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Wa`ad Agreement

In the world of Islamic finance, wa`ad or promise refers to an obligation given by one counterparty, such as a buyer or potential buyer in murabaha transactions, to another, and in which the predator agrees to pursue the contract. Shari`a keeps a binding promise for the issuer, unless an apology (force majeure) occurs and prevents execution. Legally, a promise is binding when it is outstanding for a reason and the promised costs and expenses are incurred. There are differences of opinion on the eligibility of conventional options under Shari`ah. The majority of Muslim jurists believe that conventional options are inadmissible. The Islamic Figh Academy of the Organization of Islamic Cooperation (IFA-OCI), which is an ISB, said: “Since the purpose of a [option] contract is neither a sum of money, nor a utility, nor a financial right to which it is possible to renounce, the Shari`ah contract is not allowed.” [1] The majority`s opinion is based on three different reasons: 1) The nature and use of the options are so that it is Maysir (gambling); 2) Options are used for excessive speculation; and 3) the premium paid is inadmissible. Legal experts disagree on whether the right conferred in an option can be sold. This is the question of whether the premium paid in the options is eligible. The majority argues that these rights are not material assets; Therefore, they cannot be subject to purchase or sale. [11] On the other hand, the minority argues that the optional right would be tantamount to service and usufruit.

[12] The majority of lawyers, with the exception of Hanafi`s classical jurists, recognize that usufruit deer are the intangible but authorized object of sale. They also use shari`ah, al-Khiyarat (“options”) concepts to support their claims. Futures trading has always been a difficult offer for the Islamic banking sector, as most of the attributes of managing future maturities are contrary to the security and transparency requirements of the Islamic banking system. Of course, there are contracts that apply to future transactions such as Bai Salam and Istisna`a, but these have never really started because of the restrictive terms of such contracts.