Ijarah is a term of Islamic fiqh. Lexically, it means "to give something on rent". In the Islamic jurisprudence, the term "Ijarah" is used for two different situations.
1) In the first place, it means "to employ the services of a person on wages given to him as a consideration for his hired services." The employer is called "Mustajir" while the employee is called "Ajir", while the wages paid to the Ajir are called "Ujrah".
2) The second type of Ijarah relates to the usufructs of assets and not to the services of human beings."Ijarah" in this sense means "to transfer the usufruct of a particular property to another person in exchange for a rent claimed from.him" In this case, the term ijarah is analogous to.the english term leasing. Here, the lessor is called mujir and the lessee is called Mustajir and the rent payable to lessor is called Ujrah: However, there are many difference between leasing contract of conventional Bank and Ijarah, which will be discused in detail.
The basic rules of ijarah are as follows:
1) Transferring of usufruct not ownership
In leasing the owner transfer its usufruct to another person for an agreed period, at an agreed consideration.
2) Subject matter of lease
The subject matter of lease should be valuable identified and quatified.
3) All consumable things cannot be leased out.
The corpus of leased property remains in the ownership of the seller and only its usufruct is transferred to the lessee. Thus, anything which cannot be used without consuming, cannot be leased out. For example money, wheat etc.
4) All liabilities of ownership is borne by lessor
As the corpus of the leased property remains in the ownership of the lessor so all the liabilities emerging from the ownership shall be borne by the lessor.
5) Period of lease
The period of lease must be determined in clear term.
It is necessory for a valid lease that the leased asset is fully identified by the parties.
To be countined.........