Contracts and Deals in Islamic Finance: A User s Guide to Cash Flows, Balance Sheets, and Capital Structures

Chapter 19Shariah: Sources, Interpretation, and Implementation

For a Muslim reader this section is quite a simple read and many things sound familiar. Within the framework of Islamic law, the Quran serves as the central text from which the law is extracted. It is considered to be the primary source of law without question. The second source of law is the hadith, which is a compilation of the sayings and doings of the Prophet ([saw] peace be upon him). The first person to interpret the verses of the Quran was the Prophet Muhammad [saw] himself, but his interpretations were based on divine inspiration; he left no methodology for interpreting the Quran. He also left no process or guidelines for developing a methodology for interpretation.

After the Prophet ([saw] peace be upon him) passed away, the companions of the Prophet (saw) were referred to for interpretations of verses; the most revered companions were such illustrious personalities as Hadrat Abu Bakr, Hadrat Umar, Hadrat Uthman, Hadrat Ali, and the wives of the Prophet ([saw] peace be upon him). As the companions of the Prophet also passed away, the successors became the next layer of authority on religious edicts.

Individuals who knew verses of the Quran and recollected hadiths began to gain importance in Muslim society and they became the revered scholars of society. The first criterion for scholarship was therefore recollection of the Quran and the hadith. The second criterion for scholarship, which was based on how ...