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Islamic Finance




Al-Fuduli


Arabic (الفضولي) for uncommissioned agent; a person (natural or legal) who involves himself in activities that have nothing to do with him. In a commercial or financial context, al-fuduli’s acts give rise to a contract (al-fadhalah contract/ unauthorized agency contract) that is made on behalf of another person (natural or legal) without any permission or authorization. For example, al-fuduli (also spelled al-fadhuli/ al-fodhouli) may purchase a certain property for another person without being asked or appointed to do so.

This contract (al-fadalah) is void in the opinion of Shafi’s, Hanbalis, and Zahiris, even if is ratified later (i.e., by the affected person or the person on whose behalf al-fuduli has acted). These fuqaha argue that the ex-post approval (ratification) of an affected person cannot validate a void contract. This view is based on the argument that a contract concluded by an unauthorized agent is void ab initio (it has at no time any legal validity) because that person is neither an owner of the property being purchased or disposed of nor an authorized agent by proper means. However, Hanafis and Malikis consider al-fadhalah contract as validly concluded, with its legal effect pending the approval (ratification) of the affected person.



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