Humanities & Social Sciences Reviews eISSN: 2395-6518, Vol 7, No 2, 2019, pp 396-406 https://doi.org/10.18510/hssr.2019.7247 396 |www.hssr.in © Issoufon and Abdullah REVISITING THE CONCEPT OF LEGAL GUARANTEE IN ISLAMIC LAW FOR STRUCTURING ISLAMIC FINANCIAL PRODUCTS Chaibou Issoufou * , Naziruddin Abdullah Department of Economics and Law, Universiti Kuala Lumpur Business School, Malaysia. Issoufou@unikl.edu.my Article History: Received on 15 th February 2019, Revised on 24 th March 2019, Published on 20 th July 2019 Abstract Purpose of Study: In the modern Islamic financial products and services, legal guarantee is becoming increasing important in the structuring of products, particularly those used in the investments. As a result of the increasing importance of the concept of guarantee, this paper specifically revisits the conceptual analyses of legal guarantee in Islamic law with a view to providing the basis for the use of this concept in structuring relevant Shari‘ah -compliant products. Methodology: The study adopts a comparative legal analysis of the views of classical Muslim jurists. The researchers examine the principles relating to guarantee, such as the meaning of guarantee, its authority, its pillars and conditions. Other principles include modes of guarantee and its objective. The paper also examines the principles and terms of guarantee necessitates an assessment of the effect of the guarantee contract on the contracting parties, particularly whether the guarantor has the right of recourse to the guaranteed person for a refund. The researchers adopt qualitative research methodology to analyse and examine the data. Results: It was found that although guarantee is permissible in Islamic law, it is not absolute. In fact, to make it more Islamical ly acceptable or Shari’ah compliant there are other terms and conditions that the contract has to fulfil especially by the guarantor, guaranteed person as well as guaranteed asset. Results: Legal Guarantee is permissible in Islamic law to prevent harm that may happen to the traders and investors, and protect the public interest. Classical and contemporary Muslim scholars’ views are that guarantee is not limited to guarantee for debt, but extended to the guarantee for other commercial transactions like guarantee of future liability and physical punishment. Guarantee has its own pillars and conditions, which should be met in order for a guarantee contract to be a valid one. The researchers suggest to conduct empirical research in order to have a clear picture on the concept of legal guarantee for structuring Islamic financial products. Keywords: Islamic law, Legal guarantee, Pillars of guarantee, Mode of guarantee, Islamic financial products. JEL Classification: https://www.aeaweb.org/econlit/jelCodes.php?view=econlit&print Unikl –Ubis INTRODUCTION Guarantee is not a new issue in Islamic commercial transactions. Muslims have been dealing with guarantee issues in Islamic commercial transactions since the era of the Prophet Salla Allahu alaihi Wassalam (S.A.W). Since that time, debts and other types of financial contracts have been guaranteed. The general concept of guarantee in Islamic law is to facilitate dealings among Muslims in their commercial transactions by securing the debt for the creditor without taking any fee from the guaranteed party. In large-scale transactions or transactions involving various parties, a legal guarantee will often advance such a transaction. In this regard, legal guarantee is a form of guarantee that affects a party who is different from the investors or the contracting parties. In most circumstances, it is the company, government or individual, which guarantees any loss that may happen to another party’s properties or capital or profit. The question that may arise is whether this legal guarantee can be done without taking a fee, because it may be guaranteeing a huge amount of money that an individual may not be able to afford. The purpose of legal guarantee is to provide financial compensation for any loss that may arise, or to provide security for the capital and profit of the investment. In view of this, this kind of guarantee is essential in any form of investment to help to forestall economic crises. This, however, must be in conformity with the principles of Islamic law that regulate investments and commercial transactions. REVIEW OF LITERATURE The rules of guarantee in financial matters by extensively discussing matters relating to guarantee in commercial transactions and its permissibility, including whether the subject matter is known or unknown, forms of guarantee and the extent to which it is valid. This is in addition to its rules in Islamic law, especially its concept and rule in the Qur’an, the Sunnah and ’Ijma‘, as well as the issue of guarantee in debts and work. Their discussion on guarantee focused on general matters without further elaboration on the guarantee in financial matters. However, this can help to conceptualise guarantee and its role in Islamic law, (Abd al-‘Aziz al-Khayat and Ahmad, 2004; Okon, 2017) highlight legality of guarantee and the different points of view of scholars. They highlight guarantee in debt and multiple guarantors to debt. They also analysis the rule of guarantee in case of the death of the principal debtor or guarantor, the rule of guarantee in case the debt is deferred or immediate, and the time period that the guarantor is to be discharged from the guarantee. Furthermore, (Okpechi, 2018) discusses guarantee of investment accounts and says that the bank should guarantee them for investors. discuss the contract of guarantee in debt and highlight the definition given to guarantee by the four schools of fiqh. They discuss pillars, conditions and permissibility of guarantee and extend their discussion to future liability of