I am currently explaining investment agency or Wakalah Bi Istithmar and we are at the third article on the subject. After discussing the definition and parameters of Wakalah, in the last article I explained the difference between revocable and irrevocable Wakalah.
The act of entrusting Wakalah by a person to another is not something trivial or ordinary. To be appointed as the Wakeel should be considered an honor. This is because Almighty God elevated the credibility of a person to the extent that he or she may now be considered to be appointed as the Wakeel.
Such a blessing must never be abused or misused as we saw in the live case example I narrated in article 127. If there is an iota of doubt whether the potential Wakeel may not be able to deliver the goods, he or she should politely convey the regret to the potential Muwakeel.
The following verse from the Holy Quran should provide a good indication of the most sacred nature of delegating one’s affairs to another: “In Allah (alone) let those who trust, put their trust” (Verse 12, Chapter 14 on Abraham).
Here, Allah The Most Exalted is appointed as the Wakeel by a servant for all his affairs and no one can be a better Wakeel than the Creator. Scholars say that once a person has put the trust in Allah and yet continues to worry about his or her affairs, this may be tantamount to being sinful.
An agency can be of various types depending on the given situation. For example, there can be the restricted agency which becomes void upon the completion of the task assigned by the principal. The agency can also be unrestricted such as entrusting the agent to continue selling the principal’s goods repeatedly for a given period of time when the principal is on a business trip. Such an agency will come to an end upon the principal’s return.
We also find the mention of a conditional agency in the Islamic jurisprudence books. This is used in a situation where there is a likelihood of a debtor defaulting on its financial obligation and the creditor becomes the debtor’s agent to dispose of its assets to satisfy the debt. If the debt is timely paid, such an agency falls off. Also, such an agency is effective only to the extent of the amount of debt. Hence, it will not apply to all assets if the value of the debtor’s assets is higher than the debt amount. This type of agency is also referred to as the deferred agency or Wakalah Muajjala since the agent does not act immediately but only in need.
I have experienced the conditional agency in my own case when I purchased an investment property with financing from the Islamic bank I was working with. As part of the requirement, I was asked to sign the agency agreement before the notary public to appoint the bank as my Wakeel to sell the property to recover the financing should I become a defaulter. Thankfully, the situation did not reach that stage and I was able to prematurely pay the Ijarah financing and the bank immediately canceled the agency.
I will now briefly touch upon the agencies we have discussed in previous articles. It should still be fresh in your mind since I have recently concluded the subject of Musharakah or partnership. You may refer to articles 105, 111 and 113 in which I had explained the role of the managing partner who, in the true sense of the term, performs the act of agency for and on behalf of the partners which include the managing partner itself.
Also, in article 43 I had written about the hybrid structure of Wakalah–Murabahah whereby the Islamic bank appoints the customer as its undisclosed agent to purchase the goods from the supplier who has already entrusted the customer with the sole distributorship rights, and therefore the bank is not in a position to directly enter into a sale and purchase contract with the supplier.
I had also written in article 74 while explaining Ijarah that the lessor can appoint the lessee as its service agent to carry out the major maintenance of the leased asset, pay taxes related to the leased asset and keep the leased asset fully insured at all times for and on behalf of the lessor and at the lessor’s cost.
Would readers share with me if they have come across any other type of agency not discussed by me in this space so far? Sorry, no hints until the next article.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions of the Dubai Islamic Economy Development Centre, nor the official policy or position of the government of the UAE or any of its entities. The purpose of this article is not to hurt any religious sentiments either consciously or even unwittingly.
Next week: Continuation of Wakalah discussion.