APPLICATIONS OF HIBAH IN CONTEMPORARY ISLAMIC CONTRACTS IN THE

LIGHT OF SHARIAH-OBJECTIVES (MAQÓØID) OF DONATION CONTRACTS (AL-

TABARRUÑÓT)

As a preliminary discussion, this paper begins with details of tabarru at disclosing its meaning,
its legality, its components and its legal outcome. Then the paper discusses the shariah objectives
(maqasid) of tabarru. It discusses the higher objectives of shariah (al-maqasid al-Aliyah) and the
manner tabarru at serves the latter. The paper discusses the universal shariah objective and
specific shariah objective behind legislating tabarru at.. Hibah is one of components of tabarru.
Thus the paper discusses hibah within the maqasid framework of tabarru. The paper summarizes
four modern applications of hibah proposed by Islamic Financial Institutions (IFIs) to Shariah
Advisory Committee (SAC) of Bank Negara. Then the paper gauges the resolutions of SAC in
light of sharÊÑah objectives. Hibah in return of a gift (hibah al-thawab), and stipulating hibah
with conditions are explained to understand the modern applications of hibah. In this endeavor,
some negative objectives of hibah beside its positive ones are exposed. Some guidelines are
proposed if hibah is to be applied as a supporting or combining contract.

For the tabbaru’at in Islamic jurists did not present any specific definition for the term “tabarru.
Tabarru. They did present detailed definitions of the contracts namely wasiyyah, waqf, hibah,
ariyah, and qard that come under tabarru. The definitions of these contracts one way or the other
indicate to the essence of tabarru. Scholars deriving from this essence construct the meaning of
tabarru as contracts/concepts which extend wealth or its benefit to others immediately or in
future without any consideration out of pious intentions (bi qasd al-birr WA al-ma’ruf). With the
aforementioned meaning tabarru inclusive of its sub-contracts are acts of piety and charity.

For the maqasid of the tabbaru at shariah rules set by almighty Allah are associated with the
profoundest of wise purposes and the sublimens of aims in order to achieve human interest in
this world and the hereafter (massalih a-akhlaq WA al- akhirah). These interest are inclusive of
acquiring what is good and beneficial (jalb al-maslih) and rejecting what is evil and harmful (dar
al-mafasid). This intent of shariah is known as the higher objective (maqasid al-shariah al-
aliyah). According to Jamal Eldin Attia, ibn Ashur has referred to this intent (al-maqsid al-azam)
overall intent (al-maqasid al-ammah). And higher intents.
For the application of Hibah (Gift Contract) in the light of maqasid

Hibah literally means conveying a benefit to someone without any consideration or return.20
technically, the Hanafi and the Shafi’i jurists define Hibah as: “A voluntary contract that results
in uncompensated ownership transfer between living individuals”. A more specific definition is
provided by the Hanbali jurists: “Hibah is a contract initiated by an eligible party to transfer
ownership of existent and deliverable properties to another without compensation. The properties
may be known or unknown, but they must be conventionally given as gifts, and the contract
language must specify that it is a gift or a property transfer, etc.”21 The definitions which we
presented here concentrate on individuals as the donors. This was the practice of the early days.
The contemporary practice has given rise to a new scenario. Instead of individuals.

In the areas of inheritance, Hibah can serve the purpose of overcoming some of the rigidities of
distribution that may be caused by adverse circumstances. For example a person has sons and a
grandson who is invalid due to injuries or accident. If the estate is divided according to the
inheritance law, the disadvantaged grandson will be excluded from taking a share by his father
and uncles. In this situation, the grandfather can use hibah to allocate a part of his estate to his
grandson in his lifetime. In modern commerce, Hibah ascertains the smooth flow of transactions
in the market place. When hibah is applied in conformity with its true purpose it can facilitate
new transactions and transfer ownership. Hibah is also utilized for the purpose of cleansing
impermissible income or profit which is obtained through doubtful means, especially in the
banking sector. Hibah can also be given to the non-Muslims by the state or charitable foundation
for their welfare and also help them adjust to what might mean to some a new life.

Hibah is widely used in the promotion of Islamic financing products. Some of the modern
applications of Hibah have also come under increasing scrutiny as to whether they do or do not
comply with the basic purposes of the contract. Here we are looking at the application of Hibah
as a “supporting sharÊÑah concept” and the resolutions read out by SharÊÑah Advisory Council
(SAC) of Bank Negara. There were four contracts in which application of Hibah was proposed to
SAC. The proposed contracts and SAC’s resolution in summary are:
 1. Hibah in Interbank Mudarabah Investment Contract

Participants of Islamic Interbank money market invest into each other on the principles of
mudarabah. The investor financial institution determines its rate of return (rate) based on the rate
of the investee financial institution. The rate indicates the efficiency of financial institutions in
managing their Islamic funds and assets. Higher rate indicates efficient financial institution (FI)
which will offer high return to the FI whereas lower rate indicates less efficient FI. Given this,
the investor FI does not want to invest with investee FI which has a rate lower than the market
rate. To solve this problem, a proposal was presented to SAC. The proposal suggested that the IF
with rate lower than the market rate will offer “hiba as a consolation gift to the investor FI who is
willing to invest with the former.

2. Hibah in the Contract of al-Ijarah thumma al-Bai‘(AITAB)

A proposal was presented to SAC that an FI would like to offer hibah in al-Ijarah thumma al-
Bai’ contract (AITAB) as an incentive and encouragement to the customers to pay their monthly
rent in accordance with the “prescribed schedule”. In this arrangement, the FI offers hibah to the
customers who will pay their monthly rents in the first year on schedule without any delay. 1%
of the financing amount will be credited into the eligible customers account on the 13th month.

3. Hibah in Wadi’ah

Wadi‘ah yad dhamanah is one of the methods Islamic Financial Institutions (IFI) in Malaysia
apply to accept deposits from the depositors. Some of the IFIs give hibah to wadi‘ah depositors
as a token of appreciation for their confidence in the institutions. One of the concerns raised in
the proposal was that the practice of giving hibah to the depositors in this manner will become an
outspread practice (urf) forbidden by the Shariah.

Finally, they need for developing a comprehensive parameter for modern application of hibah
still stands. Recognizing the sharÊÑah objectives of hibah, tabarruÑÉt and contracts combined
with hibah, will enhance the SharÊÑah advisors/committees and IFIs to design new parameters.
WALLAHU A’LAM.