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ISB 542CONTRACT OF SALE (AL-
BAY’)
AMIR EMME NURRAHIM BIN ABDUL RAHIM2013283428MOHAMAD NASRUL FIRDAUS BIN YUSOF2013277978NOOR AMIRA BINTI RAMLI2013694044NOOR EFFA RIZAN BINTI RUSDI2013410822
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)
Contract (Aqd)
• 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
Sale (Bay’)
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
PILLARS OF SALE
ELEMENT OF BAY’
SELLERS and
BUYERS
ITEM SOLD
PRICE CONTRACT (‘AQAD)
CONDITIONS OF PILLARS
SELLER and
BUYER
1. Capable of taking
responsibilities
2. Not prohibited from dealing with their properties
3. No coercion
Al-Nisa’: 5 & 6Al-Nisa’: 5
Al-Isra’: 26 & 27
Surah Al-Nisa’ : 29
ITEM SOLD
Must exist
Must pure (Halal) according to
Shari’ahMust have use
according to Shari’ah
Al-Israk: 27
Surah Al-Maidah: 88And 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
CONDITIONS OF PILLARS
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)
CONDITIONS OF PILLARS
CONDITIONS OF PILLARS
PRICE
Must be in known currency
Must be in absolute amount
Monetary system
Barter trade
CONTRACT (‘AQAD)
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 meetingSurah al-Nisa: 29
CONDITIONS OF PILLARS
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
Definition
Permissibility of
Bay’ Bithaman Ajil
It is permissible by Islam
Mejelle (Article 245)Reported By Bukhari
Aplplication Bay’ Bithaman Ajil in
Islamic Finance
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-NasiahOnly 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.
Issue: Whether Bay’ Bithaman Ajil OR
Riba Al- Nasiah are the same
Differences between Bay’ Bithaman Ajil and Riba al-Nasiah
2.Bay’ Al -Inah
Definition
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
Permissiblity of 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:
Tenet of Valid Bay’ Al-Inah contract based on
Shafi’i point of view
Commodity: Crude palm
oil
Cost Price: RM100,000
3.Bay’ Murabahah ( cost+profit
Definition
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)]
Illustration
Permissibility of Bay’
Murabahah
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.
Basics condition:
BAY’ AL-MUSAWAMAH(BARGAIN SALE)
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.
DEFINITION
BAY’ AL-MUSAWAMAH(BARGAIN SALE)
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”.
PERMISSIBILITY
BAY’ AL-MUSAWAMAH(BARGAIN SALE)
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
APPLICATION IN ISLAMIC FINANCE
1. Bank appoints Customer as its agent
BAY’ AL-SALAMDEFINITION
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)
Surah Al-Baqarah: 282
BAY’ AL-SALAMPERMISSIBILITY
BAY’ AL-SALAM
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
BAY’ AL-SALAM
• APPLICATION
Buyer pay agreed price today to seller
Seller delivers goods to buyer after 3 months
BUYER SELLER
Surah al-Maidah: 1O you who believe! Fulfill
(your) obligations. ...
BAY’ AL-DAYN
Sale of debt that is created under Shari’ah compliant business activities.
DEFINITION
BAY’ AL-DAYN
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)
Surah Al-Baqarah: 282O you who believe! When you contract
a debt for a fixed period, write it down...
Surah al-Maidah: 1O you who believe! Fulfill
(your) obligations.
AL-QURAN’S TRANSLATION
Al-Nisa’: 5And 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’: 6And 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’: 29O 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.
AL-QURAN’S TRANSLATION
Surah Al-Maidah: 90O 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: 3Forbidden 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).
AL-QURAN’S TRANSLATION
Surah Al-Baqarah: 275Those 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
DEFINITION
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 oilCost 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
DEFINITION
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
DEFINITION
Sale On OrderSale 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:
Definition
Permissibility
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
Residential To Be Constructed
APPLICATION IN ISLAMIC FINANCE
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 HanafiScholars There Are 17Khiyar
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)
DEFINITION 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.
b) 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.
c) 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
DEFINITION
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.
a) FOR EXAMPLE:
OPTION CAN FALLS BY NECESSITY THROUGH
I. Option Period ElapseII. The Death Of Option HolderIII. The Option Holder Is In The State Equivalent To
Death Like Insanity Or ComaIV. 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.
DEFINITION
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.
DEFINITION
KHIYARHak Pihak Berakad Sama Ada Ingin Meneruskan Akad Atau Membatalkannya Berdasarkan Sebab-Sebab Yang Diharuskan Oleh Syarak.
KHIYAR AL-MAJLISHak 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’YAHHak Bagi Pembeli Untuk Menyatakan Persetujuan Untuk Meneruskan Atau Membatalkan Jual Beli Terhadap Barang Dagangan Yang Belum Dilihatnya Semasa Kontrak.
KHIYAR AL-SYARTHak 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’YINHak Memilih Yang Diberikan Kepada Pembeli Dalam Menentukan Barang Yang Berbeza Kualiti Di Dalam Urusniaga.
KHIYAR AL-‘AYBHak 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.
PERMISSIBILITY1. It Is Permissible (Halal) According To Majority
2. Islamic Fiqh Academy Resolved That:
Bank Purchase For Rm 5m
Residential To Be Constructed
APPLICATION IN ISLAMIC FINANCE
Any Question? ^^
THANKS FOR YOU ALL
ATTENTION ^^