Shari'ah finance—glossary of terms
Shari'ah finance—glossary of terms

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Shari'ah finance—glossary of terms
  • A
  • B
  • C
  • D
  • E
  • F
  • G
  • H
  • I
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Al-AjrA commission, fee or wages levied for services.
Al-Ghurm bil GhunmThe principle that a party is entitled to gain only if it also bares the responsibility for any losses ie the parties have engaged in risk-sharing. This principle of risk sharing also forms the basis of shirkah partnership arrangements.
Al-Sar-al-AdlA just price to pay for something.
Al-WadiaThe resale of goods at a discount to the original cost.
Al-Wakala al MutlaqaAn absolute power of attorney.
Aqd Ghair LazimA contract in which any of the parties has a unilateral right to revoke the agreement with the consent of the other parties.


Bai al DaynA form of debt financing that is a short-term facility, with a maturity of not more than a year. Only documents evidencing debts arising from bona fide commercial transactions can be traded.
Bai al Salam The advance payment for goods which are to be delivered at a later date. Usually a sale cannot be effected unless the goods are in existence at the time of the agreement. A Bai al Salam sale is an exception to the general rule provided that the goods which are the subject of the agreement are defined and the date of delivery is fixed.
A condition of this type of contract is advance payment. The parties cannot rescind the agreement but do

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