Contract of Al-Ijarah in Islamic Contracts

Transactions in Islamic Law

1. Al-Ijarah
“LeaseContract”
'AgdAl-’ijar
Dr.MohammedElshobake

2. Meaningsanddefinitionsof Al-Ijarah
Literally:Itisderivedfromtherootwordajr=
compensation.
-Al-Ijarahmeansaleasecontractaswellasahire.
Technically:Ijarahisanagreementbetweentwo
parties,onebeingtheowneroftheasset,whogives
possessionoftheassetsfortheusetotheotherparty,
onanagreedrentaloveramutuallyagreedperiod.
Itisalsodefinedastransferringtheusufructofa
particularpropertytoanotherpersoninexchangefora
rentclaimedfromhim.
Usufructmeansbenefitormanfa'ahfromthesubject
matters.

3. Meaningsanddefinitionsof Al-Ijarah
•Hanafisschool-acontractintendedtogiveownership
ofadeterminedandlegitimateusufruct(manfa„ah)ofa
rentedcorporealobject(„ayn)againstaconsideration.
•MalikiSchool-atransferofownershipofpermitted
usufructforaknownperiodinexchangefor
compensation(price).
•Shafi„eschool-acontractwherethesubjectmatteris
determined,legitimate,accessibleandlawfulusufruct
ofanobjectagainstafixedconsideration.
•HanbaliSchool-acontractwherethesubjectmatteris
lawfulandfordefineduse(manfa„ah)ofcorporeal
object(„ayn)isalsolawfulanddetermined;andfora
specificperiodoftime.

4. Meaningsanddefinitionsof Al-Ijarah
▪BankMu'amalatisdefinedAl-Ijarahasacontract
wherethebenefits/useofanassetistransferredbythe
owner(lessor)tothelesseeatanagreedprice/rental
amountforanagreedperiodoftimeorleaseperiod.
▪AccordingtoBankNegaraMalaysiaAl-Ijarahrefers
to:
(a)aleasecontractthattransferstheownershipof
ausufructofanassettoanotherpersonforaspecified
periodinexchangeforaspecifiedconsideration;or
(b)acontractforhiringofservicesofapersonfora
specifiedperiodinexchangeforaspecified
consideration.

5. Meaningsanddefinitionsof Al-Ijarah
▪Leasesdifferfromsalesduetothetimelimitation
involvedinleases,incontrasttosaleswhereno
timelimitisallowed
▪InAl-ijarah,therighttousetheobjectis
transferredtotheleaser,notitsownership.Hence,
Al-ijarahisasaleofusufructnotofaphysical
entity.Whileinsale,itinvolvestransferof
ownershipoftheobject.

6. LegitimacyofAl-Ijarah
Establishedonthebasisofthequr‟an,
sunnah,andijma‟.
Qur'an:"Iftheysuckle(yourchildren)for
you,givethemtheirwages"[At-Talaq:6];
لاقلىاعت:"ْ نإَفْ
َ
ن

عَض

رأْ

مُكَلْ ن
ُ
هوُتآَفْو
ُ
جُأْ ن
ُ
ه
َ
ر"(ةروسقلاطلا:ةيآ6).

7. LegitimacyofAl-Ijarah
"Oneofthemsaid:mydearfather,hire
him;surely,thebestofwhomyouhireis
onewhoisstrongandtrustworthy“.[Al-
Qasas:26].
لاقلىاعت:"َْقْ

تَلاا
َُهُاَد

حِإْ
َ
يْ
ِ
ت
َ
بَأَْت

ساْ
ُ
ه

ر
ِ
ج أْْۖ نِإْ
َ
ي
َ
خِْن
َ
مْ
َ
ت

ر
َ
ج أَت

سا
ْ يِوَق لاْ
ُ
ي
ِ
مَ لْا"(ةروسصصقلا:ةيآ26).

8. LegitimacyofAl-Ijarah
TheSunnahoftheProphetMuhammad(peace
beuponhim)
AbuHurairah(MayAllahbepleasedwithhim)
reported:"TheProphetSAWsaid,AllahSWT
says:Iamtheadversaryofthreepeopleonthe
DayofJudgement;amanwhomadeacovenant
inmynameandthencheated;amanwhosolda
freemananddevouredtheprice;amanwho
hiredaworkerandobtainedhislabourinfull,
butdidnotgivehiswagesfully“.[al-Bukhari]

9. LegitimacyofAl-Ijarah
TheSunnah…
-Thehadithnarratedby'A’ishah(Rad.)onthe
migrationoftheHolyProphet(Sal.)andAbubakr
(Rad.),wheretheirhiringapersonasaguideis
mentioned.[al-Bukhari]
-TheMessengerofAllah(Sal.)prohibited
muzara'ah,butallowedmu'ajarah,i.e.lease.
[Muslim]
-HadithofProphetsaw:“Paythehiredworkerhis
wagesbeforehissweatdriesoff”.(Al-Baihaqi).

10. LegitimacyofAl-Ijarah
Ijma':
Thepropheticcompanionswereunanimousonthe
permissibilityofijarah,asusufructsarerequiredby
people,similartotheirneedforassets.
Theyviewthattheneedtoutilisetheusufructof
differentarticles(goodsandservices)issimilartothe
needtoutilisethearticles.Whenthecontractofsaleof
suchgoodsandservicesispermitted,theleaseofits
usufructshallalsobepermittedonthegroundsof
publicinterest(maslahah)andneed.

11. PillarsofAl-Ijarah
Contractors– Mu'jir(theonewhoprovidesthe
utility,i.e.thelessor.Inthecaseofhire,heiscalled
ajir)
Musta'jir(lessee/employer)
Subjectmatter–
Ujrah-
Text-
Manfa‟ah(usufruct/labour)
Ujrah/ Ajr (rental / wages)
Offerandacceptance

12. TypesofAl-Ijarah
Ijarahisoftwotypes:
1.Ijarahonusufruct/utility(IjarahAl-'Ayn)
Thesubjectmatterhereistheutilityoftheasset
leased.Thistakesplaceintheformofleasing
houses,buildings,andvehicles,leaseofanimals
forridingandcarriage,leaseofmachines,
implements,clothes,jewelleryetc.foruse.The
owneroftheleasedassetiscalledthemu‟jirhere.

13. TypesofAl-Ijarah
2.Ijarahonlabour(IjarahAl-'Amal)
Thiscontracttakesplaceoverprovidinga
specifiedservice,i.e.constructingawall,carrying
toaspecificlocation,stitchingadress,repairinga
machine,aswellascontractsofservicewhere
teachers,officeworkers,doctorsetc.providetheir
services.Theprovideroftheservicehereiscalled
theajir.

14. Types ofAl-IjarahintheShafi'ischool
Thesearetwotypes:
1.Ijarahal-„ayn(ijarahofspecificasset/person)
Thisisaleasecontractedonaspecificpropertysuch
asanidentifiedhouse(e.g.thishouse)oraparticular
vehicle,oracontractofhireoveraparticularperson.
2.Ijarahal-zimmah(ijarahofdescribedasset/duty)
Thisisacontractofijarahpertainingtoausufruct
establishedasaliabilityonthelessor,e.g.bysaying,I
haverentedfromyouacarofXspecificationsforone
month,or,IhavehiredyoufortakingmetoX
locationinacarofYspecifications.

15. ConditionsofAl-Ijarah
Forcontractors:
-Legalcapacity(ahliyyah)ofthecontractorsis
requiredforthevalidityoftheijarahcontract.
-Achildoraninsanepersonisnotableto
contractijarah.
Forthetext:
-Wordsthatindicatetransferoftheutilityor
usufructagainstacompensationcanbeused
forcontractingijarah.

16. ConditionsofAl-Ijarah
Fortheusufruct:
1.Knowledgeoftheobjectoftheusufruct,itsnatureand
quantity.
-Objectoftheusufructisusuallyknownbyspecifyingits
source,i.e.theleasedasset.Natureoftheusufructshould
bespecifiedwhenitispossibletobeusedindifferent
ways.
-Quantificationoftheusufructispossiblethrough
specifyingtheperiodorthespecificusufructintended.
Wheretheusufructcouldbequantifiedinbothways,
eithershouldbespecified.Intheleaseofhousesand
buildings,specifyingtheperiodisrequired,asthesubject
matterisnotgenerallyknownwithoutit.

17. ConditionsofAl-Ijarah
Fortheusufruct…
-Insomeinstances,quantifyingtheutilitycouldbe
achievedeitherbyspecifyingtheperiodorbystatingthe
specifictask,e.g.hiringforthepurposeofstitchingfora
dayorforstitchingaspecificdress,andrentingavehicle
fortraveltoaspecificdestinationorfortwodays.
-Itisnotpermissibletoquantifytheusufructbystatingthe
workandperiodboth,intheShafi‟iandMalikischools,
e.g.tohireforconstructingawallintwodays.Thisis
becausetheworkmaysometimesdelayandrequirea
longerperiod,orfinishsooner,whichcouldintroduce
someghararintothecontract.

18. ConditionsofAl-Ijarah
Fortheusufruct…
2.Theutilityshouldbedeliverablelegallyandinreality
Thismeansthatthemu'jir(lessor/employee)shouldbeable
todelivertheusufructphysicallyaswellasinalegallyvalid
manner.Thus,alostvehiclemaynotbeleased,norcoulda
plotoflandunsuitableforcultivationbeleasedforthat
purpose.
Similarly,awomanmaynotbehiredforataskthatrequires
hertravelunaccompaniedbyherhusbandoramahram(i.e.
non-marriageablecloserelative),oronethatinvolvesher
becomingsecludedwithamaleoutsider.Inthelatter
instances,deliveringtheutilityisprecludedlegally.

19. ConditionsofAl-Ijarah
Fortheusufruct…
3.The utilityshould be permissibleinshari‟ah
Ijarahcannotbecontractedforprohibitedutilities,
frivolities,
e.g.formurder
renting
orassault,impermissible
ofimpermissiblemusical
instruments,leasingofabuildingforacasino
(placeofgambling)orcarryingoutinterestbased
loantransactions.

20. ConditionsofAl-Ijarah
Fortheusufruct…
4.Theworkshouldnotbeonethatisobligatory
ontheemployee
Thismeansthatapersonmaynotbehiredfor
performingprayerorfastingthatisobligatoryon
himbeforehandinhisindividualcapacity.
Apersoncanbehiredforteachingqur'an,for
carryingouthajjinlieuofanincapacitatedperson
oradeceased,forgivingazan,distributionof
zakahetc.

21. ConditionsofAl-Ijarah
Fortheusufruct…
5.Theusufructshouldnotinvolvetheintended
depletion*ofanasset,suchasleasingatreeforits
fruits.Thisisbecauseijarahisintendedfortransferring
usufructs,andnotforthesaleofassets(objects).
Therefore,asheepmaynotberentedforitsmilkor
wool,norcouldpondsbeleasedforfishing.Ijarah
drawingbenefits,andnotconsumption.envisages
However,
indirectly,
whensuchacquiringofassets
i.e.withoutbeingspecifically
occurs
intended
throughtheijarahcontract,itisnotobjectionable.
*depletion:reductioninthenumberorquantityofsomething.

22. ConditionsofAl-Ijarah
Fortheusufruct…
Ibnal-Qayyim,alaterHanbalischolar,disagreedwith
theprinciplethatthecontractofijarahgives
entitlementonlytousufructs,andnottoacquirement
ofassets.
***Heheldthatcontractingijarahispermittedon
whatevercomesintoexistencegradually,bethey
usufructsorassets.Thus,accordingtohim,objects
thatcomeintobeingprogressively,e.g.fruitsofa
tree,couldbeaccommodatedunderijarah,andthey
aresimilartoutilitiesinruling.

23. ConditionsofAl-Ijarah
Fortheusufruct…
6.Theusufructshouldbeonethatis
commonlyintendedincontractsofijarah.
Theusufructenvisagedshouldnotbe
uncommoninnature,forwhichcontractsof
hireorleasearenotusuallyinitiated.For
example,atreemaynotbehiredforitsshade.

24. ConditionsofAl-Ijarah
Accordingto BankNegaraMalaysia:
Theassetandusufructin anijarahcontractshallbe−
(a)recognisedbyShariah;
(b)valuable;
(c)inexistence;
(d)identifiable;
(e)accessible;
(f)deliverable;
(g)notadebt-basedasset;and
(h)non-perishable.

25. ConditionsofAl-Ijarah
Forthesourceoftheutility:
Theobjectin„Ijarahshouldbeinthe
possessionofthelessor,forthevalidityofthe
contractofijarah,duetotheprohibitionofthe
HolyProphet(Sal.)fromsellingwhatonedoes
notpossess.Ijarahinvolvesatypeofsale,i.e.
saleofausufruct,thuscomingunderthisrule.

26. ConditionsofAl-Ijarah
Fortherent/wages:
Theconditionsrelevanttothepriceincontractsofsalearealso
applicableincontractsofijarah,astherent/wagesaretheprice
fortheusufructreceivedthroughijarah.Theseinclude:
1.Purity.Somethingimpuresuchasadogorwinecannotformthe
rentinavalidijarah.
2.Itshouldhaveavalidusageandvalue,conventionallyaswellas
inshari‟ah.Therentcannotbeagreedonwine,forexample.
3.Shouldbedeliverable.Itcannotbepropertythatisinthecontrol
ofanotherorisusurped.
4.Shouldbeknowntothecontractors.Thus,rentforahouse
cannotbefixedastherepairandconstructionneededinthehouse;
Avehiclecannotberentedagainstthefuelneededforitsrunning,
duetouncertaintyintheamountofrentintheseinstances.

27. ConditionsofAl-Ijarah
Forthecontractitself:
Thecontractshouldbefreeofanyexternal
conditionthatisunrelatedtotheobjective
ofthecontract,e.g.toleaseahousewith
theconditionthatthelessorwillstayinit
foramonth.

28. Characteristics
-Ijarahisabindingcontract('aqdlazim).Therefore,itmay
notbeannulledexceptthroughcausesthatresultinthe
annulmentofbindingcontracts,e.g.presenceofdefects.
-Itisnotterminatedbythedeathofthelessororthelessee,
similartoasale,asijarahisacontractofexchange(‘aqd
mu'awadah).
-IntheHanafischool,ijarahisabindingcontract,however,
itmaybeannulledduetovalidexcuses,e.g.theleasee
becominginsolvent,ormovingtoanotherlocality,and
wouldbevoidedbythedeathofthelessororthelessee.
Thisisbasedontheircategorisingthenatureoftheutility
inijarahasonethatcomesintoexistenceinstagesbythe
passageoftime.

29. Legalconsequences
Rulesofrent/wages
-TheShafi‟ischoolrequiresthatinijarahal-zimmah,therent
bepaidinfullinthecontractualsession,asthisisacontractof
salamoverusufructs.Inijarahal-„ayn,therentmaybepaid
immediatelyoratalatertime.
-Thelessorbecomesentitledtotherentwithenteringintothe
contract,whenlatepaymentwasnotstipulated,intheShafi‟i
andtheHanbalischools.
-TheHanafiandMalikischoolsdictatethattherentbecomes
established(i.e.entitlementtorentisgained)progressively,as
theusufructisgraduallyderived.Accordingtothem,rent
becomesowned(i.e.becomesclaimablebythelessor)with
immediatepayment,bystipulatingimmediatepayment,orwith
thedrawingoftheutilitybythelessee.

30. Legalconsequences
Rulesofijarahonusufructs(lease)
1.Deferredleasingofspecificproperty:Thisisnotpermittedin
theShafi‟ischool,suchasleasingXhouseforthenextyear.
Itisnecessarythattheleaseperiodcommenceimmediately
afterthecontract.Thisispermittedwhentheijarahhappens
tobeijarahal-zimmah,i.e.ijarahpertainingtodescribed
(non-specific)assets.Deferredisleasingofspecificassetsis
permittedbyotherschools.
2.Thelesseemaydrawthebenefithimselforthroughanother.
3.Inleasingland,theutilityintendedthroughthecontract
shouldbespecified,asitcanvary.
4.Liability:Theholdofthelesseeovertheleasedassetis
consideredtrust-based(yadamanah).Hence,heisnotmade
liableforitsdestructionordamage,whenhehadnot
committedanexcessorbeennegligentinitssafety.

31. Legalconsequences
Rulesof ijarahonservices(hire)
Hiredworkers areoftwo types:
1.Ajirkhas(exclusively-hiredworker):Aperson
whoishiredtoworkforasingleemployer,uptoa
definedperiod.Hemaynotworkatthesametimefor
anyoneotherthanhisemployer.
2.Ajirmushtarak(commonworker):Apersonwho
provideshisservicestothepublic,suchasatailor.He
mayworkforseveralpeopleatthesametime.

32. Legalconsequences
1.Liabilityoftheworker
-Theholdoftheexclusivelyhiredworkeroveranyassets
handedovertohimisconsideredtrust-based(yad
amanah).Assuch,heisnotliableforsuchgoods,suchas
ahouseholdservantandemployeesinaworkplace.
-Thepositionofacommonworkerissimilar.Heisnot
madeliableforlossordamageofgoodsentrustedtohim
exceptduetoexcessornegligence.
-ImamsAbuYusufandMuhammadoftheHanafischool
holdthatacommonworkerbearsliability.Heismade
liableforlossesoccurringwhiletheassetsareinhis
custody,evenwithoutanyexcessornegligenceonhis
part.

33. Legalconsequences
2.Whentheassetislostinijarahof
services:
-Iftheworkerhadworkedattheplaceofthe
employer,heisentitledtoreceivethewages.
-Iftheassetwaswiththeworkeratthetimeof
loss,heisnotentitledinthisinstanceto
claimwages,asthecompletedworkwasnot
submittedtotheemployer.

34. Termination ofijarah
1.Lossoftheleasedassetinijarahal-„ayn.
Whenaparticularvehicleishired,andthenbrakesdownbefore
thelesseestartstouseit,thecontractofijarahstands
terminated.
2.Theleasedassetgettingdamagedinijarahal-„ayn,inaway
thatprecludesthepossibilityofdrawingtheintendedusufruct.
Ijarahbecomesterminatedwhenthesubjectmatterofthe
contract,i.e.theusufruct,becomesunrealisable,e.g.ahouse
becomingdemolished.
-Whenthelossordamageoccursaftersomebenefithadbeen
drawn,i.e.aftersomeuse,thecontractisterminatedwithregard
totheperiodremaininginthefuture.Thelessorisentitledto
claimrentfortheprecedingdurationproportionately.

35. Termination ofijarah
-Inthecaseofijarahal-zimmah,thecontractisnot
terminatedwiththelossoftheassetthatwasprovided,e.g.
thevehicleprovidedfortransport.Thelessorisresponsible
forprovidinganothervehicle,asthecontractdidnottake
placeoveraspecificvehicle.
3.Non-deliveryoftheleasedassetduringtheagreedperiod,
whentheutilitywasdefinedbyreferencetothedurationof
time.
4.IntheHanafischool,deathofacontractorresultsinthe
terminationofthelease.Leaseisnotterminatedwiththe
deathofacontractor,inthemajorityofschools.Ijarahis
terminatedwiththedeathofthehiredworker.

36. Termination ofijarah
5.IjarahisterminatedintheHanafischooldueto
validexcuses,i.e.thepartiescanterminateitduean
excuse.
6.Ijarahcomestoanendwhentheintendedusufruct
isfullyderived.Inservices,thishappenswhenthe
intendedtaskisaccomplished.Wheretheusufructis
measuredbytime,thecontractisterminatedwiththe
passageoftheagreedduration.