The Application of Two Unilateral Wa'd and Its Recommended Exploration in Hedging

The principle of two unilateral wa'd or wa'dan is derived directly from the word unilateral wa'd which refers to two separate wa'd made by two parties. This principle is seen to has a room for exploration as there is no injunction of its usage in Islamic financial transaction, as is the case with hedging. The question is, what is a recommended exploration of two unilateral wa'd in hedging? This research aims to explore the usage of wa'dan in hedging and then analyzes it based on hedging parameters. This study found that the princple of two unilateral wa'd has room to be explored further as it is not similar to muwa'adah principle which is forbidden by most of the Islamic jurists due to its similarity to contract. This study also comes out with a suggestion for the usage of two unilateral wa'd in hedging, that is one party gives wa'd to do sarf contract and then other party will gives a wa'd to do commodity murabahah contract. The suggested structure of two unilateral wa'd is not similar to muwa'adah in three main aspects, namely separation of promise, different trigger event and the different outcome. Therefore two unilateral wa'd is viable to be adapted in Islamic hedging contract as long as it is consistent with the parameter hedging in terms of structuring, procedure and usage.