slideshow

The Jo’aalah Contract in Islamic Finance

Posted on 12th August 2012 by Camille Paldi,

The European University Institute, Firenze

 

Thoughts from Iraj Toutounchian’s Islamic Money & Banking, Integrating Money in Capital Theory

This is a contract under which one party, the Jaa’el or bank, undertakes to pay a specified amount of money, the Jo’ol, to the other party, the Amel or contractor, for rendering a service specified in the terms of the contract.  Either party may opt to rescind the contract so long as the stipulated action under it has not been taken.  A bank may enter a Jo’aalah agreement either as an Amel or as a Jaa’el, as necessary.  In general, the right of the Amel to transfer part of the known activity to a third party under a secondary Jo’aalah, with the agreement of the other party, is reserved.

Responsibility for the preparations and purchase of materials, tools, equipment, performing a service and other essentials for carrying out the Jo’aalah may fall to either party, depending on the terms of the agreement.  If the Amel accepts this responsibility, he should, at the outset, submit an estimate of all the operational costs for the Jo’ol to the Jaa’el.

The Jo’ol may be repaid either in lump sum or at intervals, in equal or unequal installments, at fixed maturity or maturities.  Whenever the bank acts as an Amel, it is essential to obtain sufficient security from the Jaa’el to be assured of the fulfillment of commitments made; if necessary, arrangements should also be made to insure the property involved.  (This is sooo interesting, isn’t it?  Let’s thank Dr. Iraj Toutounchian for allowing me to share all of this information with you).


Posted on 12th August 2012 by Camille Paldi


Comment on this post







Twitter

Video

Find all our videos here, and also a link to our YouTube video channel so you can view our 'video of the week'

Submit

We would like you to get involved with our site. So if you want to submit Articles, Videos, Events and Call for Papers, please click the button below:

Submit

Valid XHTML 1.1 |  Valid CSS |  Web Design in Durham and Newcastle |  Copyright © 2014

* Prices are converted at USD$0.2723 per AED 1