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Sale Transaction In Islamic Finance

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Sale Transaction In Islamic Finance

  1. 1. SALE TRANSACTION UNDER ISLAMIC FINANCE
  2. 2. Sale transaction in Islamic Finance <ul><li>DEFINATION 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>
  3. 3. Sale <ul><li>TYPES OF SALE </li></ul><ul><ul><li>Valid sale ( Bai Sahih ) </li></ul></ul><ul><ul><li>Void/Non existing Sale ( Bai Baatil ) </li></ul></ul><ul><ul><li>Existing sale but void due to defect ( Bai Fasid ) </li></ul></ul><ul><ul><li>Valid but disliked sale ( Bai Makrooh ) </li></ul></ul>
  4. 4. Sale under islamic finance <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 sales 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>
  5. 5. Sale under islamic finance
  6. 6. Sale under islamic finance <ul><li>ELEMENTS OF A VALID SALE ( Bai Sahih ) </li></ul><ul><ul><li>CONTRACT ( Aqd ) </li></ul></ul><ul><ul><ul><li>Offer & Acceptance ( Ijab-o-Qobool) </li></ul></ul></ul><ul><ul><ul><ul><li>Oral ( Qauli ) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Implied ( Isharaa ) </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Credit sales ( Istijrar ) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Hand to Hand ( Taati ) </li></ul></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>
  7. 7. Sale under islamic finance <ul><li>ELEMENTS OF A VALID SALE ( Bai Sahih ) </li></ul><ul><ul><li>CONTRACT ( Aqd ) </li></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><ul><li>unconditional contract </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>under reasonable conditions </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>under unreasonable conditions but at market practice </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>sale must be immediate </li></ul></ul></ul></ul>
  8. 8. Sale under islamic finance
  9. 9. Sale under islamic finance <ul><li>ELEMENTS OF A VALID SALE ( Bai Sahih ) </li></ul><ul><ul><li>SOLD GOOD OR SUBJECT MATTER ( Mube’e ) </li></ul></ul><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>
  10. 10. Sale under islamic finance <ul><li>ELEMENTS OF A VALID SALE ( Bai Sahih ) </li></ul><ul><ul><li>SOLD GOOD OR SUBJECT MATTER ( Mube’e ) </li></ul></ul><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>
  11. 11. Sale under islamic finance <ul><li>ELEMENTS OF A VALID SALE ( Bai Sahih ) </li></ul><ul><ul><li>PRICE ( Saman ) </li></ul></ul><ul><ul><ul><li>Quantified ( Maloom ) </li></ul></ul></ul><ul><ul><ul><li>Specified & certain ( Muta’aiyan ) </li></ul></ul></ul>
  12. 12. Sale under islamic finance <ul><li>ELEMENTS OF A VALID SALE ( Bai Sahih ) </li></ul><ul><ul><li>DELIVERY OR POSSESSION (QABZA) </li></ul></ul><ul><ul><ul><li>Physical ( Haqiqi ) </li></ul></ul></ul><ul><ul><ul><li>Constructive ( Hukmi ) </li></ul></ul></ul>
  13. 13. Sale under islamic finance <ul><li>VOID/NON EXISTING SALE ( BAI BAATIL ) </li></ul><ul><ul><li>certain conditions are not met. These relate to: </li></ul></ul><ul><ul><ul><li>conditions of offer and acceptance </li></ul></ul></ul><ul><ul><ul><ul><li>Oral acceptance </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Implied acceptance </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Credit sales </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Cash sales </li></ul></ul></ul></ul></ul>
  14. 14. Sale under islamic finance <ul><li>VOID/NON EXISTING SALE ( BAI BAATIL ) </li></ul><ul><ul><li>certain conditions are not met. These relate to: </li></ul></ul><ul><ul><ul><li>conditions for Buyer and Seller </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>
  15. 15. Sale under islamic finance <ul><li>VOID/NON EXISTING SALE ( BAI BAATIL ) </li></ul><ul><ul><li>certain conditions are not met. These relate to: </li></ul></ul><ul><ul><ul><li>conditions for Sold Goods where goods should be: </li></ul></ul></ul><ul><ul><ul><ul><li>Existable </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Valuable </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Usable </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Capable of ownership/title </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Capable of delivery/possession </li></ul></ul></ul></ul>
  16. 16. Sale under islamic finance <ul><li>VOID/NON EXISTING SALE ( BAI BAATIL ) </li></ul><ul><ul><li>the buyer does not have the title to subject matter </li></ul></ul><ul><ul><li>the seller does not have title to price </li></ul></ul><ul><ul><li>Both subject matter and price cannot be used lawfully </li></ul></ul><ul><ul><li>the produce of both will be unlawful </li></ul></ul>
  17. 17. Sale under islamic finance <ul><li>EXISTING SALE BUT VOID DUE TO DEFECT ( BAI FASID ) </li></ul><ul><ul><li>sale will exist but will be void due to defect because of non compliance to: </li></ul></ul><ul><ul><ul><li>Conditions of contract </li></ul></ul></ul><ul><ul><ul><ul><li>Sale must be immediate not deferred to future </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Sale must be non-contingent </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>unconditional </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>under reasonable conditions </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>under unreasonable conditions but within market practice </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>the buyer does not have the title to subject matter </li></ul></ul></ul></ul><ul><ul><li>the seller does not have title to price </li></ul></ul><ul><ul><li>Both subject matter and price cannot be used lawfully </li></ul></ul><ul><ul><li>the produce of both will be unlawful </li></ul></ul>
  18. 18. Sale under islamic finance <ul><li>EXISTING SALE BUT VOID DUE TO DEFECT ( BAI FASID ) </li></ul><ul><ul><li>sale will exist but will be void due to defect because of non compliance to: </li></ul></ul><ul><ul><ul><li>Conditions of Sold goods : </li></ul></ul></ul><ul><ul><ul><ul><li>goods should be specified and quantified </li></ul></ul></ul></ul><ul><ul><ul><ul><li>seller must have title and risk </li></ul></ul></ul></ul><ul><ul><ul><li>Conditions of Price </li></ul></ul></ul><ul><ul><ul><ul><li>quantified </li></ul></ul></ul></ul><ul><ul><ul><ul><li>specific and certain </li></ul></ul></ul></ul>
  19. 19. Sale under islamic finance <ul><li>EXISTING SALE BUT VOID DUE TO DEFECT ( BAI FASID ) </li></ul><ul><ul><li>the subject matter should not be possessed by the buyer </li></ul></ul><ul><ul><li>if possessed with the consent of the seller, title or ownership will be passed to the buyer but usage of subject matter will be impermissible </li></ul></ul><ul><ul><li>Buyer must return the goods to the seller </li></ul></ul><ul><ul><li>However if the defect is rectified the sale becomes valid </li></ul></ul>
  20. 20. Sale under islamic finance <ul><li>VALID BUT DISLIKED SALE ( BAI MAKROOH ) </li></ul><ul><ul><li>sale is valid but not like due to certain conditions like: </li></ul></ul><ul><ul><ul><li>sale after Juma Azan </li></ul></ul></ul><ul><ul><ul><li>sale after hoarding </li></ul></ul></ul><ul><ul><ul><li>sale by intervention of a third party while two are negotiating </li></ul></ul></ul>
  21. 21. <ul><li>Thank you for your time. </li></ul>

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