Zakat

The Zakat is a personal duty (Fardh ‘Ayn) on every Muslim who possesses the minimum amount (Nisab) in excess of his debts for the duration of a year. Whenever it becomes obligatory upon the wealth of a Muslim, it cannot be abolished. Its collection is independent of the State's needs or the Ummah's interests unlike the tax funds, which might be collected from the Ummah only in cases where there are no funds in the Bait ul-Mal to meet the State's needs and the Ummah's interests. Rather it is the right of the eight categories that the State must deliver to the Bait ul-Mal whenever it becomes due, whether there is a need for it or not. Zakat is not of the rights of the Bait ul-Mal nor is it a beneficiary from it. It is a right of the eight categories specified by Allah in the Ayah

"Verily the Sadaqah is only for... " [At-Tauba: 60]

The Bait ul-Malis only a place of sanctuary for it, such that the Imam will spend from it to those specified by the Ayah according to his view and Ijtihad.

Zakat is obliged upon the man, woman, child and insane person due to the general form of the sound Ahadith that oblige Zakat without restriction.
Amru bin Shu'aib narrated from his father from his grandfather he said: "The Prophet preached to the people and said: 'Verily, whoever has charge over an orphan with wealth then let him invest it. He should not leave it to be eaten by Sadaqah.'"
From Anas (in a Marfu’ narration): "Trade in the orphans' wealth (so that) Zakat does not consume it."
Qasim bin Muhammad said: "Aisha used to invest our wealth, as we were orphans, and give Zakat from it."
Malik bin Anas considered that there was Zakat on the lunatic's wealth, as did Az-Zuhri. From ibn Shihab: "That he (pbuh.) was asked about the lunatic's wealth, is there Zakat upon it? He (pbuh.) said: 'Yes.'"

Zakat is obliged on the following properties:
1.Livestock including camels, cows and sheep,
2.Crops and fruits,
3.Currency,
4.Trading goods and merchandise.

Zakat is obliged on these properties if they reach the Nisab for the duration of one year except for crops and fruits whose Zakat is due the moment they are harvested.

The Company (Partnership) in Islam

Company (Ash-Sharika) linguistically means mixing two or more shares together such that neither can be distinguished from the other. Company in Shar'a is a contract between two or more persons, in which they agree to perform financial work with the intention of making profit. The contract of the company requires the existence of both offer and acceptance, as is the case with all Islamic contracts. An offer occurs when one party says to the other: 'I entered into partnership with you in such and such' and the other party replies by saying, 'I accepted.' These actual words are not necessary but the meaning is. There must occur in the offer and acceptance something that indicates that one of the parties addressed the other orally or in writing on the matter of partnership over something, and the other accepted. Therefore, an agreement on partnership only does not represent a contract. An agreement to pay money or property for partnership is also not considered a contract as well. Rather, the contract must include the concept of partnership in something. The condition of validity of the partnership contract in Islam requires that the contracted matter be a right of disposal and that this right of disposal, over which the company contract is concluded, is suitable for representation (Wakala) such that what is gained by the disposal is shared between the two partners.

Partnership is allowed in Islam because when Muhammad (pbuh.) was sent as a Messenger people were dealing with companies and he (pbuh.) did not forbid this. Al Bukhari narrated that Abu Al-Minhal said: "I and my partner bought something in cash and credit. Al-Bara ibn 'Azib came to us so we asked him about this. He said: 'My partner, Zaid ibn Al-Arqam, and I did the same and we asked the Prophet (pbuh.) about this.' He (pbuh.) said: 'That which is in cash you take, and that which is in credit you return it back.”’ Ad-Daraqutni narrated from Abu Hurairah that the Prophet (pbuh.) said: "Allah the Supreme said 'I am the third of the two partners as long as one of them does not betray his companion. If he betrayed, I would withdraw from them.”’

Partnership is allowed amongst Muslims, Dhimmis (non-Muslims living under Islamic authority), and between Muslims and Dhimmis. So it is allowed for a Muslim to enter into partnership with a Christian, a fire-worshipper or other Dhimmis. Muslim narrated from Abdullah ibn 'Umar who said: 'The Prophet (pbuh.) dealt with the people of Khaybar, who were Jews, for half of the land production of plant or fruit.' In another narration by Bukhari from Aisha: "The Prophet (pbuh.) bought food from a Jew in Madinah and he deposited his armour with him as security." At-Tirmidhi narrated from Ibn ‘Abbas who said 'The Prophet (pbuh.) passed away while his armour was left as a security in return for twenty cubic measures (Sa'a) of food which He took for his family.' At-Tirmidhi narrated from Aisha that 'the Messenger of Allah sent for a Jew asking him for two garments (and to wait) until (the time of) prosperity.' Entering into partnership with Jews and Christians and other Dhimmis is therefore allowed, as dealing with them is permissible. However, Dhimmis are not allowed to sell alcohol and pork while acting as partners with Muslims. Prior to forming a partnership with a Muslim, a Dhimmi may have sold alcohol, the proceeds of which would be Halal for the company. Partnership is only valid between people whose right of disposal is allowed, for it is a contract based upon the disposal of property. It follows that it is invalid to form a company with a person who is prevented from disposal of property. It is also not allowed to enter into partnership with a person who is placed under guardianship, or a person whose right of disposal is not allowed.

Partnership is either a partnership of properties or a partnership of contracts. The company of properties is a company of assets, such as partnership in a property that has been inherited, bought or gifted. The company of contracts is the subject of discussion regarding increasing of ownership. From the examination of partnership contracts in Islam, and the divine rules (Ahkam Shar'iyah) related to them it can be concluded that there are five types of company in Islam. These are Al-’Inan (equal), Al-Abdan (bodies), Al-Mudharaba (two or more), Al-Wujooh (faces) and Al-Mufawadha (negotiation).

The laws of Insurance in Islam (2)

Secondly: The company gives a pledge to the insuring person within certain conditions, so it is a form of guarantee (Dhamaan). Accordingly, the conditions required by Shar'a in relation to the guarantee have to be applied to the insurance contract so as to be considered a legitimate guarantee. If it contained these conditions it would be legitimate, otherwise not. Referring to the guarantee we find:
The guarantee is where the guarantor (Dhaamin) joins his responsibility (Dhimma) to the responsibility of the person guaranteed for (Madhmoon ‘Anhu) in committing oneself to a certain right (Haqq). So it must include joining one's responsibility to another's responsibility; also there must be a guarantor, a person guaranteed for and a person guaranteed (Madhmoon Lahu). So the guarantee is the mandatory commitment (Iltizam) of a right as one's responsibility without compensation. A condition of the guarantee's validity is that it should be with regard to a financial right which is already due (for repayment) or which will become due. So if the pledge was not in respect of a due right or a right that will become due, the guarantee is not valid. This is so because a guarantee is the joining of one's responsibility to another's responsibility in relation to its fulfillment, so if there is no right in the responsibility of the person guaranteed for, then there is no joining of responsibilities. This is quite clear in the due right.

The laws of Insurance in Islam (1)

The accurate study of insurance shows it to be invalid according to Islam from two angles:

Firstly: It is a contract because it is an agreement between two parties, and it includes offer and acceptance, where the offer is from the insuring party and the acceptance is from the company. So in order that this contract be legitimately valid from the Shar'a (divine revelation) point of view, it must contain the Shar'a conditions of the contract. If it contains such conditions it becomes valid, otherwise not. From the Shar'a point of view, the contract should apply upon an object or a benefit. So if it did not apply upon either a thing or benefit it would be invalid, because it would not apply upon a matter that makes it a legitimate contract. This is so because the legitimate contract applies either to a thing in exchange for something else as is the case with selling, forward buying/advance sale (Salam), company and the like; or it applies upon a thing without an exchange like the gift; or it applies upon a benefit in exchange for compensation like leasing; or to a benefit without compensation like lending. Thus the legitimate contract must apply upon something.

The insurance is not a contract that applies upon an object or a benefit; rather it is a contract that applies upon a pledge i.e. guarantee (Dhamana). The pledge or the guarantee does not represent an object for it cannot be consumed nor its benefit be used; nor does it represent a benefit, because no benefit derives from that guarantee itself either by leasing or by lending. As for obtaining money based upon this guarantee, this is not considered its benefit; rather it is a result of a transaction. Therefore, the insurance contract is not considered to apply upon a thing or a benefit, and it does not include all of the conditions required by the Shar'a in a legitimate contract, so it is void.

The fact of insurance

Insurance (Ta'meen)

Insurance whether on life, goods, property or any of its numerous types is a contract. It is a contract between the insurance company and the insuring person in which the latter asks the insurance company to give him a promise that it will compensate him for that (‘Ayn) which is spoilt or destroyed or for its price with regard to goods or property, or a certain sum of money with regard to life and the like. This takes place if the accident occurs within a defined period, in exchange for a certain amount of money (premium); and the (Insurance) company accepts this.

Based upon this offer and acceptance, the insurance company undertakes to compensate the insuring person, within certain conditions approved by the two sides, either for the thing which he loses or its price when an accident occurs, or a sum of money which they have agreed upon e.g. in the event of his goods being destroyed, his car being damaged, his house being burnt down, his property being stolen, him dying or the like occurred during a certain period of time, he will be compensated, in exchange for a certain amount of money (premium) which the insuring person pays to the company during that defined period of time.

It appears from the above that insurance is an agreement between the insurance company and the insuring person over the type of insurance and its conditions, so it is a contract. However, according to this contract which was concluded between the two sides . i.e. the agreement . the company gives an undertaking to compensate or to pay a certain amount of money within the agreed conditions. So if an accident occurred to the insuring person upon which the terms of the contract apply, then the company becomes obliged to compensate him for the destroyed thing or its price according to the market price at the time of the accident. The company is free to pay the price or to compensate for the loss to the insuring person or to others. This compensation becomes a right due to the insuring person, in the company's responsibility (Dhimma) once the matter mentioned in the contract has occurred, provided the insurance company is convinced that he deserves it or if the court gave such a verdict.

The term 'insurance' has been used in this matter. Insurance could be to the benefit of the insuring person, or to the benefit of others such as his children, wife, inheritors, or any other person or group (beneficiary) assigned by the insuring person. Calling this contract 'life insurance', or insurance on goods, the voice or any other asset is aimed to market this transaction to the people. Otherwise, the fact of the matter is that the insuring person does not insure his life. He, rather, insures that a certain sum of money will be paid to his children, wife or inheritors or to any other named beneficiary designated by him, when his death occurs. Similarly he does not insure his goods, car, property etc: rather, he insures so as to be compensated for the insured object or its price in case it is injured or damaged. So it is, in fact, a guarantee (Dhamaan), for him or others to obtain a certain sum of money or compensation if something occurred to him that took his life or damaged his property, and therefore it is not a guarantee for his life or his property. This is the reality of insurance.