The Concept of Aqad (Contract) in Islamic/Sharia Finance

Abstract

The akad (contract) serves as the primary foundation of the Sharia financial system, underpinning the legality of all Islamic economic transactions. This study aims to analyze the concept of akad within the Sharia financial system, covering its definition and essence, legal basis, essential elements and conditions, types, implementation in Sharia financial institutions, and its distinctions from contracts in conventional civil law. The research employs a library research method utilizing normative and descriptive-analytical approaches. Data sources include the Qur’an, Hadith, fiqh muamalah (Islamic commercial jurisprudence) texts, Islamic economics literature, DSN-MUI fatwas, and various scholarly works on Sharia finance. The findings indicate that an akad in Islam is not merely a formal legal relationship between parties but also encompasses moral and spiritual dimensions. The validity of an akad depends on fulfilling its essential elements and conditions, such as the presence of contracting parties, the declaration of the contract (sighat), the object of the contract, and a Sharia-compliant objective. In practice, akad in the Sharia financial system comprises tabarru’ (gratuitous/charitable) contracts and tijarah (commercial) contracts—such as murabahah, mudharabah, musyarakah, ijarah, salam, and istishna’. The growth of the digital economy has also spurred the implementation of akad in Sharia fintech, hybrid contracts, and smart contracts. Furthermore, the study highlights fundamental differences between Sharia contracts and civil law contracts, particularly regarding legal sources, spiritual dimensions, principles of justice, prohibitions on riba (usury), gharar (uncertainty), and maysir (gambling), as well as concepts of profit and risk sharing. Consequently, a thorough understanding of akad is crucial for the development of the Sharia financial industry, ensuring that all transactions align with Sharia principles, justice, transparency, and the public interest (maslahah).