Glossary of Sharia'h Terminology




Guarantee/ Compensation


Decree, religious edict from a qualified scholar

Islamic commercial law

Islamic jurists



Confiscation or unlawful seizure of property

A word spoken or an act done or rectified by Holy prophet 

Token of seriousness in promise

Debt / liability Assignment Contract


Shariáh Ruling

An agreement whereby the owner of non-consumable item grants the other party the right to use it for a specified length of time in exchange for a predetermined consideration.

Reasoning by qualified scholars to obtain legal rulings from the sources of Shariáh

A contract where a party becomes liable to manufacture, build or construct assets within a specific period against a predetermined consideration

The second Istisna’ contract between the manufacture of first Istisna’ (as buyer) and a new manufacturer of the asset in which the new manufacturer becomes liable to manufacture, build or construct assets within a specific period against a predetermined consideration.

Ignorance or lack of knowledge




Public interest


A partnership where one party provides the capital while the other provides services and both parties share profits (if any) based on a predetermined profit-sharing ratio.

The partner in a Mudarabah contract that provides services.

Sale contract with a disclosure of the asset cost (purchasing price plus direct expenses) and profit margin to the buyer.

A party who possesses a collateral

Sale contract without the disclosure of the asset cost and profit margin to the buyer

joint enterprise in which all the partners share the profit or loss of the joint venture

A contract of partnership that allows one (or more) partner(s) to give a right to gradually own his share of the asset to the remaining partners based on agreed terms


Jointly owned property

Cost of liability due to dependent like siblings, wife etc.




Capital owner/investor


Usury/ commercial interest. Any conditional access without due consideration in the transaction of loan.

Blocking the means to something (evil)

Asset or service based Islamic securities/bonds


Voluntary donation/contribution

A scheme which is based on the spirit of cooperation and helping each other by providing financial assistance to participants when needed and all participants mutually agree to give contribution for the said purpose

Actual cost

To determine the actual situation of contract to apply Shariah ruling accordingly

Waive of the entitlement to claim


Purchasing an asset with deferred price, either on the basis of musawamah or murabahah, then selling it to a third party to obtain cash

Commission/ Rent/ wages/Salary


Binding promise

Agency contract

Agency contract for investment

A form of endowment by an owner of a property for public benefit and wellbeing which is allowed by Shariáh.


Effective Cause

Contracts of exchange

Contemporary contracts

Down payment/deposit to be part of price in case of completion the contract otherwise may be seized by other party.

Customary practices