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Monday, July 7, 2014

CHAPTER THREE - AL-WAKALAH -

CHAPTER THREE
3.1 CONCLUSION
Wakalah system is an important foundation in Islamic social assurance. A person acting as a representative fully entrusted to manage the required things. Thus, each representative should have honest and trustworthy to a given task. The concept of representation as practiced by most of Takaful operators creates employment opportunities and one of the sources of income. The representatives also have the opportunity to perform responsibilities, encourage people to help each other and develop Islamic Muamalat system. To abbreviate, the concept of Wakalah might be conclude as :
1.        Legally Wakalah refers to a contract where a person authorizes another to do a certain well-defined legal action on his behalf. Am agent is someone who established contractual and commercial relations between a principal and a third party. Agency is necessitated by the fact that an agent has to perform certain tasks which the principal has neither the time, knowledge nor the expertise to perform himself. The need for agency arises where a person has no ability or expertise to perform a certain action.
2.        Wakalah is non-binding contract. The principal or the agent may withdraw at any time by mutual agreement, unilateral termination, discharging the obligation, destruction of the subject matter and the death or loss of legal capacity of the contracting parties. If the agent concludes a contract that contravenes the terms and conditions of the agency, the contract is not binding in the principal and its validity depends on his approval. In case where an agent concludes a contract that apparently contravenes the conditions, but the contract as beneficial to the principal, it is binding on him.
3.        In period completely fast and practice many job or tack incapable done by someone. This case happened because of bustle or limited time and man power possessed. Thereby delegation or task / job representative to other people become custom that done by each people to achieve efficient life that more and more full with challenges. Substantively the custom appoints someone as a representative have available since previously in the matter of history people life.
4.        In Islamic contemplation, Wakalah contract in banking practices permitted done so long as based on willingness each party. For that each party involved in contract need know those Wak alah contract laws include right and obligation each party involved in contract.

CHAPTER TWO -AL-WAKALAH -

CHAPTER TWO
2.0  APPLICATION OF AL-WAKALAH
Al-Wakalah is one of the most Islamic product practicing at this moment. Based on this assignment writing, the application discuss on two parts either in banking and institution. For instance, the products provided from banking (followed shariah principles) are :
1.      Transfer of money, such as: postal money order, transfer money via a bank branch, and transfer via ATM.
2.       Import Letter Of Credit Sharia, such as: Wakalah bil Ujrah, Wakalah bil Ujrah and Qardh, Wakalah bil Ujrah and Mudharabah, Wakalah bil Ujrah and Hiwalah.
3.      Export Letter Of Credit Sharia, such as: Wakalah bil Ujrah, Wakalah bil Ujrah and Qardh, Wakalah bil Ujrah and Mudharabah.Islamic.
4.      Mutual Funds Investment.
5.      Financing the Sharia Account.
However in institution, the most popular product is takaful. Takaful is a co-operative system of reimbursement in case of loss, paid to people and companies concerned about hazards, compensated out of a fund to which they agree to donate small regular contributions managed on behalf by a Takaful Operator. It is defined as an Islamic insurance concept which is grounded in Islamic muamalat (Islamic banking), observing the rules and regulations of Islamic law.[1]

2.1 APPLICATION OF AL-WAKALAH IN BANKING
1.1.1        TRANSFER OF MONEY
The money transfer process is a process that uses the concept of Wakalah contract , where the process begins with the customer demand as Al - Muwakkil against banks as Al - Wakil to do the command / request to the bank to transfer money to the account of another person , then the bank debiting the customer's account ( If the transfer from account to account ) , and lastly is where the bank crediting of funds to the designated account . Here are some examples of this process in the transfer of money :[2]
1.      Money Order. In the process of postal money orders , cash given directly from Al - Muwakkil to Al - Wakil, and Al - Wakil give the money directly to the intended customer.
2.      Transfer money via a bank branch. In this process , Al-Muwakkil gave the money in cash to the bank which is al - Wakil, but the bank does not give directly to customers who are sent . But banks send it to the designated customer accounts.
3.      Transfer via ATM. Then there is also the money transfer process in which the delegation to send money , money not given directly from Al - Muwakkil to the bank as Al - Wakalah . In this model, the Customer (Al – Muwakkil) ask the bank to debit his savings account , and then ask the bank to add in customer accounts designated by the reduction in the own account . Which is very common today is the third process , where customers can make their own transfer via ATM machines .[3]

2.1.2 LETTER OF CREDIT SHARIA
A Letter of Credit (L/C) is a commitment, usually by a bank on behalf of a client, to pay a beneficiary, such as a supplier of goods, a stated amount of money under specified conditions such as on shipment of the specified goods. It is a form of financial guarantee covering the buyer's risk and guaranteeing payment to the seller; the bank will only make payment upon presentation of the shipping and other stipulated documents, which complies with the terms and conditions of the L/C. 
            L/Cs are widely used in financing foreign trade to guarantee payment to a supplier after shipment is effected. They carry a risk for the issuing bank in case the bank makes a payment under the L/C and the client defaults. Therefore, before issuing a L/C, the bank assesses the client’s financial position to determine whether the client’s creditworthiness merits the risk taken by the bank on the client’s ability to pay. The bank may even consider taking a security to minimise any potential loss.[4]
            Through L/C in the context of foreign trade, exporters can obtain a quick, secure and guaranteed payment of goods from a bank. The import client of the bank gives a written undertaking in favour of an exporter or a local supplier guaranteeing payment on sight or payable after a determinable period after shipment for purchase of goods from an exporter.
            When used by Islamic banks for export/import financing, L/Cs are not treated as a as a guarantee but rather as a fee based banking service to facilitate trade. Islamic banks usually issue L/Cs on the basis of Wakalah, Murabaha or Musharakah. All operations must fulfil the requirements of the Shari´ah. The processing of L/Cs usually involve two banks, the L/C opening bank and the correspondent bank to whom the L/C is sent for advising the exporter.
            When using the Wakalah concept, the bank acts as the agent of the importer; he deposits with the bank the full amount of the L/C to cover the import transaction and the bank opens the L/C; after shipment of goods and submission of stipulated documents by the exporter, the bank makes payment using the client’s deposit.  The bank charges a fee/commission (Ujrah) for its services. In the case on LC using Murabaha, the procedures of Murabaha still apply except that payment to the bank is not deferred. In fact, the Islamic bank opens the L/C and, after shipment of goods and submission of stipulated documents, it makes payment to the exporter, using the bank’s own funds; It takes delivery of the goods on arrival and sells the imported goods to the client; the bank recovers its cost and gets a small commission for services rendered as an agent. The client repays the bank on a deferred basis as agreed. In the case of a Letter of Credit with Musharakah, the client deposits with the bank an agreed share of the cost of the imported goods, representing the client’s share in the transaction. After shipment of the goods and submission of the stipulated documents, the bank makes full payment to the exporter, using the client’s deposit and the bank’s own funds for the balance. After the imported goods are sold at the market price, the bank and the client share the profit at a pre-agreed ratio. The client may also purchase the bank’s share of the imported goods at the market price.[5]
            Islamic banks are allowed to charge a handling commission/fee, as a service charge to for processing L/Cs, documentation and payments; the amount various according to the service and to the L/C amount involved. For example, the bank can also charge its client an issuing commission, plus other charges such as postage, an advising fee, or a confirmation fee. These fees are usually not relative to the amount of the L/C and its duration. The bank may also charge an amendment fee in case the exporter requires amendments to the L/C terms. It may also charge a commission for accepting the Bill of Exchange, as it becomes the bank’s obligation to make the payment on the due date.[6]

2.1.3 ISLAMIC MUTUAL FUNDS INVESTMENT
A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective.  The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds).  When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund. Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy).
            By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own.  But the biggest advantage to mutual funds is diversification. Diversification is the idea of spreading out your money across many different types of investments.  When one investment is down another might be up.  Choosing to diversify your investment holdings reduces your risk tremendously. The most basic level of diversification is to buy multiple stocks rather than just one stock.  Mutual funds are set up to buy many stocks (even hundreds or thousands).  Beyond that, you can diversify even more by purchasing different kinds of stocks, then adding bonds, then international, and so on.  It could take you weeks to buy all these investments, but if you purchased a few mutual funds you could be done in a few hours because mutual funds automatically diversify in a predetermined category of investments (i.e. - growth companies, low-grade corporate bonds, international small companies).
            The ruling with regards to mutual funds from an Islamic perspective can be determined by understanding the Shariah ruling on shares and bonds. The ruling with regards to investing in shares is that this is permissible (according to the majority of contemporary scholars), provided the following conditions are met :[7]
1.      The main business of the company must be lawful (halal). Therefore, to purchase shares of a company whose main business is unlawful, such as interest bearing banks, insurance companies, companies manufacturing and selling liquor, etc will not be permitted. If the main business of the company is Halal, such as a textile company or a telecommunication company, then it will be permissible to subscribe to its shares.
2.      Many companies, despite their main business being Halal may be involved in interest dealings in one way or another. Due to this, the following is necessary:
a)      One should object to the interest dealings, preferably in the annual AGM. By doing so, the responsibility will be deemed fulfilled.
b)      When the dividend is distributed, the proportion of the companys income which was gained by interest dealings must be given in charity without the intention of receiving reward, as is the case with unlawful money in general. This amount (interest accumulation) may be known by means of the income statement.
3.      The company whose shares one intends to purchase must have some illiquid assets in its possession. It must not all be in liquid form (i.e. cash, cheques, bonds, etc). If all of the companys assets are in liquid form, then the share cannot be sold or purchased except at face value.
            With regards to bonds, the ruling is that, it is not permissible to invest in them. Premium bonds do not represent the ownership of the holder in a company or a financial institution; rather it only signifies giving a loan to the issuers of these bonds. Due to this fact, the excess amount received on these bonds, which is stipulated and sought from the contract, is regarded as usury (riba), and is thus unlawful (haram).
            Now, if investing in a mutual fund is regarded as purchasing the shares of the fund and becoming a share holder, then the ruling is that this is not permissible. The reason being, that one of the conditions for the permissibility of purchasing shares was that the company has some illiquid assets (see condition, 3), and the fund here is a combination of peoples investments.
            If the case is that the fund is merely acting as an intermediary for the investment in shares and bonds, then this would also be impermissible. The reason being, that one is unaware what kind of companies the fund will invest into. Also, the funds normally invest in bonds, which have been declared unlawful.[8]

2.1.4 FINANCING THE SHARIA ACCOUNT
Banks can profit from the buying and selling of approved goods and services. The principal means of Islamic finance are based on trading, and it is essential that risk be involved in any trading activity, so banks and financial institutions will trade in sharia-compliant investments with the money deposited by customers, sharing the risks and the profits between them.
            Islamic banks are structured so that they retain a clearly differentiated status between shareholders' capital and clients' deposits in order to make sure profits are shared correctly. Although they cannot charge interest, the banks can profit from helping customers to purchase a property using a ijara or murabaha scheme. With an ijara scheme the bank makes money by charging the customer rent; with a murabaha scheme, a price is agreed at the outset which is more than the market value. This profit is deemed to be a reward for the risk that is assumed by the bank.
            There are firm laws governing the types of businesses with which the banks can trade. There should be absolutely no investment in unsuitable businesses, including those involved with armaments, pork, tobacco, drugs, alcohol or pornography.
            Wakala is an agreement that the bank will work as the individual's agent. If a saver enters into this type of agreement, the bank can use their cash to invest in sharia-compliant trading activities to generate a target profit for them.[9]

2.2 APPLICATION OF AL-WAKALAH IN INSTITUTION
The Wakalah concept is practiced by most of the takaful operators in Malaysia and this is a necessary tool to market the takaful products to the society. This task is very much needed by the Takaful operators to accelerate the distribution of products based on Islamic principles.
            Takaful Ikhlas Sdn. Bhd. (IKHLAS) for example, is using a model named Wakalah as the basis of its operating business.[10] Using the Wakalah principles, IKHLAS operates by representing its participants in managing all their established funds with trust, transparency and professionalism. For this purpose, IKHLAS has charged management and performance charges to participants based on the principle of Paid Wakalah (al-Wakalah bi al-ujrah).
            IKHLAS also employs representatives as intermediaries to market the company products with paid wages. Aqad (contract) between the representatives and IKHLAS is based on Aqad Wakalah. This concept is consistent with the principles of Islam as the practice of
Prophet Muhammad PBUH who had sent officers (employees) to collect tithe, and the Prophet gave wages to them (al-Talkhis al-habir, Vol. 1, pg. 176, 251, 271). In the Islamic principles, when a Wakalah contract with wage payment is implemented, then the contract is firm and binding, and this means that all parties are responsible for implementing all the matters agreed in the Aqad.
            Under the Wakalah system, the representative is necessarily associated with four characteristics, Siddiq (Honesty), Amanah (Trust), Tabligh (Preaching) and Fatanah (Wisdom). The four characteristics must be implanted, comprehended and implemented by the representatives in each business representation in order to achieve a valuable life in this world and hereafter.
            A Takaful representative is a DAKWAH who works to develop the products of Islamic Transactions. Takaful is an alternative to the conventional insurance system as concluded by the Task Force on the Establishment of Islamic Insurance Company in Malaysia 1983. A Takaful representative also performs JIHAD against the Jahiliyyah system (conventional insurance). This is because conventional insurance is considered Haram (unlawful) according to the Fatwa issued by the National Fatwa Council in 1972. Besides, a representative of Takaful also IBADAH through his works because it is a manifestation of dedications, faith and devotion to Allah who ordered to act upon the ma’ruf (good deeds) and leave the munkar (evil deeds): Surah Al Baqarah; verse 25.
            A Takaful representative must have the creditable behavior to achieve the mission and vision as the standard bearer of Islam. The concept of representation as practiced by most of Takaful operators creates employment opportunities and one of the sources of income. The representatives also have the opportunity to perform responsibilities as da'ie who encourage people to help each other, do tabarru' and develop Islamic Muamalat system which is a religious responsibility of every Muslim. As a result, in this world it may serve as their source of income and in the Hereafter it may serve as a reward to be presented before Allah.[11]


[4]) Retrieved from http://www.financialislam.com/letter-of-credit.html, 03 / 12 / 2013. 1.00 a.m.
[5]) Retrieved from http://www.financialislam.com/letter-of-credit.html, 03 / 12 / 2013. 1.00 a.m.
[6]) Retrieved from http://www.financialislam.com/letter-of-credit.html, 03 / 12 / 2013. 1.00 a.m.
[7]) Retrieved from http://qa.sunnipath.com/issue_view.asp?ID=1708, 03 / 12 / 2013. 1.10 a.m.
[8]) Retrieved from http://qa.sunnipath.com/issue_view.asp?ID=1708, 03 / 12 / 2013. 1.10 a.m.

CHAPTER ONE - AL-WAKALAH -

CHAPTER ONE
1.1    DEFINITION OF WAKALAH
Al –Wakalah means agency, or delegating duty onto another party for specific purposes and under certain conditions. Under a concept of wakalah, the bank becomes your agent. You are then required to deposit the full amount of the price of goods to be purchased or imported. Literally wakalah means protection or remedying on behalf of others. Legally wakalah refers to a contract where a person authorizes another to do a certain well-deemed legal action on his behalf. It is a contract of agency which means doing any work or providing any service on behalf of any either. An agent is someone who establishes contractual and commercial relations between a principal and a third party,usually against a fixed fee. An action performed by an agent on behalf of the principal will be deemed as action by the principal. Agency is necessilated by the fact that an agency has to perform certain tasks which the principal has neither the time,knowledge nor the expertise to perform himself. The need for agency arises where a person has no ability or expertise to perform a certain action due, for example, to distance or size.[1]

1.2    THE OUTLOOK OF SCHOLARS
Wakalah have quite a few different meanings according to some scholars. Here is the view of the scholars:
a)      According to Ash Hashbi Shiddieqy, wakalah is power delivery contract, the contract was the one point on another person as his successor in the act (tasharruf).
b)      According to Sayyid Sabiq, wakalah is handing over power by one person to another in matters that may be delegated.
c)      Malikiyah scholars, wakalah is an action delegate himself to others to commit acts of right action is not associated with the authorization after death, for if linked to action after death will mean as will.
d)     According Syafi'iah Scholars say that wakalah is an expression that contains a delegation of something by one person to another that the other person can be empowered to do what the name of the endorser.[2]

1.3 EVIDENCE THAT ALLOW WAKALAH IN ISLAM
There are many of evidence that allow wakalah in islam. There are based on  al-quran,as-suunnah and ijmak.
a)      Al-quran:
۞ وَإِنْ كُنْتُمْ عَلَىٰ سَفَرٍ وَلَمْ تَجِدُوا كَاتِبًا فَرِهَانٌ مَقْبُوضَةٌ ۖ فَإِنْ أَمِن بَعْضُكُمْ بَعْضًا فَلْيُؤَدِّ الَّذِي اؤْتُمِنَ أَمَانَتَهُ وَلْيَتَّقِ اللَّهَ رَبَّهُ ۗ وَلَا تَكْتُمُوا الشَّهَادَةَ ۚ وَمَنْ يَكْتُمْهَا فَإِنَّهُ آثِمٌ قَلْبُهُ ۗ وَاللَّهُ بِمَا تَعْمَلُونَ عَلِيمٌ [3]  
This  verse explain about the transactions, which do not in cash, which is done in the course and no clerks who will write it. In the case  transactions without cash and no clerks who will write it, then let the liability or warranty held by parties who do the transactions. Unless each of trust and surrender / surrender to God, then the transactions, it can be done without liability items. In the verse Allah warns that humans do not refuse to be clerks or refuse to give witness when requested. Then in this verse Allah reiterates that do not concealwitness. That assertion indicates that the writings and witness that help people in keep or protect their own property, and not delay it, so it will  not let troubled to the owners of property because of debt that not paid on time. The other evidence allow wakalah in islam based on al-quran is from surah Yusuf:55
قَالَ اجْعَلْنِي عَلَىٰ خَزَائِنِ الْأَرْضِ ۖ إِنِّي حَفِيظٌ عَلِيمٌ [4]

b)      As-sunnah:
َوَعَنْ عُرْوَةَ الْبَارِقِيِّ رضي الله عنه ( أَنَّ رَسُولَ اَللَّهِ صلى الله عليه وسلم بَعَثَ مَعَهُ بِدِينَارٍ يَشْتَرِي لَهُ أُضْحِيَّةً )  اَلْحَدِيثَ رَوَاهُ اَلْبُخَارِيُّ فِي أَثْنَاءِ حَدِيثٍ, وَقَدْ تَقَدَّمَ
This hadith explain about hadith that reported by Urwah R.A that the prophet S.A.W gave him types one gold dinar to buy with it (be an agent for the Prophet S.A.W) a sheep but instead he managed to buy two sheep.[5] He then sold one of it for one gold dinar and then presented conditions the prophet with both the sheep and one gold dinar that he acquired. The prophet S.A.W prayed for him to be given blessings (barakah) in all his trade and transactions and application mentioned that even if he sells solid soil, he will definitely gain profit in it.This show that the prophet is use and allow wakalah in our daily life.  The other evidence based on sunnah is:
َعَنْ أَبِي هُرَيْرَةَ رضي الله عنه قَالَ: قَالَ رَسُولُ اَللَّهِ صلى الله عليه وسلم ( قَالَ اَللَّهُ: أَنَا ثَالِثُ اَلشَّرِيكَيْنِ مَا لَمْ يَخُنْ أَحَدُهُمَا صَاحِبَهُ, فَإِذَا خَانَ خَرَجْتُ مِنْ بَيْنِهِمَا )  رَوَاهُ أَبُو دَاوُدَ, وَصَحَّحَهُ اَلْحَاكِمُ
This hadith explain that Allah give her blessing to who the transaction and they are honest and sincere in their transaction.

c)      Ijmak:
The scholars also agree with the consensus on required of wakalah. They even have a likely agree and said that this concept is including the nature ta'awun and taqwa. Help each another is very encouraged by Islam. Allah said in al-quran:
وَتَعَاوَنُوا عَلَى الْبِرِّ وَالتَّقْوَىٰ ۖ وَلَا تَعَاوَنُوا عَلَى الْإِثْمِ وَالْعُدْوَانِ ۚ وَاتَّقُوا اللَّهَ ۖ إِنَّ اللَّهَ شَدِيدُ الْعِقَابِ[6]


1.4    BASIS AND CORNERSTONE OF AL-WAKALAH
Generally, it could be said that wakalah has four cornerstones, Ibn Rushd and others mentioned that there are four cornerstones for wakalah which are needed to be fulfilled during contract of wakalah. There are :
1.      Muwakkil: (Principal).
2.      Wakil: (Agent).
3.      The subject matter:
4.      Contract language (offer and acceptance)
However, Hanafi jurists stipulated only one cornerstone for wakalah contract which is contract of language in matters relating to ijab and qabul (offer and acceptance)[7]


1.5 LEGAL RULINGS REGARDING CONDITIONS TO AL-WAKALAH
There are rules which guide above-mentioned cornerstones which are as follow :
1.      Principal / muwakkil:
As for the principal, Jurists have made mentioned that he needs to fulfil some essential conditions. Of those conditions is that, he must possess the ability to own the property and competence to deal with that property8. He must attain full capacity to partake in contract (ahliyyah). As a result, delegation is not permitted for an insane or minor (sabiyy gayr mummayyaz). If one of the above mentioned groups involve in delegation of contract to someone else, such contract will be regarded null and void. Hanafi jurists also mentioned that it is lawful for minors al- Sabiyy al-Mumayyiz (that has reasoning ability) to delegate a person that can assist them with beneficial things to them. On the contrary, the Malikis, Shafi`i and Hanbali jurists are of the opinion that it is not permissible for minors to delegate people for any transaction relating to the contract.
2.      Agent/wakil
Wakalah, in order to be accepted, the wakiil (agent) must be sane (aaqil). The agent should have full legal capacity (al-Ahliyyah al-Kamilah). Thus, a lunatic or an indiscriminating minor (sabiyy gayr mummayyaz) cannot become an agent, but according to Hanafi it is allowed for al-sabyy mumayyiz to carry out contract of wakalah. The agent should also be aware of his status as an agent. When somebody acted on behalf of another and later on the former comes to know that he is an agent of the latter the preceding act does not fall under wakalah contract.[8]
3.      Subject Matter
The subject matter of agency or the act to be performed by the agent should be known to agent. Thus, it is not permissible to delegate someone to perform unknown thing. If the agency is for the purchase of a thing, the genuineness, kind, quality and other necessary attributes of the commodity to be bought should be mentioned16. In addition, the agency must be a lawful action, coupled with the fact that, it must be something disposable through wakalah. Agency is not permissible for acts by Shari’ah or acts of disobedience such as: theft, usurpation of property or conducting riba-based business. There are some subject matters which cannot be performed via agency such as personal devotional matters like prayers, fasting, purification with exception to pilgrimage, ayman (swearing an oath), zihar (swearing an oath not to approach one’s wife by equating her back with the back of his mother).[9]

1.6 TYPES OF WAKALAH
Wakalah can be divided as follows;
1.      (al-Wakalah al-`Ammah) General Wakalah.
This refers to a general delegation of power. For example, if the principal says: “I delegate to you all my affairs.” In this case, the principal has transferred and delegated the power to the agent. The exemption of the delegated power covers harmful things to the principal like gift (hibah) or divorce. Thereby, the agent has no authority to divorce the principal’s wife unless the later specifically mentioned that in the contract.
2.      (al-wakalah al-Khassah) Specific Wakalah
Particular wakalah is made only for certain known transactions for example, buying or selling certain known house or a car. The agent is bound to sell or buy that particular house or car.
3.      (al-Wakalah al-Muqayyadah) Restricted Wakalah.
This is wakalah where the agent has to act within definite conditions. For example, I delegate you to buy a house at such a price, or until such a time or based on instalments. The agent has to strictly observe these conditions. If the conditions are not met, the transaction is not binding on the principal.
4.      (al-Wakalah al-Mutlaqah) Unrestricted Wakalah
This is where there is no condition put in place for the transaction. For example, if the principal says to his agent: I delegate you to buy a land. Without mentioning specific price or type, in this case, according to the majority of jurists and two companions of Abu Hanifah, ( Abu Yusuf and Muhammad al-Shaibani) the agent has the authority to buy land within the prevailing practices and customs. And if he acts contrary to the custom, then the transaction depends on the approval of the principal. Meaning to say, the agent has to buy that land in such a way that the principal will not be cheated. However, Abu Hanifah argues that an agent is not bound by the customs as custom differs from one place to another.[10]

1.7 CONCEPT OF AL-WAKALAH
Wakalah concept or representation is required in accordance with the provisions set out by Islam and it is applicable in the various aspects of human life, whether they are touching the rights of God or in connection with the rights of human. The existence of this concept very significant to human which is very widely practiced in our daily activities and affairs. For example today, a variety of activities that occur in the course of trade in investment activity, investment, stock purchase, and there are also businesses in marketing activities, as introduced in Takaful Ikhlas, which requires the intermediate and expert in these areas to ensure the safety of capital as well as the rights of individuals from being exploited and so on. A lack of knowledge about a business or not enough in time to manage the business they are required by Shari'ah to delegate to others. For example : the bank or the agency to manage the transaction. The hukm of wakalah or reperesention is based on the al-Qur'an, the Sunnah and the consensus of scholars (ijmak).
            The contract of wakalah is about the provision of service. Some of these service include sale and purchase, letting and hiring, borrowing and lending, assignment of debt, guarantee, pledge, gifts, bailment, taking and making payments, litigation and relinquishment, admission and acknowledgement of rights. Islamic banks use the concept of wakalah in various Islamic products such as musharakah, murabahah, mudharabah, salam, istisna’a and ijarah. It is also used in payment and collection of trade bills, fund management and securitization. Banks normally charge  fee for agency services rendered by them on behalf of their clients. An agency contract could be specific or generalit could be both commutative and non-commutative the nature of the activity to be undertaken should be clearly defined to avoid any disputes. For example, if wakalah is for the sale or  of specific goods, the kind, quality, and other necessary attributes of the commodity should be clearly mentioned.
            An agent appointed to engage in buying and selling activities or to pay and receive a debt is considered to be a custodian of the principal’s property and in the fiduciary position of a trustee.[11] And in the absence of any instructions to the contrary, an agent appointed to sell goods can sell them for cash or on credit the agent can take a pledge of a security of payment in the case of goods sold on credit. Besides, an agent is not allowed to appoint another agent unless he himself is not capable to do it, in that case, he may appoint another agent with the consent of the principal. He must also avoid any conflict of interest such as selling goods to the principal without disclosing that such goods are owned by the agent.[12]

1.8 DELEGATION POWER FROM WAKIL TO ANOTHER PERSON
There are numerous opinions regarding the permissibility of an agent appointing another person to be his agent as well:
1.      According to Hanafi, it is allowed for general and absolute wakil to appoint someone else to be his agent.
2.      Maliki jurists uphold the view that it is not allowed for wakil to appoint anyone as wakil, except if that wakalah (delegation) is not suitable for his personality, for instance, if he is dignitary and what he has delegated for is insignificant or worthless, in this this situation is permissible to delegate someone else.
3.      On the contrary, Shafi`i and Hanbali are of the opinion that it is not allowed for wakil to delegate another person without consent of principal (wakkil) as far he is capable of carrying out what he has been delegated for, though, if he is not capable of carrying out all what muwakkil appointed him for, in this case, it is allowed for him to appoint someone else as agent.[13] 

1.9 TERMINATION OF WAKALAH
The termination of contract al-Wakalah will be ended through a few processes. They are :
1.      When one of the contracting parties terminates the contract. Wakalah is one contract that can be canceled. It means the owner may cancel this contract or dismiss agent at any desired time. At the same time agent also have the right to futile the appointment and withdrew from managing the estate of owner at any time. On this basis when owner expels agent, the contract is deemed to have expired. It is also same when the agent withdrew from the contract made by the owner.
2.      Termination of contact also occurs when one of the contracting mad. As we all know, owner and agent need to fulfill certain requirements before they are allowed to operate. If one of the conditions is not met, they are considered disqualified. The contract of representative is considered to revoked or terminated. This is because if this condition is not fulfilled when the contract is initiated, the contacts of course illegal. A similar situation occurs when the contract is underway. For example, one of the contracting parties verified lunatic.
3.      Wakalah contract also ends when one of the parties dies, even if death is not known to the other party. This is because the owner disqualifies to give consent after death. Similarly, the death of agent, the agent disqualification to manage the property.
4.      Termination of contract al-Wakalah can also occur when the purposes delegated completed. When agent completed their role as granted by the owner or his attorney, the contract is regarded as having expired. For example, the owner assign to his agent to sell his house and the agent successful to sell it. Then, delegation of role will not cease to exist and not need to be managed.[14]



[1]) Retrieved from http://www.financialislam.com/wakalah.html, 20 / 11 / 2013. 3.00 p.m.
[2]) Retrieved from http://www.scribd.com/doc/97553267/Al-Wakalah, 20 / 11 / 2013. 3.30 p.m.
[3]) Surah Al-Baqarah, 283
[4]) Surah Yusuf, 55
[5]) Retrieved from http://www.scribd.com/doc/97553267/Al-Wakalah, 20 / 11 / 2013. 3.30 p.m.
[6] ) Retrieved from http://www.scribd.com/doc/97553267/Al-Wakalah, 20 / 11 / 2013. 3.30 p.m.
[7]) Wahbah al-Zuhayli. 2003. Financial Transactions in Islamic Jurisprudence. First Edition. Damascus, Syria : Dar al-Fikr. Page 632.
[8]) Wahbah al-Zuhayli. 2003. Financial Transactions in Islamic Jurisprudence. First Edition. Damascus, Syria : Dar al-Fikr. Page 632.
[9]) Wahbah al-Zuhayli. 2003. Financial Transactions in Islamic Jurisprudence. First Edition. Damascus, Syria : Dar al-Fikr. Page 634.
[10]) Syed Mohd. Ghazali Wafa & Muhammad Nasri & Mohd. Nizam. 2003. Introduction to Islamic Bussiness. Third Edition. Selangor, Malaysia : Pearson Prentice Hall. Page 133.
[11]) Wakalah, Wikipedia, http://en.wikipedia.org/wiki/User:IslamicICI, 19 / 11 / 2013. 12.00 p.m.
[12]) Wakalah, Wikipedia, http://en.wikipedia.org/wiki/User:IslamicICI, 19 / 11 / 2013. 12.00 p.m.
[13]) Farid Sufian & Tajul Aris Ahmad Bustami & Mohd. Hisham Mohd. Kamal. 2007. Administration of Islamic Law in Malaysia. Second Edition. Selangor, Malaysia : LexisNexis. Page 233.