Chapter 1 - Islamic E-Commerce

Chapter 1:
Islamic e-Commerce
APLIKASI MULTIMEDIA DALAM E-DAGANG ISLAM

(AFH 2213)
SITI FATIMAH SAUD / SALBIAH ZAINAL
E-COMMERCE
 The use of information and communication technologies to network
economic activities and processes, in order to reduce information
related to transaction costs to gain a strategic, information
advantage
 From Islamic point of view, e-commerce has a similar definition
with the conventional commerce, but some rules and obligations
must be aligned with the need of Islamic principles and permissible
by Islam
 In the e-commerce, the example of rights which concerned here are
the rights of privacy, consumer data protection, rights to be secure
in dealing with the transactions, rights to know the detailed of the
product, rights of producer to get information from customer, rights
to get the payment when the products are delivered and many more
ISLAMIC BUSINESS
Islamic Businesses can be defined as business organizations, which operate it
business under the Shariah law and exclude their operations from the
following criteria:
 Operations based on riba (interest) such as activities of commercial and

merchant banks, finance companies.
 “Allah will deprive usury of all blessing, but will give increase for deeds of
charity: For He loveth not creatures ungrateful and wicked” (Al-Baqarah,
276)”.
 Operations involving Maisir (gambling)

 “They ask thee concerning wine and gambling. Say: "In them is great sin, and
some profit, for men; but the sin is greater than the profit." They ask thee how
much they are to spend; Say: "What is beyond your needs." Thus doth Allah
Make clear to you His Signs: In order that ye may conside” (Al Baqarah:219).
ISLAMIC BUSINESS
 Activities involving the manufacture and/or sale of haram
(forbidden) products such as liquor, non-halal meats and pork.
The Prophet (pbuh) said “Allah has prescribed certain obligations for
you, so do not neglect them; He has defined certain limits, so do not
transgress them; He has prohibited certain things, so do not do them;
and He has kept silent concerning other things out of mercy for you and
not because of forgetfulness, so do not ask questions concerning them”.
(Reported by aI-Darqutni and classified as hasan (good) by al-Nawawi.)
 Operations containing element of Gharar (uncertainty) such as

conventional insurance business.
'Ibn Majah on the authority of 'Abu Hurayra (r.a) (translation of the
version in Muslim) that “The Prophet (pbuh) prohibited the pebble sale
and the Gharar sale”.
ISLAMIC BUSINESS ETHICS IN E-
COMMERCE
 Truthfulness, sincerity and honesty
 Customers only rely on Web information to make purchasing decision.
 There is no scope of cheating, speaking lies, swearing too much and

false advertising in Islamic framework of business
 As stated in the Quran:

 ‘‘Allah do command you to render back your trust to those to whom they
are due; and when you judge between man and man, that you judge with
justice...’’ (4:58).
 Trust is very important because without trust, development of E-

Commerce could not reach its potential.
LEGITIMACY OF E-COMMERCE
CONTRACT
 Islam defined contract as an agreement of both parties to the
fullfillment of a certain things rising from the agreement and
the concurrence of the offer and acceptance
 As stated in the Quran:

‘‘O you who believe! Fulfill (all) obligations...’’ (5:1)
 There are four pillars of contract that must be fulfilled:

which are offer (ijab)
acceptance (qabul)
subject matter and
the mode of expression (sigha)
LEGITIMACY OF E-COMMERCE
CONTRACT
 First, the offer is made by the first party to the contract. Then, it gave and
confirmed the freedom of acceptance from the second party. The offer and
acceptance must be clear to both parties, confirmed by both parties and there
must be continuity from the offer to the acceptance (there is a connection
between offer and acceptance).
 Second, the capacity of the two contracting parties to enter into a valid contract
is majority, the age of puberty and has a sound mind.
 Third, the subject matter is the object of the sale and it must be beneficial,
lawful in Islam (halal), valuable, under possession, in existence and deliverable.
 Fourth, the mode of expression is the utterance of both contracting parties

expressing their wills and it could be through words (act) or in writing, but it
should be clear to both parties
TYPES OF CONTRACT IN ISLAMIC
E-COMMERCE
1. Ordered Sale (Bai’ Al-Salam)
2. Manufacturing Sale (Bai’ Al-Istisna’)
3. Deferred Sale (Bai’ Muajjal)
Ordered Sale (Bai’ Al-Salam) is a contract of sale in
which the price is fully paid in advance while the product
will be delivered in future
There are necessary conditions for the subject matter of

Ordered Sale:
1. Must be able to be specified.
2. Must be delayed in its delivery.
3. Must be available in the market.
Manufacturing Sale (Bai’ Al-Istisna’) is a contract of sale
where the buyer gave an order to a workman (seller) to
make a definite thing with an agreement to pay definite
wage or price for that thing when it is made.
It is similar to Ordered Sale since it is also something non-

existence; but the price need not be paid in advance; no
specification of delivery and the subject matter is not
available in the market
Sale (Bai’ Muajjal) is a contract of sale in which both
contracting parties agree that the payment of price for the
product shall be deferred.
There are Syariah rules of sales which are applicable to

the Deferred Sale:
1. Subject matter must be in existence.
2. Subject matter must be owned and possessed by the seller.
3. Sale is instant and absolute. It is not pending on future
date.
4. The price is certain.
5. No conditions attached.
THE VALIDITY OF E-COMMERCE
FROM ISLAMIC VIEW
Initiating a contract (Al-Ta’aqut)
Confirming the validity (Sihha)
Implementation (Nafath)
Binding (Ilzham)
Delivery (state of exchange)
PAYMENT FOR E-COMMERCE
TRANSACTION
 The core concept is that the customer should be able to make payment over the network
easily and in secure.
 The issue of Islamicity of E-Commerce is in question when the customer only pays the
15% minimum requirement where the issuing bank would charge him or her 2% monthly
interest rate on the remaining balance.
 Murabahah is generally defined as a sale with Mark-up or a cost plus profit sale. It is the
sale of a product for the price at which the seller has purchased it, with the addition of
stated profit to be known to both parties-the buyer and the seller.
 Murabahah is used as an Islamic contract of financing because it allowed the bank to use
it as a credit vehicle to finance the buyer against a predetermined profit without bearing
any risk.
 The Murabahah System is considered legal in Islam based on evidence from the Quran:
 ‘‘O you who believe! When you deal with each other, in transactions involving future
obligations in a fixed period of time, reduce them to writing...’’ (2:282).
KEY SUCCESS FACTORS OF THE
ISLAMIC E-COMMERCE
 Differentiation
 Islam encourages competition and promotes free market and we could see that Internet is
not merely a network of computers but it has become a new platform of new free markets
and war zones.
 E-Marketing Mix
 Product
 Place
 Price
 Networking
 Information
 Discussion and advice
 Capital Sources
 Borrowing resources
 Customers and referrals
 Suppliers and referrals

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Chapter 1:

APLIKASI MULTIMEDIA DALAM E-DAGANG ISLAM

 Operations based on riba (interest) such as activities of commercial and

 Operations involving Maisir (gambling)

 Operations containing element of Gharar (uncertainty) such as

 Customers only rely on Web information to make purchasing decision.

 There is no scope of cheating, speaking lies, swearing too much and

 As stated in the Quran:

 Trust is very important because without trust, development of E-

 As stated in the Quran:

 There are four pillars of contract that must be fulfilled:

 Fourth, the mode of expression is the utterance of both contracting parties

There are necessary conditions for the subject matter of

It is similar to Ordered Sale since it is also something non-

There are Syariah rules of sales which are applicable to

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