FINN45315: Islamic Law and Financial Transactions

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• To provide students with an advanced understanding of key concepts of Islamic law related to commercial and financial transactions.
• To enable students to critically evaluate the process of law making in Islam.
• To provide students with an advanced understanding of the principles and implications of Islamic law for financial transactions.
• To critically examine the application of Islamic contracts in Islamic financial institutions and different legal jurisdictions.

• Introduction to Islamic Law: Brief history of Islamic law. Difference between Shariah and Fiqh. General Principles of Islamic Law related to transactions.
• Methodology of Islamic law (Usul-al Fiqh): Primary sources of Islamic law (Quran and Sunnah). The process of obtaining legal rules from Shariah through ijtihad using other sources and methods including the following: ljma (consensus), al-qiyas (analogy).
• Riba and Gharar: Definition and types of riba (riba al-fadl and riba al-nasiah). Definition and types of gharar (Gharar in the essence of contract and the object of the contract). Implications of riba and gharar for contemporary financial transactions.
• Types of Traditional Nominate Contracts: Contracts of exchange, sale contracts (Bai), hire contract (ijarah), work done for reward (juala). Accessory contracts agency (wakala), partnerships (sharika), assignment (hawala), pledge or mortgage (rahn). Gratuitous contracts loan (gard), deposit (wadia), gift (hiba), guarantee and personal security (daman or kafala).
• Application of Islamic contracts in Contemporary Financial Transactions: Approaches to develop financial products from traditional contracts. Examples of major instruments used in Islamic Finance.
• Shariah Governance: Functions of Shariah Supervisory Board in Islamic finance. Role of Shariah Supervisory Board in the pre and post-product development stage. Critical issues in Shariah supervision.
• Issues related to application of Islamic law and financial transactions.
• Islamic banking law/statutes. Standardisation of Shariah rules. Dispute settlement/conflict resolution institutions. Application of Islamic contracts in common and civil law jurisdictions.

Subject-specific Knowledge:

• An advanced knowledge of the nature and scope of Islamic Law and its application in financial transactions.
• Advanced understanding of the application of Islamic contracts in contemporary financial transactions.
• An advanced knowledge of the issues related to implementing Islamic contracts consistent with the objectives of the Islamic Law (Maqasid al-Shariah).
• An advanced understanding of organizational and legal issues related to applying Islamic law during contemporary times.

Subject-specific Skills:

• The ability to evaluate the principles of Islamic law and its applications in financial transactions.
• The ability to explain convincingly the rationale for the prohibition of riba and gharar and its implications for Islamic finance.
• The ability to critically review the contracts used in Islamic banking and finance.
• An advanced ability to analyse the role of Shariah boards in product development and compliance at Islamic financial institutions.
• The intellectual capacity to ascertain the problems of implementation of Islamic financial transactions.

Key Skills:

• Independent learning within a defined framework of study at an advanced level.
• Independent thought in analyzing and critiquing existing scholarship on the subject area and in evaluating its contribution.
• The ability to work to a deadline and complete written work within word limits.
• The ability to seek out and use relevant data sources, including electronic and bibliographic sources.

• The modes of teaching are lectures which provide students with an opportunity to learn new concepts, principals, and philosophies and seminars, which allow the students to discuss freely the assigned topics. Guidelines will be given by the tutor. At MA level, seminars are appropriate for the students because they are from different academic backgrounds. Seminars also allow a better exchange of views and ideas.
• Summative assessment is by a 60-minute in-class exam and 90 minutes exam. The in-class exam will test students' critical judgement and problem-solving technical skills. The 1.5 hour exam with written answers will test students depth of understanding and their analytical skills.

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