Mid-Term Exam (Take-Home) Fall - 2020

(Nemal Farhat_41690)

Q. No. 1 2 3 4
Total Marks 08 07 07 08
Obtained Marks

Department of Business Administration

Q1:

Answer:

Living the faith is ibada, service to God through service to humankind.

A view inside the ninth-century Karaouine Mosque, Fez, Morocco. (Aramco World Magazine,
May-June 1993; photo Nik Wheeler).

By no means shall ye attain righteousness unless ye give (freely) of that which ye love; and
whatever ye give, of a truth God knoweth it well.
Qur'an 3:92

Following are the different aspects of individual and social life activities under the umbrella of
Sharia.
1. Equality and fair play.

2. Morality and charity/Zakat.

3. Mercy.

4. Freedom.

5. Accountability and transparency.

6. Justice

Following are the levels of Sharia rulings.

This has been extensively discussed in Usool al-fiqh books. However, for information that it
exists and due to its importance it is being discussed in short.

Hukm

In its literal sense, the hukm shari (ah'kām) carries the interpretation of an Islamic law code. The
plural form of ukm (law), which means rule, command, utter, order, decision, injunction,
prescription, and decree, is therefore a kām (rules). It is considered legally a rule of Islamic law
Amidī rejects adillah/proof as the science of fiqh's evidence and the signs they give with respect
to the sharia.

Mukallaf

A lawful fee or obligation; entrusting or charging a task to another. A individual who satisfies
the legal requirements becomes a mukallaf (a person obligated by law to discharge a legal duty).
Prayer, for example, is a taklif performed on those at the age of discernment (bulgh). To conduct
prayer, a woman who menstruates does not have a taklif. Hardship or disability will relieve a
person of certain obligations or impose less demanding responsibilities, such as praying while
sitting down in the case of a sick person. A taklif imposed upon property is an encumbrance.

Legal Rulings

1. Ijab: (declaring an act mandatory): It is the contact that requires the execution of an act
completely.

2. Nadb: (recommendation): It is the relationship that requires the production of an act

indecisively.

3. Tahrim: (declaring an act prohibited): It is the contact that actually allows an act to be absent.
4. Karahah: (disapproval): It is the contact that demands to abstain from an act indecisively.

5. Lbahah: (permissibility): It is the relationship that confers a choice between the performance
and omission of an act.

Q2:

Forms of Riba involved in monetary and barter exchanges:

In Islamic finance, RIBA refers to the interest 
rate paid on loans and other forms of loans. 
It is termed as illegal, unethical and usurious when there is exploitative gain made in the business

. There are two types of Riba:

I) Riba An Nasiyah: (Riba in loan contract)

Riba An Nasiyah is considered a surplus that a lender earns over and above its principle
at a pre-determined interest rate.
Example:
 If the payment of the loan was postponed by a borrower and the lender paid him more
than was decided at the start due to the delay, it is considered immoral and falls under
Riba An Nasiyah.

II) Riba Al fadl: (Barter contract )

The excess compensation arising from the selling of goods and services is refused.
Where there is a selling of one specific commodity with the purchase of the same
commodity, it may be commodity exchange or barter exchange.
Example:
suppose one wants to swap dates of inferior quality with dates of superior quality but
asking for a small amount of superior dates by giving a high amount of inferior dates,
then Riba denitely is this kind of trade. The seller will sell it for money and buy the
Superior dates with that money instead, that won't be Riba.

Q3:

Answer:

Gharar is that whose consequences are hidden because these involves the uncertainity and the
risk.

There are legal effects on the financial and non-financial transactions and the example is:

If there is a single contract with two sales here there single buyer accepts the contract offer
without specifying the price there is or with specifying the price but this contract involves any
type of risk without giving clear instructions and which effects one or more parties and ultimate
less of the party the legalities are not explanatory. The financial positives yet not cleared this
incorporates the “gharar”.

So, we can say gharar is the incorporation of uncertainty and the risk.

Q4:

Answers:
As we know, the two most important socio-economic structures are being used by the entire
world to improve the citizens of their nations. Some countries use capitalism, whereas socialism
is used by some nations.

Capitalism:

Capitalism means an economic environment where individuals can run their business and do
what they want to do, since there is no interference by States in general circumstances.

The FLAW or disadvantage of the structure of capitalism follows:

1. It establishes a monopoly that is not advantageous to society.

2. Capitalism approach ignores social Benet because there is free entry into the market in
this approach where organizations just care about port harming society, such as the
increase in POLLUTION due to more production units started in every region.

3. Rising social disparity increases as the income level gap is used by the neoliberal
method.

4. The question of social division and struggle emerges in the approach to capitalism due
to income disparities.

Socialism:

This system explains that all actions must be carried out and supervised by the State for
the Benet of society.

The shortcomings and drawbacks of socialism follow.

1. Slow economic growth-The economic growth rate is slow relative to the method of
capitalism because of the socialist policy.

2. Because of capitalism, the chances of becoming entrepreneurs are less relative to

capitalism. Sluggish growth rate of entrepreneurs

3. Lack of individual motivation in the method of socialism.

There is a lack of competition between organisations because of the socialist approach.

The Islamic economic structure takes the downside of both the approach to capitalism
and socialism into account and offers the best approach by overcoming the disadvantage
of both the system of capitalism and socialism. The ISLAMIC financial system aims to
tackle the downside of capitalism and socialism in the following way:
1. 1. Focusing on improved economic distribution structures, this system focuses on
equality and revenue growth.
2. 2. Security of interest- This system focuses on the protection of the individual's
interest.
3. 3. Efficient business focus helps companies and countries achieve sustainable
development and overcome the socialist disadvantage.
4. 4. There is provision for distribution justice that reduces the income gap in the
ISLAMIC economic system and reduces the chances of social division because of