The word “wakalah” literally has several meanings, including support, delegation, authorization, retention and execution of a task on behalf of others. Technically, Wakalah refers to a type of contract whereby one person (the captain) assigns another person to perform certain tasks for him. In other words, it is an agency contract that authorizes an agent to perform and manage certain cases on behalf of a client. There are two contractors in the Wakalah contract: the client (aka muwakkil) and the agent (also called Wakeel). In essence, Wakalah is a kind of responsibility, while the officer must carry out his delegated duties in the way the agent assumes his responsibilities. Wakalah is a non-binding contract. The principal (client) or agent (Islamic bank) may at any time withdraw by mutual agreement, unilateral termination, execution of the undertaking, destruction of the object and death or loss of legal strength of the parties. This agreement is for a known transaction. Example: the agent is required to sell or buy a house or private car. However, in cases where the state agreement of profit sharing between Islamic banks (agent) and client (principle). The same will happen, according to the agreement, on an agreement known as Wakalah-tul-istithmar – Investment Wakalah. Wakalah is one of the contracts used by banks when depositing. In this agreement, the Islamic bank is mandated by the client as an agent (Wakil) to invest customers` money in various protocols and companies compliant with Shari`ah.
With respect to the investment aspects in which the client expects a return in the company imposed by the contract, the profits and losses belong exclusively to the client. Muslim scholars have reached the consensus on Wakalah`s admissibility on the basis of evidence from the Qur`an and the Sunna of the Prophet Muhammad (peace be with him). This is because people need help with certain tasks that they are not able to do themselves. The main purpose of an agency contract (Wakalah) is to facilitate economic exchanges and transactions between a client and third parties if the client is unable to do so personally or if he is not willing to work himself. Similarly, the agency contract is necessary because, on several occasions, the client does not have the knowledge, expertise or time to perform certain tasks. In such a situation, he must delegate someone who performs certain tasks on his behalf. For example, a real estate agent is responsible for selling or buying a particular property on behalf of the client. The agency contract is also necessary in some cases where a person is dealing with different clients on their different sites. For example, takaful agents (Islamic insurance) or travel agencies are appointed to exchange different customers at different locations. A general agency is a kind of contract by which a principal obligated person entrusts an agent with the full power to carry out a certain number of transactions on his or her behalf.
For example, a client may delegate the purchase of the house to a broker, rent it to others and collect the rent each month. A director of a company could be an example of a general agency. Because he has all the authority to perform a number of tasks on behalf of the company. The Muwakil can transfer its money via a Cash Deposit Machine, in which case the Cash Deposit Machine will act as Wakil on behalf of the bank (Muwakkil). In the case of postal instructions in which the bank (Wakil) receives the money directly from the customer (Muwakkil) and sends it to the intentional customer (destination).