1. MAHYUDDIN KHALID  emkay@salam.uitm.edu.my

2. CONTENT
 DEFINITION
DEFINITION
 EVIDENCE
EVIDENCES  PILLARS OF AL-KAFALAH
 TYPES OF AL-KAFALAH
PILLARS
 ADVANTAGE OF AL-KAFALAH
TYPES
 CONDITIONS OF AL-KAFALAH
 APPLICATION OF AL-KAFALAH
CONDITIONS
APPLICATION
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3. AL-KAFALAH
 Kafalah
DEFINITION
 Conjoining of the guarantor‟s liability of the guaranteed
EVIDENCES  Dhaman
 Guarantee for future obligations involving property
PILLARS such as debt obligation, the return of borrowed
property, the delivery of products, payment for
TYPES
purchase of products or services or the security if
goods.
CONDITIONS  Hamalah
 Guarantee for future obligations involving diyat (blood-
APPLICATION money)
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4. DEFINITION
 Kafalah comes from the root word kafala ( ) which
DEFINITION
means junction – joining combination responsibility or
suretyship.
EVIDENCES
 Literally
 Guarantee, bail, surety, responsibility, suretyship
PILLARS
 Technically
TYPES
 The pledge given by the guarantor/surety (al-kafil) to a
creditor (al-makful lah) on behalf of the principal debtor (al-
makful anh) to secure that the guaranteed (al-makful bih) i.e
CONDITIONS the debtor, will be present at a definite place, e.g. to pay his
debt, or fine, or, in the case of retaliation, to undergo
APPLICATION punishment.
 The SAC of BNM :
 A guaranteed contract on a certain asset, usufruct and/or
service provided by a guarantor to the parties involved
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5. EVIDENCE
 Al-Quran
DEFINITION
EVIDENCES
PILLARS
TYPES
CONDITIONS
APPLICATION
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6. EVIDENCE
 Hadith
DEFINITION  The prophet (s.a.w) said to the effect, “The Guarantor is the
debtor”
EVIDENCES  Narrated from Salamah bin al-Akwa‟, he says: “Once we
were with Prophet (s.a.w), then a group of people came with
a funeral procession and said “O prophet (s.a.w), please
PILLARS conduct the funeral rites for this corpse.”. He asked: “Has he
left anything?” They replied: “Nothing.” Then he asked: “has
TYPES
he left any debt?” They replied: “Yes, three dinar,” then the
Prophet (s.a.w) said: “You should pray for him.” Then Abu
Qatadah said: O Prophet (s.a.w) please pray for him, I bear
CONDITIONS the liability of the debt,” Then the Prophet (s.a.w) prayed for
the corpse.
 (Narrated by al-Bukhari)
APPLICATION
 Ijma‟
 The scholars of Islam unanimously agreed on the legitimacy
of al-kafalah in principle since it is a necessity in the society
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7. PILLARS OF AL-KAFALAH
1. Guarantor/surety (al-kafil)
DEFINITION
 A person who gives the guarantee is also called surety. A
person who agrees to be responsible for another person‟s
EVIDENCES liability especially paying for his debt
2. Creditor (al-makful lah)
PILLARS  A creditor to whom the guarantee is given
3. Principal debtor (al-makful anh)
TYPES
 The person in respect of whose default the guarantee is
given. He is also called the principal debtor.
CONDITIONS
4. Guaranteed (al-makful bih) i.e the debtor, things
 The claim itself whether it relates to the person or property.
APPLICATION
5. Sighah
 Offer
 Acceptance
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8. FLOWS OF AL-KAFALAH
DEFINITION
Kafil (Gurantor)
EVIDENCES
PILLARS
TYPES
Makful Bih (Debtor/ Things)
CONDITIONS
APPLICATION
Makful Anh Makful – Lah
(Principle Debtor) (Creditor)
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9. TYPES OF AL-KAFALAH
 Al-Kafalah bi al-nafs ( )
DEFINITION
 Guarantee to bring someone to a specific authority, such
as the judiciary
EVIDENCES
 Al-Kafalah bi al-mal ( )
 Guarantee to return an asset to its owner
PILLARS
 Can be divided into three main categories:
1. Kafalah bi al-dayn
TYPES  Guarantee of repayment of another party‟s loan obligation
2. Kafalah bi al-‟ayn/ kafalah bi al‟-taslim
CONDITIONS  Guarantee of payment for an item or a guarantee of delivery
in a transaction
3. Kafalah bi al-darak
APPLICATION
 Guarantee that an asset is free from any encumbrances –
specific for transactions that involve the transfer of titles of
rights and ensures that an asset is free from any
encumbrances
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10. AL-KAFALAH BI AL-NAFS
 Guarantee of Person
DEFINITION
 In Suretyship for a person the guarantor is
assuming the responsibility to make sure the
EVIDENCES
presence of the principal in a lawsuit.
 This is also possible in cases where the principal
PILLARS
owes the creditor.
TYPES
 The guarantor is required only to make sure the
presence of the person.
CONDITIONS
 He is not liable to settle the debt on behalf of the
principal.
APPLICATION  If the principal dies the guarantor is not bound to
pay on his behalf. This is because the guarantee
given is for the presence of the principal and not for
the settlement of his debt.
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11. AL-KAFALAH BI AL-MAL
 Kafalah for the property can be both for the
DEFINITION
settlement of a debt (dain) or a guarantee that a
certain specific thing („ain) would be returned.
EVIDENCES
 In this case a guarantor is not freed of from liability
PILLARS if the creditor or the owner of the thing dies. The
heirs of the creditor or the owner of the thing can
TYPES demand that the guarantor settle the debt or return
the thing.
CONDITIONS
 For instance, the guarantor is liable to make sure
that a certain property bought by the buyer will be
APPLICATION
returned to him. The creditor has the option of
demanding repayment from either the principal or
the guarantor.
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12. EFFECTS OF AL-KAFALAH
 Once a valid kafalah is concluded it establishes a
DEFINITION
right to the creditor to claim the debt from the
guarantor. The principal debtor is not released from
EVIDENCES
the debt.
PILLARS  The creditor has an option whether to demand the
payment of debt from the principal debtor or from
TYPES the guarantor.
 Kafalah is a gratuitous contract. This means that the
CONDITIONS
service rendered by the guarantor is done freely
without any reward or payment. However, it is
APPLICATION
possible that a guarantor may demand a certain fee
for his service.
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13. THE ADVANTAGE OF AL-KAFALAH
 Kafalah is gratuitous contract and authenticate/
DEFINITION
security contract
EVIDENCES
 Creditor:
 Could authenticate the loan repayment and ensure that
PILLARS he (the creditor) can retrieve his money back by
demanding the payment from the guarantor in case of
TYPES
default payment by the debtor/ pledger
 Entitles the creditor to call upon either the debtor or the
CONDITIONS
guarantor to perform the obligation and demand from
one will not affect his right to go after the other if the
obligation is not fully satisfied
APPLICATION
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14. THE ADVANTAGE OF AL-KAFALAH
 Debtor
DEFINITION
 Minimize and spread his risk because the guarantor by
his guarantee, joined his liability to the creditor
EVIDENCES
 Can convince the creditor to lend him the money since
he has somebody to back him up as the guarantor of
PILLARS
payment. Nobody will normally lend him any amount
of money if he has nobody that can support him and
TYPES
perform the obligation on his behalf in case of default
CONDITIONS
APPLICATION
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15. CONDITIONS OF AL-KAFALAH
 Guarantor
DEFINITION
 Has the capacity and capability to be a guarantor
EVIDENCES
 Has the can‟t withdraw or pullback after the loan
agreement has been sealed or after the money has been
given to the debtor
PILLARS
 No limit to the number of people that can be a
guarantor to the debtor
TYPES
 Not forced or threatened by anybody to be the
guarantor
CONDITIONS
APPLICATION
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16. CONDITIONS OF AL-KAFALAH
 Creditor
DEFINITION
 Must be known by the guarantor
EVIDENCES
 Has the right to claim the debt from either the debtor or
the guarantor in case of default
PILLARS
 Can relief the guarantor from his obligation but the
debtor is still obligated to settle his debt
TYPES
 Can relief the debtor from his obligation and in this
case, the guarantor is no longer obliged to settle the
debt on behalf of the debtor
CONDITIONS
APPLICATION
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17. CONDITIONS OF AL-KAFALAH
 Guaranteed Object/ Asset
DEFINITION
 Object must be an established liability (fungible. Non-
fungible, a person or an action)
EVIDENCES
 Object of financial guarantee must be possible to collect
from the guarantor.
PILLARS
 A guaranteed financial debt must be valid and binding
liability
TYPES
CONDITIONS
APPLICATION
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18. MODERN APPLICATION
 Two ways of application of al-kafalah in IFI
DEFINITION
 When the financial institutions act as a
guarantor, where the guarantee is for its customer to a
EVIDENCES third party. Its a recourse guarantee. AAOIFI
stipulates that only recourse could be done by a
PILLARS
financial institution unless its shareholders and
investors have authorized to make such benevolent
donations.
TYPES
 Guarantee contracts
 Murabaha
CONDITIONS
 Ijarah
 Salam
APPLICATION  Istisna‟
 Sharikah and Mudarabah,
 Guarantee in documentary credit,
 Credit card based on contract of kafalah.
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19. END OF CHAPTER
DEFINITION
EVIDENCES
PILLARS
TYPES 
CONDITIONS
APPLICATION
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