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Islamic Finance




Conditional Guaranty


A contract of guaranty in which some party becomes a guarantor (kafeel or dhamen) if certain conditions are met. In other words, the guaranty takes effect when the conditions are satisfied as agreed between the parties. For example, someone may accept to guarantee a debtor if the latter owes less than a specific amount of money (say, $10,000). In such a case, the guarantee will take effect when the principal debtor is indebted for $10,000 or less.



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