Office Of Grand Ayatollah Sayyid M.S.Al-Hakeem - Books-Islamic Laws Simplified - Leasing (Ijarah)

Books Islamic Laws SimplifiedLeasing (Ijarah)


Silent Partnership (Mudharaba)

Leasing is a contract which consists of passing the benefits of assets to the lessee, by giving possession of the asset to the lessee in exchange for a specified fee.
Note: Here, a lease also includes the hiring of other people for work and the lease payment will be their wages.
Ruling 446: The benefit should be independent from the asset, such that it is possible to gain the benefit from the asset while the latter still remains. Therefore, it is necessary that the asset is capable of being leased. There a number of other conditions in respect to the benefit, as follows:
(1)   Specification, such that it is not confused between two things or more.
(2)   That the benefit is permissible, so – for example – the leasing of places in order for prohibited deeds to take place is invalid.
(3)   That its handing over and delivery does not involve an impermissible act, such as the hiring of a woman in her menses to clean a mosque.
(4)   Actual ability to receive the said benefit, as an obligatory precaution.
(5)   Knowledge of the approximate quantity of the said benefit, as an obligatory precaution. However, one can lease land in exchange for a specified portion of its produce, such as a third or a quarter. As for the lease payment – which is paid in lieu of the benefit received – as an obligatory precaution one should know it in the same way as explained previously about the price of items sold (see Ruling 414).
Rules of Leasing
Ruling 447: Leases are one of the binding contracts, so they cannot be cancelled except with the agreement of both parties, or with the establishing of the right of withdrawal for either or both of them.
Ruling 448: If the lessee finds a defect in the item leased to him, and was unaware of it at the time of entering into the lease agreement, and if this defect results in him not being able to fully benefit from the leased item – such as some rooms of a leased house being unusable – he will revert to the lessor and obtain from him a refund of the lease payment proportionate to the lost benefit. If it results in a defect in the benefit itself – such as an animal being cripple – he has the option to cancel the lease.
Ruling 449: If the lessor finds a defect in the lease payment (e.g. the rent), he has the option to cancel the lease if the payment is a specific item. If it is a non-specific item – such as currency – he can demand a replacement.
Ruling 450: If the owner of the leased item sells it before the end of the lease period, the lease does not become void by this; rather, the item’s ownership will pass to the buyer, although he will not have the right of utilizing it during the lease; if he did not know about the lease, he will have the right of withdrawal from the sale agreement.
Ruling 451: When the lease contract is consummated, it is obligatory upon both parties – the lessee and the lessor – to pass over to the other what is obligated upon them in the manner stipulated in the terms of the agreement. In the event of the contract being silent on this issue, they will act according to what is customary and usual.
Ruling 452: If either of the parties withholds what is due upon them for the other party as per the agreed terms, the other party has the right to void the contract. If one party has handed over what is due upon them and the period of the lease has ended, then if it is the lessee the contract is annulled and the lease payment will be returned to him; and if it is the lessor, he has the right to demand the lease payment.
Ruling 453: If the benefit which is the subject of the lease is limited to a particular time, it is sufficient that it be surrendered during this time to the lessee– hence executing the lease – such as the surrendering of the keys to a house or a car, or the presence of workers at their workplace, at a particular period of time, even if the lessee does not actually benefit from it.
Ruling 454: If it is not possible to obtain the benefit from the leased asset before it is passed to the lessee, the lease becomes void. The same is the case if the subject of the benefit is no longer present; for example, if a doctor is hired to treat a patient, but the patient has been cured before his treatment, the contract becomes void. However, if the lessee in particular is unable to use it for a specific reason – for example, if he cannot use a hired car because the government does not allow him to drive it or due to his ill health – and it has not been made a condition that he himself should be able to use the leased item, the lease is valid and the lessee may pass the item to somebody else for free or for a lease so he may benefit from it.
Ruling 455: The leased asset is given in trust to the lessee, as is the item given to the hired person, such as a hired tailor who is given cloth to work on, or a hired repairman who is given the item to be repaired. Therefore, there is no liability on any of them – the lessee or the hired person – for any loss or damage, except if he transgresses or acts negligently or it is an agreed condition in the contract.
Ruling 456: Whoever is hired to work on the property of somebody else or on his person, such as a tailor, a butcher, and a doctor, – even if he is working voluntarily – if he was requested to work well without specification of what work he will do, he will be liable if he causes damage or loss. The same applies if the work is specified and he exceeds the limits of his specified work.
Ruling 457: Doctors – whether they are actually treating the patient or overseeing his treatment – are liable if the patient is a child or insane or the like; rather, they are liable as an obligatory precaution even if the patient is not so. However they are not liable by just advising medications if it is merely to give his medical opinion, not in order to arrange actual treatment. The doctor is also not liable if the patient or his guardian waives his liabilities, provided that the doctor was not negligent. If he was negligent, he will remain liable. All this also applies to veterinary doctors.
Ruling 458: If a doctor is treating a patient or ordering his treatment, his assistant who follows the doctor and applies his directions – such as a nurse – will be liable if the patient is a child or insane or the like, in two situations:
(1)   when the patient or his guardian has not given permission in applying the orders of the doctors;
(2)  when he exceeds the guidance and directions of the doctor without the permission of the patient or his guardian.
Ruling 459: If a person is hired to carry and transport something, and he drops it and damages it, he will not be liable except if this was due to his shortcoming, e.g. by not walking in a normal way, or by walking faster than usual, or by knowing that he is unable to carry it, etc.
Ruling 460: If a hired person claims that the item that was given to him in trust has been lost or damaged in such a way that does not make him liable, such as theft, being burnt or sunk in water, he will be believed if he is reliable, or if he comes with two adil witnesses, or if there is something there that is consistent with it – such as if his whole shop was burglarized. The same is the case if he testifies with an oath, as an obligatory precaution. Without this, it is permissible to hold him liable.
Ruling 461: A lessee can lease out the leased item to another party, such as the reservation of a coach seat, unless it has been expressly or implicitly agreed that only the lessee himself may benefit from it, even if such implication may be derived from the fact that such leases generally have such a term.
However, if the lease agreement conventionally restricts the passing of the leased item to the lessee in particular, then the sub-lease will not be valid without the permission of the lessor. If the lessor gives permission to the lessee to lease the item to a third party, or the original lease contract conventionally allows such subleasing, then the lessee must ensure that the sub-lessee is trustworthy in his eyes.
It is not permissible for the lessee to lease the item out to somebody who he does not believe to be trustworthy except with the express permission of the lessor who owns the item.
Ruling 462: If the lease contract of an item allows it to be sub-leased, it is permissible to do so for the same or a lower lease payment; he may also lease it for a higher lease payment if some change has occurred on the lease item, such as repair, painting, etc.
Ruling 463: Whoever is hired for a particular work, such as to build a house or to sew a garment, for a specified wage, in such a way that he is allowed to hire someone else to do it, he cannot hire somebody else to do that work for a lower wage than he is to receive, except if he has done part of the work himself, such as the laying of the foundation of the house, or the cutting of the cloth.
Ruling 464: If one is hired for a particular work subject to a particular agreed condition in respect to time, place, usage of tools or anything else, and he undertakes it without complying with the agreement made, then there are two possible scenarios:
(1)   The work now is not possible, even if it’s due to the passing of the stipulated time. The hire agreement is annulled and the hired person will not need to be paid for his work.
(2)   The work is still possible. He is required to repeat the work according to the agreed conditions in some cases. Further details of this scenario can be found in the detailed books.
Ruling 465: If one is hired for a particular work subject to an agreed condition in respect to something other than the work, and he undertakes it without complying with the condition, the hiring is valid and the hired person has the right to the wage, but it is also permissible for the hirer to annul the hire contract and to give him the conventional wage according to the work undertaken only.
Ruling 466: If one is hired for a particular work, and is then unable to undertake it and does not complete it, he has the right to receive a portion of the agreed wage in proportion to the work he has undertaken.
Ruling 467: The lessee does not have the right of possession over the leased asset after the period of the lease has expired, and he must return it to the owner if he wants it, except if there is a condition within the lease agreement or another contract which establishes such a right, and this is discussed in greater depth in other detailed books of Islamic law.
Ruling 448: Anybody who seeks from somebody else labour or benefit – which have a customary monetary value – and the other provides him with what he seeks, he must pay the provider remuneration for what he has provided, with the following conditions:
(1)   That the seeker is capable of disposing of his affairs, so he should not be a child, or insane, or whose wealth has been frozen.
(2)   That there is no indication from the perspective of the provider that the seeker wanted what he sought for free.
(3)   That the provider did not intend to do so for free.
Ruling 449: If the seeking of the benefit and its provision as mentioned in the previous ruling is based on a specified payment – such as the hotel-owner who writes on a sign a specific nightly rent, or the doctor who offers treatment for a specific price – that specified payment should be paid. If there is no specified price, he should pay a conventionally appropriate amount.
This also applies for tangible owned items, such as somebody asking for food at a restaurant, and he eats it; he is obligated to pay its price as long as there is no intention of this being for free from both parties.
Rewards (Ju’ala)
This is when a person obligates himself to pay another person in return for work done. This is one of the unilateral contracts, so it is sufficient that the person who wants something done to merely make the offer. For example, one would say: whoever returns to me my stray horse, I will pay him such-and-such amount, or whoever repairs this equipment, I will pay him such-and-such amount.
Ruling 470: It is necessary for the offeror to be able to dispose of his property, and that he is not impaired in his dealings due to foolishness, or being a child, or insane, otherwise the permission of his guardian will be required.
Ruling 471: For the acceptor to deserve the payment, it is necessary that he completes the work with the intention of deserving the payment. It is permissible to withdraw the offer before the work is commenced upon; however it is problematic to withdraw from it after it has begun or if it is in preliminary stages, and the details of these issues have been dealt with in more detailed books of Islamic law.


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