Contract structures
Contract structures.
Four structures, one governed rules engine, and specimen drafting starting points — none of them approved.
The rules engine
A governed rules engine, not an autonomous fatwa.
KHATT operates a non-bank, fee-only Sharia transaction infrastructure designed to structurally prevent non-compliant transactions — built for the global halal travel economy. Part of how that is designed to work is that nobody at KHATT writes a contract from scratch. Structure selection is a governed workflow, not a judgement call, and not a fatwa.
A halal travel transaction is not made compliant by naming a structure. It is made compliant — or not — by what actually happens: what was bought, who owned it, what evidence proves it, when title and risk moved, who was paid, and what was earned. The contract has to follow those facts. So the platform is built to derive the structure from the facts rather than let anyone choose a structure and then find facts to fit it.
The rules service works in five steps, in this order, and it cannot be run out of order.
No autonomous fatwa. The system never decides alone and must never be marketed as if it does. It narrows, evidences, documents and routes; a qualified human decides. Every decision records the inputs, the rules version, the template version, the actor and the rationale, so that the reasoning can be reconstructed and sampled later. Automation is there to make the human decision auditable and consistent, not to replace it.
Asset type
The transaction is classified by what is actually being acquired — a physical good, a defined service or usufruct, a pooled capital mandate, or a forward commitment.
Approved mapping
The asset type is tested against a versioned mapping of asset types to permitted structures. The mapping is data, not code comments, and every version is retained so that any past transaction can be reconstructed against the rules that were live at the time.
Template
Only a template drawn from the governed template library can be issued. There are no free-text contracts. A structure with no template for that asset class simply cannot be selected — it becomes an exception instead.
Evidence completeness
The evidence checklist for that structure is enforced as a gate. Every required item must be present, validated and linked to the same transaction record before any contract document is issued. Incomplete evidence is a hard stop, not a warning.
Human decision
A qualified human on the Sharia board approves the mapping, or grants a documented exception, or refuses. Novel, mixed or borderline packages — a bundle of goods, nights and transport under one invoice, for example — are routed to a scholar by design, not by escalation from a failure.
Controls
Four controls, designed so that no individual can switch them off.
Evidence gate
No contract without ownership, possession or service-right evidence.
Template approval
No transaction without a governed template and sign-off.
Maker-checker payment
No payment without two people and a verified supplier account.
Hard-coded prohibitions
Interest, late-payment income, receivable sale, first-loss support and guaranteed returns cannot be enabled in the system at all.
Status, stated plainly. The architecture is complete and designed with reference to AAOIFI standards. The Sharia Supervisory Board charter is drafted and scholar appointments are underway. No board is seated. No fatwa, certification or legal opinion exists. Until appointments are confirmed, the mapping below is design intent — an illustrative toolkit, subject to the appointed board and to the law of each jurisdiction — and nothing in this section has been approved by anyone. Operations do not begin before those appointments are confirmed.
Tawarruq is excluded from the toolkit entirely, at the design level. The platform must never use form to conceal a conventional cash loan.
Structure one — Murabaha
Identified goods, at a disclosed cost plus a fixed profit.
Murabaha is a sale at a disclosed cost plus a fixed, agreed profit. The seller buys a specific, identified asset, takes ownership and the risk that goes with it, and only then sells it onward at a price the buyer can see broken down into cost and profit. The price is fixed at contract and never moves afterwards — not for time, not for delay, not for anything.
Where it applies
Goods, and only goods: pilgrim welcome kits and ihram sets, catering provisions, bottled water and consumables for a group programme, printed materials, equipment and durable supplies bought from a verified supplier for a defined departure. It does not apply to hotel nights, transport or any other service — those are usufruct, and usufruct is Ijarah territory. Where a supplier invoice mixes goods and services, the transaction is split or routed to a scholar; it is not forced into one structure for convenience.
Who does what
The pool SPV — a ring-fenced pool holding investor capital — is the party that buys from the supplier, owns the goods, carries the ownership risk for the period it owns them, and sells onward. The supplier sells and delivers. The operator buys the goods on deferred payment terms at the disclosed cost-plus price. KHATT verifies, structures, documents and services the transaction and earns a fixed, disclosed fee for that work — it is not the buyer, not the seller, not the owner and not a party to the price. Money movement runs through licensed banking and payment partners directly to the verified supplier account. KHATT does not lend, does not hold client money and does not execute payments itself. The operator never receives unrestricted cash.
What the transaction must carry first
- Supplier identity, licence and beneficial ownership verified; supplier bank account verified.
- A specific description of the goods — quantity, specification, unit price — not a generic category.
- Proof that the goods exist and are identifiable, and evidence of the purchase price actually paid.
- Evidence of ownership or constructive possession by the seller before the onward sale, with the sequence and timing captured. No sale before acquisition.
- The underlying travel demand the goods serve: booking, customer demand or deposit evidence.
- Delivery or acceptance evidence at the far end, linked to the same transaction ID.
What cannot sit inside it
- Interest, or any element of the price that varies with time or with an outstanding balance.
- Late-payment income of any kind — a late payment triggers a board-approved charity clause directing any such amount to sadaqah, plus documented actual recovery costs only.
- Sale, discounting or assignment for value of the resulting receivable.
- First-loss support or credit enhancement from KHATT; any guaranteed return to anyone.
- Re-pricing, roll-over markup, or a “restructuring” that increases the price.
- Any back-to-back arrangement whose real substance is a cash loan.
Structure two — Ijarah
Services and usufruct, for a defined period and a defined rent.
Ijarah is a lease of usufruct — the right to use something, or to receive a defined service, for a defined period, for a defined rent. The owner keeps the asset and keeps the risks of ownership; the lessee gets use. Where the subject is a defined future service rather than an existing asset, the forward form (ijarah mawsufah fi al-dhimmah) may be used, provided the service is specified tightly enough that there is no material uncertainty about what is owed.
Where it applies
The service side of travel, which is most of it: hotel room nights and room allotments, ground transport and coach services, DMC ground handling, catering as a service, guide services, and group airfare and block seats where the facts support it. Hotel room-nights are the canonical case — a defined property, defined room category, defined dates, defined number of nights.
Who does what
The supplier — the hotel or transport provider — holds the asset and grants the usufruct. The pool SPV acquires the right to the defined nights or services and leases that usufruct onward. The operator takes the usufruct for its programme and pays rent on the agreed schedule. KHATT verifies the service-right evidence, maps the asset to the structure, issues from the governed template, monitors delivery and services the transaction, for a fixed disclosed fee. Payment to the supplier is executed by licensed payment partners to a verified supplier account under two-person authorisation. KHATT does not move the money.
What the transaction must carry first
- A service-right evidence package: the supplier contract or allotment agreement establishing that the right to the nights or services actually exists and is held.
- Confirmation from the supplier naming the property, room category, dates, night count and rate.
- Specification precise enough to remove material uncertainty — dates, location, standard, headcount.
- Cancellation, amendment, no-show and refund terms extracted and validated against the invoice, with mismatches flagged before contract issue.
- Verified supplier identity and bank account; the underlying booking and customer demand evidence.
- Delivery evidence — check-in, consumption or performance confirmation — recorded at the far end.
What cannot sit inside it
- Interest and time-value pricing; late-payment income of any kind.
- Sale or assignment for value of rental receivables.
- First-loss support and guaranteed return.
- Rent accruing for a period in which the usufruct was not available. If the nights are not deliverable, rent abates — charging for a usufruct that does not exist is the failure mode this structure has to be built against.
- Pushing ownership-side risks and obligations onto the lessee by drafting.
- Penalty rent, compounding rent and rent that steps up on delay.
Structure three — Wakalah
An agency mandate over pooled capital.
Wakalah is agency. One party (the principal) appoints another (the agent, or wakil) to do a defined job within defined limits, and pays a fee for the work. The agent acts for the principal and does not buy the principal’s risk: the money remains the principal’s, the outcomes remain the principal’s, and the agent earns its fee for performing the mandate — not for the result.
Where it applies
Two places. First and principally, the investment agency mandate over a ring-fenced pool: the pool appoints KHATT to deploy pool capital into approved travel transactions within a written mandate — eligible asset types, tenor limits, concentration caps, corridor limits — in return for an agency fee. Second, agency procurement, where a travel agency is appointed within defined limits to procure a specified asset on another party’s behalf. The pooled-capital mandate is the one that matters structurally, because it is what keeps investor capital off the KHATT balance sheet.
Who does what
The pool SPV holds the capital, carries the risk and takes the losses. KHATT acts as agent within the mandate: it verifies, structures, instructs, monitors, services and reports, and earns an agency fee. Investor capital never touches the KHATT balance sheet. Custody, escrow and payment execution sit with licensed partners in each jurisdiction; the agent instructs, and a licensed institution moves the money to verified accounts under two-person authorisation. Upon appointment, the independent Sharia Supervisory Board reviews the mandate, samples deployments and can halt any transaction.
What the transaction must carry first
- A written mandate with explicit investment criteria, limits, exclusions and escalation paths.
- Evidence that the pool is genuinely ring-fenced: separate legal vehicle, separate accounts, segregated records, and no commingling with KHATT operating funds or with any other pool.
- Investor onboarding, KYC and suitability records held by the appropriate licensed party.
- Per deployment, the full underlying evidence pack for whichever structure is used — the agency mandate does not relax any downstream evidence gate.
- Records showing the agent acted inside the mandate: decision logs, limit checks, maker-checker authorisations, exception approvals.
- Independent valuation, reporting and audit arrangements for the pool.
What cannot sit inside it
- Interest anywhere in the mandate; late-payment income; sale of receivables out of the pool.
- First-loss support, capital protection, indemnity of investment outcome.
- Guaranteed return, guaranteed profit or guaranteed distribution. An indicative or expected profit rate may be stated as an indication only and cannot become an entitlement.
- Any obligation on the agent to bear the pool’s investment losses — an agent who guarantees the principal’s capital has stopped being an agent. Losses fall on the pool.
The agent remains liable for its own negligence, wilful default, fraud and breach of mandate, which is a different thing entirely and is not excluded.
Structure four — Wa’d
A unilateral promise, and nothing more than that.
A wa’d is a one-sided promise: one party undertakes to do something in the future, and the other party gives no matching undertaking back. It is not a sale and it does not transfer anything. Its job is to give a party enough comfort to acquire an asset, while leaving the actual contract to be concluded properly, later, when the asset genuinely exists and is genuinely owned.
Where it applies
Sequencing. The pool will not buy thousands of welcome kits or take an allotment of room nights without some assurance the operator will proceed; the operator’s unilateral promise to purchase, or to lease, supplies that assurance. It is what allows the pool to acquire first and sell second — which is what Murabaha requires — instead of selling something it does not yet own. It also covers forward programme commitments where the underlying asset is defined but not yet acquired.
Who does what
The operator gives the promise. The pool SPV relies on it to acquire the asset from the supplier — and, having acquired it, offers it under a separate contract which the operator then accepts. KHATT records the promise against the transaction ID, enforces the separation of promise and contract in the workflow, and routes the enforceability question to the Sharia board rather than resolving it in software. No money moves under a wa’d. When money does move, at the later contract stage, it moves through licensed payment partners to verified supplier accounts — never through KHATT.
What the transaction must carry first
- Evidence that the promise is genuinely unilateral — one promisor, one direction, no reciprocal promise from the other side, and no side letter or course of dealing that creates one in substance.
- A specific description of the asset or usufruct promised, and the basis on which the future price will be determined.
- Evidence of genuine underlying travel demand — booking, programme or customer deposit — so that the promise attaches to a real transaction and not to a financing shape.
- Clear separation in the record between the promise and the later contract: distinct documents, distinct dates, distinct signatures, distinct entries.
- Board-level treatment of enforceability, recorded per jurisdiction.
What cannot sit inside it
- Interest, time-based charges and late-payment income.
- Using the promise to manufacture a binding forward sale between the same two parties — reciprocal binding promises (muwa’adah) that in substance form a forward contract are excluded.
- First-loss cover, guaranteed return, receivable sale.
- Treating the promise as consideration, transferring ownership or risk on it, or trading it.
- Any remedy beyond actual, documented, evidenced loss — never lost profit, opportunity cost, a liquidated sum or anything that functions as a penalty.
Enforceability of a wa’d is a live scholarly question and a live legal question; the drafting must not assume an answer.
The five prohibitions
Designed as system constraints, not policy preferences.
The platform is built so that these cannot be enabled.
No interest (riba)
No charge, benefit or return calculated by reference to time or to an outstanding balance.
No late-payment income
No amount payable on late payment may be income to KHATT or to any party. Late amounts are directed to sadaqah under a board-approved charity clause; only documented actual recovery costs are recoverable, and a documented hardship process applies.
No sale of receivables
No sale, discounting, factoring, assignment for value or securitisation of any receivable.
No first-loss support
No first-loss cover, credit enhancement, indemnity or capital protection given by KHATT. Pool losses are borne by the pool.
No guaranteed return
No guaranteed return, guaranteed profit, guaranteed distribution or guaranteed capital to any party.
Also excluded by design
Tawarruq; unrestricted cash disbursement; free-text contracts; status or gate override; takaful underwriting; any arrangement whose substance is a cash loan wearing the form of a sale or lease.
These four structures are an illustrative toolkit. Final selection depends on the facts of each asset, the law of each jurisdiction, and the judgement of an independent Sharia Supervisory Board that is not yet seated. Nothing here is approved, and we will not describe it as approved until it is.
Ask us the hard questions.
Sharia governance is the product. We welcome scrutiny from scholars, institutions and regulators.