Defining Islamic guidelines for extended warranties: Fatwa analysis and practical applications

Abstract

This study addresses the challenge of defining comprehensive Islamic guidelines for extended warranties, a topic marked by inconsistent practices and conflicting scholarly opinions. Focusing on fatwa analysis and practical applications, the research bridges the gap between Islamic principles and modern market needs. The study employs a qualitative methodology, conducting extensive library research on academic literature and analyzing 28 fatwa rulings from 1999 to 2024. Findings reveal a spectrum of scholarly opinions, with consensus on standard warranties included in original sales, but divergence on separately purchased extended warranties. The research identifies key parameters for Shariah compliance, including integration with the original sale contract, transparency of terms, and avoidance of excessive uncertainty (gharar) and gambling-like elements (maysir). Practical applications are proposed, including takaful-based models and service-oriented warranties focusing on periodic maintenance. These align with Islamic principles of cooperation (ta'awun) and consumer protection while addressing market demands. The study emphasizes the importance of purchase timing and suggests integrating extended warranties into initial product pricing as a viable approach in Islamic finance. Additionally, it explores the potential of sustainability-focused warranty structures to align with Islamic ethics and contemporary environmental concerns, offering a framework for the practical implementation of Shariah-compliant extended warranties in various market contexts.