The Consequences of Improper Sequence (Tartib) In Tawarruq Financing Contract

Abstract

The application of sequencing (tartib) in validating Islamic financing contracts is becoming extremely prevalent, particularly among Islamic financial institutions. According to the majority of Shariah experts, a contract can only be performed with a sequence which after the seller has possession of the agreed commodity by the client, based on the pillar of contract in Islam, which is offer and acceptance. Previous survey conducted by other researcher shows the most Shariah non-compliance event occur in Tawarruq contract was an improper sequence in a contract execution. Therefore, the aim of this study is to explore the consequences of improper sequence (tartib) in Tawarruq financing contract. This research adopted primary, and secondary data through library research. The study has found the application of sequencing in validating the Islamic financing contracts especially in the Tawarruq contract is beneficial as it ensures the success of Islamic Banking institutions as there are consequences due to improper sequence of the Tawarruq Financing contract. The findings are expected to serve as a reference point for other researchers, academics, students, and especially to Islamic Banking Industries. In order to carry out the roles and responsibilities effectively, the players and the regulators of Islamic Banks were encouraged to refine the local Islamic financing system into a better platform in the future as an outcome of this research.