Prohibition in Al-Wadia’h Contract

Prohibition in Al-Wadia’h Contract   

1.    Utilizing the deposit

The scholars are agreed in disallowing the custodian to utilize the deposit without the permission of the depositor.  It must be guaranteed if the deposit were used with permission since the contract is safekeeping.

2.    Travelling with the deposit

         According to Abu Hanifah: The safekeeper have right to travel provided the depositor did not prohibit him from doing so & the route is safe. Therefore the wadi’ah is unrestricted geographically unless explicit in the contract.
If there is a loss then he is not liable for compensation. However must be have taken all necessary precautions to avoid loss or damage.

         Maliki: The custodian have no right to travel unless instructed by the depositor. Allowable to transfer the custodian if going on a journey ending his liability.

         Shafi’e & Hanbali: The custodian is not allowed to travel and must return the deposit if need be. If the custodian travels he will be liable for compensation if the the deposit lost.

Therefore travelling with deposit is prohibited by the majority of Fiqh Scholars.

3.   Entrusting a 3rd party

Absolute not allowed without a good reason.

         Abu Hanifah & Malik: Permissible to leave with family members. Contemporary practice it is deemed permissible as banks can guarantee the safety.
The rationale is that as the depositor requires safety, it gives implicit permission for taking such measures to ensure the safety required.

4.    Making deposits with other properties

         To avoid disputes, if the item deposited is similar to the custodians own assets, they must be separated.

If it is mixed Abu Hanifah qualifies it as negligence.

5.    Violating depositor conditions

            Most jurists agree that:

            If the place is less secure than instructed by the depositor – he is liable.

            If the place is equally or more secure – then not liable.

            Main issue is security of the deposit.
            Since contract is based on trust the depositor should not place restrictions which make it difficult for the custodian to ensure security over the deposit.