Wakalah is the process whereby a person (principal; in Arabic: muwakkel) empowers another person (agent; in Arabic: wakeel) to perform some task or act (authorized act) on behalf of him (i.e., the former). The latter stands ready to assume the powers of the former in fulfilling that task or act. For example, one person may authorize another to sell a property for a specific price during a set period of time.

Agency (wakalah) may be classified in various forms including: general agency (wakalah ‘ammah), specific agency (wakalah khassah), limited or restricted agency (wakalah muqayyadah), absolute or unrestricted agency (wakalah mutlaqah), binding wakalah (wakalah mulzimah), non-binding wakalah (wakalah ghair mulzimah), paid agency, non-paid agency, etc. Criteria of classification are: the subject-matter of the agency contract, the scope of authority, the right to revoke, and the remuneration to the agent. The following diagram illustrates the various classifications of agency:

A brief description of the main classifications of agency is provided hereunder:

• General agency: the principal grants a full authority to the agent to do whatever needed to achieve the purpose of the agency contract, provided that in so doing the agent duly observes the interest of the principal and applicable customary practices. In principle, the agent’s acts don’t include making donations, unless the principal officially authorizes the agent to do so.
• Specific agency: the principal specifies a certain condition(s) on the agent’s acts so that if he doesn’t heed the principal order, his actions will not binding on the principal. In the case where the agent acts in contravention to the principal’s authorization but only in good faith, then- according to some schools of thought- his acts will not deemed to be in violation of the agency contract.
• Limited agency: it restricts the agent’s acts to a set of criteria or limitations as stipulated by the principal in the contract of agency. However, the agent may on some occasions act in contravention to the principal’s conditions if his acts are proved to be in the very interest of the principal.
• Absolute agency: it involves an unfettered authority granted by the principal to the agent. However, absolute agency is usually bound by urf (customary practices) and the interest of the principal. For example, an agent with absolute authority is not allowed to sell at less or buy at more than the market price. Restrictions attached to absolute agency may also include impermissibility of barter sale (ba’i al-muqayadah), deferred payment sale (ba’i ajil), installment sale, and so on, unless with permission from the principal.
• Binding agency: each of the parties to the agency contract is bound to fulfill his obligations towards the other. Neither party has the right to revoke the contract without the mutual consent of both parties. Typically, this agency is based on an agreement of both parties for a specific reward to be paid by the principal in return for the efforts exerted by the agent. Binding agency is also referred to in Arabic as wakalah lazimah.
• Non-binding agency: in essence, agency is non-binding, i.e., each of the two parties has the right to revoke the contract without denying its effects that may remain binding after revocation. Non-binding agency is also known in Arabic as wakalah ghair lazimah.
• Paid agency: the agent receives a certain remuneration from the principal for doing the tasks of agency or providing the services associated therewith. The Arabic term for paid agency is wakalah bil ajr.
• Non-paid agency: the agent undertakes the tasks of agency for free. Non-payment of remuneration doesn’t affect the responsibility of the agent towards the principal for fulfillment of his obligations. The Arabic term for non-paid agency is wakalah bi-ghair ajr (also wakalah bi-doon ajr).