Sample Essay
The Islamic Law for commerce gives more freedom and rights to people involved in business by providing them with interest free capital provision and equal hare in profit and loss on investment returns. The contract law in the west renders the parties involved in a contract to be bound until the termination of the contract or the expiry of its fixed period. However the Islamic Law of contracts in commerce allows either party to dissolve the contract on the basis of dissatisfaction.
Similarly business can be terminated by partner, where more than one are present, under the Islamic Commercial Law even if the agreement of the business according to western law states that the contract is fixed and cannot be terminated until it expires after period of time. “Financial transactions may be structured to reallocate risk-sharing and profits by using the Islamic doctrines of murābahah (the sale of commodities at prices that include stated profits foreseen by seller and buyer); mudārabah (a form of trust whereby an owner entrusts funds to a trustee, who returns the principal and an agreed-to share of profits after using the funds for a specified purpose); mushārakah (a partnership of limited duration for the purpose of completing a specific project, and which allows partners to share losses based on the proportion of their capital contributions); ījārah (a type of lease allowing a bank to purchase equipment or machinery and lease it to clients, who may ultimately take absolute ownership); muqaradah (which allows banks to issue bonds to finance specific projects); bai῾mu῾ajjal (the practice of purchasing and reselling property on a deferred payment basis) and bāi῾salam (whereby a price is paid at the time the contract is formulated, but delivery takes place at a future date).” (Warren, 2009)
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