Friday, May 24, 2024

WAKALA: It’s Concept and Permissibility

Wakala is a structure that utilizes the idea of principal and agent theory. The principal provides the capital, and the agent gets hired to provide expertise and labor. Under a wakala, the capital provider receives the profits from the venture, less an agreed-upon fee that goes to pay the agent. Bank deposits can also be structured as a wakala.[1]

The word “Wakala” literally has several meanings including, delegation, authorization, preservation and performing a task on behalf of others. Technically Wakala refers to a type of contract in which one person delegated another person to perform some tasks on behalf of him.[2] Wakala has essential element as a matter of contract, these are the principal (muwakkil), the agent (wakil) and the subject matter (muwakkal bihi). These three elements must be concurred for its validity.[3]

According to Imaam al Shawkhani, “It is permissible for an owner to give authority to someone else to act his behalf in respect of every dealings in as much as there is nothing that could legally prevent such, If an agent sells beyond the amount specified by the owner, the excess money goes to the owner, and if the he acts contrary to the owner’s specification for a better achievement or he like, and the owner is pleased with it, then the transaction becomes valid.”[4]

One of the legal basis from Qur’an often cited on the principle of wakala is the verse found in Surah al Baqara, when Allah said:

وَإِذ قالَ رَبُّكَ لِلمَلائِكَةِ إِنّي جاعِلٌ فِي الأَرضِ خَليفَةً ۖ قالوا أَتَجعَلُ فيها مَن يُفسِدُ فيها وَيَسفِكُ الدِّماءَ وَنَحنُ نُسَبِّحُ بِحَمدِكَ وَنُقَدِّسُ لَكَ ۖ قالَ إِنّي أَعلَمُ ما لا تَعلَم

When your Lord said to the angels, ‘Indeed I am going to set a vicegerent on the earth, ’they said, ‘Will You set in it someone who will cause corruption in it, and shed blood, while we celebrate Your praise and proclaim Your sanctity? He said, ‘Indeed I know what you do not know.’[5]

However, it has to be noted that according to Muslims scholars, the mentioned verse was mainly referring to the authority which Allah has bestowed upon man on earth, such as leadership or political leadership, and as spiritual torch bearer in the Muslim community. A khalifa or viceregent as contemplated from this legislation also in the purview of leading a small unit, such as but not limited to a family, firm, organization, platoons of military armies, or any other institution that requires management and leadership.          

In relation to the discussion on wakala as far as Islamic commercial transactions are concerned, Wakala in modern sense could be linked to the Remittances. According to the basic definition, "a remittance means "send back." In terms of money, a remittance is the sending of money to a recipient who lives abroad. Most families living in slow-growing economies and developing nations rely heavily on these remittances as their main source of income, (anonymous, ccto)".  

Accordingly, the three essential elements of Wakala as mentioned above, Muwakkil is the principal or sender, wakil as the agent, while muwakkil bihe is the subject matter, or the money to be sent. Thus, in remittances, muwakkil is the sender of money from abroad, and wakil is the remittance center, or a bank who facilitates the transferee, while the money is the muwakkil bihe, or the object of the transaction. Thereafter, every successful transaction of remittances was accompanied by a written contract. The receipt issued by the wakil or agent serves as evidence of a perfected contract between the wakil or agent and the muwakkil or principal-sender.          

Based on this transaction, the agent or wakil was entrusted by the muwakkil of his property (money transfer), as such it contemplates the notion of Wakala. Hence, under Islamic commercial transaction, the wakala or remittances is permissible, provided that when the agent do not transgress to the limit as to the authority given to him by the principal, (i.e.) that the agent do not misappropriate the fund entrusted to him to be remitted.

Another Qur’anic legislation that regulates Islamic commercial transaction was found in Surah al Baqara, when Allah said:

يا أَيُّهَا الَّذينَ آمَنوا إِذا تَدايَنتُم بِدَينٍ إِلىٰ أَجَلٍ مُسَمًّى فَاكتُبوهُ ۚ وَليَكتُب بَينَكُم كاتِبٌ بِالعَدلِ ۚ وَلا يَأبَ كاتِبٌ أَن يَكتُبَ كَما عَلَّمَهُ اللَّهُ ۚ فَليَكتُب وَليُملِلِ الَّذي عَلَيهِ الحَقُّ وَليَتَّقِ اللَّهَ رَبَّهُ وَلا يَبخَس مِنهُ شَيئًا ۚ فَإِن كانَ الَّذي عَلَيهِ الحَقُّ سَفيهًا أَو ضَعيفًا أَو لا يَستَطيعُ أَن يُمِلَّ هُوَ فَليُملِل وَلِيُّهُ بِالعَدلِ 

O you who have believed, when you contract a debt for a specified term, write it down. And let a scribe write (it) between you in justice. Let no scribe refuse to write as Allah has taught him. So let him write and let the one who has the obligation dictate. And let him fear Allah, his Lord, and not leave anything out of it. But if the one who has the obligation is of limited understanding or weak or unable to dictate himself, then let his guardian dictate in justice.[6]

 

This verse highlighted the general procedure on how a credit should be regulated, and the fundamental requisites. Thus, an oral agreement is something not recommended under this ruling, instead, a written agreement is preferred. One of the reasons could be that a man in character is scatterbrained, and upon writing, such is to become conclusive evidence. 

To be valid, credit transaction must contain the following: (1), that there is specified credit (2), such must be in writing (3), in a just (4), if one of the parties is illiterate, weak of understating, be represented by his guardian with just (5), and that there should be witnessed by at least two men, or two women and one man. It must be noted that the required witness for this kind of transaction is two men of just, or two women together with one man all of them be of just.[7] 

 

Conclusion 

Wakala, this principle falls within the second division of Islamic aspects called Muammalat. It is referring to the relationship between man and his fellow in relation to the formulation of human society and their community; such relationship is governed by Shari’ah as to the civil aspects of the law.

As defined above, Wakala regulates the business transaction between the principal and his duly authorized representative. When the principal authorized other in his behalf, it is viewed that whatever may be the action taken by the delegate, is the same as it was executed by the principal by himself, and by his owned utterances and act, provided, however, that agent do not step up wholly in the shoe of the principal without his consent.

In other words, although Wakala is permitted, it not absolute. The act of the agent to be valid must be confined to the authorized acts purported to be, otherwise, that act could be challenged. Also, the agent under this principle would not only be limited as to the specific action that he may exercise, but it should be in accordance with the essential requisites mentioned in the Qur’anic regulation. 



[2] Dr. Kheiralla Sirour, The Rules of Wakala Contract (agency) in Sharia law and its application in Islamic Finance A Comparative study, 2015

[3] Ibid

[4] Ash-Shawkhani, Comprehensive Islamic Jurisprudence, Dakwah Corner Bookstore, Malaysia, 1173-1255H, p., 593

[5] Al Qur’an, 2:30

[6] Al Qur’an, 2:282

[7] Ibid, 2015

No comments:

Post a Comment

ATCI Overseas Corporation, vs. Ma. Josefa Echin, G.R. No. 178551, October 11, 2010

Doctrine of processual presumption The party invoking the application of a foreign law has the burden of proving the law, under the doctri...