Types of Sharia Contracts/Agreements in Indonesia

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By:

Team of Hukumindo

Previously, the www.hukumindo.com platform has talk about "President Prabowo Calls to the World to End the Gaza Tragedy", "Jamal was arrested by Singaporean authorities after swimming illegally from Batam", you may read also "Chinese Tourist Fined for Urinating in Public" and on this occasion we will discuss about 'Types of Sharia Contracts/Agreements in Indonesia'.

Introduction

The development of Islamic economics in Indonesia has grown rapidly, especially after the enactment of Law No. 21 of 2008 on Islamic Banking and Law No. 19 of 2008 on Sovereign Sukuk (SBSN). One of the fundamental aspects of Islamic economic practice is the 'akad' (contract/agreement), which serves as the legal basis for the validity of a transaction in accordance with Sharia principles. These contracts are not only applied in the banking sector but also in financing, investment, insurance, and the Islamic capital market.

Legal Foundations

1. The Qur’an – principles of muamalah (transactions) based on justice, mutual consent, and prohibition of riba (usury) (Surah Al-Baqarah: 275–279).
2. Hadith of the Prophet – emphasizing clarity, fairness, and mutual consent in transactions.
3. Compilation of Sharia Economic Law (KHES, 2008) – a legal reference for resolving disputes in Islamic economic activities.
4. DSN-MUI Fatwas – providing detailed guidelines for various contracts such as murabahah, mudharabah, musyarakah, and others.

Types of Sharia Contracts in Indonesia

In general, Sharia contracts are categorized into several main groups:

1. Tabarru’ Contracts (Non-Profit/Non-Commercial)

These contracts are intended for mutual assistance rather than profit.

• Qardh – a loan without interest, requiring repayment of the principal only.
• Wadi’ah – safekeeping or deposit of goods/money.
• Hibah – voluntary gift without compensation.
• Wakalah – granting authority to act on someone’s behalf.
• Kafalah – guarantee or surety by a third party.
• Hawalah – transfer of debt from one party to another.

2. Tijarah Contracts (Commercial/Profit-Oriented)

These contracts are designed to generate lawful profits.

• Murabahah – sale with cost-plus margin agreed upon by both parties.
• Salam – forward sale with advance payment and future delivery.
• Istisna’ – manufacturing or procurement contract based on specific orders, with flexible payment terms.
• Ijarah – lease or rental of goods or services.
• Ijarah Muntahiyah Bittamlik (IMBT) – lease contract ending with transfer of ownership.

3. Syirkah Contracts (Partnership/Joint Venture)

Contracts based on cooperation and profit-sharing.

• Musyarakah – partnership where two or more parties contribute capital, and profits are shared according to agreement.
• Mudharabah – a partnership where the capital provider (shahibul maal) entrusts funds to a manager (mudharib), with profit-sharing based on agreed ratios, while losses are borne by the capital provider unless negligence occurs.

4. Supporting and Derivative Contracts

• Rahn (Islamic Pawn) – pledging assets as collateral for a loan.
• Ju’alah – promise of reward for completing a specific task or result.
• Istijrar – repeated sale and purchase over a period with deferred payment.

Implementation in Indonesia

In practice, these contracts are applied in various sectors:

• Islamic banking → murabahah, mudharabah, musyarakah, ijarah.
• Islamic insurance (takaful) → tabarru’, wakalah bil ujrah.
• Islamic capital market → sukuk with ijarah, mudharabah, or musyarakah contracts.
• Islamic microfinance institutions (BMTs, Islamic cooperatives) → qardh, rahn, murabahah.

Conclusion

Sharia contracts in Indonesia demonstrate the flexibility of Islamic law in addressing modern economic needs. The diversity of contracts allows for fair, transparent, and lawful transactions, free from riba (usury), gharar (uncertainty), and maysir (speculation). Moving forward, strengthening regulations and improving public literacy will further solidify Sharia contracts as the foundation of Indonesia’s halal economy.

And if you have any legal issue in Indonesia territory, contact us for business inquiry, feel free in 24 hour, we will be glad to assist you. 

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*) For further information please contact:

Mahmud Kusuma Advocate

Law Office

Jakarta - Indonesia.

E-mail: mahmudkusuma22@gmail.com