3. Ijarah: The Second Contract in HPSM

Ijarah plays a vital role in the HPSM contract. It refers to Islamic leasing, which involves the transfer of the right to use an asset or property from the lessor to the lessee for a specified period in exchange for rental payments. This chapter will delve into the fundamental principles and key elements of the ijarah contract and examine the conditions that must be fulfilled by the contracting parties. It will explore the requirements pertaining to the property or asset, ensuring its ownership, readiness for use, and specification. Moreover, it will explore the concept of benefit in the context of ijarah, emphasising the importance of adhering to Shari’ah guidelines regarding permissible usage and the distinction between the material part of the property and the usufruct derived from it. Furthermore, it will highlight the necessity of specifying the currency and the absolute amounts in accordance with Shari’ah principles. It will also address practical issues and challenges that may arise in its implementation by examining scenarios where ambiguity or inadequate provisions may lead to disputes and suggest solutions to overcome these challenges while ensuring Shari’ah compliance.