Sample Qard Agreement

A Sample Qard Agreement: A Comprehensive Guide

If you`re looking for a way to lend or borrow money in a Shariah-compliant way, you may have come across the term ‘qard’ – an interest-free loan agreement between two parties. While a qard agreement may be simple enough in theory, it`s essential to get all the documentation right to ensure that both parties are protected. In this article, we`ll give you a comprehensive guide to a sample qard agreement.

What is a Qard?

Qard is an Arabic term that means loan or lending without interest. In Islam, the practice of charging interest is considered usury or riba, which is prohibited. Therefore, qard is a way to lend and borrow money while following Islamic law.

A qard agreement is when a borrower receives a loan from a lender without any interest or profit. It`s purely a benevolent and charitable act by the lender, and the borrower is only expected to repay the amount borrowed.

Sample Qard Agreement

Now that we`ve established the basic concepts let`s dive into the sample qard agreement. This sample is a template that you can use to draft your qard agreement, but it’s essential to consult with a legal expert before finalizing the agreement.

The sample qard agreement contains nine essential clauses:

1. Parties involved: This clause identifies the lender and the borrower.

2. Purpose of the loan: It specifies the reasons why the borrower is taking the loan.

3. Amount of the loan: This clause states the total amount of the loan the borrower will receive.

4. Repayment plan: It outlines the terms of repayment, including the frequency and duration of repayments.

5. Late payment penalty: This clause specifies the amount charged if the borrower fails to make a payment on time.

6. Confidentiality: The lender agrees to keep all information related to the loan confidential.

7. Governing law: This clause specifies which law will govern the agreement. Shariah law should apply to qard agreements.

8. Amendment: This clause outlines how either party can make changes to the agreement.

9. Termination: It outlines the reasons for terminating the agreement, including non-payment of the loan.


In conclusion, a qard agreement is an interest-free loan agreement that is compliant with Islamic law. To draft a qard agreement, you must include essential clauses such as the parties involved, the purpose of the loan, the amount of the loan, the repayment plan, and the late payment penalty. Ensure that you consult with a legal expert to help you finalize your qard agreement.

Comments are closed.