The Book of Selling and

Commercial Transactions

Leasing & Hiring

الشَّرِكَةِ

Glossary

The Book of Leasing and Hiring (Ijârah) ⁹⁷⁹

Ijârah is a contract whose object is a benefit [service or utility]. ⁹⁸⁰ It is mutually binding on both parties; neither of them holds the right to (unilaterally) annul it. ⁹⁸¹ The contract is not annulled by the death ⁹⁸² or insanity of either party. ⁹⁸³ However, it is annulled when the property, or object of the contract, is damaged or becomes of no avail.

وَهِيَ عَقْدٌ عَلَى الْمَنَافِعِ، لاَزِمٌ مِنَ الطَّرَفَيْنِ، لاَ يَمْلِكُ أَحَدُهُمَا فَسْخَهَا، وَلاَ تَنْفَسِخُ بِمَوْتِهِ وَلاَ جُنُوْنِهِ. وَتَنْفَسِخُ بِتَلَفِ الْعَيْنِ الْمَعْقُوْدِ عَلَيْهَا وَانْقِطَاعِ نَفْعِهَا، وَلِلْمُسْتَأْجِرِ فَسْخَهَا بِالْعَيْبِ قَدِيْمًا

979. Ijârah is about leasing and hiring. The usufruct (right to use something that belongs to another) may be the use of a certain property or the service of a certain individual. Ijârah is permissible by consensus and derives its legitimacy from the Qur’an, the Sunnah, and reasoning. Allah said:

{One of the women said: O my father, hire him. Indeed, the best one you can hire is the strong

قَالَتْ إِحْدَاهُمَا يَا أَبَتِ اسْتَأْجِرْهُ إِنَّ خَيْرَ مَنِ اسْتَأْجَرْتَ الْقَوِيُّ الْأَمِينُ.

The Prophet (SA) said:

“Give the hired worker (ajeer) his or her wages (ajr) before the sweat is dried.” (Ma – from Ibn ‘Umar; al-Albâni: S)

أَعْطُوا الْأَجِيرَ أَجْرَهُ قَبْلَ أَنْ يَجِفَّ عَرَقُه

Ijârah is also acceptable by reasoning, because it is a means for people to use properties they cannot purchase.

980. It is a purchase of this benefit, but unlike in a sale, the commodity outlasts the contract and returns to the owner, whose ownership is not terminated by the contract of ijârah. One is not allowed to rent something that will perish or be consumed during the duration of the contract.

981. Unless the two parties agree on termination of the contract.

982. The rights and obligations of the contract are transferred to the heirs. Also, the lessor may sell the leased asset to a third party. In this case, the rights and obligations of the lessor under the ijârah contract are transferred to the new owner.

983. This is clear in the case of renting, since the lessee or his or her heirs could still use the property and pay the rent to the lessor or to his or her heirs. As for hiring, the worker may have been hired to do a certain job either alone or by working with others. In this case, the contract is not annulled by the worker’s death because someone could be hired by the worker’s heirs to finish the required work. If the employer hired only that particular worker to do the job, then the contract will be annulled, since its prerequisite – the service of that particular individual – is no longer valid.

The lessee has the right to annul the contract for a defect, be it old ⁹⁸⁴ or newly occurring. ⁹⁸⁵

كَانَ أَوْ حَادِثًا.

Leasing or hiring is only valid when the benefit [service/utility] is determinately known. This may be either by custom, as in renting a house for dwelling, ⁹⁸⁶ or by description, such as in [hiring someone to] sew a certain garment, build a wall, or haul something to a certain place. It is also only valid when the benefit is accurately described, ⁹⁸⁷ and the compensation [wage or rent] is known. ⁹⁸⁸ If the subject matter of the contract is a physical ⁹⁸⁹

وَلاَ تَصِحُّ إِلاَّ عَلَى نَفْعٍ مَعْلُوْمٍ، إِمَّا بِالْعُرْفِ، كَسُكْنَى دَارٍ، وَإِمَّا بِالْوَصْفِ، كَخِيَاطَةِ ثَوْبٍ مُعَيَّنٍ، وَبِنَاءِ حَائِطٍ، وَحَمْلِ شَيْءٍ إِلَى مَوْضِعٍ مُعَيَّنٍ، وَضَبْطِ ذٰلِكَ بِصِفَاتِهِ، وَمَعْرِفَةِ أُجْرَتِهِ. وَإِنْ وَقَعَتْ عَلَى عَيْنٍ، فَلاَ بُدَّ مِنْ مَعْرِفَتِهَا.

Whoever rents something may substitute another person in his or her place to procure the benefit

وَمَنِ اسْتَأْجَرَ شَيْئًا فَلَهُ أَنْ يُقِيْمَ مَقَامَهُ مَنْ يَسْتَوْفِيْهِ بِإِجَارَةٍ أ

984. This is because the usufruct is the subject matter of the contract. Its interruption or termination without the transgression or negligence of the lessee terminates the contract.

985. For example, some damage occurs in the house after renting it. The right of annulment in this case is a result of the interruption of the usufruct, which is the prerequisite of the contract. (If the damage was caused by the lessee, he must compensate for it.)

986. Here, the nature of the usage does not need to be described, because it is known by custom. When one rents a room in a hotel, it is also known by custom what one may and may not do.

987. Custom will have a role here as well since the description may not address all of the details of the job. Whatever is known to be customary may be omitted from the description. In case of a dispute, what is customary shall be determined by the experts in the respective craft.

988. It was reported through a weak chain that the Prophet (SA) said:

“Whoever hires a worker must inform the person of his or her wages.” (Ba – from Abu Hurayrah)

مَنْ اسْتَأْجَرَ أَجِيرًا فَلْيُعْلِمْهُ أَجْرَهُ.

Even though the hadith’s chain is weak, the meaning of the hadith is unanimously accepted by scholars.

989. You cannot rent one of two non-identical objects without specifying which one. You must specify the one being rented at the time of the contract.

[service/utility] for the same rent or a different one. That is only if he (or she) is ‘like him or less’. ⁹⁹⁰

أَوْ غَيْرِهَا، إِذَا كَانَ مِثْلَهُ أَوْ دُوْنَهُ.

If someone leases land for growing [a certain crop], he or she may [also] grow any [crop] that is less harmful [to the land]. However, if the person grows something that brings about more harm or a different type of harm, then he or she has to pay the fair rent [ujrat al-mithl, literally the ‘equivalent wage’].

وَإِنِ اسْتَأْجَرَ أَرْضًا لِزَرْعٍ، فَلَهُ زَرْعَ مَا هُوَ أَقَلُّ مِنْهُ ضَرَرًا، فَإِنْ زَرَعَ مَا هُوَ أَكْبَرُ ضَرَرًا مِنْهُ، أَوْ يُخَالِفُ ضَرَرُهُ ضَرَرَهُ فَعَلَيْهِ أَجْرُ الْمِثْلِ.

The same applies to the one who rents a beast of mount or [an individual] to carry something to a certain place. If the renter goes beyond [that place] or exceeds the carrying load, he or she has to pay the fair/equivalent wage for the excess, ⁹⁹¹ and also bears liability (ḍamân) for the loss of the commodity if it perishes. If the property is damaged without transgression, then there is no liability. ⁹⁹²

وَإِنِ اكْتَرَى إِلَى مَوْضِعٍ مُعَيَّنٍ فَجَاوَزَهُ أَوْ لِحَمْلِ شَيْءٍ فَزَادَ عَلَيْهِ، فَعَلَيْهِ أَجْرُ الْمِثْلِ لِلزَّائِدِ، وَضَمَانُ الْعَيْنِ إِنْ تَلِفَتْ. وَإِنْ تَلِفَتِ الْعَيْنُ مِنْ غَيْرِ تَعَدٍّ فَلاَ ضَمَانَ عَلَيْهِ.

A worker hired for a certain period bears no liability for damaging anything, as long as there is no negligence (tafreeṭ) on the part of the worker. Similarly, there is no liability on a cupper, ⁹⁹³ a

وَلاَ ضَمَانَ عَلَى الأَجِيْرِ الَّذِيْ يُؤَجِّرُ نَفْسَهُ مُدَّةً بِعَيْنِهَا فِيْمَا يَتْلَفُ فِيْ يَدِهِ مِنْ غَيْرِ تَفْرِيْطٍ.

990. This is what we would in modern terms call ‘subleasing.’ The phrase ‘like him or less’ pertains to the rate of utilization. For instance, if the person rented a mule, and subleased it, the new beneficiary must be equal in weight to the renter or lighter.

991. If someone hired a person to haul something to point X, and afterwards told the hauler to get it to somewhere farther, then the hirer must pay the difference. Similarly, if the agreement involved hauling a certain weight, and then that weight was exceeded, the hirer must pay the difference. That difference may be in wages or rent, depending on whether the object of the contract was a service or utility, and it is determined by the fair market value.

992. The leased asset is the responsibility of the lessor through the duration of the ijârah, unless the lessee commits transgression or is negligent.

993. A ḥajjâm, or blood-letter, is one who does cupping.

circumciser or a physician if the person is known for his or her skill ⁹⁹⁴ and did not commit wrongdoing (jinâyah). A shepherd also would not be liable if he (or she) did not transgress.

وَلاَ عَلَى حَجَّامٍ أَوْ خَتَّانٍ أَوْ طَبِيْبٍ إِذَا عُرِفَ مِنْهُمْ حِذْقُ الصَّنْعَةِ، وَلَمْ تَجْنِ أَيْدِيْهِمْ. وَلاَ عَلَى الرَّاعِيْ إِذَا لَمْ يَتَعَدَّ.

However, a fuller, ⁹⁹⁵ a tailor and others like them who work for (piece) wages, would be liable for the damage they cause by their own doing, ⁹⁹⁶ but not for what is damaged while in their custody. ⁹⁹⁷

وَيَضْمَنُ الْقَصَّارُ وَالْخَيَّاطُ وَنَحْوُهُمَا مِمَّنْ يَتَقَبَّلُ الْعَمَلَ مَا تَلِفَ بِعَمَلِهِ، دُوْنَ مَا تَلِفَ مِنْ حِرْزِهِ.

994. The Messenger of Allah (SA) said:

“Unqualified people who practice medicine shall be held liable.” (D – from ‘Amr ibn Shu‘ayb; al-Albâni: S)

مَنْ تَطَبَّبَ وَلَمْ يُعْلَمْ مِنْهُ طِبٌّ فَهُوَ ضَامِنٌ

995. A fuller is someone who cleans wool and other materials through the process of fulling.
The examples mentioned here are those of an ajeer mushtarak (literally, a ‘shared worker’), a person paid on the basis of work done for different people who commission him or her, and who is paid a piece wage for each item (piece) produced. This is in contrast to an ajeer khâṣṣ, who is devoted to work for one employer during a certain time. The latter is held liable only if he or she commits transgression or negligence.

996. This is to deter craftsmen from mishandling the properties of people.

997. Because if the property was appropriately kept in their store, and, despite that, it perished, they shall be treated like trustees.
Lease-to-Own Contracts

The lease-to-own model may be used in modern Islamic financing. Among the many technicalities that should be observed, the two most important points are: ensuring the ownership of the lessor before he or she leases the property out, and abiding by the obligations and rights of the lease contract while the property is leased. This is to ensure that the contract is not simply a trick to guarantee the return of capital with a profit, without any risk-taking or liability for the investor/financier, as this would constitute usury (ribâ).

The two other commonly-used models of Islamic financing are: ‘declining partnership’ (sharâkah mutanâqiṣah) and ‘cost-plus sale to the purchase orderer’ (bay‘ al-murâbaḥah lil-âmir bish-shirâ’). In Islam, profit follows liability. Immunizing the capital of the investors against loss is the essence of usury. Some of the safeguards against that include the complete possession of the property before its sale to the client in the cost-plus sales, and the shared responsibility of the partners in the declining partnership model.

Islamic financing encounters enormous hurdles when it operates within a framework that is negligent of its principles. Sincere efforts by the Islamic financing industry should be appreciated. Ongoing improvements must be undertaken to achieve compliance with the spirit and values of Sharia, not only its technicalities.

Leasing & Hiring

( Page : no 87)

The Book of Selling and

Commercial Transactions

Leasing & Hiring

الشَّرِكَةِ

Introduction

The Book of Purification

The Book of Prayer

The Book of Funerals

The Book of Fasting

The Book of Hajj and 'Umrah

Book of Zakat

The Book of Selling and Commercial Transactions

The Book of Bequests

The Book of Inheritance

The Book of Marriage

The Book of Divorce

The Book of Sadaq

The Book of Dhihar

The Book of Lian

The Book of Foods

The Book of Oaths

Book of Fatal and Non-Fatal Assault

The Book of Indemnities

The Book of Hudood

The Book of Jihad

The Book of the Judiciary

The Book of Testimonies

Appendix

Glossary

Leasing & Hiring