PRE-SIGNING AND SEQUENCE IN CONTRACT EXECUTION OF ISLAMIC BANKING PRODUCTS

Customer pre-signing of all transactional documents in one sitting is a questionable procedure as it does not follow the required sequence in the Sharīʿah concept of “offer and acceptance”. As “offer and acceptance” or “ījāb and qabūl” (i.e.ṣīghah) is, according to the vast majority of scholars, an absolute requirement of exchange contracts and can be executed only after the seller possesses the contracted item. Pre-signing in normal circumstances has been seen as either a promise from one party to purchase or to sell, or as an execution of contract without proper ownership by contracting parties.

Hence, the study is integral in order to analyse the permissibility of considering pre-signing as offer and acceptance. Furthermore, it is assumed that any non-compliance issues in the execution of a contract will affect its validity. Therefore, this study aims to explain the Sharīʿah view on the sequence of contract execution in Islamic banking products, and the Islamic banks’ practices in executing contracts in vehicle financing, house financing and personal financing. The paper applies the qualitative research method comprising of document analyses, fiqh muqāran and interviews with the stakeholders. This paper suggests that “offer and acceptance” should be done in a proper manner as described by Islamic jurists and that modern technology, especially communication technology, should be used to overcome pre-signing needs. In a nutshell, this study contributes in sharpening the practices of Islamic banks to comply with contractual sequence as required by Islamic law