A Legal Remedy for Financial Necessity from Bukhara to Istanbul: Redefining Bay‘ bi-al-Wafa’ as a Shari’ah-Compliant Credit Instrument

Abstract

This study investigates the bayʿ bi-al-wafaʾ contract, a controversial legal device in Islamic jurisprudence, from its historical emergence to its application in Ottoman legal practice. The central problem addressed is whether this contract can be considered a legitimate and functional alternative to interest-based debt structures. Methodologically, the research combines textual analysis of classical fiqh works with documentary examination of Ottoman qaḍi court registers and codified law, particularly the Majalla. Through this comparative framework, the study analyzes four major juridical perspectives that classify bayʿ bi-al-wafaʾ as a valid sale (ṣaḥiḥ), defective sale (fasid), void sale (baṭil), or pledge (rahn), and further explores the “comprehensive view” (qawl jamiʿ) that treats it as a sui generis hybrid contract. The findings demonstrate that bayʿ bi-al-wafaʾ possesses distinctive parameters such as intention, profit and its method of acquisition, duration, risk of loss, public auction procedures, and protection against unfair advantage/lesion (ghabn) that differentiate it from conventional interest-bearing transactions. Ottoman court practice confirms that the contract served both as a means of securing debts and as a tool for providing credit. Despite internal contradictions in the Majalla, the research highlights its normative significance as an institutional mechanism developed within Islamic law rather than borrowed from external models. In conclusion, bayʿ bi-al-wafaʾ should not be dismissed as a mere stratagem to disguise interest but reconsidered as a dynamic, contested, yet potentially valuable instrument for contemporary interest-free financial systems. The study thus fills a gap in the literature by linking doctrinal debates, historical practice, and modern financial discourse.