Contracts and Financial Instruments

Which of the following is NOT an element of a valid contract in Islamic law?

• Offer and acceptance

• Subject matter that exists and is lawful

• Price clearly determined

• Guarantee of profit to both parties

A contract that is deficient (fasid) becomes valid if:

• It is cancelled and replaced with a new one.

• The deficiency is corrected (e.g., price or subject matter clarified).

• One party waives their rights.

• It is approved by a Shariah supervisory board.

Which situation best describes a void (batil) contract?

• Selling an asset not yet owned physically

• Sale of wine by an Islamic bank.

• Delayed delivery of goods due to market disruption.

• Misrepresentation of cost in Murabaha.

The element of gharar (excessive uncertainty) is best illustrated by:

• Selling shares for long-term investment.

• Selling an animal not yet born.

• Leasing machinery for 5 years.

• Musharaka partnership with shared risk.

Which of the following contracts is exchange-based?

• Ijarah

• Murabaha

• Musharaka

• Mudaraba

In a Murabaha transaction:

• The financier lends money with interest.

• The financier buys the asset and sells it at a markup.

• The asset is leased to the client.

• The profit share is fixed as a percentage of net income.

The Ijarah (leasing) contract requires:

• Ownership of the leased asset remains with the lessor.

• Ownership automatically transfers to the lessee.

• The rent is linked to interest rate movements.

• The asset must be intangible.

Which of the following is an equity-based contract?

• Salam

• Istisna’

• Musharaka

• Ijarah

In Mudaraba, losses are borne by:

• Both parties equally.

• The entrepreneur (mudarib).

• The capital provider (rabb al-mal).

• The Shariah supervisory board.

Which Islamic financial instrument involves advance payment for goods delivered in the future?

• Murabaha

• Salam

• Ijarah

• Tawarruq