An Overview of Islamic Contracts and Principles By Yusuf Talal DeLorenzo Kuwait March 2005

Agenda Introduction Governing Law Contracts Nominate Contracts Rethinking the Nominates Summary

Introduction The context of Modern Islamic Contracts –Modern Shariah Boards and the their jurisprudence –Classical Islamic contracts –Using the nominate contracts for trade and exchange as their building blocks, modern Muslim jurists have provided Shariah-compliant solutions to an ever-expanding spectrum of needs.

Governing Law British Court of Appeals (Civil Division) 2004, decides that it cannot recognize Shariah Law. The jurists of Islam hold that it is the responsibililty of the believer to transact in compliance with Shariah Faith, not jurisdiction, is the determining factor Modern agreements may be drafted to accommodate Shariah compliance in any jurisdiction

Contracts The sanctity of contracts Mutual consent Freedom of contract restricted only by Shariah principles

Nominate Contracts Recognized ways of contracting, contractual norms approved by consensus Legitimacy of modern commercial jurisprudence derives from the use of nominates (classical models) Recovery and adaptation of classical models for modern needs

Rethinking the Nominates Blocks or units in which the integrity of the classical models is maintained Blocks may be combined and joined together to meet contemporary needs Adaptation of classical models by modern Shariah boards for modern business and commerce

Summary Nominates represent the fundamental building blocks of all modern Islamic Finance The regulation of modern Islamic finance may benefit from an enhanced understanding of the nominates The modern Islamic financial services industry needs to further explain its inner workings as it continues to adapt the nominates for innovation and development

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