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Islamic Finance




Ju’alah


In Islamic finance, ju’alah (also spelled ju’ala), in Arabic script جعالة, is a contract (aqd) whose subject matter is a work or task to be done. More specifically, one of the parties (general offeror or ja’il) offers specified compensation (ju’el) to anyone (worker or ‘amil) against achieving a predetermined work, task or result in a period of time, whether predetermined or not. In principle, ju’alah is not a binding contract (aqd mulzim); that is, the offeror or the worker can revoke the contract unilaterally before the worker sets to work.

However, it becomes binding (mulzim) on the offeror when the worker commences work. It is also binding on the worker if he undertakes not to revoke the contract during a specified period. Once the work initiates, the property of the offeror is transferred to the possession, not ownership, of the worker, and therefore, the worker is deemed as a trustee, not a guarantor as to that property. In other words, the worker will not be liable for any losses or damages that may occur except in the case of negligence, misconduct or violation of the conditions stipulated by the offeror.



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