1. MAHYUDDIN KHALID  emkay@salam.uitm.edu.my

2. CONTENT
 DEFINITION
DEFINITION
 EVIDENCE
EVIDENCES  PILLARS OF AL-IJARAH
 CONDITION OF AL-IJARAH
PILLARS
 COMPARISON BETWEEN AL-IJARAH AND
NORMAL SALES
TYPES
 AL-IJARAH THUMMA AL-BAY‟
OPINION OF
SCHOLARS
APPLICATION
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3. DEFINITION
 Literally:
DEFINITION  Ijarah came from the root word which means
compensation or . It also means the sale of usufruct.
EVIDENCES  Technically:
 A contract of proposed and known usufruct with a specified
PILLARS
and lawful return or compensation for the effort or work
which has been expended.
 It is used to express the sale (bay‟) of a known benefit in
TYPES return for its known equivalent.
OPINION OF
SCHOLARS
 Usufruct:
 The usage of shelter for house, transportation for vehicles
and others for a fee.
APPLICATION
 Services:
 To work using physical energy or skills such as lifting goods,
cleaning of office, writing, lecturing, and others for a fee
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4. NATURE OF AL-IJARAH
 Lease is a contract by which the owner of land, a
DEFINITION
building allows another person to use it for a
specific time, usually in return for a rent
EVIDENCES
 Al-Ijarah means a lease contract as well as a hire
PILLARS contract.
 Al-Ijarah, is also known as al-Kira‟. It is like
TYPES someone who is selling to someone else a right to
benefit or as a payment for services with a certain
OPINION OF
SCHOLARS price to be paid for it.
 In the context of Islamic banking it is a lease
APPLICATION
contract under which the bank or financial
institution leases equipment or a building to one of
its clients against a fixed charge.
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5. DIFFERENCES OF OPINION
OPINION REASON
DEFINITION Forbids Some jurist Ijarah is the sale of usufruct or services,
contract of including and services is something intangible and
EVIDENCES
Ijarah. Hassan al- does not exist at the time of contract.
Basri, al- It only can be achieve gradually over
Nahrawani and certain period and something that not exist
PILLARS others cannot be sold.
It is not permissible to associate bay‟
TYPES (trade) with something that could only be
realized and achieved in the future
OPINION OF Allowed Majority of Even though usufruct does not exist at the
SCHOLARS
contracts of jurist including time of contract, normally it could be
Ijarah Ibn Rushd realized or achieved
APPLICATION
This type of usufruct or benefit could
ordinarily be accomplished, or its
accomplishment or non-accomplishment is
rather similar
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6. EVIDENCE
 Quran:
DEFINITION
 .
EVIDENCES
PILLARS
TYPES
OPINION OF
SCHOLARS
APPLICATION
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7. EVIDENCE
 Hadith:
DEFINITION
 “Give a servant his fee before his sweat dries up”
 (Al-Baihaqi)
EVIDENCES
 Reported by Ibn Abbas to the effect that Prophet (s.a.w)
had himself cupped and gave the person who cupped
PILLARS
him his remuneration, if it is prohibited he would not
have paid him in the first place.
TYPES
OPINION OF  Ijma‟:
SCHOLARS
 The ummah had came to a consensus during the time of
APPLICATION companion on permissibility of Ujrah since the need of
people for usufruct is similar to their need to physical
good.
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8. PILLARS OF AL-IJARAH
1. Muajjir:
DEFINITION
 A person who give something for hire – Lessor,
landlord, owner etc.
EVIDENCES
2. Musta‟jir:
 A person who takes on hire – Lessee, tenant, renter etc.
PILLARS
3. Ma‟jur:
 A thing given for rent
TYPES
4. Al-Manfaah:
OPINION OF  The benefit from a thing – usufruct, services etc.
SCHOLARS
5. Ujrah:
APPLICATION  Price or fee given for the payment of rent or lease
6. Sighah:
 Offer (Ijab) and Acceptance (Qabul)
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9. FLOWS OF AL-IJARAH
 Flows of al-Ijarah (Renting/ Leasing)
DEFINITION
Use of Manfaah
EVIDENCES
IJAB (Offer)
PILLARS
MA‟JUR
MUAJJIR (THINGS/ ASSET)
TYPES MUSTA‟JIR
(OWNER)
MANFAAH
OPINION OF
SCHOLARS
QABUL (Acceptance)
APPLICATION
Ujrah (Fees/ Rental)
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10. TYPES OF IJARAH
DEFINITION Tangible asset
EVIDENCES
Based on Subject Matter Labour
PILLARS
Ijarah
TYPES Description of asset
OPINION OF
SCHOLARS
Operating lease
APPLICATION
Based on The
Contractual Relationship
Financial lease
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11. TYPES OF IJARAH
Based on Subject Matter of the Leased Asset
DEFINITION 1. Ijarah ‘Ain • To lease the usufruct from the specific goods or asset
• Comprises all tangible assets.
EVIDENCES • E.g.: property, transport, facilities and factories, etc.
2. Ijarah ‘Amal • To lease out the works or self skills
PILLARS • Two type of workers:
1. Employee : person/entity that work only for the interest
of a particular employer or independent contractor;
TYPES does not have right to work for any other lessee during
contract.
OPINION OF 2. Independent contractor: offer services to the general
SCHOLARS public
• E.g: consultant, lawyer, contractor
APPLICATION 3. Ijarah • Form of ijarah where asset need to be described in
Mawsufah fi advance
al-Zimmah • The leased item/asset is not available during contract
• The asset must be delivered on a future agreed date
• No requirement should be imposed for the rental
11 payment to be paid in advance

12. TYPES OF IJARAH
Based on The Contractual Relationship
DEFINITION 1. Operating • Original form of ijarah „ain
Lease • Features of operating lease:
EVIDENCES • Asset acqusition is in full ownership of the lessor –
legal and beneficial ownership
• Responsibility to maintain bear by the lessor in
PILLARS administrative affairs and maintenance of asset;
lessee only responsible in the maintenance due to
TYPES
the usage and has to pay rent per agreed.
• Risk on the asset ander liability and responsibility
of the lessor
OPINION OF
SCHOLARS
• High risk in nature.
2. Financial • Normally used and offered by Islamic bank as
APPLICATION Lease financial intermediaries in:
• Obtaining desired asset
• Obtaining cash money for various purposes
• Known as al-Ijarah Thumma al-Bay‟, al-Ijarah wa al-
Iqtina‟ or al-Ijarah Muntahiyah bi al-Tamlik.
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13. SUBJECT MATTER OF AL-IJARAH
1. Since Ijarah is the sale of usufruct, majority of jurist
DEFINITION forbid Ijarah on trees and grapevines, since fruit are
physical goods and Ijarah is the sale of usufruct and not
physical goods.
EVIDENCES
2. It is also not permissible to conduct Ijarah on animal for
its milk; ghee, wool or offspring; water in the river or
PILLARS well or canal since all these are goods, and not eligible
to be under contract of Ijarah.
TYPES 3. It is also not permitted to conduct ijarah on non-arable
(not fit for cultivation) land which have ponds for
OPINION OF
fishing, canes and wildlife for hunting since all these are
SCHOLARS goods. It is not legal to rent pond or lake for fishing.
4. Basic principle of Ijarah: every item that could be
APPLICATION utilized with its original substance and part
consistently being conserved or preserved is allowed
for Ijarah, and if not is not legal.
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14. CONDITIONS OF AL-IJARAH
 The conditions for Property
DEFINITION
1. The property must be belong to lessor
EVIDENCES
2. The property is known to both parties and is specified
3. The property can be acquired by the lessee for his use
PILLARS
until the end of tenancy or lease
4. The property should be in a good condition possible
TYPES
for leasing
5. It is the liability of the lessor to repair damages of the
OPINION OF property in order to make it possible for leasing
SCHOLARS
6. It is the liability of the lessee to ensure the cleanliness
APPLICATION and safety of the property
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15. CONDITIONS OF AL-IJARAH
7. The liability of the lessee over the property is under the
DEFINITION concept of trust (wadiah yadd amanah). However, in the
case of damages due to his negligence, the lessee is liable
EVIDENCES to pay the compensation (dhaman).
8. The lessee cannot lease the property to another tenant and
PILLARS the second contract is considered as illegitimate.
9. The sale of a lease property is legitimate. However, the
TYPES lessee has a right to use the property until the lease
contract has expired, where the property will then be
OPINION OF
SCHOLARS
submitted to the buyer.
10. The concept of al-Wadiah is applied when the lease
APPLICATION contract has expired and the lessee is still holding the
property.
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16. CONDITIONS OF AL-IJARAH
 The conditions for Usufruct
DEFINITION
1. The use of the service (usufruct) can be valued with money.
2. The usufruct must be valid according to Islamic commercial
EVIDENCES law.
3. The lessee should be able to make use of the property on
PILLARS lease.
4. The usage of the property should be made clear in order to
TYPES avoid any argument.
5. The usufruct does not entitled the lessee to own the
OPINION OF property.
SCHOLARS
6. The lessee is not obliged to inform the lessor his intention for
APPLICATION
using the property, except in the case of possible destruction.
7. The usufruct of property beyond its normal usage is
considered as an act of intention.
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17. CONDITIONS OF AL-IJARAH
 The conditions for Payment
DEFINITION
1. The amount of payment of rent must be known. If the
payment is not in form of cash money, the goods in
EVIDENCES
return must be specified its quantity, types and its
characteristics.
PILLARS
2. The payment of rent can be made in advance.
3. If the condition for payment does not prescribed to be
TYPES
paid in advance, the payment begins when usufruct
OPINION OF
started.
SCHOLARS 4. If the payment is made on daily, weekly or monthly
basis, the payment should be made at the end of period
APPLICATION
unless otherwise stated on the agreement.
5. If the property cannot be used the payment is not
obliged upon the user.
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18. CONDITIONS OF AL-IJARAH
 The conditions for Sighah
DEFINITION
 The contract of offer and acceptance should follow all
the conditions of the contract of sale in Islam; i.e. it
EVIDENCES
should be on mutual acceptance, cannot be made in
form of promises or an order and the offer and
PILLARS acceptance should be the same.
TYPES
OPINION OF
SCHOLARS
APPLICATION
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19. DIFFERENCES BETWEEN IJARAH & NORMAL SALES
IJARAH ELEMENT NORMAL SALES
DEFINITION
Based solely on a DURATION Does not permit any time
predetermined time frame frame
EVIDENCES as part of the requirement of
the contract
PILLARS
A temporary contract with a NATURE A permanent contract
TYPES specified time frame for its without any specified
expiry and due time period of expiration
OPINION OF
SCHOLARS
No time of ownership OWNERSHIP Transfer of ownership
APPLICATION occurs
Usufruct and services SUBJECT Physical Goods and
property
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20. MODERN APPLICATION
1. Simple ijarah
DEFINITION
2. AITAB
EVIDENCES 3. Musharakah mutanaqisah
4. Ijarah based credit card
PILLARS
5. Sukuk ijarah
TYPES
6. Ijarah rental swaps
OPINION OF
SCHOLARS
APPLICATION
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21. AL-IJARAH THUMMA AL-BAY’ (AITAB)
 AITAB also known as ijarah wa iqtina‟ ( ) or al-
DEFINITION
ijarah muntahiya bi-tamlik ( )
 Definition:
EVIDENCES
 Owning the benefit of certain assets for a specific period of
time, by paying an agreed sums of rental, with an agreement
PILLARS that the owner will transfer the rented asset to the hirer at the
end of the agreed period or during the period, provided all
TYPES rental payments or installments have been made in entirety
 In theory, the contract of AITAB shall consist of two
OPINION OF
SCHOLARS
different contracts, namely:
1. The contract of lease (al-ijarah „ain)
APPLICATION 2. The contract of sale (al-bay‟)
 AITAB is a contract of leasing with a promise to sell the
asset.
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22. FLOWS OF AITAB
 In AITAB, the contract of al-ijarah runs separately
DEFINITION
from the contract of al-bay‟. These stages are:
 Stage 1: Executing the contract of true leasing (al-ijarah
EVIDENCES
„ain)
PILLARS
 Stage 2: Executing the contract of sale (al-bay‟) at a
nominal value agreed upon by both parties.
TYPES
OPINION OF
SCHOLARS
APPLICATION
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23. FLOWS OF AITAB
1st: Contract of al-ijarah
DEFINITION
1)Lease Agreement
EVIDENCES 2) Rental Payment
PILLARS
TYPES FINANCIER ASSET CUSTOMER
OPINION OF
SCHOLARS
3) Sale Agreement
APPLICATION
4) Sale Price
2nd : Contract of al-bay‟
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24. END OF CHAPTER
DEFINITION
EVIDENCES
PILLARS
TYPES 
OPINION OF
SCHOLARS
APPLICATION
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