Mosa’qaat Contract in Islamic Finance

This is a contract between the owner of a ‘tree and the like’ and an Amel, against a clear-cut share of the yield, which includes fruit, flower petals, and so on. Again, the constituent parts of Mosa’qaat can be separated into tree, labor, yield, and time period. The ‘tree and the like,’ which form the subject of an agreement must possess the following characteristics:

1. The trees and plants should be such as have gone into the ground and be capable of staying in the ground for more than one year. It then follows that vegetation and plants of a seasonal nature, which naturally last less than one year, cannot be the subject of such a contract.
2. Non-yielding trees, which do not give fruit, cannot be the subject of a Mosa’qaat agreement unless their leaves or flowers have market value.
3. The garden (or orchard) owner should really own the trees or interests therein, and/or should be entitled to use them.

The specification and boundaries of the orchard or garden should be stated in relation to the yield, as well as the type and number of trees. If the share of the parties is fixed as a definite quantity of the yield, and/or the yield of certain trees is reserved for one of the parties, and the rest for the other party, the transaction is void. In the same way, it is not permissible for the entire yield to go to one of the parties. (Iraj Toutounchian)

Source: Prof. Iraj Toutounchian, Thoughts from Iraj Toutounchian’s Islamic Money & Banking: Narrated by Camille Paldi. Republished with permission.