What makes a Shariah nominate contract?

In-Depth Analysis

After covering the Shariah governance aspect of Islamic banking, the series examines the parameters of Islamic financing contracts which did not need to undergo any changes during and after the global financial crisis of 2008. Shariah financing contracts are those that have endured the test of time on several occasions. A contract in Arabic is called Aqd. The literal meaning of Aqd in Arabic is 'to bind or to strengthen.' The word Aqd is also used in Arabic in the sense of confirming an oath. As such, any covenant, pact, agreement and treaty will also be referred to as Aqd since all of them demonstrate a firm resolve for execution. The plural of Aqd is Uqood or contracts. According to Shariah, a contract cannot be defined as such unless it has the following four prerequisites: 1. Existence of minimum two parties: A contract cannot be formed with the presence of a single party. 2. Offer and acceptance: It is necessary for a contract to have consent from a minimum of two parties forming the contract over the purpose and content. In Arabic, it is called Ijab wa Qabool, meaning offer (Ijab) and acceptance (Qabool). The offer and acceptance could be written as well as verbal since Islam gives high importance to the fulfillment of one's obligation under a contract. 3. Shariah compliant: The offer and acceptance between the parties should be for a purpose not repugnant to Shariah. If the parties agree over an act which is out of line with Shariah, the contract will be void under Islamic law. 4. Contract's object: The subject matter of the contract must change hands upon the completion of the contract. The object of a contract should be fit or suitable for carrying out a transaction — Shariah renders any such contract invalid where it will be impossible to achieve the consideration for which the contract was formed.