Wakalah Agreement

Muslim scholars have reached a consensus on the admissibility of Wakalah based on the evidence of the Qur`an and the Sunnah of the Prophet Muhammad (peace be upon him). This is because people need help with certain tasks that they can`t do on their own. The main purpose of an agency contract (Wakalah) is to facilitate economic exchanges and transactions between a client and a third party when the client is unable to do so personally or is unwilling to perform on his own. Similarly, the agency contract is also required due to the fact that the client does not have the knowledge, technical knowledge or time to perform certain tasks several times. In such a situation, he must delegate someone who carries out certain responsibilities on his behalf. For example, a real estate agent is responsible for selling or buying a particular property on behalf of the principal. The agency contract is also necessary in some cases where a person deals with different clients on their different sites. For example, takaful (Islamic) agents or travel agencies are responsible for dealing with different customers in different locations. This agreement is entered into for a particular known transaction. For example, the agent is required to sell or buy a house or private car. However, in cases where the agreement provides for profit sharing between Islamic banks (agent) and the customer (principal). The same will be done in accordance with the agreement on an agreement known as (Wakalah-tul-istithmar) – Wakalah Investment. Wakalah is a non-binding contract.

The client or intermediary (Islamic bank) may resign at any time by mutual agreement, in the event of unilateral termination, convening of the commitment, destruction of the property and in the event of death or loss of the legal capacity of the parties. Wakalah is one of the contracts used by banks for the collection of deposits. In this agreement, the Islamic bank is appointed by the client as an agent (Wakil) to invest the clients` money in various Shariah-compliant protocols and businesses. With regard to those aspects of investment for which the client expects a return in the business prescribed by the contract, the profits and losses belong exclusively to the client. The word “Wakalah” literally has several meanings, including taking charge, delegation, authorization, retention, and performing a task on behalf of others. Technically, Wakalah refers to a type of contract in which one person (the client) delegates another person to perform certain tasks on their behalf. In other words, it is an agency contract that authorizes an agent to conduct and conduct certain business on behalf of a principal. There are two parties to the Treaty of Wakalah: the client (also known as Muwakkil) and the agent (also known as Wakeel). Basically, Wakalah is a kind of responsibility, while the agent must perform his delegated task in the same way that the trustee fulfills his responsibility. If no conditions are made for the transaction; For example, the agent does not receive a specific price or time. When the agent acts under certain conditions; For example: Buy the house at a certain price and in a certain time. Wakala refers to the concept of a businessman who will entrust someone else in his place or as his representative.