According to the Qur’an 2: 282 we should write make a signed loan agreement whenever we lend money to someone. Suppose if my friend asks me some money, may be very little amount, do you think that it will be feasible for me to write down the loan agreement each time I give him money? Will it not cause a distrust in our relationship? Please explain.
There are basically two aspects to keep in my relating to the directives of the Qur’an regarding the documentation of loan agreements:
Firstly, the directive does not relate to mere ‘friendly’ kind of loans, where one friend lends some amount to another friend for an unspecified time, where the agreement is that whenever the borrower will have the money, he will return it to the lender. The directive, on the contrary, relates to loans given for a specified time and where the time-frame of the loan as well as the amount lent is of importance to both the parties.
Secondly, the directive of documenting the loans and holding witnesses on it is not to cater for any existing distrust between the borrower and the lender, but, on the contrary, it is to safeguard against any potential misunderstandings arising between ‘good friends’ with reference to either the time-frame of the loan or with reference to its amount. In such a situation, the Qur’an has directed us to bring the understanding down to writing, so that neither of the two parties may develop a misunderstanding, which may lead to distrust and a break in a strong relationship, for such a trivial reason.
In view of the above, it is clear that even today, when we decide to enter into a loan agreement for a specified period of time, we should bring the agreement down to writing. In such instances, it may help to tell our friends that the formality is not because of any existing distrust between us and them, but to safeguard our relationship from any potential misunderstanding developing out of this transaction.
I hope this helps.
June 4, 2005