Islamic Finance
Aqd Tawtheeq
November 1, 2020
Derivatives
Margin Account
November 3, 2020

Arabic (عقد توثيق) for a documentation contract (contract of security/ guarantee). Under shari’ah (Islamic law), accessory contracts/ subordinate contracts are contracts (uqud/ pl. of aqd) which do not exist by their own and are not independent of other contracts. These contracts do require the existence of another contract (other contracts) as a perquisite for them to come into existence. The essential purpose of such contracts is documentation and safeguarding of contractual rights.

Examples of aqd tawthiq include rahn (collateralization), kafalah (suretyship), hawalah (assignment/ transfer of debt), and wakalah (agency or proxy).

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