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Glossary of Financial Terms: K

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Kafalah

Surety, An obligation in addition to an existing obligation in respect of a demand for something. Lit: responsibility or suretyship. It is a covenant or pledge given. Legally, a third party becomes surety for the payment of a debt of another. Suretyship in Shari’ah is the creation of an additional liability with regard to a claim, not to the debt or the assumption only of a liability and not of the debt. A person providing surety or a guarantor is known as Kafil. Islamic banks use Kafalah to issue guarantees for their business customers, for example, the bank   may  guarantee the customer’s   standing to facilitate any business endeavours that may require such guarantees, or the bank may give a surety to the owner of a ship or the shipping agent, to discharge goods imported by a customer  on arrival of the carrying ship, pending receipt of the original shipping documents before the customer can take delivery of the imported goods. Also, known as Kifalah.

Kafil

Guarantor.

Kast Al Takaful

Takaful contribution (premium).

Khalabah

Misleading marketing; pursuing unaware and simple clients by over-projecting the quality of a commodity.

Kharaj

A levy on land use.

Khatar

A kind of gharar. Khatar is involved if the liability of any of the parties to a contract is uncertain or contingent, delivery of one of the goods of exchange is not in the control of any party or the payment from one side is uncertain.

Khayr

Good, beneficial or well-being.

Khiyar

Lit: option, choice. The option to rescind or cancel a sales contract in certain conditions, for example a defect in the goods. The jurists have traditionally recognised different types of khiyar, including Khiyar alru-yah/roy’atkhiyar al-aib/ayb, khiyar al-shartkhiyar al-majlis.

Khiyar al-Aib/Ayb

An option of dissolving the contract on discovery of defect.

Khiyar al-Ghabn

An option of the buyer to cancel the contract on knowing that the seller has sold the goods at price far higher than the market price.

Khiyar al-Naqad

An option where the seller has the right to cancel the contract if the buyer does not make payment by a certain agreed date.

Khiyar al-Ro’yat

Option to rescind a sale contract after physical inspection of the object of sale.

Khiyar al-Shart

An option to cancel a previous agreed sale within a specific number of days.

Khiyar al-Tayin

An option of determination, where a person having purchased two or three things of the same kind, stipulates a period to make selection out of the purchased stock.

Khiyar al-Wasf

An option to be exercised due to the absence of a desired quality in the goods.

Khiyar-e-Majlis Khiyar al-Majlis

An option whereby the parties have right to withdraw from a contract so long as the parties do not leave the place of contract.

Kifala

See Kifalah

Kifalah

See Kafalah.

Koran

See Qur’an.