murabaha and bai bithaman ajil (kontrak jual beli)


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  • NIBAF SALE CONTRACT Contract or transaction ( Aqd) 1.1 Offer & acceptance ( Ijab-o-Qobool ): The term “Offer” means that one person proposes to either sell his commodity to another person or buy from him and “Acceptance” means that the person who has been offered gives his approval of the proposal. Offer and acceptance are always done in past tense eg. “I have sold” or “I have purchased” etc. There are two ways of doing it: 1.1.1 Oral ( Qauli ): By saying. 1.1.2 Implied ( Isharaa ): By indicating. This is of two types: 1.1.1(a) Credit Sale ( Istijrar ) for eg. settlement of the bill at the end of the month. 1.1.1(b) Hand-to-Hand Sale ( Taati ): Exchange of money with goods without uttering Ijab-o-Qobool for eg. procedure adopted in contemporary stores. 1.2 Buyer & seller ( Muta’aquadeen ): Both must be : 1.2.1 Sane : Should be mentally sound at the time of contract. Mature : Should be adult, however, if minor, must understand
  • NIBAF SALE CONTRACT 1.1 Existable The subject matter of sale must be existing at the time of sale. Thus, a thing which has not yet come into existence cannot be sold. If a non-existent thing has been sold, even with mutual consent, the sale is void according to shari’ah. Eg. ‘A’ sells the unborn calf of his cow to ‘B’. The sale is void. 1.2 Valuable The subject of sale must be a property of value. Thus a thing having no value according to the usage of trade eg. a leaf or a stone on a roadside cannot be sold or purchased. 1.3 Usable The subject of sale should not be a thing which is not used except for a haram purpose, like pork, alcohol etc. 2.4 Capable of ownership/title The subject matter should not be anything which is not capable of ownership/title for eg. sea or sky. 2.5 Capable of delivery/possession For eg. an unconstructed building cannot be possessed since it is non-existent.
  • murabaha and bai bithaman ajil (kontrak jual beli)

    1. 1. MURABAHAH Sale Contract Bai Bithaman Ajil
    2. 2. CONTRACT IN ISLAM CONTRACT SUBJECT MATTER CONTRACTORS WORDING OF CONTRACT <ul><li>Specified </li></ul><ul><li>Quantified </li></ul><ul><li>Non-restricted </li></ul><ul><li>Sane </li></ul><ul><li>Mature </li></ul><ul><li>Present </li></ul><ul><li>Unconditional </li></ul><ul><li>Non-contingent </li></ul>
    3. 3. Law of Contract <ul><li>Islamic Contract : It is connection between the offer and the acceptance in a manner that results the proper affects. </li></ul><ul><li>Offer </li></ul><ul><li>Acceptance </li></ul><ul><li>Subject matter </li></ul>
    4. 4. ISLAMIC SALE <ul><li>DEFINITION OF SALE (BAI) </li></ul><ul><ul><li>exchange of a thing of value with another thing of value with mutual consent. </li></ul></ul><ul><ul><li>the sale of a commodity in exchange of cash. </li></ul></ul>
    5. 5. ISLAMIC SALE <ul><li>VALID SALE ( Bai Sahih ) </li></ul><ul><ul><li>A sale is valid if all elements together with their conditions are present </li></ul></ul><ul><ul><li>Elements of valid sale are </li></ul></ul><ul><ul><ul><li>Contract ( Aqd ) </li></ul></ul></ul><ul><ul><ul><li>Subject matter ( Mabe’e) </li></ul></ul></ul><ul><ul><ul><li>Price ( Thaman ) </li></ul></ul></ul><ul><ul><ul><li>Possession or delivery ( Qabza ) </li></ul></ul></ul>
    6. 6. CONTRACT ( Aqd ) <ul><ul><ul><li>Offer & Acceptance ( Ijab-Qabul) </li></ul></ul></ul><ul><ul><ul><ul><li>Oral ( Qauli ) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Implied ( Hukmi ) </li></ul></ul></ul></ul><ul><ul><ul><li>Buyer and seller ( Muta’aquadeen ) must be </li></ul></ul></ul><ul><ul><ul><ul><li>Sane </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Mature </li></ul></ul></ul></ul><ul><ul><ul><li>Conditions of contract ( Sharaet-e-Aqd ) </li></ul></ul></ul><ul><ul><ul><ul><li>sale must be non-contingent </li></ul></ul></ul></ul><ul><ul><ul><ul><li>sale must be immediate </li></ul></ul></ul></ul>
    7. 7. SOLD GOOD OR SUBJECT MATTER ( Mube’e ) <ul><ul><ul><li>Existing </li></ul></ul></ul><ul><ul><ul><li>Valuable </li></ul></ul></ul><ul><ul><ul><li>Usable </li></ul></ul></ul><ul><ul><ul><li>Capable of ownership/title </li></ul></ul></ul><ul><ul><ul><li>Capable of delivery/possession </li></ul></ul></ul><ul><ul><ul><li>Specific & Quantified </li></ul></ul></ul><ul><ul><ul><li>Seller must have title & risk </li></ul></ul></ul>
    8. 8. <ul><li>Murabahah or murabaha , (Arabic مرابحه ): </li></ul><ul><li>A sale transaction , compliant with shariah, where the seller expressly mentions the cost he has incurred on the commodities to be sold and sells it to another person by adding some profit or mark-up , which is known to the buyer. </li></ul><ul><li>An ‘ honest declaration of cost’ - murabaha is one type of bai-al-amanah ('fiduciary' sale) </li></ul><ul><li>The other two types of bai-al-amanah are Tawliyah (sale at cost) and Wadiah (sale at specified loss). </li></ul>Definition
    9. 9. MURABAHA <ul><li>Murabaha is a particular kind of sale where the seller discloses its cost and profit charged thereon. </li></ul><ul><li>The price in this sale can be both on spot and deferred. </li></ul>
    10. 10. <ul><li>The sale of goods at a price , which includes a profit margin agreed to by both parties. </li></ul><ul><li>The purchase and selling price , other costs , and the profit margin must be clearly stated at the time of the sale agreement. The bank is compensated for the time value of its money in the form of the profit margin. </li></ul>Murabahah concept
    11. 11. <ul><li>In practice: A fixed-income loan for the purchase of a real asset (such as real estate or a vehicle), with a fixed rate of profit determined by the profit margin. The bank is not compensated for the time value of money outside of the contracted term (i.e., the bank cannot charge additional profit on late payments); but, the asset remains as a mortgage with the bank until the Murabaha is paid in full. </li></ul>Murabahah concept – Cont…...
    12. 12. It is a contract wherein the institution, upon request by the customer , purchases an asset from the third party usually a supplier/vendor and resells the same to the customer either against immediate payment or on a deferred payment basis. <ul><ul><li>BANKING MURABAHA </li></ul></ul>
    13. 13. BANKING MURABAHA <ul><li>It is called Murabaha to the purchase order </li></ul><ul><li>It is a bunch of contracts completed in steps and ultimately suffices the financial needs of the client. </li></ul><ul><li>The sequence of their execution is extremely important to make the transaction Shariah compliant . </li></ul>
    14. 14. <ul><li>Seller </li></ul><ul><li>Buyer </li></ul><ul><li>Asset </li></ul><ul><li>Price (Mark-up) </li></ul><ul><li>Ijab and Qabul </li></ul>Rukun Murabahah
    15. 15. <ul><li>These instruments falls under NCC because unlike equity financing, the return to the financier under NCC is pre-determined . It is certain . </li></ul><ul><li>These are called debt-based instruments. The bank enjoys a pre-determined return that has no corelation with the performance of the user of finance. </li></ul><ul><li>These debt–based instruments have to observe conditions of trading to ensure it is free from Riba. </li></ul><ul><li>If a normal sale, in which the seller does not disclose the profit, it is known as Musawwamah. Both murabahah and musawwamah are valid in Shariah. </li></ul>Natural Certainty Contract (NCC)
    16. 16. Difference between Murabaha & Musawima <ul><li>MURABAHA is a particular kind of sale where the seller discloses its cost and profit charged thereon . </li></ul><ul><li>MUSAWIMA is a sale on agreed price without referring to the first price on which the seller has purchased </li></ul>
    17. 17. <ul><li>In Murabahah, both parties to the transaction must know the cost and also the profit. This is a trust-sale where the buyer trusts that the seller has made a truthful disclosure about the cost and mark-up. </li></ul><ul><li>Payment of the price may be spot or deferred depending on the agreement. </li></ul><ul><li>A Bai Bithaman Ajil (BBA) refers to the deferred mode of payment in a sale. It is also known as Bai Mu’ajjal . </li></ul><ul><li>In BBA- the deferred payment has been made and agreed at the beginning of the contract . </li></ul>Murabahah and Al Bai Bhitaman Ajil (BBA)
    18. 18. MURABAHAH Cost Plus Profit (On the Spot basis) Cost Plus Profit- BBA (Deferred basis)
    19. 19. <ul><li>Jamil needs to buy a car and he approaches an Islamic bank who is the vendor for cars. </li></ul><ul><li>Jamil chooses to purchase a car that costs RM50,000. The bank sells the car to him at RM60,000 (RM50,000 cost + RM10,000 profit). He would have the option to pay the Islamic bank in deferred installments over 8 years. </li></ul>Example 1: Classical Murabahah
    20. 20. <ul><li>In case 1- if Jamil choses to pay in installments , then it is a Murabahah (because cost and profit were disclosed) and also a BBA (because price was paid deferred). </li></ul><ul><li>BBA has been subject to some controversies regarding its permissibility because the price charged in a deffered sale is higher than its spot price. </li></ul><ul><li>According to majority of scholars, the deferred price may be more than the spot price, however the price must be fixed at the time of sale. </li></ul>Example 1
    21. 21. <ul><li>Company XY wants to buy a machine that costs RM150,000 but it does not have enough money. </li></ul><ul><li>The company approaches an Islamic bank for financing. The Islamic bank buys the machine from the supplier and sells to Company XY for RM200,000 ( the cost + profit to bank). </li></ul><ul><li>The company agreed and will pay the bank in installment over 10 years. </li></ul>Example 2: Murabahah Financing
    22. 22. Bank purchase the Asset from vendor Bank sell to client Client pay deferred payment Client identify the assets from vendor
    23. 23. <ul><li>At times, a BBA/Murabahah instrument may appear similar to conventional bank loans. </li></ul><ul><li>Some argue that Islamic banks merely substitute the interest rate with profit rate. Thus, shariah law has imposed several constraints to ensure that Murabahah is free from Riba. </li></ul>Murabahah Financing
    24. 24. <ul><li>The subject of sale must exist in the ownership and possession (physical or constructive) of the bank at the time of sale to its client. As a seller (i.e. owner of goods) the bank is exposed to ownership risks such as price risk and risk of destruction of asset before actual delivery to client. This risk-bearing legitimates the bank’s profit. </li></ul>Conditions in Murabahah
    25. 25. <ul><li>2. The price of the sale must be fixed at the time of contract. This is important to avoid gharar (uncertainty) in the transaction. </li></ul><ul><li>3. The first sale and purchase between the bank and the producer of the commodity must be an independent transaction from the second sale and purchase i.e. the bank must purchase the commodity from a third party and not the client himself. </li></ul><ul><li>4. A Murabahah/BBA must not involve sale of forbidden commodities such as liquor, pork and the like. </li></ul>Conditions in Murabahah
    26. 26. To be Continued……….