Wakalah
وكالة
Pronunciation: wah-KAH-lah
An agency contract where one party appoints another to act on their behalf for a fee.
Definition
An agency contract where one party (the principal) appoints another (the agent, or wakil) to conduct transactions or manage investments on their behalf. The agent earns a fee (ujrah) or, in some structures, a share of profit for their services.
Wakalah is widely used in Islamic finance for investment management (Wakalah bil-Istithmar), where investors appoint a fund manager as their agent. It is also one of the two main operational models for Takaful — in the Wakalah model, the insurance operator manages the takaful fund for a fixed agency fee rather than a profit share.
Related Terms
Ujrahأجرة
A fee or wage charged for services rendered — the Islamic basis for fee-based financial services.
Ju'alahجعالة
A service-for-fee contract where payment is contingent on completing a specified task.
Takafulتكافل
Islamic cooperative insurance based on mutual assistance and shared risk among participants.
Mudarabahمضاربة
A profit-sharing partnership where one party provides capital and the other provides expertise.
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Wakalah (وكالة) — An agency contract where one party appoints another to act on their behalf for a fee. An agency contract where one party (the principal) appoints another (the agent, or wakil) to conduct transactions or manage investments on their behalf. The agent earns a fee (ujrah) or, in some structures, a share of profit for their services.
- An agency contract where one party appoints another to act on their behalf for a fee.
- Category: Contracts
- Related: Ujrah, Ju'alah, Takaful, Mudarabah
- Compare related Shariah-compliant products on HalalWallet
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Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-07-01
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