RFP Module 2 key terms

Any contractually agreed increase or advantage taken on a loan of money or in an exchange of unequal quantities of the same commodity, which Shariah prohibits as unjust enrichment.

The riba that arises in a loan, where the lender stipulates repayment of more than the principal lent; it is the classic form of riba prohibited in the Quran.

Excess riba arising when two ribawi commodities of the same kind are exchanged in unequal quantities, such as more gold for less gold, even if the exchange is immediate.

A commodity that Shariah designates as ribawi, traditionally the six items of gold, silver, wheat, barley, dates and salt, and by analogy anything used as money or as a staple foodstuff.

Excessive uncertainty in a contract, where a key element such as the price, object, timing or deliverability is unknown or dependent on chance to a degree that can lead to dispute.

Major or excessive uncertainty that invalidates a contract, distinguished from minor uncertainty, gharar yasir, which is tolerated because it is unavoidable in ordinary commercial life.

Minor, incidental uncertainty that Shariah tolerates because it cannot reasonably be separated from legitimate transactions, such as not knowing the exact weight of a delivered load.

Gambling or speculative gain that depends purely on chance, where one party's winnings come directly from another's loss without any productive exchange of value.

A form of gaming or wagering in which each participant stakes money to win the stakes of others, treated by jurists as a subset of maysir and prohibited.

A benevolent loan advanced without any stipulated return, where the borrower is morally obliged to repay the principal only and the lender may not seek an increase.

A sale in which the seller discloses the cost of acquiring an asset and adds a stated profit margin, with payment commonly deferred under agreed instalments.

The underlying sale structure of murabaha, in which the price equals the documented acquisition cost plus an agreed markup, fixed at the time of contracting.

A profit-sharing partnership in which one party supplies capital and the other contributes effort and management, with profits shared by a pre-agreed ratio and losses borne by the capital provider.

The capital provider in a mudarabah arrangement, who funds the venture, bears monetary loss absent misconduct, and does not take part in day-to-day management.

The working partner in a mudarabah who manages the venture with the capital supplied by the rab al-mal and shares in profits according to the agreed ratio.

A joint partnership in which all partners contribute capital and share profits by agreed ratio and losses in proportion to their capital contributions.

A declining-balance partnership in which the financier and customer jointly own an asset and the customer gradually buys out the financier's share, often used for home finance.

A lease contract in which the owner of a usable asset transfers its usufruct to another party for a stated rental over a defined period, while retaining ownership and major ownership risks.

A lease ending in ownership, in which the lessee is promised the right to acquire the leased asset at the end of the term, either by gift, sale or gradual purchase.

The right to use and enjoy an asset without owning it, which is the subject matter transferred in ijarah and must be identifiable and lawfully usable.

A forward sale in which the buyer pays the full price in advance for a precisely specified fungible good to be delivered at a future date, with quality and quantity fixed.

A manufacturing or construction contract in which a buyer commissions a party to build or produce a specified asset to agreed specifications, with payment timing flexible.

The exchange of one currency for another, which must be settled hand to hand when the currencies differ and in equal amounts when they are of the same kind.

A transaction in which a customer buys an asset on deferred payment and then sells it to a third party for cash, used to obtain liquidity; jurists debate its permissibility.

A sale in which the seller sells an asset to the buyer on deferred payment and then buys it back for a lower cash price, widely treated as a riba device.

A voluntary gift or donation made without any expected countervalue, which underpins structures such as takaful contributions and charity penalties.

Cooperative insurance in which participants contribute to a shared fund used to compensate members for defined losses, with surplus and risk handled on mutual rather than commercial-insurance lines.

An agency contract in which one party appoints another to act on its behalf for a defined task, often for a stated fee, without transferring ownership of the underlying assets.

A guarantee in which a third party undertakes to satisfy another's obligation if that party fails, adding credit support without earning interest on the guaranteed amount.

A pledge of an asset as security for a debt, where the pledgee may retain the asset until repayment but may not benefit from it beyond necessary maintenance.

An independent body of qualified scholars that reviews and approves a firm's products, contracts and policies for Shariah compliance and issues rulings on disputed matters.

A formal ruling or opinion issued by a qualified scholar or Shariah board on a specific question, which guides product design and compliance decisions.

A structured review of transactions, contracts and processes against Shariah rulings and internal policies, reporting findings and requiring remediation of any non-compliance.

The risk that a product, contract or process fails to meet Shariah requirements, leading to reputational harm, income purification and possible invalidation of the transaction.

The process of separating and donating income or gains deemed non-compliant, such as interest received inadvertently, so that remaining earnings are Shariah acceptable.

A request for proposal, a formal document inviting suppliers to submit priced technical and commercial offers for a defined scope, evaluated against stated criteria.

The final phase of a professional training pathway in which candidates integrate earlier learning into an applied project or integrated assessment rather than isolated topic tests.

A standard issued by the Accounting and Auditing Organization for Islamic Financial Institutions covering accounting, auditing, governance and Shariah-compliant contract structures.