Application of Islamic Financial Contracts

Abstract

This chapter deals with the application of Islamic commercial contracts as they are applied in modern day Islamic finance. Due to the complexities of modern ay financial landscape, the contracts that were developed and elaborated by Muslim jurists of the past are moulded to a greater extent in order to make them applicable in the modern world. This has resulted in the emergence innovative application of the classical Islamic law contracts in contemporary Islamic finance. Thus, we find that the famously found in Islamic law like murabahah, musharakah, mudharabah, ijarah, salam, and istisna etc., are usually applied in a group form. Similarly, these contracts are designed in novel ways in order to fulfil the needs of the modern day finance. Thus, this chapter elaborates the application of the classical Islamic contracts in the modern day Islamic finance with the help of diagrams and illustrations.