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END-OF-SEMESTER EXAMINATIONSEMESTER I, 2006/2007 SESSION

AHMAD IBRAHIM KULLIYYAH OF LAWS

Programme : Bachelor of Laws Level of : FirstStudy

Reading Time : 9.00 a.m. 9.15 a.m. Date : 15.11.2006Duration : ( 15 minutes )

Answering Time : 9.15 a.m. 12.15 p.m. Section(s) : All SectionsDuration ( 3 hours )

Course Title : Transactions in Islamic Course Code : SHA 1411Law II

This Question Paper Consists of 7 Printed Pages With 6 Questions.

INSTRUCTIONS TO CANDIDATESDO NOT OPEN UNTIL YOU ARE ASKED TO DO SO.

Answer FOUR (4) questions.

Any form of cheating or attempt to cheat is a seriousoffence which may lead to dismissal

APPROVED BY

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QUESTION 1

a) Evaluate the concept of sharikat al-milk and its application to the contemporary

Islamic banking practices. In your answer, explain also the differences between

sharikat al-milk and sharikat al-aqd.

(7 marks)

b) Muhammad and Ahmad are closed to one another since their childhood. They come

from the same village, Kampung Alor, Sungai Petani, Kedah Darul Aman. Before

celebrating Iyd al-Fitri , that is during the month of Ramadan , they decided to

engage themselves in business of selling of festival cookies and clothes and the

profits of this business will be distributed equally between themselves. They

decided to order and buy variety of cookies on credit from Momma Cake House,

Gombak, Selangor. For clothes, they bought from Samsuddeen Superstore Sdn.

Bhd. and Kundang Supermarket Malaysia Sdn. Bhd. because these two companies

allowed them to defer the payment after a week of Iyd al-Fitri.

Discuss the validity of the abovementioned transaction involving Muhammad and

Ahmad.

(8 marks)

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QUESTION 2

a) O you who believe! Eat not riba doubled and multiplied, but fear Allah that you

may successful. ( surat al Imran , 3:130)

Examine the legal effects of the above verse in detail.

(5 marks)

b) Decide the validity of the following transactions and support your answer with

relevant authorities from al-Quran , Hadith of the Prophet s.a.w. and views of

Muslim jurists.

i) Raziff borrowed RM10,000 from Razali. The whole transaction was

concluded in Kuala Lumpur, Malaysia. However, Razali directed that Raziff

pays the full amount to his partner cum agent in London.

(5 marks)

ii) Muaz exchanged on cash three kilogrammes of grade A dates with one

kilogramme of grade B dates belonging to Muhammad. He also exchanged

four kilogrammes of Vietnamese fragrance rice with ten kilogrammes grade A

local rice with Ali.

(5 marks)

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QUESTION 3

a) The mudarib must carry out all the works that any similar asset or fund manager

would be liable, by custom, to do. In this case, the mudarib is not entitled to a fee

for this work as this is part of his responsibilities. If the mudarib appoints another

party on an ijarah (hiring contract) basis to carry out such work, the wages for the

worker must be paid from the personal funds of the mudarib and not from the

mudaraba funds. The mudarib may hire against the account of mudaraba funds

another party to execute work that is not by custom the responsibility of the

mudarib . (Shariah Standard No. 9/5 of Accounting ad Auditing Organization For

Islamic Financial Institutions)

Based on the above Standard, explain the rights and duties of the mudarib in

mudarabah contract.

(7 marks)

b) Compose an essay on the similarities and differences between al-mudarabah and

al-musharakah .

(8 marks)

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QUESTION 4

a) Discuss the concept of al-wakalah al-ammah and explain the differences between

al-wakalah al-ammah and al-wakalah al-muilaqah.

(7 marks)

b) Datok Ahmad has authorised Far Reaching Company, a leading stock broking

company to purchase 50,000 shares of Tabung Haji (Pilgrimage Fund) Plantation

that listed and traded in Bursa Malaysia for RM2.00 per share. Datok Ahmad has

also given an authorisation to Far Reaching Company to dispose of those shares

once they reach RM2.50 per share worth of value. It is very clear from the

arrangement that Datok Ahmad expects to earn capital gain of RM0.50 for each

share from the movement of the market price of the shares. However, Far Reaching

Company has purchased 50,000 shares of another counter that is not listed under the

category of plantation section. The Company managed to earn capital gain totaling

of RM100,000 from the said transaction. From the financial analysis perspective,

the amount earned is considerably to be extraordinary and is unlikely to be earned

should Far Reaching Company were to confine their investments to counters listed

under plantation sector.

Discuss the case from the Islamic principles of al-wakalah.

(8 marks)

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QUESTION 5

a) If you decide on a foster-mother (wet-nurse) for your offspring, there is no blame

on you, provided you pay the mother what you offer, on equitable term. But fear

Allah and know that Allah sees well what you see. ( surat al-Baqarah , 2:233)

Discuss the legal effects of the above verse in detail.

(7 marks)

b) Abdullah and Muhammad are neighbours staying in Perdana Heights. Abdullah,

who works as a Manager with Malaysian Airline System (MAS) has been assigned

to MAS Office in New York. His contract of employment stated that he has to work

in New York for eight years. Abdullah has asked Muhammad to look after his

house during his absence. Muhammad has leased the house to Unicom Corporation

for RM200,000 for two years and used the money to buy a condominium at Bukit

Antara for RM250,000 and later sold the condominium at RM400,000. Muhammad

sent RM200,000 to Abdullah and used the balance of RM 200,000 to buy a piece of

land at Rawang, Selangor.

Discuss the validity of the contract and advise the parties as to their rights and

obligations.

(8 marks)

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QUESTION 6

Discuss the following issues.

Kafalah bi al-nafs , its legal consequences and termination

(6 marks)

Concept of taking possession in al-rahn

(5 marks)

Al-hiwalah al-muqayyadah and its relevant principles

(4 marks)