CONTRACT OF SALE (Al-Bay')

ISB 542
CONTRACT OF SALE (AL-BAY’)
AMIR EMME NURRAHIM BIN ABDUL RAHIM 2013283428
MOHAMAD NASRUL FIRDAUS BIN YUSOF 2013277978
NOOR AMIRA BINTI RAMLI 2013694044
NOOR EFFA RIZAN BINTI RUSDI 2013410822
D2BM2493A
Group
Group Member’s
Name

Definition of Contract Sale
Literally: to conjunct, to tie, to knot, to contract and etc.
Means: „Aqd is a contract between to parties on a particular
subject matter which is to be concluded upon offer( Ijab) and
acceptance (Qabul) of the parties.
“O you who believe! Fulfill contractual obligation”
(Al-Maidah verse 1)
• Bay‟‟ refers both to the activities of buying & selling- derived from
the term ba‟ (for arm) because one extends one‟s arm to give or to
take.
• Means: Exchanging property for property, property for money or
money for property upon mutual consent among the contracting
parties. - Al-Baqarah 175
-Al-Nisa‟ 29

Concept Buying and Selling
AL-QURAN
“But Allah has permitted trade” (2:275)
“But take witnesses whenever you make a commercial contract”
(2:282)
“But let there be among you traffic and trade by mutual good will”
(4:29),
“It is no crime for you to seek the bounty of your Lord” (2:198)
The Prophet was asked: “Which are the best forms of income
generation ?”. He replied: “A man‟s labor, and every legitimate
sale”.
Another saying is: “A sale must be by mutual consent”.
Another Hadith, He said: “The truthful and honest trader is among
the prophets, the righteous, and the martyrs”
AL-SUNNAH
PERMISSIBLE BY ISLAM

ELEMENT OF BAY’
SELLERS
and
BUYERS
ITEM
SOLD
PRICE
CONTRACT
(‘AQAD)

1. Capable of
taking
responsibilities
2. Not prohibited
from dealing with
their properties
3. No coercion
Al-Nisa’: 5 & 6
Al-Nisa’: 5
Al-Isra’: 26 &
27
Surah Al-Nisa’ : 29

ITEM
SOLD
Must exist
Must pure (Halal)
according to
Shari‟ah
Must have use
according to Shari‟ah
Al-Israk: 27
Surah Al-Maidah: 88
And eat of the things which is Allah has
provided for you, lawful and good and fear
Allah in Whom you believe.
Surah Al-Maidah: 3 &
90
Hadith (ABU DAUD &
TARMIZI) :
No (illegal) trade in goods
unless you have.

ITEM
SOLD
Must be known n
specific by address,
description or
specification
Must be capable of
being delivered &
free from
encumbrances
Must be owned by
seller
Hadith (ABU DAUD &
TARMIZI) : no (illegal)
trade in goods unless
you have.
Hadith (MUSLIM) : The Prophet
prohibite us to make any contract
that include gharar (ambiguity)

Must be in known
currency
Must be in
absolute amount
Monetary
system
Barter
trade

Offer & acceptance must be absolute and in
definite and decisive language
The acceptance
must agree with the
offer
Not be
conditional
Not be fixed to
a certain
time/limited
period
Must be in the
present/past tense
Offer & acceptance
must be made at 1 &
same meeting
Surah al-
Nisa: 29

Type Of Sale (Bay’)
5. Bay‟
Bithaman
Ajil
6. Bay‟
al-Inah
7. Bay‟
al-Murabahah
8. Bay‟ al-
Musawamah
9. Bay‟
al-salam
10. Bay‟
al-Dayn
2. Bay‟ al-Wadiah
11. Bay‟ al-Istisna‟
4. Bay‟ al-Istijrar
1. Bay‟ al-Tawarruq 3. Bay‟
al-Tawliyah

1.Bay’ Bithaman Ajil
 Bay‟ means „sale‟, Bi means „with‟, Thaman means „prices‟.
 It is refer to sale with deferred payment of the price.
 Known as Bay‟ al-Mu‟ajjal or Bay‟ al-Taqsit.
 It is valid if the period of settlement of the price is fixed without
any ambiguity or uncertainty.
.
Basis lump sum or instalment

It is permissible by Islam
Mejelle (Article 245)Reported By Bukhari
Normally be applied in the house financing and vehicle
where the purpose of financing is commonly for assets
acquisition (proses beli barang in same other way)
Ex:
“The propet (s.a.w) bought foodstuft
on credit from a jew and give him
shield in mortgage”
“A sale for a deferred payment
or payment by instalments is
good”

Bay’ Bithaman Ajil Riba al-Nasiah
Only method for payment of in a
sale and purchase transaction.
Occur when the debtor request
some time to repay the debt to
the creditor.
The price is fixed at the
conclusion of transaction that be
paid by deferred basis.
The original prices or loan is
fixed in onset.
Prices remain same if the buyer
make the full settlement:
• At the maturity date
• Before the maturity date unless
seller decide to give Ibra‟
(rebate/waiver).
Prices remain same if debtor
make the full settlement:
• At maturity date
• But will increase if debtor default
to repaying the loan at the
maturity date.
No extra charges. Extra charges (interest) for
required extra time.
Differences between Bay‟ Bithaman Ajil and Riba al-Nasiah

2.Bay’ Al -Inah
Defined as double sale involving “buy-back”.
Debtor and creditor sell and resell a assets
between them which is once for cash and once
for higher price on credit.
For example Ibn Qudama says 2

Scholar of Hanafi,
Imam Malik , Ahmad
and some of scholar
Shafi‟i School.
Sale is
forbidden
Imam Shafi‟i, Abu
Yusuf and some
scholar of Shafi‟I
School.
Sale is not
contradictory
to Shari‟ah
principles
Many Muslim jurist consider it as prohibited because it is open
door to Riba (back door Riba or Hiyalah ila Riba)
Different views of Muslim Scholar in Bay‟ Al-Inah

Debtor and creditor is
know their purpose to
do the Bay‟ Al-Inah but
there is no sign of it in
contract.
The parties are desirous of entering the
following:
1.Assets Sales
Agreement
which is Bank shall sell
Assets to the customer
that free from burden at
the Asset Sale Price
payable by customer to
the bank on deferred
term (credit)
2.Subject
Matter
which is Assets
by Bank to the
customer
according
Assets Sale
Agreement
1.Contract concluded of
Manner :
2.Contract are independently
concluded:

Commodity: Crude palm oil
Cost Price: RM100,000
3.Bay’ Murabahah ( cost+profit
Sale of commodity whereby price have addition of the
stated profit. The price is decided by seller or owner and be
agreed (mutual) by buyer.
By way of Bai Murabahah:
the sale price is RM130,000
RM100,000 + RM30,000(profit)]

It is form of sale that permissible or
acceptability by virtue of the generality of
the above Qur‟anic verses.
Allah
says in
Qur‟an:
“But Allah has
permitted
trade” (2:275)
“But let there be
among you traffic and
trade by mutual good
will” (4:29)
Seller disclose the actual price of commodities together with
profit that have been added thereon to the buyer
 ulama‟ jumhur stated the commodities that have any defective
cannot be sell according murabahah until justified it.

A sale in which the seller is not obligated to
disclose the price paid to obtain the goods.
While the seller may or may not have full knowledge of the
cost of goods being negotiated with the purchaser, the seller
is under no obligation to reveal the cost of the goods to the
purchaser as part of the negotiation process.

Permissible by virtue of the
generality of the Quran on the
permissibility of trade
Surah Al-Baqarah: 275
“But Allah has permitted
trade”.
Surah Al-Nisa’: 29
“But let there be among you
traffic and trade by mutual
goodwill”.

2. PURCHASE ORDER
4. SUPPLIES G & S
3. Settles the purchase price
6. Settle the Bank’s selling
price on installment basis
5. Sells goods on deferred
payment basis
SUPPLIER OF
GOODS/
COMMODITY
CUSTOMER
BANK
1. Bank appoints Customer as its agent

An agreement whereby payment is made immediately
while the goods are delivered at an agreed later date.
It is equivalent to an advance payment
The delivery of the goods is made in the future
while the price needs to be settled on the spot

Permissible in
Shari’ah
Narrated by Ibn Abbas that
Prophet Muhammad and the
people used to pay in advance the
price of fruits to be delivered
within 2 to 3 years. (Bukhari)

CONDITION
The buyer needs
to pay to the
seller the price in
full at the time of
executing Bay’ Al-
Salam contract
Can be affected in
those commodities
the quality and
quantity of which
can be specified
The quantity and
quality of the
commodity needs
to be specified at
the time of
executing BS
contract so as to
avoid any dispute
in the future
The date and place of
delivery must be
specified
Surah Al-A’raf:
85

• APPLICATION
Buyer pay agreed price today to seller
Seller delivers goods to buyer after 3 months
BUYER SELLER
Surah al-Maidah: 1
O you who believe! Fulfill
(your) obligations. ...

Sale of debt that is created under Shari’ah
compliant business activities.

REQUIREMENT
A debt must have been
created through a contract
of deferred payment of sale
of goods or service
The goods must have been
delivered or the service must
have been rendered
The trading of the debt must be on cash
terms in order to avoid the prohibition, on
Bay’ al-Kali bi’l-Kali (sale of debt for debt)
O you who believe! When you contract
a debt for a fixed period, write it
down...
Surah al-Maidah: 1
O you who believe! Fulfill
(your) obligations.

Al-Nisa’: 5
And give not unto the foolish your
property which Allah has made a means
of support for you , but feed and clothe
them therewith, and speak to them
words of kindness and justice.
Al-Nisa’: 6
And try orphans (as regards their
intelligence) until they reach the age
of marriage; if then you find sound
judgement in them, release their
property to them, but consume it not
wastefully, and hastily fearing that they
should grow up, and whoever amongst
guardians is rich, he should take no
wages, but if he is poor, let him have
for himself what is just and reasonable
(according to his work). And when you
release their property to them, take
witness in their presence; and Allah is
All-Sufficient in taking account.
Al-Nisa’: 29
O you who believe! Eat not up
your property among yourselves
unjustly except it be a trade
amongst you, by mutual
consent. And do not kill
yourselves (nor kill one
another). Surely, Allah is Most
Merciful to you.

Surah Al-Maidah: 90
O you who believe! Intoxicants (all kinds of
alcoholic drinks), gambling, Al-Ansab , and Al-
Azlam (arrows for seeking luck or decision) are
an abomination of Shaitan's (Satan) handiwork.
So avoid (strictly all) that (abomination) in order
that you may be successful .
Surah Al-A’raf: 85
...Verily, a clear proof (sign) from your Lord
has come unto you; so give full measure
and full weight and wrong not men in
their things, and do not mischief on the
earth after it has been set in order, that will
be better for you, if you are believers.
Surah Al-Maidah: 3
Forbidden to you (for food) are: Al-Maytatah (the dead animals - cattle-beast not
slaughtered), blood, the flesh of swine, and the meat of that which has been
slaughtered as a sacrifice for others than Allah, or has been slaughtered for idols,
etc., or on which Allah's Name has not been mentioned while slaughtering, and that
which has been killed by strangling, or by a violent blow, or by a headlong fall, or by
the goring of horns - and that which has been (partly) eaten by a wild animal - unless
you are able to slaughter it (before its death) - and that which is sacrificed
(slaughtered) on An-Nusub (stone altars). (Forbidden) also is to use arrows seeking
luck or decision, (all) that is Fisqun (disobedience of Allah and sin).

Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing
of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say:
"Trading is only like Riba (usury)," whereas Allah has permitted trading and
forbidden Riba (usury). So whosoever receives an admonition from his Lord and stops
eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but
whoever returns [toRiba (usury)], such are the dwellers of the Fire - they will abide therein.
Al-Israk:
26. And give to the kindred his due and to the Miskin (poor) and to the wayfarer. But spend
not wastefully (your wealth) in the manner of a spendthrift . [Tafsir. At-Tabari, Vol. 10, Page
158 (Verse 9: 60)].
27. Verily, spendthrifts are brothers of the Shayatin (devils), and the Shaitan (Devil - Satan)
is ever ungrateful to his Lord.

Bay’ al-Tawarruq
Buying a commodity on differed
payment and selling it to a person other
than the buyer for a lower price with
immediate payment
Imam Ahmad ibn Hanbal – Prohibited (haram)
•Imam Muhammad bin Hasan Al-Shaybani (Hanafee) –
Discourage (Makruh)
Imam ibn Taimiyyah – exceptional dealing (permitted only
in the case of necessity ( Dharurat)
•Hanbali and many other scholars permitted Al-Tawarruq
ARGUMENTS ON PROHIBITED

Bay’ al-Wadi’ah
The seller resells the goods at a discount from the
original cost at which the goods were obtained (Below
cost)
Examples :
Commodity : crude palm oil
Cost price : RM 1000
Sale price : RM 900

Bay al-Tawliyah
The resale of goods at the stated
original cost with no profit or loss to
the seller

Bay al- Istijrar
•an Arabic term that means “recurring sale” or “repeat sale”
or “supply contract”.
•An agreement between the client and the supplier, whereby
the supplier agrees to supply a particular product on an on-
going basis (weekly, monthly, etc), at an agreed price and
method of payment
•An agreement where a buyer purchases a particular product
from the seller or supplier from time to time

Sale On Order
Sale In The Way Of Ordering Which
Means:
1. Price Is Paid In Advance But
2. The Assets Are Manufactured And
Delivered At A Later Specified Time
Bay’ Istisna’
1. It Is Permissible (Halal) According To
Majority
2. Islamic Fiqh Academy Resolved That:

FIRST
• CONTRACT IS BINDING IF MEETS THE BASIC REQUIREMENT
AND CONDITIONS.
SECOND
• THE CONTRACT MUST STIPULATED THE REQUIREMENT
SPECIFICATION OF THE PRODUCT TO BE MANUFACTURED.
• TIME LIMIT SHOULD BE SPECIFIED.
THIRD
• PAYMENT MAY IN DIFFERED IN FULL BUT ACCORDING TO PRE-
DETERMINED INSTALLMENTS OR SPECIFIC DUE DATES.
FOURTH
• THE CONTRACT MAY INCLUDE PENALTY.
• Agreed By The Two Contracting Parties.
• Subject To The Case Of Force Majeure.

Bank Purchase For
Rm 5m
ResidentialTo Be
Constructed

DEFINITION OF HHIYAR
A Specific Type Of Right Of Either Or Both
Parties To The Contract To Confirm Or
Rescind The Contract
THERE ARE
VARIOUS KINDS
OF KHIYAR
According To Hanafi
Scholars There Are 17
Khiyar
According TO Shafie
jurists There Are 16
Khiyar

KHIYAR
(OPTION)
Khiyar Al-Majlis
(Session Option)
Khiyar Al-
Syart(Condition
Option)
Khiyar Al-Ayb’(Defect
Option)
Khiyar Al-
Ru’yah(Inspection
Option)
THE 4 MOST PROMINENT
KHIYAR ARE AS FOLLOW:

KHIYAR AL-MAJLIS (SESSION OPTION)
Means The Option Only Occur During
The Session Which Both Parties Have
The Right To Withdraw As Long As
They Remain In The Same Majlis.
a) Only Applies For Exchange Of Commodities Or Their Benefits.
a) Based On Imam Malik And Abu Hanifah, This Khiyar Is Invalid
Sale Is Concluded Once Offer And Acceptance Have Been
Uttered Even If Both Parties Still In The Meetings.
a) Based On Shafie And Ibn Hanbal, This Khiyar Is Valid.
The Parties Of Contract Have The Option To Rescind The
Contract As Long As They Have Not Parted From The
Session.

KHIYAR AL-SYART (CONDITION OPTION)
Both Or One Party Has The Choice
Of Either Confirming Or Canceling
The Contract During A Period Of
Time
The Seller, Or Buyer, Or Both, May Insert A Condition In The Contract
Of Sale.Giving Them An Option, Within A Fixed Period, To Cancel Or
Ratify The Sale.
THE OPTION OF CONDITION IS ALLOWED BY ALL SCHOLARS
BUT THEY DIFFER IN THE TIME ALLOWED
I. Abu Hanifa, Zufar And Shafie : Maximum 3 Days.
II. Abu Yusuf,Muhammad And Ahmad bin Hanbal : Can Exceed 3 Days.
III. May Be Short Or Long Depends On The Buyer Or Seller Agreement.

OPTION CAN FALLS BY NECESSITY THROUGH
I. Option Period Elapse
II. The Death Of Option Holder
III.The Option Holder Is In The State Equivalent
To Death Like Insanity Or Coma
IV.Object Sale Is Perishing
CANCELATION OR RATIFICATION OF THE
CONTRACT MAY BE BY VERBAL(WORD)OR
CONDUCT
I. Verbal: “I Ratify”
II. Conduct: Modify The Object

KHIYAR AL-AYB’ (DEFECT OPTION)
Is An Option That Is Caused By
The Defect In The Object Of
Sale Itself
NECESSARY CONDITION
I. The Defect Is In Existence Before The Receipt (Even If It Is After
The Aqd)
II. The Buyer Is Unaware Of The Defect When He Receives The
Commodity. If He Aware And Keeps Quite Then There Is No Khiyar.
The Seller Does Ask For Consent.
III. The Defect Is Continuous Until Just Before Withdrawal.

KHIYAR AL-RU’YAH(INSPECTION OPTION)
Is An Option That Is Caused When A
Person Buy A Piece Property Without
Seeing The Property.
I. Reason : A Buyer Want To Buy In Advance A
Commodity He Has Not Seen Before Or During The
Aqad
a) The Inspection Option Is Established When The
Buyer Inspects (Sees) The Object Of Sale, And Not
Before.

KHIYAR
Hak Pihak Berakad Sama Ada Ingin Meneruskan Akad
Atau Membatalkannya Berdasarkan Sebab-Sebab
Yang Diharuskan Oleh Syarak.
KHIYAR AL-
MAJLIS
Hak Pilihan Ketika Dalam Majlis, Hak Menentukan
Pilihan Bagi Kedua Belah Pihak Untuk Melangsungkan
Jual Beli Atau Membatalkannya Selama Mana Masih
Dalam Majlis Tersebut. Sekiranya Berpisah Maka
Hilanglah Hak Khiyar Majlis Itu.
KHIYAR AL-
RU‟YAH
Hak Bagi Pembeli Untuk Menyatakan Persetujuan
Untuk Meneruskan Atau Membatalkan Jual Beli
Terhadap Barang Dagangan Yang Belum Dilihatnya
Semasa Kontrak.
KHIYAR AL-
SYART
Hak Memilih Yang Ditetapkan Oleh Salah Satu Pihak
Yang Berakad Atau Keduanya Untuk Meneruskan Atau
Membatalkan Jual Beli Dalam Jangka Masa Yang
Ditetapkan.
KHIYAR AL-
TA‟YIN
Hak Memilih Yang Diberikan Kepada Pembeli Dalam
Menentukan Barang Yang Berbeza Kualiti Di Dalam
Urusniaga.
KHIYAR AL-„AYB
Hak Untuk Membatalkan Atau Melangsungkan Jual
Beli Bagi Kedua Belah Pihak Yang Berakad Apabila
Terdapat Suatu Kecacatan Pada Barang Dagangan.
Sedangkan Kecacatan Itu Tidak Diketahui Oleh
Pemiliknya Ketika Akad.

FIRST
• CONTRACT IS BINDING IF MEETS THE BASIC
REQUIREMENT AND CONDITIONS.
SECOND
• THE CONTRACT MUST STIPULATED THE REQUIREMENT
SPECIFICATION OF THE PRODUCT TO BE MANUFACTURED.
• TIME LIMIT SHOULD BE SPECIFIED.
THIRD
• PAYMENT MAY IN DIFFERED IN FULL BUT ACCORDING TO
PRE-DETERMINED INSTALLMENTS OR SPECIFIC DUE DATES.
FOURTH
• THE CONTRACT MAY INCLUDE PENALTY.
• Agreed By The Two Contracting Parties.
• Subject To The Case Of Force Majeure.
1. It Is Permissible (Halal) According To
Majority
2. Islamic Fiqh Academy Resolved That:

Any Question? ^^
THANKS FOR YOU
ALL ATTENTION ^^

CONTRACT OF SALE (Al-Bay')

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