: al-kafalah, al-hawalah, and al-rahnu.
- Act of Tabarru’, where the guarantor guarantees commitment for another party.
- Also known as حمالة وضمانة وزعامة.
Kafalah: Assurance for Guaranteed Party’s Liability
- Provides assurance on obligation fulfillment.
- Binding (mulzim/lazim) on the guarantor.
Pillars of al-Kafalah Jumhur :
parties, subject matter, format qawul
Pillars of al-Kafalah Abu Hanifah & Muhammad Hasan: Format
Ijab & Qabul
Kafalah Contracting Parties
- Guarantor (kafil): legal capacity to enter into a contract.
- Beneficiary (makful lahu): legal entity.
- Guaranteed party (makful `anhu): can be guaranteed by multiple guarantors.
Kafalah Contract Process
- Affected by the guarantor’s offer.
- An offer can be oral, written, or documented.
Charging Fee on al-Kafalah
- Percentage
- Fixed amount
Guarantor Fee Permission
- Permitted for necessities or public conveniences.
Application of al-Kafalah
- Letter of Credit
- Letter of Guarantee
- Shipping Guarantee
- Bank Guarantee
- Advance Payment Guarantee
- Performance Guarantee
- Tender Guarantee
- Credit card based on al-Kafalah contract.
Contractual Agreement and Islamic Bank Guarantee
- Customer enters contractual agreement with beneficiary.
- RHB Islamic Bank issues Islamic Bank Guarantee (IBG) as a surety.
- IBG issued as a fee to customer.
- Customer default results in beneficiary claim from RHB Islamic Bank.
- RHB Islamic Bank pays immediately on demand, provided claim meets guarantee conditions.
- If no default, beneficiary returns IBG, RHB Islamic Bank cancels upon maturity.
