Implementation of Maqasid Shari'ah in Islamic house financing: A study of the rights and responsibilities of contracting parties in Bai' Bithaman Ajil and Musharakah Mutanaqisah

Abstract

The Maqasid-oriented approach in Islam demonstrates the Muslims commitment to uphold the authenticity of Islam as a religion and a complete way of life (ad-din). Maqasid Shari'ah is a transparent tool to outline and clarify the effective extent of the rights and responsibilities of the Mukallaf (servant of Allah) towards each other. Ignorance on Maqasid Shari'ah in Islamic business transactions, particularly for Islamic house financing led to misinterpretation, disruption, chaos, and trivial conflicts among the contracting parties. This paper discusses the implementation of Bai' Bithaman Ajil (BBA) and Musharakah Mutanaqisah (MM) Home Financing instruments as practiced in Malaysia using the method of Imam al Shatibi. This paper concluded that a sound understanding of the knowledge, goals, and objectives of the Shari'ah at every level of a contract involving parties to a sale and purchase in Islamic Home Financing would enable improvement in practice through ijtihad (collective decision or general consensus). The Maqasid Shari'ah (the objective of Islamic Jurispudence) is adequate to provide the appropriate vehicle and procedure for the fulfillment of rights and responsibilities of contracting parties, thereby eliminating all sorts of financial criminology in trading and business (Kamali, 2002). © 2011 The Clute Institute.