The Cardinal Prohibitions Positively Stated

  • Either a product or a service must be delivered.
  • In order for a party to profit, it must commit to a true commercial or financial risk. In other words, there must be a bonafide [sic] transaction and one must be prepared to accept a loss as well as a profit.
  • The parties must have a verbal or written contract that is clearly defined.
  • The parties must deal in an open market, with fair information. No party should seek to deceive or defraud the other, even without the intention to harm.

Quoted from Abdulkader Thomas, ‘What is riba?’ in Abdulkader Thomas ed, Interest in Islamic Economics: Understanding riba (Routledge, 2006), 125-134 at 133.

The fifth element, omitted here, is the re-iteration that the goods and services subject to contract must not be expressly prohibited by Islamic law.