SHARIAsource

This fatwa defines an ijarah as a benefit-transfer agreement pertaining to an object for a certain term, with a rental (ujrah) cost, that does not transfer ownership of the object itself. It also defines an ujrah review as a review of the quantum of the ujrah in the ijarah agreement between the shari'a financial institute and customer after a certain period. The fatwa states that an ujrah review may be conducted between the parties to an ijarah agreement provided that:

1. there is a change to the term of the ijarah agreement;
2. there is a strong indication that if a review is not conducted one of the parties will suffer a loss; and
3. both parties accede.

A review of the quantum of the ujrah after a certain period is permitted, provided that:

1. the ujrah agreed to for one term of the ijarah agreement may not be increased;
2. the quantum of the ujrah may be monitored for the next term pursuant to a formula of which both parties are aware;
3. the review is conducted after a certain agreed-upon period of time has passed, as provided in the agreement; and
4. in the event there is a change to the rental cost, the rental cost for the first term must be explained, and the rental cost for the next period must be based on a clear formula that does not generate conflict between the parties.