Ijarah and conventional lease contracts Assignment

Ijarah and conventional lease contracts - Assignment Example The main aim of this research is to give detailed characteristic of conventional leasing system and Ijara, to disclose differences and common features and discuss the variety of options and applications of both(Usmani). â€Å"Ijarah† in the language of banking and finance can have two simple definitions â€Å"hiring† and â€Å"leasing† which are commonly interchangeable, but the origin of that word comes from Arabic ‘ajara’ which means ‘recompensing’ or ‘rewarding’. From the view of the Islamic banking system Ijarah is referred to Islamic contract of leasing of property and equipment, of land to be leased to a client for rental payments or stream payments. From the view of Islamic banking system Ijarah is referred to a certain leasing contract of property and equipment or land which is leased to a client for rental or stream payment(Open to comparison). Ijarah word is to symbolize a contract between the two sides – the lessee and the lessor where the lessor is presented as an owner of a property of any kind and he gives permission to a lessee to make use of the usufructs of the property in question with terms agreed about the leasin g and the rental period. According to the fact that Islamic countries cannot be disconnected with their religion Ijarah contract has gained the permission of the Shari’ah due to several authorities(Nizram): The both parts of the contract are to be provided with certain conditions: they must be able to take responsibilities as well as being in sound mind and having reached the age puberty and the majority age. Secondly, the must not be banned to deal with their property, they need to present stability and stay far from being declared bankrupt or wasteful. Both of the sides should not be under pressure re any kind of compulsion. There are four conditions set up for property: first and foremost property must be owned by a lessor, it has to be available for immediate use, it is supposed to be delivered to the lessee and