The Concept of Ju’ala in Islamic Law and Its Modern Application in Islamic Banking and Finance: Pakistan’s Perspective

Abstract

Juala refers to a contract in which the jaʿil (the one offering the reward) assigns to a person a known task or a task whose exact estimation is difficult and promises a specified compensation in return.

The permissibility of Juʿālah is established through the Qur’an and Sunnah. This article primarily discusses the foundational concept of Juʿālah in Islamic jurisprudence and then examines its applications in the context of Pakistan. The study employs a qualitative method. The author concludes that the permissibility of Juʿālah is also affirmed in the Maliki, Shafiʿi, and Hanbali schools of thought, and scholars of these legal traditions have applied Juʿālah in various financial transactions. In the contemporary era, it can be effectively utilized in Islamic banking and finance. For example, Islamic banks can directly or indirectly utilize Juʿālah in various matters such as deposit mobilization, debt recovery, investment in real estate, etc., which can be expected to yield optimal results. In this regard, there is a need to benefit from the Juʿālah-based initiatives of the Central Bank of Indonesia.