URDU-4 Unilateral Promise & its Application in Islamic Banking and Finance

Abstract

Wa’ad means a promise give the impression of an expression of compliance of a person or a group on a particular matter. There are two types of Promise: a unilateral Promise as well as Bilateral promise. This division denotes the nature of binding and undertaking of the subject matter. It is fact the Wa’ad e Bay (Promise to purchase or sale) plays a vital role in the transactions used by Islamic financial institutions. Murabaha to purchase order, Ijarah Muntahia Bittamleek and Diminishing Musharaka are modes of Islamic financial institutions where unilateral Promise is binding with special reference to the views from the Islamic jurists. AAOIFI Shariah standards had mentioned about unilateral Promise and its application in Islamic which reads as fellow: The promise given by the client in the Murabahah transactions 5/1 The promise given by the client in the Murabahah transactions conducted by institutions is legally binding by virtue of item 3/5 of this Standard. This paper is aimed to discuss the binding nature of Wa’ad (Promise) in Shariah Law from both angles; as Diyanata (moral) as well as Qada’a (legal), with the refrence of the modern Islamic financial system.