Legal documentation in Islamic Financial Transactions.
The rapid growth of Islamic finance industry of the Islamic banking industry has been complemented and supported by an equally parallel comprehensive development in the legal infrastructure, integrating Shari, ah principles, legislation, and complex legal documentation matters. Thus, understanding these issues is very crucial for bankers and legal professional practicing in Islamic finance as a profession. As the Islamic finance industry keep expanding further, and become more innovative, keeping yourself updated on impending legal issues is of paramount importance.
The Islamic finance industry has been focusing more on contract forms practiced in various financial transaction. Contract is a very essence of various transactions which without it may lead to void of legal significance. Islamic commercial law laid down comprehensive rules in leading to the creation of contract. We could see that Islamic commercial law is inspiring with many kinds of contracts that are beneficial to meet people’s need in different situations.
The basic of transactions in Islam stresses in ethical, social and dimensions of financial transactions to improve equity and fairness for the general good of society. This perfect environment can be illuminate through the important verses in the Quran which stressed out the significance and how it enjoins believers to "keep faith contracts" (Awfu bi al-'Uqud), the formation of contract.
According Nabil (1990) and Mohd (2008), there is no exact definition of a contract as such is to be found in the treatises of Islamic law until the 19th centuries. This is due to Islamic law never established a general theory of contract, thus majority of Muslim jurist have focused on the contract of sale which they viewed as the model for all sorts of contracts.
Thus, legal documentation can be defined as a document that potrays the rights and liabilities of two contracting parties as the result of entering into a particular contract. These...