The Shariah Advisory Council of Bank Negara Malaysia (the SAC) 157th Meeting

The Shariah Advisory Council of Bank Negara Malaysia (SAC) held its 157th meeting on 31 March 2015. The meeting discussed among others the concept of wa`d (promise) and muwa`adah (bilateral promise).

Wa`d
The SAC ruled that wa`d is a promise by a person or a party to perform a certain task/action in the future. Wa’d is unilaterally binding on the promisor if it is attached to a cause/circumstance. The bindingness (mulzim) of wa`d shall take effect at the time when the wa`d is expressed. In the event that the promisor fails to fulfil his binding promise(wa`d mulzim), the promisee may claim for compensation based on actual loss suffered (if any) due to the breach.

Muwa`adah
The SAC is of the view that muwa`adah is a bilateral binding promise between two parties to enter into a contract in the future. The SAC ruled that muwa`adah is permissible as it is not tantamount to a contract. Since the contract is yet to be entered into during the muwa’adah period, therefore it does not have the effect of a contract. The promisor who breaches his promise is liable for compensation based on actual loss suffered (if any) by the aggrieved promisee due to the breach.

This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking