Contracts In Islamic Commercial Law-Analytical View And Application

The trade volume and investments between China and the Muslim countries has increased a lot,in particular in the governmental sectors.Although,the private sectors in both sides have been trying for the last two decade to extend their transactions,the trade and investment activities are still far from their potentials.Having different regulatory mechanisms that govern and organize the business transactions,precisely the contract laws.This hurdle is found particularly on the Muslim countries side,as people tend to follow Islamic law i.e.Shari'a,and strive to conduct all their daily activities and business transaction according the Shari'a and its principles.The research aims to contribute to the academic work in the area of Islamic Commercial law.In particular,the Islamic contract law.In order to achieve the goals of this research,analytical and comparative approaches are followed to examine the contracts in Islamic law and their applications in the contemporary investment environments.Moreover,this research aims to raise awareness about the different aspects that are likely to help enhancing the investments between the People's Republic of China and the Muslim world.Therefore,to attain this goal and create awareness and transparency about the Islamic commercial law and the contracts under it,the research approaches the principles and sources of Shari'a and explains them in an adequate way that highlight the influence of Shari'a on business transactions and business environment.Moreover,the research discusses the major Islamic sects and the main schools of Islamic jurisprudence,as well as the impacts their divergence on the socioeconomic aspect in the Muslim communities.This research also introduces the Islamic law-compliant companies and the screening criteria used to ensure that the company is conducting it business in accordance with Shari'a.The research also provides contextual background on the historical evolution of Islamic commercial law,as well as detailed examination of the different types of Islamic commercial contract i.e.contracts of exchange,contracts of security,contracts of partnership' contracts of utilization of usufruct,contracts of safe custody,contracts of agency.The application of the different types of contract along with their potentials in the contemporary business environment are discussed in this research.In addition,risks of applying and using the Islamic contracts in the contemporary business environment i.e.market risk,operational risk,liquidity risk and credit risk are analyzed.In order to encourage and activate the Islamic Financial Institutions(IFIs)in China,the author emphasizes on the importance of establishing a comprehensive regulatory framework.This regulatory framework must actively monitor capital adequacy of IFIs,control,manage risk,and ensure the customer satisfaction.The author also recommend after establishing such regulatory framework,it should take into consideration that conventional financial services providers and business are already operating in the market,which represent significant challenge to Islamic financial services providers(IFSPs).In addition,IFSPs' customers should have at least similar protection as customers of the conventional financial products.Simultaneously,the author emphasizes on the importance of having impartial regulatory framework and institutions to guarantee that both Islamic financial services providers and the conventional financial institutions are have the same benefits and advantages.On the business side,the author recommends the Islamic financial services providers to be more innovative and aware of the different kinds of risks and potentials of their transaction.As a result,they need to offer a more flexible combination of Islamic investments and retail banking services that meet the requirements of the customers and fit with the contemporary business environment.Giving the facts that some Islamic financial services providers are heavily using and advertising that their contracts comply with Shari'a,while in fact they are just conventional contracts,it is highly recommended to raise awareness and educate both Chinese investors and customers on the similarities and difference between Islamic and conventional contracts.