Week 5 6

WEEK 5 & 6
AKHLAQ GUIDELINES IN
BUSINESS
AFS 3103
ETHICS IN ISLAMIC FINANCE
Business dealings in Islam is regulated
by its own unique value-base ethical
system which provide guidelines
concerning business ethics.
These guidelines are prescribed based

on the concept of permissibility and
prohibition of an action as according
to the Quran and Hadith.
5 CLASSES OF ACTIONS
Obligated (Fard) • Actions that are mandatory.
Recommended • Actions that are not obligatory but highly

(Mustahabb) encouraged.
Indifferent • Actions that are neither mandatory nor

(mubah) forbidden.
Reprehensible • Actions that are not absolutely prohibited, but

(makruh) are hated.
Prohibited
• Actions that are unlawful and forbidden.
(haram)
AKHLAQ GUIDELINES IN SALES AND
TRADE
MARKET MECHANISM
From the shariah perspective, prices should

be reflected by the surpluses or shortages.
Traders are prohibited to artificially withheld

the supply or artificially created the demand
so that they can manipulate the price of
goods.
Utility maximization of both buyers and sellers

should not involve any unethical activities.
PROMOTION OF FAIRNESS
The believers of Allah should practice justice

with everyone including the enemies.
The Quran says: “and let not the enmity and hatred
of others make you avoid justice. Be just; that is
nearest to piety” (al-Maidah:8).
No one should unjustly take the property of

others.
The Quran says: “and eat up not one another’s
property unjustly (in any illegal way, e.g. stealing,
robbing, deceiving, etc.) nor give bribery to the rulers
that you may knowingly eat up a part of the property
of others sinfully” (al-Baqarah:188).
KEENNESS TO EARN HALAL EARNINGS
Islam has clearly distinguish between

legitimate and illegitimate things. In between
the two are the doubtful things which people
should avoid.
A true Muslim businessman should be careful

of the doubtful things in order to keep himself
clear in regard to his faith and his honour
because one who falls into doubtful matters
is sure to fall into that which is unlawful.
TRADE THROUGH MUTUAL CONSENT
A business transaction is valid when there is

mutual consent between the contracted parties.
Islam prohibit financial exploitation such as taking

advantage of others and charging high price.
Allah said in the Quran, “O you who believe! Eat

not up your property among yourselves in
vanities: but let there be amongst you traffic and
trade by mutual goodwill: nor kill [or destroy]
yourselves: for verily Allah has been to you Most
Merciful” (al-Nisa’:29).
HONESTY AND TRUTHFULNESS
Allah blesses the business dealings of honest

people and condemns business dealings
which involves lies.
A seller must be honest and truthful with

regards to the specifications of the goods and
their prices. He must ensure that the goods are
sold as per its specifications and at a fair price.
A contract can be revoke if there exist the
element of deception.
TRUSTWORTHINESS (AMANAH)
A trustworthy person will fulfil his respective

responsibility and obligations in a business
dealing.
Islam urges Muslims to be trustworthy and

condemns those who betray a trust.
A trustworthy seller will avoid fraud and

deception when selling goods. He will disclose
the good and bad side of an item to
interested buyer so that the buyer feels satisfy
with his purchases.
GENEROSITY AND LENIENCY
A good businessman should be gentle and

avoid harshness when dealing in a business.
As reported by Imam Bukhari, Prophet
Muhammad said: “May Allah have mercy on
a person who is gentle when he sells, when he
buys and when he demand his rights” (al-
Bukhari, hadith no 1970).
CONT.
A creditor is encouraged to be generous

and lenient in collecting debt. Whereas a
debtor should repay his debt timely with due
thanks and politeness.
However, institutions like Islamic banks are

allowed to impose fines on default debtor
with the purpose of disciplining them and to
prevent deliberate default by the costumer.
HONOURING AND FULFILLING
BUSINESS OBLIGATIONS
Fulfilling contract and promises is highly

emphasized in Islam.
 Allah said in the Quran, “O you who believe! Fulfil
[your] obligations’ (al-Ma`idah:1).
A Muslim trader must fulfil the obligations

that have been agreed upon in a business
contract.
FAIR TREATMENT OF WORKERS
Islam promotes the spirit of brotherhood

between employer and employees.
The employer is responsible to care for the

welfare and betterment of his employees.
Employers must treat his employees

appropriately such as by giving them fair
wages for their hard work.
AKHLAQ GUIDELINES IN MARKETING
AND ADVERTISING
• Give true information

• Do not lie or provide misleading
Truth information.
• Give freedom for buyers to make his

own judgments, reasoning and decision
Fair without being forced.
CONT.
• Make available to customer all

necessary information regarding the
Guarantee guarantee and warranty of an item
and before they buy it.
warranty
• Obey all rules and regulations imposed

by relevant authorities.
Compliance
CONT.
• Respect the Islamic social and eastern

Decency and values.
courtesy of
Islam
• Never take advantage on children,

women, elderly and the disadvantaged.
Exploitation
AKHLAQ GUIDELINES IN MANAGEMENT
AND SOCIAL RESPONSIBILITY
•Conducive •Fair treatment

working to employees
condition •Health and
•Promote safety
environmental protection
responsibility
Environmen- Human
tal dimension resource
dimension
Human
Philanthropic
rights
dimension
dimension
•Business should •Promote and
not only respect human
making money rights
but serve the
society

Week 5 6

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WEEK 5 & 6

These guidelines are prescribed based

Obligated (Fard) • Actions that are mandatory.

Recommended • Actions that are not obligatory but highly

Indifferent • Actions that are neither mandatory nor

Reprehensible • Actions that are not absolutely prohibited, but

From the shariah perspective, prices should

Traders are prohibited to artificially withheld

Utility maximization of both buyers and sellers

The believers of Allah should practice justice

No one should unjustly take the property of

Islam has clearly distinguish between

A true Muslim businessman should be careful

A business transaction is valid when there is

Islam prohibit financial exploitation such as taking

Allah said in the Quran, “O you who believe! Eat

Allah blesses the business dealings of honest

A seller must be honest and truthful with

A trustworthy person will fulfil his respective

Islam urges Muslims to be trustworthy and

A trustworthy seller will avoid fraud and

A good businessman should be gentle and

A creditor is encouraged to be generous

However, institutions like Islamic banks are

Fulfilling contract and promises is highly

A Muslim trader must fulfil the obligations

Islam promotes the spirit of brotherhood

The employer is responsible to care for the

Employers must treat his employees

• Give true information

• Give freedom for buyers to make his

• Make available to customer all

• Obey all rules and regulations imposed

• Respect the Islamic social and eastern

• Never take advantage on children,

•Conducive •Fair treatment

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