Competitions and Prizes — practice questions

Correct answer: C. Clauses 2/3/1 and 2/3/2: Competitions are permissible in permissible activities (such as scientific, cultural and sports contests) that do not involve or lead to anything prohibited. Reward-based competitions must also be clearly defined as to timing, location, type, particulars, tools and mode of operation, and the reward must be offered by a third party or by one of the competitors; if it is offered by more than one competitor, it is not permissible, since it would resemble gambling.

Correct answer: A. Clause 2/3/3: An Institution may organise or sponsor competitions provided the expenses, including the reward, are covered from its own funds (shareholders’ funds) and not from the funds of the investment accounts; due consideration is given to public interest and appropriate priorities without extravagance; and the competition is approved by the Institution’s Shari’ah Supervisory Board.

Correct answer: B. Clauses 3/3/1 to 3/3/3: A draw may be held for a prize without requiring any purchase. Purchase may be stipulated as a condition of entry only if the price is not increased compared with the same goods without the right to enter; the purchase is intended irrespective of the prize (and this is announced); all customers have equal chances; the draw is not meant to harm others; and no fee is charged for entry, directly or indirectly, such as by raising call rates above the normal tariff.