Can I Draft Contracts Containing Interest and Insurance Clauses?

Answered by Shaykh Muhammad Carr

Question

My responsibilities include property transactions (e.g., sales and purchases) and asset management (e.g., lease renewals and licenses). This involves drafting documents such as sale contracts, leases, and licenses that have detailed provisions related to interest and insurance obligations.

For example, the tenant would pay interest on overdue rent after x number of days, or the landlord must insure for x,y, and z. This is market practice.

Answer

Thank you for your question.

May Allah reward you for striving to ensure that your services align with Shari‘a principles.

Allah (Most High)says,

“It is not Allah’s Will to burden you, but to purify you and complete His favour upon you, so perhaps you will be grateful.” [Quran, 5:6]

You may continue in this job for the following reasons:

• The interest clauses are conditional, and insurance is generally left to the client’s discretion.
• The provisions are secondary to the primary contract.
• It is a common market practice that reflects a widespread affliction.

However, you should make every effort to minimize both direct and indirect involvement with interest and impermissible forms of insurance. The Prophet (Allah bless him and give him peace) said, “Whoever’s two days are the same is at a loss.” [Ithaf] This implies a continuous effort to align your work more closely with Islamic law.

I pray this is of benefit and Allah guides us all.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.