International Shari'ah Research Academy for Islamic Finance (ISRA)

The study aims to provide a comprehensive analysis of the bindingness and enforceability of a unilateral promise (wa'd) from both the Islamic law and legal perspectives. At the outset, the research also addresses the Shari'ah rulings of some related principles, namely two-way unilateral promise (wa'dan) and bilateral promise (muwa'adah). Studying these aforementioned principles is vital as it helps to further comprehend the application of wa'd in modern Islamic banking and finance practices. The research also undertakes a case study, analysing some sukuk purchase and sale undertaking clauses found in offering circulars. This is to identify the application of two-way undertakings in sukuk structures, with a critical examination of the Shari'ah compliance of these structures with regard to the related principles mentioned above. Besides that, the research elaborates on the possibility of enforcing binding wa'd from various legal positions, particularly the Malaysian Contract Act 1950, the equitable doctrine of promissory estoppel and the principles of undertaking. The research finds that the majority of contemporary Muslim scholars recognize wa'd in Islamic financial transactions to be binding on the promisor if it is contingent and related to a cause. Nevertheless, Malaysian legal provisions, especially the Contract Act 1950, are silent on the enforceability of wa'd in a court of law. Therefore, the study proposes that a separate clause on wa'd, defining its meaning and outlining the main characteristics or conditions of binding wa'd, should be incorporated in the Act.