Al-Ijara

Al-Ijara is a contract that aims to grant ownership of a known legitimate benefit for a specified period in return for a known legitimate compensation. According to Article (557) of the Libyan Civil Code, it is defined as a contract by which the lessor undertakes to enable the lessee to benefit from a specific thing for a specified period in return for a known fee.

• Al-Ijara ending with ownership: A lease that includes a promise to transfer ownership of the leased property to the lessee at the end of the lease period or during it.
• Rent: What the lessee is obligated to pay in exchange for the benefit he owns.
• Benefit: It is the subject of the lease and what is meant by it or what corresponds to the price.
• The lessee customer: It is every natural person who owns a current account with the bank and wishes to obtain the benefit fee.
• The promise: It is the desire of the customer (lessee) to conclude a lease contract with the bank when the bank possesses the leased benefit in a legally correct manner.
• The customer’s refusal: It is the customer’s withdrawal from completing what he promised the bank before signing the contract subject to the required product.
• The list of data for the customer’s refusal: It is an electronic list or icon in which the names of the bank’s customers who have reneged on implementing what they committed to with the bank are recorded.
• Cancellation: The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) defined cancellation as the lifting and removal of the contract by agreement of the two parties.

Sections of leasing:

• Al-IjaraAl-A’yan (Properties): A contract intended to grant ownership of a known legitimate benefit for a specified period in return for a known legitimate compensation. According to Article (557) of the Libyan Civil Code, it is defined as a contract by which the lessor undertakes to enable the lessee to benefit from a specific thing for a specified period in return for a known fee.
• Persons’ Leasing: A contract for the benefit (service or work) of a natural or legal person for a known fee, whether the benefit is specific or described in the conscience. Such as educational, health, consulting benefits, etc.

In banking reality, the bank purchases the right to use many benefits from their lessors such as schools, universities, hospitals, etc. for a specific cash value, then sells this right to those who wish to enter into parallel leasing contracts for a deferred fee or in installments with an appropriate profit margin.