SYARIAH IN ISLAMIC

BANKING & FINANCE

Chapter 12:
Kafalah

Definition of Kafalah
• Literal Definition: means
responsibility.

• Legal Definition: is the act of

someone adding him self to
another person and making him
self liable to perform the
responsibility.

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Elements of Kafalah
• Makful ‘Anhu: the principle debtor or
guaranteed.

• Kafil: the person who offers to bear the

liability.

• Makful Lahu: creditor, this is the party

whose right is owed by the principle
debtor.

• Makful Bihi: object /guarantee.

• Sighah: expression.

Rules & Conditions

• The guaranteed
• not allowed to guarantee the debt of a person who
dies insolvent because his entire debts stand
discharged after his death: Hanafi
• kafalah for an insolvent deceased is valid, because
death does not discharge the liability of an insolvent
debtor; Hadith of Abu Qatadah

• The guarantor
• must have legal capacity

• Object of guarantee
• jurists are unanimous that kafalah can be effected
upon all pecuniary claims relating to the enforceable
rights of the creditors

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Rules & Conditions
• The creditor
• creditor should be known to the guarantor,
because without this condition, the objective of
suretyship cannot be realised

• Sighah
• clear and inferring, explicitly or implicitly, the
meaning of the guarantee
• must be done without stipulating any uncommon
conditions which attainment is uncertain
• “I guarantee Mr. A’s debt if it rains.”

Types of Kafalah
• Kafalah bil Nafs (physical guaranty)
• this is a contract whereby the guarantor
undertakes to produce the guaranteed
person before the court of law.

• Kafalah bil Mal (Financial guarantee)

• it is a pledge given to a creditor by the
guarantor that the debtor will pay his
debt, fine or any other personal liability.
• guarantor is entitled to arrange the
order of liability by stipulating it in the
contract of agreement

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Types of Kafalah
• financial guarantee are divided into
three
• Kafalah bi al-dayn (guarantee for debt)
• to guarantee the payment of debt

• Kafalah bi al-Taslim (guarantee for

delivery)
• guarantee to deliver property to its owner

• Kafalah bi al-dark
• seller will return the price of the object, or
• a guarantee in favour of the seller

Kafalah in Modern
Commercial Transactions
• Murabahah
• the guarantee here maybe as a third party, to
secure the operation of the Murabahah.
• Ijarah
• to take guarantee in Ijarah to secure the payment
against the leasing of the equipment or other type
of rental.
• Salam & Istisna
• institution to lay claim on either the supplier or his
guarantor for the recovery of the contract sum or
recover the same from the security obtained
• Shirkah & Mudarabah
• on situations of negligence and loss resulting from
unauthorised transactions
• capital only, not the profit that may be derived

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 The End

Thank You