&To perfect the buy-sell transaction, the two parties must participate in
all risks (including profit and loss) as defined by the buy-sell contract.
&The buy-sell contract must be fully documented, free from any decep-
tions or undefined parameters and risks, and should be transparent.
The concept is called gharar-free (which means deception-free.)
Gharar-freerules also require that trading in risk, as in cases of sale
with a guaranteed buyback at a future date at a predefined price (called
eenain Shari’aa), uncovered short sales, naked options, and futures, as
well as financial derivatives, involve major aspects ofgharar, and they
are prohibited.
&Future sale prices cannot be set ahead of time because such practices
interfere with the free market system as defined by the Judeo-Christian-
Islamic value system. Only God knows the future. That is why a con-
tract that includes two sales (i.e., buying a property from someone at a
price and promising to sell it back to him/her at a future date in the
same contract at another prefixed price—an eena sale), is prohibited.
Contracts of this type are considered divinely prohibited (haram) con-
tracts and a means of gharar.
&If the person who was entrusted with the money cannot make the pay-
ments for legitimate reasons, such as unexpected changes in the econ-
omy or a sudden war—force majeure—foreclosure is not allowed
unless one of the parties committed fraud or deception. In this case, the
asset is sold and the proceeds are distributed between the contracting
parties as per partnership agreement.
&In a joint venture, a predefined profit is not allowed. However, the per-
centage participation in profit and loss, or the rent for the use of the
property, or the service between the parties can be agreed upon be-
tween them.
&One cannot sell what one does not own.
&Ruses and circumvention (heelah) of the rules of Shari’aa are not
allowed.Banking and Securities Laws and Regulations
&In the United States, these regulations are rooted in the Judeo-Chris-
tian-Islamic value system of fairness, transparency, full disclosure,
truthfulness, trust, and preservation of people’s assets and properties.
These regulations encourage the people to reinvest their savings in the
community, thus generating job opportunities and economic prosperity
and allowing equal opportunity for all, regardless of faith, skin color,
gender, marital status, language, national origin, social status, and/or
relationships.RF Banking Model for the 21st Century 231