When it comes to non-lending activities, Islam is (generally) interested in ensuring that these activities can be made into viable businesses and therefore the burden of proving the absence of hardship when charging a late penalty is dropped. A lessor may charge a lessee a penalty if their payments are late just as a utility company may charge a customer for a late electric bill.
I’ve been advocating for the adoption of HCM agreements in the Muslim community and while the default ruling on anything in Islam is permissibility, it helps to have explicit support for an idea in the Quran or Sunnah (the life and sayings of the prophet Muhammad peace be upon him). I believe there is such support for Human Capital Mudarabah in the Quran.
A sample of some of the nonsense I’ve had to deal with why advocating for Human Capital Mudarabah
When associating a particular product with Islamic finance, one must address how the product serves or at least does not run afoul of any ethical considerations. Here are 3 reasons why I think HCM agreements are superior to debt-based financing from an ethical perspective.
A Mudarabah contract is based on a partnership in which one partner is the financier (the investor, or rabb-ul-mal) and the other partner (the fund
Adam just graduated college and needs $25,000 in financing to buy his first car. Here’s how he can get financed without using interest-bearing debt …