Abstract:
The guarantee has been regarded as an important method of securing the performance of
future obligations. In modern banking lending transactions the practical use of the
guarantee has been accepted with full recognition. This is also true in the Islamic banking
sector. However, due to its constant reliance upon classical formulations, the business of
Islamic banking that relates to the guarantee seems inconsistent with modern
developments. This thesis examines classical interpretations on the guarantee and the
extent to which it has influenced the modern decisions of Islamic banking and legal
practices. A wide range of Islamic legal sources has been consulted and this includes both
classical and modern legal literature. The classical legal source represents legal
formulations and legal explanations (fatwas) that have been constructed during the 8th
century A. D. The modern legal source represents modern legal writings and some of the
Arab civil codes. In order to understand the legal position of the classical Islamic
guarantee in common law jurisdictions a reference has been made to the English and
Malaysian common laws. The thesis demonstrates that there are more similarities than
differences between classical Islamic law and modern common laws with regard to the
function and objective of the guarantee. The thesis also argues that classical Islamic law
of guarantees has a profound influence in both modern Islamic banking and Muslim legal
practices. The factors that contribute to this are perceived to be the movement of the
reassertion of Islamic Shari'a and the belief that classical texts, which were formulated
upon calculated deductions, offer great information about rules that reflect the will of the
Islamic Shari'a. This, however, does not mean that classical interpretations on the
guarantee are perfect; it has its own strengths and weaknesses. Hence, adaptation and
modification in the classical Islamic law of guarantee are still possible for the betterment
of legal practice.
