View source for Fatwa on Murabahah



== Top 20 FREQUENT WORDS ==
murabaha 595
client 513
goods 513
purchase 387
finance 371
kuwait 335
contract 321
price 286
sale 245
transaction 240
shari 236
source 234
fatwa 228
islamic 219
fatwas 207
permissible 206
profit 202
credit 161
buyer 149
exporter 147



== DOCUMENT KEY POINTS ==
*this effort comes within a context of a wider plan which aims to translate the huge knoweledge wealth produced by the group earlier as a result of sustained efforts in the field of development of islamic financial and banking instruments and in a bid to introduce islamic economics and transactions to english speaking individuals and communities parallel with recent rapid expansion and development in the field of islamic banking and in conformity with the general objective of land construction and development as well as dissemination of islamic principles and values in economics business domains
*introduction praise be to allah the lord of the universe peace and prayers be upon the righteous imam our prophet and messenger mohammad peace and prayers be also upon his relatives and companions

*providing this publication to all al baraka banking group would like to thank doctor ahmed mohieddin ahmed director of research development department for compiling sorting and indexing the book s material and doctor abdul sattar abughuddah for revising the same
*this book is issued as part of the series of computerized shariah opinions fatwa program whereby the series had covered shariah opinions fatwas on murabaha mudharaba and musharaka e

*general provisions of murabaha question what are the conditions of permissibility of different modes of murabaha answer the forum which had been held during the period th thjune corresponding to dul qa dah h and based on indepth study of murabaha has reached the following conclusions scholars have got a specific concept of murabaha
*fiqh has a famous rule that the essential factor in contract is about the purposes and meanings and not words and phrases

*the modes of murabaha which are prevailing today in the islamic banks can only be accepted based on the following terms and conditions athe bank clearly stipulates in its special form the nature of the goods which the bank sells as to their kind origin and other description that must be mentioned in order not to leave in the contract any kind of vagueness and ambiguity which lead to dispute between the contractors
*it must also state the amount of benefit granted to the bank out of the value of the contract and to determine the duration of maturity and amount of installments

*the turkish refineries authority will open a documentary credit in favor of the islamic banks represented by this islamic bank which will purchase the oil from the iraqi exporter who will deliver it to the final buyer in turkey
*please specify whether we may participate in this transaction answer i do not see any objection against this transaction within the context of legitimate murabaha sale procedures that are applied in

*however the client will mortgage same to the bank until he settles down the value of the property the answer the application contains two facts a promise to purchase and selling in murabaha mode

*promise to purchase is no doubt permissible and subsequently binding the promising buyer towards the mentioned details however selling in murabaha mode is permissible and the above mentioned profit offered by the promising buyer though it is little relative to the property value is also permissible and no objection from shari ah point of view as well as the shariah board based the permissibility of the promise to purchase on opinions of jurists which are summarized as follows first promise is not binding
*application text as the applicant promised to buy the property in mode of murabaha from the bank and asked the bank to purchase the house from its current owner at value of

*the board accepts in its current fatwa and future fatwa s binding the promising buyer to purchase after the arrival of the commodity and awarded him the right of option provided that he has to pay all expenses incurred due to his promise or all costs that the bank would not have incurred if not being promised
*fourth representatives of the islamic banks discussed the subject of promise to purchase and authorized shariah boards of banks to choose between binding or non binding promise

*however albeit istisna contract is permissible in islamic law yet we draw the attention to paragraph of the form in which the bank is not allowed to agree with the owner of the land to offer it profit of of the costs because this is a sort of ambiguity in the conditions of the purchase of the house by the bank and commitment of the promising buyer to buy
*this requirement is not allowed in such an agreement because it is an increase to the amount which binds buyer and this increase is of the same kind of the debt and increases in accordance with the length of delay period in which the client has not settled the required amount hence such increment fall within the prohibited usury

*we prefer to replace the paragraph with a text in which the bank is entitled to sell the house to anyone who wishes to buy it provided that the promising buyer has to bear any differences expenses or decrease in value caused by his promise to purchase according to which the bank entered into the given transaction
*question with respect to permissibility of murabaha sales are the transactions described below permissible from a shariah point of view first an owner of a piece of land asked the bank to finance a building on it

*the bank agreed with him to construct the building provided that it gets a profit of since the value will be paid through installments within a period of five years answer this transaction did not fall within the mode of murabaha sale in which the buyer has to sell the commodity in its principal value provided that the second buyer put specified additional profit

*so the permissible method is that the bank estimates the cost and adds its profit to it then agrees with the owner of the land to build the house for a particular amount a the cost plus the profit a to be paid on delivery or pay part of it in advance and the rest on delivery or settle it down in installments to be agreed upon
*istisna contract is permissible in shariah but the bank is not allowed to agree with the owner of the land to get a profit of of the costs as this dealing involves ignorance of price

*of course the disposition of these cases by the bank and the act of purchase

*in all these cases it is imperative that the whole transaction should be free of any exploitation and grievance of any party to the other and that any of these transactions has to be restricted to the bank s clients who are trustful and reliable for the transactions to be conducted smoothly and avoids problems raised by any client who intends to fiddle around with the bank s rights
*however the transaction can be carried out according to murabaha in which the client authorizes the bank to carry out the purchase of a commodity with particular specifications provided that the client purchases the same commodity in same initial purchase price plus a certain percentage of profit to be agreed upon

*question please provide shariah opinion in case it is stipulated that assets which are the subject matter of murabaha transaction should be made known and identified answer according to shariah principles and in case of murabaha sale the original price of the good and all costs incurred by the original buyer to obtain good should be clear and known to the buyer in murabaha transaction and therefore scholars define the sale of murabaha as the sale of commodity with its current costs plus an agreed upon profit
*hence we believe that all murabaha sale information should be clarified in all sale documents placed in the file of each contract

*question please provide the shariah opinion on the dealings of the company in murabaha transactions of international goods as summarized hereunder first a client applies to al rajhi investment banking company requesting it to purchase a specific type of goods with known specifications in accordance with international announced price of these goods then the company sells same to the client purchase orderer to pay its value on a deferred specific date
*second al rajhi company carries out the purchase of such goods from an investment bank that deals with transactions of purchase and sale of these goods and pays it the specified value

*answer the board has no objection for the company to invest its money through such transaction provided that such goods should already be in the stores of the investment bank and registered under the name of al rajhi company and the bank provides the company with a certificate from its warehouse that demonstrates the presence of the goods in its warehouses and under the ownership of al rajhi on the date of the transaction
*third al rajhi company then sells such goods to the client the purchase applicant and asks the investment bank to transfer ownership of the goods to him from the ownership of the client the purchase orderer

*second kuwait finance house opens a documentary credit under its name that includes the following conditions the process of selling between kuwait finance house and the exporter is carried out on the date of receipt of the commodity by the kuwait finance house and approval of
*question please state the shariah opinion on murabaha sales in the foreign trade which take place in the following forms first the client makes a request to purchase certain goods from an exporter outside kuwait that is conditional upon the approval of the goods

*fifth the client inspects and receives the goods in the name of the kuwait finance house then informs kuwait finance house if he is satisfied and accepted the goods
*fourth when kuwait finance house receives the documents it informs and delivers them to the client against an interim promissory note to secure the rights of kuwait finance house

*however the opening of the credit is considered as a binding offer issued by the kuwait finance house that offset by the positive acceptance of the exporter through the shipment of goods in the name of kuwait finance house and then the goods
*question in execution of murabaha credits a documentary credit will be opened from the kuwait finance house for the benefit of the exporter

*the answer to the questions raised is first the fact that the exporter responded in writing to the kuwait finance house offer is considered an explicit acceptance and at conjunction of offer and acceptance sale is executed
*third the goods should not be sent or delivered to purchase pormissor unless a contract be made between him purchase promissor and kuwait finance house

*question as for goods imported based on murabaha sales fob and s f is it necessary for kuwait finance house to pay freight charges to be paid after the receipt of the goods and conclusion of sales contract answer in case of murabaha sale the agreement should either be based on a purchase price hence no any other expenses may be added or on price plus the cost specified in the contract then the agreed upon percentage of profit may be added
*however after the agreement if any expenses existed then only such new expenses after being referred to in the contract can be added without adding any further profit

*the reason for handing over the goods to the representative of the buyer before signing a contract of sale is because the buyer is abroad as well as the fear of the goods not to be damaged after being arrived to kuwait answer it is permissible just to hand over the documents to the representative of the client to complete the transaction provided that a prior written consent of the client should be issued to stipulate that the receipt of document by his representative is considered as approval and acceptance of the contract
*question credit department delivers to the representative of the client all documents needed to clear and receive the goods that were imported under murabaha credit

*question a form submitted by the department of documentary credits regarding granting some body the power of attorney to purchase and ship goods in the name of kuwait finance house and the client promised to purchase same after being shipped under the name of the bank
*the form is messrs kuwait finance house assalamu alaikum wa rahmatullah wa barakatuh please note that we have received an offer from messrs to export the following goods to kuwait according to preliminary invoice number dated and the prices listed kuwait delivery to be insured by

*we also agree to purchase same goods in mode of murabaha after being shipped to you if you agree that the margin of profit will be of the cost of the goods
*with best regards name account number telephone number answer the above mentioned form is approved and upon the reception of documents they will be considered as acceptance to the sale based on the offer issued by kuwait finance house through its agent

*question please provide us with shariah opinion in case the bank purchases cars from an official agent and then sells them to the clients under murabaha according to the following guidelines first the vendor provides the bank with an invoice of price offer in order to obtain the approval of the bank to carry out murabaha sale at the request of the client buyer
*third the seller arranges the sale contracts and promissory notes and receipt of the first installment of the car value and directly waives them to the buyer as well as to

*fourth the seller submits the documents to the bank which in turn pays the value of the invoice of the sold item and receives the promissory notes after completion of the procedures necessary to conclude the second sale contract
*seventh the maximum repayment period is thirty months and the percentage of murabaha is for the period that exceeds twenty four months

*answer first the second article of the code of jordan islamic bank for finance and investment stipulated that the sale to purchase promissor in murabaha implies that the bank executes the request for purchase after contracting and this requires that the bank shall not purchase or obliges to pay the price or actually pays the price prior to contracting with the other party which include commitment of the purchase promissor in accordance with the agreement
*this is complementary to the cost because all figh texts unanimously agreed that all contracting parties should be equally informed as regarding price and cost so that it will not be a source of conflict between them

*from accredited dealers and sells them to clients in murabaha mode along the following lines first the vendor provides the bank with an invoice stating the prices in order to obtain the approval of the bank to carry
*therefore i believe that shariah principles require that for murabaha sale to be valid and complete its requirements a contract shall be executed with the purchase orderer before the bank enters into any financial responsibility or obligation and before taking other activities

*second the bank approves the invoice after verifying that it is in conformity with the set forth requirements and conditions and returns it to the vendor

*answer according to your letter it seems that the bank purchases household furnishings or any other fittings which it agrees to their price prior to the arrangement and signing of a contract between the bank and the purchase promissor although in the case of murabaha the purchase promissor first requests to buy the currently existing goods or goods with accurately described specifications and after the bank s verification of the price and cost a contract shall be arranged with the purchase promissor embodying the commitment of the latter to purchase the items which it ordered the bank to purchase a etc
*otherwise shariah requires that first a contract be made and entered into between the bank and the purchase promissory that stipulates his commitment to buy what he requested the bank to purchase under his name

*question what are the basic points to be followed in commercial murabaha transactions by procurement from the local or foreign market answer the board affirmed the need to adhere to the recommendations of the second conference of the islamic bank held in kuwait on jumada akhar th a th h corresponding to march st rd
*if this is part of what the contract between you and the client included or it will be executed under an authorization by you then it is shariah permissible

*however the board in this stage as the bank has no yards for loading offloading and storage gave the bank permission to deliver the sold goods to the purchase orderer at the show room or the place from which the bank purchased the commodity until the bank gets its own suitable storage areas in the future
*g based on the following shariah guidelines of murabaha transactions first the promise to sell on murabha transaction to purchase orderer after the bank has purchased and possessed the commodity then sold it to the purchase orderer for an agreed upon profit provided that the islamic bank is responsible for the loss and damage before delivery and the subsequent rejection in case of unseen defects

*third the responsibility of the bank regarding the importation from abroad in connection with the purchase orderer will end as soon as the client receives the documents the goods arrives to the port and the sales contract is concluded between the bank and the client
*however due to the practical difficulties in dealing with importation in the global market in the name of the bank alone where the bank faces a c the presence of inclusive agents of the commodities a c the objections of suppliers

*the board approved the opening of credit under the name of the bank coupled with the name of the purchase orderer for two reasons maintains the stability of commercial relations between clients and suppliers abroad
*that this procedure will not affect the essence of the murabaha in terms of the bank s responsibility and the bearing of all costs burdens and risks related to the importation and consequences of rejection due to unseen defects

*hence in such case is there any need to prepare a separate purchase order a promise to purchase and a murabaha contract for each part of the goods handed over to the client answer the board has acknowledged that as long as murabaha transaction is carried out as one transaction and delivery will be in parts then a purchase order a promise to purchase and a murabaha contract are to be made provided that all goods should be delivered in whole to the client in a relatively short period
*question in local murabaha transactions the bank purchases the goods from a variety of sources from the local market and sometimes delivers the goods in parts to the client

*question in case of foreign murabaha transactions and importing of goods from abroad through the opening of a fragmented documentary credit ie the arrival of goods in phases is there any need to prepare one separate purchase order one promise to purchase and one murabaha contract for the whole transaction or all these documents are to be issued for each arrived batch of goods answer the board in this case approved issuance of one purchase order and one promise to purchase document for the transaction however an independent murabaha contract shall be concluded for each arrived batch of goods
*source fatwas of shari ah board of qatar islamic bank fatwa no

*question a question about the procedures followed by the bank in the event of the arrival of the goods prior to the arrival of the documents answer the board has approved the procedures currently followed in such casesdeliver the goods to the client until the arrival of the documents and calculates the value in a murabaha contract in accordance with the currency exchange rate at the date of deduction of the goods value against us by the correspondent bank
*question is it permissible for the bank to open a documentary credit under a murabaha transaction according to a price quotation issued under the name of the purchase orderer

*question some documents which are to be collected under the name of the bank arrived to a client who has not signed the documents of the order and promise to purchase would it be considered murabaha or not if not what are the required procedures so as to consider it a shariah acceptable murabaha transaction
*answer the board opines that it shall be better whenever possible for the quotation to be under the name of the bank but it is not a condition for the completion of murabaha

*question is it permissible to complete the implementation of the promise to purchase and complete the sale of murabaha for goods imported from abroad pursuant to a documentary credit which did not show the name of the islamic bank as a buyer while the bill of lading is in the name of the bank
*answer it is not permissible to consider goods whose documents at the request of the client have been sent to the bank for collection as a murabaha transaction unless imposed murabaha steps be completed prior to the shipment of the goods and sending of documents

*answer we are of the opinion that in order to avoid recurrence of such cases the documentary credit should essentially be opened in the name of the bank and should not show the name of the client
*however in this case the board has approved submission of other invoices in the name of the bank even if the invoices have been received by the telex then this telex invoice should cancel the previous first invoice

*question is it permissible to execute the murabaha transaction if the goods arrived prior to the arrival of the documents and the bank was forced to allow the client to clear the goods through the issuance of customs clearance permit and hence received the documents with a violationinvoices are issued in the name of the client also is it permissible to execute the murabaha transaction in case the documents arrived before or at the arrival of the goods while the invoices are issued in the name of the client
*answer the board opines that it is not permissible to make any collection of installments before the arrival and delivery of the goods to the client

*answer the board opined that the receipt of invoices in the name of the bank is one of the main pillars of the process of murabaha as these invoices are the basic and only documents that prove the ownership and possession of the goods by the bank hence it has been decided that for the second case concerning the arrival of the documents before or at the goods arrival while the invoices have been issued in the name of the client the documents should be rejected and the goods shall not be delivered to the client unless the bank gets new invoices issued in the name of the bank either by mail or by telex
*as for the first case ie the arrival of the goods prior to the arrival of the documents and the bank being forced to allow the client to clear the goods by the issuance of authorized customs clearance permit and the reception of documents with a violation ie issue of the invoices in the name of the client in order to issue the clearance permit for the client to release the goods the board set forth the following conditions

*fourth if the beneficiary did not notify the bank and the client requested the issuance of the release permit a telex shall be sent to the beneficiary requesting him to provide the bank with the details of the invoice as regarding its amount and its issuance in the name of the bank
*however the release permit should not be issued unless the beneficiary confirms that the invoice has been issued in the name of the bank except if the non issuance of such permit will surely cause damage

*notice the general manager had commented that there are some cases which can not be delayed and the client can not wait until the correspondent bank replies the telex of the bank particularly if the client submitted his application on wednesday or thursday as friday is a holiday for us while saturday and sunday are holidays abroad which in turn delays the delivery of the goods to the client
*the board opined that in principle invoice shall be issued in the name of the bank but if they have been issued in the name of the client then it is considered an exceptional case that can not be taken as a reference

*period of payment and grace period for the unseen defect upon defining the ceiling for the client which must not be exceeded in murabaha transaction without taking into consideration the nature of the commodity which is the subject matter of the contract and the velocity of its circulation for each murabaha transaction answer the board sees that it is permissible besides the possibility of adding any other conditions at the time
*question in accordance with the minutes of its meeting no the board has stipulated that it is a condition that foreign investment transactions shall be based on actual dealings of purchase and selling besides the delivery of shipping and storage documents

*what is meant by this separating period of time is it in hours days please specify considering that delivery is made according to storage documents which are considered documents for the bearer ie the person who hold these documents is considered the owner of the commodity answer the separating period of time between the action of purchase and selling might be a matter of hours
*question the bank issues shipping guarantess and clearance permits clearance of goods under murabaha transactions in a manner which implies that the client has opened the credit in his name at the bank while the credit is actually opened in the name of the

*does this contradict or violate shariah controls of murabaha sale transaction answer it is not permissible for the client to open the credit in murabaha sale but the bank shall open the credit in its name and the goods should arrive in the name of the bank which in turn endorses all relevant documents after concluding the sale contract
*bank and the bank justified this so as to enable the client receives the goods by himself

*question is it permissible to include both purchase order and promise to purchase documents in one form so that conditions of purchase order are included in one page and the conditions of promise to purchase on the other page in accordance with the attached proposed form in a bid to simplify procedures reducing forms and save expenses answer it is permissible in view of simplifying the procedures and redcing the number of for miss source fatwas of the shari ah board of qatar islamic bank fatwa no
*source fatwas of the shari ah board of qatar islamic bank fatwa no

*question what are the required controls and procedures that show the main role of the bank in murabaha transaction answer first in application of murabaha sales to a customer ordering purchase the banks shall abide by controls which reflect the role of the bank in the transaction and avoids putting all its burden on the purchase orderer such controls include the bank undertakes to purchase the commodity by itself or through an authorized agent other than the purchase orderer the bank has to pay directly to the seller without mediation of the purchase orderer
*the bank should receive the commodity under its guarantee

*therefore the committee confirms the second recommendation of the resolution no d issued by jeddah islamic figh academy which reads islamic banks should qualify their officials and employees and provide them with experts well acquainted with the nature of islamic banking as well as provide them with the suitable training programme in cooperation with the islamic institute of research and training and all other bodies in connection with islamic banking training
*second to observe such controls it is essential to pay much attention and care to those who undertake and apply murabaha transactions

*as they also cited suspicions about the permissibility of murabaha sale to the purchase orderer such suspicions are first this contract includes the selling of an item which is not possessed by the seller
*second postponement of both exchanged ite miss third it is the sale of money dirham against money dirham while the sold item is differed or it is a kind of tawaroq transaction

*it reads as follows the conference decided that promising in murabaha sale to the purchase orderer after possession if any of the purchased commodity by the bank to the purchase orderer at the profit rate mentioned in the previous promise is permissible as long as the islamic bank bears and held responsible for the damages incurred before delivery besides the responsibility of rejection if any
*answer sale of murabaha which is known in islamic figh is permissible and agreed upon unanimously whether it is in cash or in credit and this usurious suspicion raised on murabaha sale in credit is not true whether for this kind of sale or in deferred sale

*however as for the suspicions raised against the sale of the murabaha to purchase orderer we reply as follows first this contract does not involve the sale of un possessed items by the seller because the contract of sale entered into with the buyer is only concluded after the actual possession and ownership as well as suspicion of prohibition to sell what is not possessed by the seller is not agreed on
*second suspicion concerning the deferment of the two exchanged items is rejected because ownership of the goods which is one of the two exchanged items is fulfilled in terms of on the spot price or deferred price

*third the usurious exchange in case of the loan takes place by exchanging an item for a similar item for example the usurer gives the debtor hundred riyals in credit and then recovers them as hundred and ten riyal while in the case of sale such as in the case of deferred credit murabaha the exchange takes place for two different things ie the sold commodity and the price money
*hence how it comes to compare and measure the dealing in murabaha with riba process particularly that despite the fixing of profit in murabaha this determination of profit implies either to miss the profit for the benefit of the purchase orderer when the market price soars or incur loss upon the occurrence of the contrary

*the exporter shipped the goods in the name of the client purchase orderer and not in the name of kuwaiti finance house
*source dallah albaraka group resolutions recommendations of albaraka symposia on the islamic economy al barakah first symposium fatwa no

*answer it is not permissible since goods must be in the name of the kuwait finance house otherwise the whole transaction will become a mere financing transaction which is wrong this error can be corrected by canceling all issued contracts or procedures entered between the client and the exporter
*question to what extent does the bank accept the execution of new murabaha transaction for a local client who previously filed a request for the implementation of local murabaha transaction

*question what are the necessary controls and procedures to show the basic role of the bank in murabaha operations answer first it is necessary that the bank when applying murabaha sales to a purchase orderer abides by the controls that mark the main role of the bank in the transaction and avoids putting
*where it was discovered that the goods which are the subject matter of murabaha do not exist then he submitted other price quotation from another person answer the board opines that this matter is related to the management and its keenness to deal with entrusted clients

*therefore the committee confirmed the second recommendation of the resolution no d issued by jeddah islamic figh academy which reads islamic banks should qualify their officials and employees and provide them with experts well

*acquainted with the nature of islamic banking as well as provide them with the suitable training programme in cooperation with the islamic institute of research and training and all other bodies in connection with islamic banking training
*source dallah al baraka group development and research department resolutions and recommendations of al baraka symposia on islamic economy th symposia fatwa no

*a timing of murabaha contract question please provide us with shariah opinion for the attached form appendix of sale contract for the purchase orderer particularly with respect to the following is it permissible to set a period of time for the murabaha sale contract made with the purchase orderer the client whereby a ceiling is set for provisions through this ceiling provisions the client may conclude several transactions with the bank against sufficient guarantees
*the first party has the right to amend all its applied transactions conditions murabaha ratios commissions the currency difference mailing feesa etc

*it may only notify the second and or third party of any change made to those conditions answer regarding clarification on amendments made by the board of directors to the terms of murabaha contract concerning setting time for a murabaha contract it seems to me that this contract is a partnership on a trading matter in accordance with an agreement between the two parties
*nevertheless the permissibility of timing of partnership has been confirmed in fatawa al khaniyah as well as it has been mentioned in maajam al hanablah that it is permissible to set a time for mudharabah while it is prohibited by others

*in view of the above mentioned facts i opine that timing of murabaha contract is permissible as agreed by the two parties if the bank s interest necessitates so
*source jordan islamic bank for finance and investment book of fatwas parts fatwa no

*having noticed that the major part of the activities of many islamic banks was geared to

*the practical aspects of murabha on purchase orderer to be studied by islamic banks with the aim of working out the basis for safeguarding against any pitfall in the process of application and to help observing general shariah rules as well as those governing operations of murabha for orderer of purchase
*financing operations of murabaha on the purchase orders it is recommended that the activities of the islamic banks shall be extended to cover all the development mechanism of the economy particularly by sponsoring industrial and commercial projects through individual initiatives or equity participation or mudharabah with other partners

*a amending the articles of murabaha contracts question provide shariah opinion regarding the attached form appendix of a contract of sale for the orderer of purchase especially with regard to the following issue is it permissible for the bank to apply the attached form which states the bank s right to unilaterally apply any modifications or changes to the current terms and conditions of transaction such as murabaha rating commissions differences in currency mail fees a etc
*without recourse to the client the other party to the contract and informing the client only the proposed amendment first article no

*regarding the shariah opinion for the stated subject as per the attached form this matter is in connection with the profit of the transaction and scholars unanimously agree on the necessity of defining and specifying the capital and the determination of the profit at contracting besides the seller and buyer should be equally informed to avoid conflict as can be drawn from the fiqh books such as al moghani ibn godamah and rad al muhtar and other great figh books
*thus if it is meant to change those rates in the future contracts and the purchase orderer agrees to them then no objection for that yet if it is intended to amend the contracts that have been previously made as well as to change what had been willingly and mutually agreed upon then this is not permissible

*because the contract has lost the element of mutual consent which is a condition for the validity of the contract
*source jordan islamic bank for finance and investment book of fatwas parts an fatwa no

*the client demands kuwait finance house to buy the foreign currency from it when the kuwait finance house pays the price of goods to the seller when the foreign exchange rate is suitable to the kuwait finance house compared to the market rates at that time
*is it permissible for kuwait finance house to carry out such a transaction from shari ah perspective answer if the goods sale contract is independent from the currency purchase agreement with the client and both contracts are entirely independent then there would be no objection from shari ah point of view

*question in the event that the international murabaha transaction is bound by kuwaiti dinar the investment department would demand approval and acknowledgement letters from the agent and the buyer stating that the transaction shall be registered in the dinar currency at the rate prevailing on the day of purchase from the exporter
*is this permissible answer it is permissible to conduct murabaha transaction in dollar and then convert the dollar to dinar at the exchange rate of the dollar or others prevailing on the day of purchase from the exporter

*question in the event of restricting the international murabaha transaction to be executed in kuwaiti dinar the investment department would demand approval and acknowledgement letters from the agent and the buyer stating that the transaction shall be registered in dinar at the rate prevailing on the day of purchase from the exporter
*is this permissible answer from shari ah perspective no objection to conduct murabaha transaction in dollar and then convert the dollar to the dinar at the exchange rate of the dollar and other currencies prevailing on the day of purchase from the exporter

*this client demands the finance house to buy the foreign currency from it upon payment of the goods value by kuwait finance house to the seller
*is it permissible for kuwait finance house to exercise such practice answer if the goods sale contract is independent from the currency purchase agreement with the client and if both contracts are

*entirely independent then there would be no objection from the shari ah point of view thereon
*source kuwait finance house book of fatwas in economic issues part and fatwa no

*inclusion of bank employees costs question in case of selling goods based on murabaha method do we add on the goods cost all expenses spent on it including employees salaries involved in the goods importation e
*with regard to customs clearing agents if they happen to be from outside kuwait finance house staff then whatsoever is paid to them shall be added to the price

*basis of charging selling price to the client question what is the shari ah opinion on the method of calculating the selling price in murabaha sales answer the fundamental principle in murabaha sale is strict observance of honesty

*the question is if the credit conditions stipulate an advance payment to the exporter wherein the goods would arrive about months later and the remaining amount has to be paid upon goods arrival would it be appropriate for the finance house to consider this period of time while calculating the profit rate illustrative example on buying goods by way of murabaha for an amount of dinars for instance and the client asked payment to be effected a year later profit calculation would be as follows
*question please advice shariah opinion on following transaction with regard to murabaha credits kuwait finance house calculates goods costs on the payment day and adds up a certain rate as a profit margin for the bank from sale transaction to the client

*is this method of calculation permissible or not lastly i wish to be allowed to attend the discussion of this enquiry in order to respond to any details that you may raise in this connection

*clerks auditors customs clearing agents answer the customary expenses which increase the goods value and are directly connected to it should be added to price of goods sold on murabaha
*customs clearance cost question in case of selling goods based on murabaha method do we add on the goods cost all expenses spent on it including employees salaries who were involved in the goods importation e

*is there any objection from the shari ah perspective in granting such a bonus to the distributor by the agent bearing in mind that we in fact who were the original buyers from the agent is it also permissible from the shari ah view point to request the agent to grant us such bonus and preserve our option to either grant it to the distributor or keep it for ourselves
*adding bonus amount payable to distributors question commercial deals activities within the local murabaha management in the trade sector is offering services of electric appliances distributors

*are we allowed in such a case to increase the profit in a manner which would cover the period extending from time of paying the amount to the exporter and the contracting party with the purchase orderer answer identifying the profit in the contract is to be arranged by mutual agreement between the seller and the buyer
*addition of profit in return for advance payment to the exporter question a client has approached us and promised to buy some goods

*with the foregoing in mind may the finance house pay value of the additions to the contractor and sell them to the client taking into
*adding additional cost value in murabaha transactions that include services question we have executed a murabaha transaction with one of our clients

*client benefiting from commissions given to the bank in connection with murabaha credit question may we share with our correspondent banks in whatever commission that they may get from exporters in their countries generated from opening our documentary credits known as circulation of shipping documents commission also is the collected amount is considered to be the finance house right or should it be returned to the client account lodged at the finance house irrespective of being for cash credit or murabaha answer the client should be notified that you would be earning commission from the foreign bank which would be accounted for you
*with regard to murabaha credits if this is understood that it would be granted then it should be deducted from the principal amount as per murabaha provisions

*dropping compensation amount paid by insurance company from commodities value question in cases where value of the damaged commodities is minimal dinars would it be necessary to drop an amount proportionate to the damage value from the price or is it enough to pay to the purchase promisor the compensation amount received from the insurance company answer if the method is based on murabaha it is necessary to drop the minimal amount of the damaged commodities value from the price because murabaha sale is based on honesty
*if however the sale is not based on absolute honesty sale mode the sale shall be effected according to the mutual agreement of the two parties

*the president has raised the following question what is the relationship between the exporter and the finance house answer kuwait finance house shall bear the demurrage charges which were entitled before concluding its contract with the promising buyer prior to enabling the buyer to receive the commodities
*adding demurrage charges to commodity cost question in a murabaha operation demurrage charges have been paid on goods imported from italy and arrived at kuwait port

*purchase orderer benefiting from discount granted to the bank question may a client buying a car benefit from a discount granted to the finance house after having concluded a murabaha deal with him answer whereas the sale has been performed on a murabaha method as stated by the official in charge of the operation the cost is of essence
*the discounted price shall be considered to be the base price

*is this discount considered to be our privilege or is it a right of the client to whom we sold the goods answer if the sale deal was completed on murabaha basis any discount on the buying price whether preceeding or following shall be the client s right

*the answer is the insurance is included in the cost but the insurance amount shall not be subject to the profit rate in murabaha
*charging against insurance question please advise whether or not we may include insurance charges in murabaha cost

*charging distribution agent commission question is it allowed to pay a commission value to the purchase promisor in cash and then add up its value on the commodities price or should we deduct its value from the total commodities price and charge him for the net only and then calculate the profit value on the net
*it should be noticed that some clients insist on payment of commission in cash because it is related to agency activities and not connected to trading in commodities

*this means that it is a payment agent authorized to pay on behalf of the exporter the funds entitled on the exporter for the commercial agent who is also the purchase promisor
*in this instance the finance house when paying the commission to the commercial agent has a separate capacity different from the promising and murabaha operation

*goods not possessed or received question please provide the shariah opinion towards the following offer submitted to the bank this is in respect to financing the purchase of video cassettes of national model and also air conditioning units to be sold on murabaha

*this is because a murabaha sale means to sell out a commodity that you possess by a price that you have paid added to it a profit margin agreed upon by the party interested in buying it on murabaha method

*what is the shariah opinion in paying such a difference by the client bearing in mind that promising buyer s obligation to pay the disputed difference amount between the property owner and the finance house is a verbal agreement between the promising buyer and the owner
*is the third party eligible to pay the difference to the seller as a grant hibah from him in order to facilitate the contract signing process and so that the third party may earn some benefit by way of buying from the purchaser

*answer contracting between kuwait finance house and the owner as in this case is not permissible because the owner is selling something which has gone out of his possession and became the promising buyer possesion which is non permissible because the owner would appear as a principal
*in case the finance house happens to know about this issue it should refrain from entering into a contract with the property owner due to the fact that it would be contracting with a party who does not possess the property

*answer it is a prerequisite for the bank to possess the goods even if it is a constructive possession
*source shari ah board fatwas islamic bank of western sudan fatwa no

*goods not allowed for importation except for the purchase orderer question is it permissible to import goods for the purpose of selling it on murabaha although it is not allowed for importation except for the promising buyer based on a special approval from the government authorities e
*medicine approved by the ministry of health and factory equipment to be approved by the ministry of commerce and industry answer it is permissible to import goods to be sold on murabaha even if its importation is restricted only for promising buyers by virtue of securing a license from specific authorities

*the reverend sheikh bader has some reservations on this issue and he conceives that refrain is relatively beneficial so as to evade putting shareholders money at risk
*source kuwait finance house book of fatwas on economic issues part and fatwa no

*what is the correct action for handling this issue in case of partial damage total damage partial loss or total loss answer if it is proofed that the goods has some defect whether partial or total loss the client may approach the finance house and claim compensation equivalent to this loss
*when kuwait finance house bought the goods by way of opening murabaha credit it has been noticed that the goods sustain some damages and that the insurance company would arrange for compensation duly

*for the year i would like to advise you that the bank was not exposed to any loss in the joint investment operations for the year except for a loss of dinars due to the following first an agreement has been reached with one of the clients whereby the bank would buy sanitary ware and sell them on
*this means that the client has the choice of either claiming equivalent value of the defect damage or return the entire goods or accept as a whole

*fourth at the client s request the bank insured the goods against consignment loss rather than total insurance as the installments of total insurance is relatively higher on such type of goods
*the client has signed a document assuming any liability related to loss of goods resulting from lack of total insurance thereon as such type of goods are loaded in containers and the exposure to damage is unlikely

*following the negotiations with the client and in light of his signed commitment it has been agreed to settle the case whereby the bank would pay of the loss while the client would incur the remaining
*fifth upon transport of goods from aqaba port to amman city the truck loaded with the goods has overturned thereby causing some breakage damages to the goods

*in light of the foregoing and whereas the loss has resulted due to force majeure without any transgression or negligence and prior to consigning the goods to the client the loss has been entered on the joint investment revenues account for the year
*answer it is apparent that according to the agreement between you and the client whereby the goods should be delivered at amman and that during the goods transport from alaqaba port to amman the truck has overturned causing break damages there to

*whereas the damage has occurred before consigning the goods to the client the guarantee in this instance will be on the seller s part bank
*the board of directors enjoys powers including the following ratification of settlements reconciliations and acceptance of arbitration in cases approved by the bank management

*question in case some of the goods imported for the client the purchase orderer being damaged who is responsible the bank or the client considering that the damage has occurred after the goods were transported from the port to the bank s stores
*answer if the goods imported for the client were damaged after having been transported to the bank stores the bank shall be liable for the damage

*answer shariah board conceives that the client owns both companies in the first one he is the owner while the in second he is a partner
*question a client has requested the bank to conclude with it a murabaha sale contract in order to buy sesame franchise from a company in which he is a partner in favour of a company that he owns

*the fact that the goods has been stored in favour of the company does not justify its permissibility becasuse it could not been possesed by the bank

*the goods and thereafter offer it to the client who has the choice between buying it on the designated profit or rejecting it altogether
*furthermore this particular contract consists of several dubieties for which reason we advice not to be pursued or approved

*is it appropriate for the bank to sell to one of the partners a portion of the company funds on credit murabaha answer it is permissible for one of the partners to buy part of the company funds on murabaha whether on credit or immediate price
*however if he buys on credit he may not sell to the company what he has bought from it to evade aynah sale

*it should be noticed that the share of the partner hasan represents a part of the company assets composed of goods machineries equipment establishment expenses and debtors etc would you explain the shariah opinion on the request made by the partner zaid urging the bank to buy the share of the partner hasan in the same company to be sold to the partner zaid on murabaha at
*case clarification we have been approached by one of the partners whose name is say zaid in a limited company formed of two other persons namely hasan ali in addition to zaid

*an agreed profit rate provided that the share value along with the bank profit should be settled within years answer if the company is a limited company composed of persons and its assets are formed of goods machineries equipment establishment expenses and debts it appears to me to be as follows first the question stated that company is indebted and its debts were not specified
*second it is possible to identify the company s assets and estimate whether it is in loss or profit so as to eliminate the ignorance gharar element which is likely to undermine the contract

*question kindly explain the shari ah permissibility as to whether or not it is for the islamic bank to sell a share in a partnership in which it entered with one of the clients using murabaha method
*for all these remarks it appears to me that the shari ah opinion requires that this proceeding should be stopped

*source fatwas of the shari ah board of qatar islamic bank fatwa no
*according to right of preemption otherwise it may be sold to others

*this procedure used to be and still is customary amongst businessmen where it is conducted on the warrant of whoever party would deal

*therefore if situations similar to the aforementioned occur defects shortage in quantity or any irregularity affecting the value the bank would be in a position to claim its entitlements from either of the two parties exporter or client who has signed a warrant of exporter for proper performance

*the guarantee represents the risk that the bank ought to undergo which is the basis for the sale contract execution and the consequential loss or profit
*the client stated that he knows it well and he has had previous dealings with it and that he was prepared to accept liability towards any damages resulting from violations of such goods imported from that exporter in respect to the required specifications

*the client would then request to procure from this exporter and furnish the bank with a guarantee for the goods imported from that exporter
*the client stated that he knows it well and he has had previous dealings with it and that he was prepared to accept liability towards any damages resulting

*does this process conform to the shariah answer if the purchase orderer stipulated to bear and accept liabilities of imported goods violation to the required specifications the board opines that it is shariah permissible as it relieves the bank of the defects condition
*there is no objection to this from shariah perspective as it is supported by statements of islamic scholars

*the dealer wants the bank to buy the vehicles from the seller whom he has designated on condition that he would guarantee for the bank that the vehicles are free of any defects
*what is the shari ah opinion in completing this sale as described answer in order to ensure a shariah permissible sale on murabaha the bank is obliged to guarantee that the goods are defect free

*as the proceedings listed in the question relieve the bank of all guarantees collectively the transaction is therefore not based on murabaha method
*the bank may instead execute the process on a different basis such as partnership musharaka modaraba transactions or by opening documentary credit if deemed appropriate

*what would be the status of goods for which forged documents were presented would the kuwait finance house be held responsible bearing in mind that the client has admitted liabilities related to behaviour of the exporter and warranted the exporter appropriate execution of the operation answer if a warrant has been issued by the purchase promissor to the effect that he would guarantee whatsoever shortcoming may occur from the exporter in fulfilling his obligations such a warrant would be in conformity with the shariah which is considered as darak guarantee
*but he shall not be obligated by the purchase contract for which he promised because the subject contract has been either nullified or defective

*the question is what is the shari ah opinion in accepting such a warrant and an undertaking from the promising buyer
*he may even write an undertaking and a declaration by which he would guarantee the exporter in terms of quality and specifications of goods

*however upon sale contract signing the promising party may present an undertaking not to inspect the goods and that he would be the sole responsible party for any defect that might appear on the goods
*answer the goods prior to contract signing is considered to be the property of kuwait finance house which is free to dispense it in any fashion

*question what is the shari ah opinion on the following statement we hereby confirm and guarantee that we may request kuwait finance house to sell us goods on murabaha after it buys the goods for itself from exporters nominated by us abroad
*kuwait and in a good acceptable condition in terms of health considerations answer this is permissible from the shari ah point of view because the warrant is considered as a donation contract tabaru

*we undertake to pay any compensation in favour of kuwait finance house against any damages caused by the aforementioned exporters on the first request made by kuwait finance house irrespective of the guaranteed party discretion
*answer this declaration is known by hanafi school as darak guarantee meaning guarantee for consequences and commitments that might occur in the future upon dealing with an individual

*may we accept the client s undertaking to be liable for the damage caused by such an initiative particularly when the client is trustworthy financially sound and credit worthy as a matter of fact there are two types of insurance

*second type this type of insurance covers risks of non complete delivery of a packaging unit as described in the shipping document due to misplacement for reasons unknown and unrecognized to the shipper

*question the following is a sample form presented by the documentary credit department relevant to authorizing a person to procure goods in the name of kuwait finance house to be shipped also in the kuwait finance house name
*the promising buyer may not be held liable unless he himself offers to accept part of the liabilities

*dear sirs please be advised that we received an offer from messrs a a a in order to export the following goods to kuwait according to the pro forma invoice no
*the goods will be delivered in kuwait and would be insured bya a a a bearing in mind that the shipment will be effected by a a a a

*when the client was asked to pay compensation against the declaration and guarantee signed by him as a guarantor of the exporter the client has had some reservations on how he would be liable for paying compensation at a time when we have sent him a letter stating receiving of goods

*when the goods arrived at doha port we dispatched an employee accompanied by the promising buyer for the purpose of goods inspection and delivery to the client
*since this practice of the buyer may cause liability to the bank for an indefinite time which may extend for along time may we accept

*an undertaking signed by the client in favour of the bank relieving the bank of any unseen defect liability it is noteworthy that the bank is prepared to assume responsibility of the unseen defects if the goods were inspected upon receipt delivery of the boxes answer the unseen defects may not appear except after a prolonged duration and the goods may sustain damages due to storage
*the concerned parties may agree upon a specific period of time after which the bank would be set free of any defect responsibilities that may crop up later

*is such murabaha transaction permissible when the buyer waives his right of rejecting the goods sustaining unseen defects answer concerning your enquiry about selling cars to a client on condition of seller s non responsibility towards unseen defects such an issue
*on these grounds the bank deals in new goods in order to minimize the defects arising from the old and used goods

*the islamic scholars have disagreed among arguments first according to al shafie in the most likely statement and the narration of ahmed the condition and contract are correct
*the seller is rendered free of any defect existing at the time of contract irrespective of whether he knew about it or not

*these are four arguments but in my opinion the most likely one is the first statement which says that both the contract and condition are correct and that the seller is relieved of any defect liability existing at the time of contract of which he was not aware of
*it has been narrated that abdullah bin omar has sold to zaid bin thabit a slave on condition of being relieved of any shortcomings for an amount of dirham

*based on the foregoing the bank in this instance is entitled to set up for itself a condition whereby it would be relieved of any defect liability particularly those of which it is not aware and the buyer on the other hand knows more about it because he is the one who requested the bank to buy the cars for him
*asked ibn omar do you swear by allah that you have no knowledge of this shortcoming he responded no

*a murabaha in shares question what is the shariah opinion with regard to the following a government authority offered to sell to al rajhi banking investment company some shares owned by the government in an electric company or any other company provided that al rajhi company pays in cash the value of the shares to the government
*answer there isn t any objection based on shari ah perspective against this transaction but if the company decided to sell these shares to the government while their price had not changed by increase or decrease during the period in which the company owned these shares and no time has elapsed to rule out fraud concerning the seriousness of sale then al rajhi should not sell them at a price

*because if the shares sold at a price more than the price of purchasing then such transaction will be the reverse of al einah sale transaction in which case scholars here pointed out that in accordance with prophet s sayings the reverse of ayna and ayna sale are standing on same footing regarding prohibition
*question please provide shari ah opinion on the following question a customer approached the company to purchase some shares and requested the company to purchase the shares and then sells them to him on credit

*answer the company is entitled to purchase shares of companies which their circulation by selling or buying is permissible if regulations of al rajhi company permit the transaction
*however after actual possession of such shares by the company then it is permissible to resell them to any body in cash or installment basis

*doubtful prohibited commodities question what is the shariah opinion regarding opening of credits to import cigarettes and khat plant answer business transactions on cigarettes are based on shari ah opinions concerning cigarettes themselves
*also the fundamental righteous stand is avoiding the abhorrence unless its avoidance would result into loss of interests which are more important than the subject matter itself as shown

*thus an achievement whereby the company transforms its activities to a non usury function is a cause outweighing avoidance of abhorred practice particularly with regard to the aforementioned restriction related to nonfinancing the credit facility in addition to the difference over the subject matter essence
*ie a company which was interested to open a self credit facility at the bank to import cigarettes without financing has other activities and it wanted to shift such activities to the bank if mutual dealing in this field was feasible

*as such in reply to the question there would be no objection in opening a self credit facility to import cigarettes without importing khat plant it is advisable to refrain from such dealing
*however there is no objection in opening an account on demand for the gat company because it is a general service not confined to dealing in gat

*however the seller is entitled to withhold the commodity if its price is immediate but if the payment is on credit the seller should not withhold the price as he agreed to delay the price but he may mortgage the commodity on fiduciary basis a matter that should be stipulated in the contract until he is repaid the full amount to secure the bank s right as the fiduciary mortgage does not prohibit the owner to dispose of his property until the price is recovered thereby preserving the bank s right
*hypothecation of commodity sold in murabaha mode question is it permissible for the islamic bank to involve a commodity sold on murabaha as a guarantee answer contract is always binding to the contracted parties

*damages resulting from delay of goods delivery question you are aware that murabaha transactions which require an opening of a documentary credit are settled after the goods arrival to doha port as the client is required to come forward to receive the goods

*stipulates the buyer undertaking to receive the goods upon arrival and hence would be held liable for delayed delivery and the consequential damages
*is this practice in conformity with shari ah answer the board opines that para no

*delay in payment of goods price to the first seller question a client of the bank desires to buy ready made building materials through opening of a documentary credit is it permissible for this client the purchase orderer and also the consultant authorized by the bank to receive the goods in a good condition before the bank pays the goods value to the seller answer it is permissible to defer payment of goods price to the first buyer until the last buyer receives the goods and acknowledges that he received it in a good condition provided that the first sale contract is concluded
*source fatwas of the shari ah board of qatar islamic bank fatwa no

*the concept is that the client is in need of the company as above described since it possesses the assets and the liquidity necessary to develop the assets
*establishment and selling of a company on murabaha basis question a customer offered to al rajhi company to establish a company to buy a number of oil fields and equipment for an amount of million dollars

*is it permissible for the asset owner after having known the estimated value of the property to sell it to some other party for an advanced price lower than the value estimated by the committee considering that it is probable that the objection committee may opt to change the estimated price a upwards or downwardsand its decision would be final and binding to both parties answer government s expropriation of an asset for public interest is considered from shariah view a compulsory sale which is
*the owner reserves his right to object over such estimations to the appeal committee and the government property department also has the right to object

*therefore the asset owner is not entitled thereafter to sell his property to another party but if this sale was conducted by the original owner before the expropriation decision it would have been considered shariah acceptable because the original owner has disposed of his own property

*can this be considered as murabaha or not if the answer is negative what are the required procedures to consider the transaction as murabaha and hence be permissible according to shari ah answer goods whose documents are sent to a bank for collection upon request of a client is not considered as murabaha transaction unless murabaha requirements are fulfilled before shipment and dispatch of documents
*deals contracted prior to murabaha contract between the client and the bank question documents under collection under the bank s name were received which are related to a client without signing an application and purchase promise

*the question is who bears payment of such demurrage fine the buyer or the kuwait finance house answer if default was caused by the seller ie the kuwait finance house then it shall pay the fine but if it was from the buyer then the later shall be liable for the fine
*in some cases the goods would be subject to demurrage charges payable to the customs authority as a fine for delay in receiving the goods

*the president has raised the following question what is the relationship between the exporter and the kuwait finance house answer the kuwait finance house shall bear the demurrage charges which were due before concluding the contract between it and the promising buyer and prior to enabling the later to receive the goods even if it was known later after the contract signing and enabling
*question in murabaha transaction demurrage charges have been paid for goods imported from italy and arrived at kuwait port

*according to the shari ah the contract relationship obligation and effects should be maintained between the kuwait finance house and the exporter and not between the exporter and the promising buyer
*question is it permissible to consider storage charges of goods imported on murabaha basis as part of the cost answer yes it is permissible to consider storage charges of goods imported on murabaha basis as part of the cost

*answer it is permissible to complete this transaction pursuant to salam sale provided that goods specifications and delivery time are defined and on basis of advanced payment and deferred delivery of goods

*in some cases the client demanded postponement of repayment to match the aforementioned cheques maturity due to conditions related to the commercial market which allows for previous selling prices to go higher from the client s point of view

*accordingly he opts to grant the bank on his own volition the advantage of increasing the previously agreed prices and that the mutual agreement on facilitating the client s proceedings is in line with the commercial system applied in the market
*answer the board has discussed the issue and would like to provide the following opinion first murabaha sale transaction is not like what has been explained in the bank s letter ie sale on suitable price

*second due to buyer delay to paying the price at the designated time because this method indicates that delay in settlement of debt was made in consideration of an interest which is prohibited haram
*source book of fatwas of shari ah board of faisal islamic bank of egypt fatwa no

*after we bought the car from the source and sold it to the client on credit the client sold the car to some one and that later person came to us along with a promising buyer to sell the vehicle to the kuwait finance house
*the question is is it permissible to buy such a vehicle in this instance answer it is permissible to buy a car from a client who has previously bought it from the kuwait finance house on credit and later on concluded tawaroq transaction with a party other than the seller

*he later on sells it to one of our suppliers establishment and that the supplier on his turn resells the car to the kuwait finance house
*however in order to avoid discrepancies and involvement of fictitious buyers it is advisable that kuwait finance house refrains from such dealings so as to avoid evasive legal practices

*answer despite the fact that dealing on tawaroq is allowed even if it ends up in the ownership of a single car by more than a client and since this deal is carried out in modes other than ayna where the seller buys in cash what he has previously sold for a higher value in credit it is not permissible to deal in this method so as to avoid discrepancies and evasive as well as speculative practices
*question the bank buys certain goods and then sells them on murabaha to a client and wishes to repurchase the same from this client to be sold on murabaha to another client

*the thing which has to be considered in contracts is the intent behind it there appeared to be a pretense for prohibited intention and illegal purpose and such sale is an evidence of prohibited intent according to scholars opinion

*third the client buys the land on murabaha from the bank as soon as the bank buys it whereby the client would pay in cash part of the price and would pay the remaining part on monthly installments over different agreed terms according to promissory notes signed by the buyer
*buying and selling of lands without registration question kindly provide us with the shari ah opinion on the following issue first a client has approached us requesting to buy land on murabaha from the bank second the bank would buy the land and register it on the bank s name at the registration department

*therefore in order for the murabaha contract to be shariah compatible it is essential that the sale object be registered at the registration department on the name of the purchaser against the agreed price even if on credit
*with regard to the other part of the question wherein the client requested a waiver of the land to be effected in future in favour of the client himself or for other persons such an arrangement would

*also with regard to his request that the bank awards the purchaser a proxy to dispose of as he may wish is inappropriate because the murabaha contract is not fulfilled
*source jordan islamic bank for finance and investment book of shariah fatwas parts and fatwa no

*as there is an internal agreement between the auto and the murabaha sections that the murabaha section is prohibited from buying automobiles from licensed agents thereby compelling the murabaha section to buy the cars from a supplier at a higher price which is a a pursuant to the consent of the promising buyer client
*what is the shari ah opinion on this issue answer there is no objection to murabaha transaction on a commodity possessed by the kuwait finance house from an external party at a given price even if the kuwait finance house has a similar commodity at a lower price but this method has an adverse impact

*may be offered to buy a similar commodity whose cost to kuwait finance house is lesser so as to avoid moral precautions
*source kuwait finance house book of fatwas in economic issues parts and fatwa no

*ignorance of the commodity specifications question what is the shari ah opinion regarding the purchase of goods to be sold to a promising buyer if the buyer is not aware of the goods detailed specifications such as buying a small factory or a printing press bearing in mind that the credit officer cannot be aware of all details of the goods which he will buy for the promising buyer answer this type of sale depends on the description stated on the trade mark catalogues model determination of exporter and its business position
*the sold item is known and if any discrepancy on the description was found the buyer would have an option of description deficiency and hence it is entitled to reject the sold commodity and recover the price or reach a compromise on another price

*purchase of travel tickets and selling them on murabaha question please look into the question raised by the commercial department concerning the purchase of travel tickets and selling them on murabaha on credit through a draft agreement forwarded by the enquiring party answer there is no objection from shari ah point of view to buy tickets and sell them on murabaha subject to the following first the commercial department would prepare a draft of the contract clarifying the relationship between the kuwait finance house and the kuwaiti airlines on how to execute this transaction with the clients
*however it is necessary to submit the contract to the shariah board prior to its implementation

*second enquire the commercial department about the method of executing this operation in conjunction with the clients
*source kuwait finance house book of fatwas in economic issues parts and fatwa no

*f is there any correlation between the kuwait finance house receiving a compensation from the insurance company or not and settling the matter with the client considering that according to the contract the first installment becomes due after a week
*existence of damage deficiency or otherwise question a client approached the kuwait finance house to purchase some goods for him and kuwait finance house has purchased the goods

*answer according to shari ah opinion in cases of partial damage to contracted goods the value of the damaged commodities shall be deducted from the price according to the percentage between the complete price and the entire quantity of the contracted goods
*there is no relationship between the sale contract signed with the client and the insurance agreement which has been concluded between the kuwait finance house and the insurance company as well as whether or not compensation has been attained before or after negotiating with the client

*relieving the exporter from defects found in goods question is it permissible to enter into a sale contract with the promising buyer on damaged good that have been shipped on board a vessel provided that such damage is disclosed to the promising buyer prior to the contract or should the kuwait finance house relieve the exporter of the damages prior to the promising buyer relieves kuwait finance house before the contract is signed with him answer there is no connection between the act of promising to buy and the contract signed with the exporter
*each one shall have its provisions applied in the light of the agreed terms with regard to claiming compensation against damages or rebating the claim

*in some cases the goods may arrive at kuwait port long after the execution of the sale and after the maturity date of the first installment of the sale price
*we would like to know the shari ah opinion with regard to sale contracting and receiving the value prior to goods arrival in kuwait

*it is permissible to speed up some effects by way of partial or total payment of price prior to goods arrival
*concluded without any binding condition to delay the sold commodity delivery except in case of salam which shall be bound by its conditions

*this other party buys from the kuwait finance house the equipment on a profit margin and the equipment value is not registered on the buyer s side irrespective of the sale being in cash or credit until the equipment are installed in the building
*conditions regarding installation of the contracted commodity question we purchase central air conditioning units from a seller who undertakes to bear cost of service of installation in the building

*the kuwait finance house buys the air conditioning units from the exporter according to specifications known by both parties on condition of installation whereas to kuwait finance house desires and agrees with the exporter on methods of payment according to agreed installation stages

*it also tackled the submitted questions and listened to the explanations of some of the directors of banks where some members confirmed this fatwa while the opinion of others is to reconsider the subject then it has been decided to defer the matter for further research up to the coming symposium as well as the preparation of new researches regarding this subject
*a default in payment of murabaha debt question is it permissible to have compensation for damages resulting from the delay in payment of murabaha installments answer the committee had been briefed on fatwa issued by the majority in the third symposium of al baraka held in turkey regarding the permissibility of compensation

*question what are shariah modes that may be applied in dealing with banks customers who default in payment of installments of murabaha at their due dates answer the answer to your question on the above subject can be summed up in that the dealers with the bank through murabaha default in payment of their debts when they are due and that this may be intended for the reasons you mentioned and not as the result of force majeure that prevented them from paying
*you requested us to provide you with the shariah view of the methods that would ensure the preservation of the legitimate rights of the bank our advice is as follows

*second instead of buying and selling goods in murabaha with a deferred payment of price which may result in those risks you have mentioned the goods should be kept in possession of the bank at bank owned stores and to provide the dealer with irrevocable authorization for a given period of time to sell the goods at a specified price that includes the suitable margin of profit to be set forth by the bank in the light of market conditions
*yet whereas such remuneration is calculated as a certain percentage of the sales price profit or the value in excess of the price to be determined by the principal hence it has been approved by a variety of scholars of the sahaba and followers as

*b this method ensures the rights of the bank since the release of the goods can only be conducted after paying for them or after ensuring the solvency and trustworthy of the client
*stated in the books of fath al bari and omdat al qarii sharh sahih al bukhari as well as in other books of comparative figh

*hereunder is the explanation of albukhari of this method it has been stated in the book of fath al bari sharh sahih al bukhari that ibn abbas said it doesn t matter to say sell this garment and if you got more than the hereto specified amount it would be yours

*third some goods might be sold in murabaha transactions provided that such goods should be mortgaged against their price or otherwise sale transaction automatically be cancelled in case of non payment of installments and the goods be returned to the bank
*we have shown in a previous note the permissibility of compensation and its figh basis as well as the elements of compensation and the way to collect it

*question is it permissible to terminate the arrears of murabaha debt answer first if the buyer did not pay the due debts in murabaha at due date then the bank is entitled to purchase the item that has been sold to the client under murabaha or any part of it at an immediate price to be receivable from the bank if a period of time has passed after the sale of murabaha during which prices typically vary depending on the commodity this is the so called by scholars markets assignment
*source international islamic bank book of shari ah fatwas on banking transactions publisher movement of islamic economy fatwa no

*second the bank then has the right to dispose of the goods or equipment or assets purchased from the customer as it deems the best to achieve its interests either with the same customer or others in accordance with shariah permissible modes such as musharakah or mudharabah based on their own requirements and conditions or through normal rent or lease ending in ownership provided that the bank should not resale them in credit to the customer at a price more than the price of purchasing since this is considered as reversal of ayna sale which is called exchanging of debt with another debt which is shariah prohibited
*third it is impermissible to reschedule the debts of murabaha or other debts by increasing the amount and the term of debt

*advancing installments question the bank intends to enter into a contract of murabaha transaction with a client who desires to settle down the payment before the credit mature date is it permissible for the bank to make any discount from the specified amount answer this discount is permissible provided that the customer should not stipulate such a discount as a condition if he advances payment as well as it should not have an oral or written correlation with the contract or after it but must be at the discretion of the creditor only ie without any oral or written condition
*source kuwait finance house book of fatwas on economic issues part and fatwa no

*ie the return of a percentage of or of the profit as a gift hiba or reward or the like as we took the value of the full year profit despite the fact that the duration of settlement is less than one year answer a c from the shari ah perspective it is permissible to discount a portion of the profit for those who paid before the end of the term if there is no any prior oral or written agreement
*question is it possible to deduct a certain percentage out of the profit taken from the customer upon completion of the sale contract by the end of the term if the customer withdraws the goods and settled down the payment of the price prior to the end of the year

*pounds to be reimbursed over a period of months however the customer offered to pay thousand pounds and wishes to pay all of it at once and requests from the bank to calculate the profit based on the remaining indebtedness amount hence is the bank obligated to reduce its margin of profit answer the bank is not from shariah perspective or legally obliged to accept the offer made by the buyer yet the prophet calls for good treatment in such circumstances
*question the bank entered into murabaha transaction with a customer whereby it sold him a truck at an amount of thousand pounds with a margin of profit amount to

*hence in order for the bank to deal in good and noble manners it is better to consider this case because the theory which permits increasing the price in case of selling on credit is based on the fact that the seller has left his money for longer time in the hands of the buyer than on the spot selling and collection of price whereby he misses what could be accrued to the price if paid on the spot therefore the board recommends to observe this situation and reduce the margin of profit
*question is it shariah permissible to grant dealers with the bank some prizes if they paid their installments of the murabaha before the maturity date without affecting the profit of the bank in the whole transaction

*second there is no disagreement between scholars about the permissibility of paying the debt before the maturity date upon the consent of the creditor and the debtor and the permissibility for the creditor to unconditionally waiver a portion of the debt to the debtor who paid the debt before the maturity date because it is not usury and does not contain any suspicion of usury
*according to majallat alahkam alshariah article it is permissible for the debtor to pay more or less of his debt based on mutual consent or to increase or decrease in the amount or character without prior conditions or arrangement

*the view of those who deny the rule is based on the fact that the debtor is paying earlier to obtain a write off of a part of the debt and that is similar to increase the time and get more interest which is unanimously prohibited hence the similarity is the
*nevertheless it has been mentioned at the start of the book of bidiat almojtahid by ibn rushd p second that the rule of give discount and receive soon had been accepted by ibn abbas who is one of the prophet s pbuh companions as well as some other jurists

*whereas the view of those who allow this arrangement is based on the prophet saying hadith which has been reported by ibn abbas that when tribe of banu nadir were banished from madinah some of those people came to the prophet pbuh and said you have ordered to expel us but some people owe us some debt which have not yet matured
*it has been disliked by zaid bin thabit omar ibn al miqdad saeed bin mussayeb salem hammad al hassan el shafei malik haitham al thawri ibn aliyah isaac and abu hanifa

*that both of them will face war from allah and his messenger whereas it had been reported by ibin abbas that it is acceptable to use such method as well as supported by al nakhai and abi thour who see there is no objection thereupon as the seller just take some of his due amount and leave the other hence it is permissible as if the debt is promptly paid
*al khargi also reported that it is all right to make a discount against earlier payment it is just like a creditor says to the debtor i give you ten dirhams if you paid earlier the dirhams you owe to me

*third however in special cases in which the interest of the bank is to collect its debts before the maturity date from some customers who deny that without being given specific discount then it is admissible to agree with the customer on this award on personal basis in accordance with the opinion of ibn abbas al nakhaai and abi thor although majority of jurists are against this opinion because it is a controversial issue as it opposes the text of hadith and due to the suspicion resemblance as previously discussed
*with the client thereon as well as there is no objection for the clients to be aware of this policy in advance without being a party in setting it or requesting them to accept it

*selling in murabaha mode is permissible and the above mentioned profit albeit inconsiderable relative to the value of the house it is also shariah permissible as well as the board see the permissibility of the promise to purchase based on sayings of jurists which are summarized as follows first promise is not binding
*pounds as a price of the property after three months from the date of sale of the house

*the board is applying in its current shari ah opinion and persists in its future advisory opinions on binding the promising buyer to consummate the purchase after the arrival of the commodity and to give him the right of option provided that he has to pay all expenses incurred due to his promise or all costs that the bank would not have incurred if not being promised
*this transaction is shariah permissible with the following notes we have approved the form of promise to purchase which contains clauses that stipulates the approval of the promising buyer to pay a certain percentage of the value as collateral to prove his seriousness in execution of his

*we hereby attract the attention to the sixth paragraph of the form and we leave to the bank to apply it in accordance with the confidence of the bank in the client

*we prefer to replace the paragraph with a text in which the bank is entitled to sell the house to who ever wishes to buy it as well as the promising buyer has to bear any differences expenses or decrease in value caused by his promise to purchase according to which the bank entered into the given transaction
*source resolutions of the shari ah board of islamic bank of sudan question no

*a long delay of payment after the date of selling the goods question a client requested to engage with the bank in a transaction of murabaha to import fabrics for both sexes provided it pays the value over a period of three years whereas the sale of these goods will be executed within months only answer there is no objection from shari ah point of view to be engaged in such transactions and that the decision is up to the management of the bank in terms of studying the market conditions availability of liquidity the possibility of financing and the applicable terms for payment in such cases
*source fatwas of the shari ah board of qatar islamic bank fatwa no

*question some clients request from the bank to purchase in mode of murabaha some goods imported under documentary credits provided the bank pay the price of the goods under scheduled time drawdowns in foreign currencies dollar or sterling pound for example after the period of time agreed upon with the seller three months or six months for example as of the date of receipt of the documents by the bank
*please advise the shari ah point of view on the permissibility of selling the goods in murabaha to the purchase orderer for which the bank agrees with the seller to pay the price thereafter in dollar

*the bank wants to agree with the purchase orderer to determine the price according to the value of the foreign currency on the arrival of the documents a etc and based on the fact that the sale of murabaha in order to be valid requires that the seller and the buyer upon conclusion of the contract have to know the capital price and the profit and that each of them has to know the resulting cost if any and that in this case neither the seller the bank nor the buyer the purchase orderer at the time of making the contract of murabaha sale know specifically the real price and both of them do not know the
*answer regarding the shari ah opinion on the sale of goods in mode of murabaha to the purchase orderer whereas the bank agreed with the seller the exporting company to pay its value deferred thereafter in dollars or sterling pounds in accordance with the prevailing rate thereat upon the maturity date

*all of this embodies an ambiguity that voids the validity of the contract and make it subject to controversy and conflict because of the increase or decrease of the value of the foreign currency therefore the contract as contained in the question is shariah invalid
*the knowledge of the purchase orderer that the purchase price is deferred will not change this position because it is undefined

*is it shariah permissible considering that no increase in the price of murabaha would be effected if those clients were committed to paying on time answer there is no objection in terms of shariah opinion to request more profit upon conclusion of a new contract with the client who had delayed in payment of a previous murabaha transaction without specification of the details of the increase in the amount and without any written or oral agreement regarding such action because the subject matter is the mutual consent to be reached on
*solutions to settle the murabaha debt question some clients often are delinquent in the payment of installments of the murabaha the value of the murabaha rate for such clients may be and due to repeated delinquency in payments we want to increase the rate of murabaha in future deals

*second the bank then has the right to dispose of the goods or equipment or assets purchased from the customer as it deems the best to achieve its interests either with the same the customer or others in accordance with shariah permissible modes such as musharaka partnership mudharaba based on their own requirements and conditions or through normal rent or lease ending in ownership provided that the bank should not resale them in credit to the customer at a price more than the price of purchasing since this is considered as reversal of ayna that is called exchanging of debt with another debt which is shariah prohibited
*third it is impermissible to reschedule the debts of murabaha or other debts by increasing the amount and the term of debt

*the binding nature of promise resolution having taken cognizance of the papers presented by members and experts in the subject of murabaha sale for purchase orderer and after listening to discussions about the subject it has been decided that first promise issued by the purchase orderer or the ordering entity unilaterally would be binding to the promisor according to shari ah fatwas unless there is an acceptable excuse with respect to this matter
*however it would be enforceable judicially if it is tied up to certain cause and if the promise has caused the promissor to incur some expenses the effect of binding in this case is determined either by fulfilling the promise or paying a compensation for the damages incurred thereby due to non fulfillment of the promise without any reason

*however if option is not offered then murabaha sale is impermissible because binding promise in murabaha sale is similar to selling itself whereby the seller should take possession of the sold object to avoid violation to shari ah rule of sale as the prophet forbade the selling of things not possessed by the seller
*source organization of islamic conference oic resolutions and recommendations of the council of the islamic figh academy first second and fifth sessions resolution no

*for instance a client is in need of purchasing specific commodity or goods that he can not pay their price in cash yet we believed that if we purchased and possessed the same he shall purchase it on credit basis against a specific profit as referred to in his previously stated promise answer the statement made by the purchase orderer is a promise and the islamic main jurists imams were of different opinions with regard to whether this promise is binding or not
*question you are kindly requested to provide the shari ah opinion regarding the permissibility in case we purchased commodities and goods in cash based on a promise by a client that he is ready if we received the commodities to purchase them from us on credit basis at a price higher than their cash price

*question what is the shariah opinion if kuwait finance house requires to purchase a crop or metal other than gold and silver or any other raw material that is actually possessed by the seller who specified a maximum period of time to receive the goods provided that kuwait finance house is entitled to receive the goods at any time during this period
*kuwait finance house paid an amount of money to the seller as an earnest money urbun and promised to pay the remaining amount upon delivery

*is this transaction permissible and is it permissible for kuwait finance house to sell such goods and when answer this purchase transaction which is called purchase on earnest money urbun is correct it is permissible for kuwait finance house to directly or indirectly sell these goods after taking the full possession of the same otherwise it is impermissible to sell them
*question is it permissible for us to purchase a specific commodity based on a promise from a client who will purchase it on credit at a price higher than the purchase value a c are we allowed to take earnest money urbun from this client

*a c if we purchased the commodity while the client declined to purchase it from us is it permissible for us to confiscate the earnest money paid to us answer first regarding the promise made by a client to purchase a specific commodity to be sold to him on credit at a price higher than the original purchase price i say that all general texts of shariah stipulate that all muslims have to fulfill and abide by their contracts and promises unless they allow what is prohibitd and prohibits what is permissible
*however all main islamic jurists imams see that the fulfillment of a promise is obligatory although it is not forcible by courts in accordance with the opinions of the three emams jurists abi hanifah al shafei and ahmed

*second and third taking earnest money from such client is shari ah permissible and if he did not fulfill his promise the earnest money may be seized if this condition is stipulated in the contract
*i support this opinion as fulfillment of a promise is a major feature of the believer whereas backing out is a distinctive feature of hypocrites

*are we obliged to execute our promise and deliver the goods to same client and be included within the procedures of the liquidation or shall we hold back our promise to reserve our rights on the other hand if we concluded a sale contract with this client and sold him the goods and then we are informed of his insolvency shall we deliver him the goods in such case or not answer promise according to the opinion of jurists is not enforceable through courts
*before the arrival of the goods we have been informed that this client is insolvent as well as indebted for much money and he has been put under liquidation by court

*recommendation the conference acknowledges that promising in murabaha sale for the purchase orderer after taking possession of the purchased commodity and reselling it to same party at the price mentioned in
*this promise according to the fatwas of malki school of jurisprudence is enforceable by law while other schools of figh see that it is shari ah binding

*whereas for the binding nature of the promise to the purchase orderer or the bank or both of them collectively it is better for the benefit of the transactions and dealings to adopt the opinion of binding nature as it observes the interests of the bank and the client
*in fact the binding nature is shari ah acceptable and any bank has the option to adopt it or leave it in accordance with the decision taken by its own shari ah board

*amending conditions of purchase promise question is it permissible before the arrival of the goods and submission of the documents to the correspondent bank abroad to change the sale price and payment maturity date of goods that we have promised to sell to a client in a murabaha transaction by a documentary credit answer if the sale contract is not concluded by both parties as well as both of them agreed to cancel the previous promise to purchase and enter into a new promise with new mutually agreed upon terms there is no objection to make the required amendments as muslims ought to fulfill their promises
*source fatwas of shari ah board of qatar islamic bank fatwa no

*question is it allowed to change the conditions of the mutual promise upon conclusion of murabaha contract answer there is no objection for the bank and the purchase ordere to agree to change the term and conditions of the mutual promise upon conclusion of the murabaha contract
*therefore in such a case the extension of the term duration with the increase in profit does not fall within the realm of debt rescheduling which is shariah prohibited

*payment of part of the commodity price at promising time question is it permissible for the purchase orderer to pay part of the price at promising date answer it is permissible for the purchase orderer to pay part of the price to be part of the sale value if the sale contract is concluded provided that such paid amount must be returned in whole to the purchase orderer if sale transaction is not completed
*source dallah al barakah group development and research department resolutions recommendations of albaraka symposia on the islamic economy first second and third seminar fatwa no

*unauthorization fedalah in murabaha transactions question is it permissible in shari ah rules for a client to purchase for himself and others by way of intrusion fedalah answer based on the information provided by the person following up the transaction that the party who ordered murabaha financing has already expressed his desire to purchase a vehicle through the company considering that he will submit his application to albarakah company before entering into a contract with the vehicle manufacturing company and before paying it the advance payment
*based on the above mentioned information the behaviour of the client in conclusion of the purchase contract is of a dual capacity as he purchased of the vehicle value in behalf of himself and as an unauthorized person al fodoli in behalf of the company ie on the basis of the

*in case of approval the company will own of the vehicle and is obliged to pay its share in price thereby the partnership of the vehicle which is shirkat a ul milk is executed between the company and the client
*should the two parties agreed to sell the vehicle then the profit shall be divided between them on pro rata basis after each party returned its capital also loss shall be distributed between them on pro rata basis

*is it permissible for the kuwait finance house to sell the vehicles to this businessman considering that the businessman is a client of the kuwait finance house who is regularly dealing with it in such transactions
*question a businessman approached kuwait finance house to purchase specific type of vehicles from a supplier in kuwait and promised to repurchase them from kuwait finance house

*answer the behaviour of receiving the vehicles by the client is of the type of behaviour of unauthorized person fedoli and the kuwait finance house is allowed to accept it as far as later permission is like a prior agency particularly that this businessman is a regular dealer of kuwait finance house in such transactions as well as he has already got the initial approval to this transaction
*question is it allowable for a client based on the approval of kuwait finance house to directly purchase and ship goods from the exporter under the name of kuwait finance house

*hence the sale is concluded for the benfit of kuwait finance house since later permission is considered like prior agency
*answer it is permissible provided that kuwait finance house accepts such behaviour from this unauthorized fedoli client

*since murabaha sales to the purchase orderer are executed in the bank on the basis of payment obligations by the clients within periods ranging between months to months in return for a percentage of profits to be obtained by the bank in direct proportion with the length of the repayment period
*achieved profit for each year question please provide the shari ah opinion regarding realizing profits in murabaha sales transactions for the purchase orderer and profit of each fiscal year

*please provide the shari ah opinion regarding the following points a c are the profits shown in the example above that amount to jd considered profits achieved in only

*please kindly provide the shari ah opinion on the above mentioned matter so that the bank can implement shari ah compliant financial procedures prior to the end of the current fiscal year answer the answer to this question is related to paragraph c of article of the code of the islamic bank of jordan no
*a c or should those profits be distributed to match installments which the buyer is bound to repay and thus be distributed among the years as follows dinars as profits of

*in the case of defer if the buyer paid the agreed upon price or on installments before the maturity date he is entitled to recover from the price an amount equal or proportionate to the remaining period figh principles which are followed by ancient jurists stipulate that if the debtor paid the debt before its maturity date then the creditor has nothing to be paid to him for the remaining period because he has voluntarily paid prior to the payment due date

*thus the aforementioned paragraph supports the point of view of ancient jurists who considered the profit to be realized when a subsequent contract is concluded because he has to obtain nothing even if the debt is paid before the due date thus the debt is considered as a loan that must be paid to the bank on its due date
*however there are two matters to be clarified before answering the question first the bank act is drafted by a group of trusted jurists on the basis of the provisions and rules of the islamic principles and shari ah

*question the bank is buying and financing particular goods at the request of the partner who is the purchase orderer at the same time where the partner sells the goods and receives part of the price in cash and the other part is sold in installments spreading over months
*the process of settlement of accounts with the partner takes place after the conclusion of the last contract of sale with the last buyer and after the partner hands over the cash amount and the remaining amount in promissory notes to the bank

*therefore shariah opinion is sought with regard to the following to enable the bank to conduct shari ah compliant financial procedures prior to the end of the current fiscal year first are the profits shown in the example above that amount to jd considered profits achieved in only second or shall those profits be distributed to match the cash amount received at settlement time as well as the
*the partner sold the goods in the amount of jd out of which the buyer paid an amount of jd in cash and the remaining value of jd to be paid in installments at equal monthly installments

*installments the buyer has promised to pay and thus be distributed over the years answer the contract that you have mentioned does not apply to mudharabah contracts murabaha contracts or even to contracts known along the history of islamic shariah but it is a new kind of contracts although it bears some elements and features of mudharabaha and some signs of murabaha contracts however this does not preclude it from being a partnership established on trade and profit where the profit is not specific and no specific share so there is nothing included in it that makes it prohibited as indicated in my written answer dated which you referred to in the letter
*from the scenarios mentioned in the latter it was found that the bank purchases and finances specific goods at the request of the partner who sells the goods to another person and receives part of the price in cash and the remainder will be divided into

*the process of settlement of the accounts with the partner takes place after the conclusion of the last contract of sale with the last buyer and after the amount of cash is deposited to the bank by the partner as well as handing over promissory notes to the bank for the remaining amount
*this situation is covered by the opinions of sheikh al islam ibn taymiah that according to the opinions held by imam ahmad that if two partners settled their accounts without sorting then that will be considered as sharing even if the money is lost after that the loss will not be compensated by profit

*therefore the acceptance of the seller to defer the price drops his right to withhold the sold item and he undertakes to deliver it to the buyer as shown in the second paragraph of article of the aforementioned civil code

*in the event murabaha margin is changed then it is not a condition to liquidate the previous murabaha and settle its due amounts and reopen the new facility margin as it is possible to enter into a new debt while keeping the debt of the earlier transaction pending or its maturity is confirmed but it should remain as a trust with the debtor in order to be carried out as a balance to the new transaction
*second however in the case of execution of a murabaha transaction as per the framework then according to shari ah there is no room to increase or decrease its profit margin to be connected with the increase or decrease of its term

*is it permissible for us to increase the profit in such a situation to cover the period between the payment of the amount to the exporter and the contracted party who desires to purchase answer determination of the profit in the contract is made according to an agreement between the seller and the buyer and will not be affected by the internal considerations taken into account in such determination
*bases and rules of profit determination in murabaha transactions question a client approached us and promised to purchase goods he put a condition for us to pay an advance amount upon opening the credit and prior to the receipt of the goods from the exporter

*no objection to refer to the agreed upon amount of profit in the promissory note without linking it with any period of time as profit in murabaha is part of the price and can not be separated to be divided over time albeit the maturity term has a noticeable effect in the increase of the price because the notice of acceptance is a part of the contract hence adding it to the notice of execution of agency and purchase offer notice the contract is completed
*calculation of profits according to the number of days during which payment is made question is it shariah permissible for the promissory note to reflect the percentage of profit tied up to time answer the statement of the percentage of profit per annum which is tied up to specific time should be deleted from the notice of acceptance in reply to offer notice by the client in execution of the promise

*as for the contract framework which regulates the future dealing with the customer we would not mind such a reference as it was nothing but a promise and statement describing the conditions to be taken into account as well as it is not a contract and does not result in action of sale or purchase except after the exchange of the desire of the two parties in implementation of the specific transaction through mutual submitted notices
*question islamic banking system in luxemburg offered qatar islamic bank on to contribute in financing the purchase of a land machineries and equipment for an american company located in the united states according to mode of murabaha transaction with a value of

*kindly provide the shari ah opinion in this transaction answer the board founds that this is an error which has been declared by the bank in due time
*source fatwas of shari ah board of qatar islamic bank fatwa no

*how to determine the price and profit in case of difference in credit currency question what is the modes of contracting concluded to sell goods in case of deferred documentary credits deferred to the bank answer documentary credit opened by the bank in which it is a beneficiary in case of murabaha transactions for the purchase orderer if value is deferred in a currency other than the currency specified in the murabaha contract it is prohibited by shari ah to execute this transaction on murabaha basis because it is not possible to determine the cost of the commodity in the currency specified in the promise
*the shariah acceptable alternative is one of the following two alternatives first either to carry out the murabaha transaction accordint to the currency specified in the credit and when the customer

*then if the bank paid the value of the credit and discovered injustice in it against the bank or the client after knowing the cost then there is no objection for both parties to agree at once without any prior collusion to increase or reduce the sales price to amend the price specified in the previous contract
*second or execute the sale transaction on the basis of bargaining whereby the bank estimates the price that it deems conducive to its interest and agrees with the customer to enter into a contract of sale accordingly

*calculation of profit for advance payments offered to the exporter question kindly provide with shari ah opinion on the following with regard to murabaha credits kuwait finance house is used to calculate the cost of goods on the day of payment and add to it a specific percentage as a profit of selling operation to the client as the period increases the percentage increases
*our inquiry is about the following case if a condition of the credit is to pay an advance payment to the exporter while the goods will arrive after about months and the remaining value will be paid upon the arrival of the goods

*the calculation of the profit will be as follows dinars dk in the particular case of the question for example quarter of the profit will be paid in advance on the three quarters on upon the arrival of the goods and payment will be made after a year as of ie on
*illustrative example upon purchasing goods in murabaha for example at a value of dinars and the client requests payment to be after one year

*increasing the margin in return for deferral of payment question please provide shari ah opinion in case of increasing the price in return for the defer of payment in the event of the arrival of the goods and prior to the preparation of murabaha contract and delivery of documents and goods to the client answer it is not permissible to increase price in this case in return for the increase of the tem of payment and the client should abide by the provisions of the promise to purchase because the bank is following the principle that the promise of purchase is binding
*source fatwas of shari ah board of qatar islamic bank fatwa no

*postponing the specification of the profit ratio question is variation in the determination of profit ratios permissible based on their nature as capital profits or operational income answer if the subject of mudharabah is assets that generate income then it is permissible for the mudharib and the capital owner to agree on dividing this income between them in specific ratios under account and to agree on different ratios in case of sale of the assets
*however if the assets are sold at a price less than its purchase price then the difference shall be offset from the operational income

*receiving a percentage from the profits of the client company question in the event that kuwait finance house sold equipment to an industrial company in mode of murabaha is it permissible for kuwait finance house in addition to the selling price to receive specific percentage out of the annual profits of this company considering that kuwait finance house is not a partner to this company answer the committee opines that the first part of the question which is the selling of the equipment in murabaha mode to the industrial company is shari ah permissible
*however the second part of the question concerning receiving a percentage out of the profits of that company is shari ah impermissible because the equipment and generated profits thereby have become the exclusive property of that company and kuwait

*the guarantor question is it permissible for the buyer in murabaha sale to appoint a guarantor answer it is permissible to appoint out a guarantor in murabaha sale on credit like any other sale on credit
*source dalah al barakah group department of development and research resolutions recommendations of albaraka symposia on the islamic economy al barakah first symposium fatwa no

*however the seller is entitled to retain the sold material if the price will be paid on the spot otherwise if it is on credit basis then it is impermissible to retain the sold material as the seller in such case has already accepted the delay of payment yet he has the right to put the sold material under trust mortgage a matter that is officially stipulated in the contract until the whole price is settled down in order to ensure the right of the bank as the trust mortgage does not prohibit the owner from disposing of his property
*mortgage of sold goods question is it permissible for the islamic bank to use the commodity sold in a murabaha transaction as collateral answer in view of the fact that the contract is the law of the contractors then if the seller contractually stipulated that the sold material be retained until the performance of the entire price then this is a condition required by the contract

*to keep the registration in the name of the bank question is it permissible for the bank to purchase a residential house register it in its name and then sell it to the customer of the bank on installment basis for a specific period of time against conclusion of an initial sale contract only and without registering such a house at the real estate registration department provided that same registration will be conducted at the end of installment period answer this is permissible unless the purchaser client offers another mortgage that fulfills its obligations towards the bank
*source fatwas of shari ah board of qatar islamic bank fatwa no

*is it shariah permissible to ask for the submission of a guarantee cheque from the guarantor answer upon receipt of a cheque from the guarantor to ensure the settlement of the client s debt in case of default in payment the guarantor should be provided with a written letter which stipulates that the cheque will not be drawn except in the case of nonpayment bearing in mind that when the client delayed the payment of one installment all other installments should be due in order to preserve the right of the guarantor for fear of submission of the
*based on our consideration of the sale form submitted by the client we are in need of a strong guarantee to execute the transaction and so we ask for the submission of a guarantee cheque from the guarantor

*the sold commodity as guarantee question is it permissible for the islamic bank to use the sold commodity in murabaha transaction as guarantee answer it is shari ah impermissible in any form to use a commodity sold in murabaha transaction as guarantee
*for example first the islamic bank is not allowed to retain the ownership of the sold commodity until the settlement of its price by the purchase orderer

*if the bank failed to do so then it has to take other measures or actions that would disable the purchase orderer from disposing of the property subject matter of murabaha until he settles down the whole amounts due to the bank
*source fatwas of shari ah board of qatar islamic bank fatwa no

*what is the shari ah opinion regarding this action and what is the shari ah opinion if the withheld amount is taken from the current account of the client answer the distraint which has been taken at the expense of saving account or the deposit of the client applying for a credit is considered as a prevention of the partner from using his right of partial or whole restitution of his share in the partnership after he had been previously permitted by his partner the bank to do so and this distraint is to ensure the possibility of setting off between the obligation arising from the opening of the credit and that share
*sometimes we request provision of specific guarantees such as deposits or saving accounts where the value of the credit will be withheld as a guarantee

*general provisions of agency in murabaha transactions question is it permissible to appoint the client as an agent of the company and what are the possible cases in murabaha and documentary credit answer first if the company appointed a client as its agent to import on its behalf and its name then there is no objection for the credit to be in the name of the client as he directly purchases in his name but for the benefit and interest of the principal
*upon documents arrival a contract would be entered into between the company as seller and owner of the goods and the client in his capacity as purchaser provided that the latter has to inform the company that the agency has been implemented and completed ie the company has possessed the commodity

*however the agent in this case also should have to send a notice to the company showing that he has executed the agency and purchased the commodity to himself in order to draw a clear line between the periods of the two warranties and avoid confusion and overlapping between the two successive warranties ie the warrant by the principal the company between the period of the execution of the agency and up to the time of selling from the agent to him self and the warrant by the purchaser the exagent in view of the fact that as soon as he sells the commodity to himself it will be under his warranty yet
*second if the company provided the client with an agency to purchase a commodity on its behalf and then sells it to himself and the selling price has already been specified by the company then this action is also permissible and the agent will represent the two parties of the contract

*although these procedures are permissible and included within the recommendations of dallah al barakah first fatwas forum but this model is inadvisable as the role of the company is almost hidden as well as its interests will be under risk because the agent might possess the commodity and delays sending the purchase notice during which time the commodity might be subject to damage and accordingly the agent might add this damage to the period during which he was an agent and claimed that it is just a custody in trust in order to charge its warranty to the company
*third the following steps should be carefully observed in giving murabaha credit ceiling and agency to purchase local goods a etc to ensure shari ah compliance

*b conclusion of a general frame agreement that explains the execution steps and refers to the general terms and provisions of the dealing the promise the purchase order the intended agency and murabaha which will be concluded in due time a etc
*d to provide the client with a cheque to his order for the execution of purchase agency on behalf of the company yet there is no objection for the client as an agent to purchase in his name

*the murabaha contract may be concluded by exchanging of two notices the first notice to show that the client has executed the agency and purchased the goods from the company whereas the second notice is the answer thereof from the company which confirms that it has sold the goods in murabaha as well as includes the specification of price and profit
*on the other hand the signature of the client on the invoice which shows that he is the purchaser and the company signature on the invoice to show that it s the seller is not enough as there should be available a clear document showing execution of purchase and selling which might be a separate contract murabaha contract or exchange of offer and acceptance notices intending murabaha as shown in paragraph e above

*question is it shariah permissible to enter into a murabaha finance transaction with a client of an interest based bank through the latter answer this method may theoretically satisfy the minimum steps required for a shari ah compliant murabaha transaction in which the bank authorizes the client to purchase as an agent and sells to himself in murabaha besides informing the bank to that effect
*it is similar to the procedures of purchase agency conducted through international banks and affiliate companies whereby they purchase products and sell them to their clients or to themselves

*if the relation of the client with the interest based bank is a murabaha transaction then what is the role of the islamic bank and what profits it will obtain and why hence the interestbased bank either plays the role of the agent of the islamic bank and takes specific commission runs the murabaha procedures through its client and the whole profit returns to the islamic bank
*for example the money may be delivered directly from the bank to the seller in lieu of the client whose role must be confined only to the conclusion of contracts of purchase and selling to himself a sharp line should be drawn between the steps of purchase and selling even for a short time which can be achieved by sending a telex or fax which shows that purchase agency has been implemented and then selling to himself have been executed

*otherwise the bank has to conclude a mudarabah contract between the islamic bank the owner of the money and the interest based bank the mudarib provided that both parties have to abide by the shari ah dealings in execution and follow up of the contract besides financial accounting and auditing

*appointment of the purchase orderer as an agent question is it permissible to appoint the client as an agent of the company and what are the possible cases in murabaha and documentary credit answer first if the company appointed a client as its agent to import on its behalf and its name then there is no objection for the credit to be in the name of the client as he directly purchases in his name but for the benefit and interest of the principal
*upon documents arrival a contract would be entered into between the company as seller and owner of the goods and the client in his capacity as purchaser provided that the latter has to inform the company that the agency has been implemented and completed ie the company has possessed the commodity

*however the agent in this case also should have to send a notice to the company showing that he has executed the agency and purchased the commodity to himself in order to draw a clear line between the periods of the two warranties and avoid confusion and overlapping between the two successive warranties ie the warrant by the principal the company between the period of the execution of the agency and up to the time of selling from the agent to him self and the warrant by the purchaser the exagent in view of the fact that as soon as he sells the commodity to himself it will be under his warranty yet
*second if the company provided the client with an agency to purchase a commodity on its behalf and then sells it to himself and the selling price has already been specified by the company then this action is also permissible and the agent will represent the two parties of the contract

*although these procedures are permissible and included within the recommendations of dallah al barakah first fatwas forum but this model is inadvisable as the role of the company is almost hidden as well as its interests will be under risk because the agent might possess the commodity and delays sending the purchase notice during which time the commodity might be subject to damage and accordingly the agent might add this damage to the period during which he was an agent and claimed that it is just a custody in trust in order to charge its warranty to the company
*third the following steps should be carefully observed in giving murabaha credit ceiling and agency to purchase local goods a etc to ensure shari ah compliance

*g conclusion of a general frame agreement that explains the execution steps and refers to the general terms and provisions of the dealing the promise the purchase order the intended agency and murabaha which will be concluded in due time a etc
*i to provide the client with a cheque to his order for the execution of purchase agency on behalf of the company yet there is no objection for the client as an agent to purchase in his name

*the murabaha contract may be concluded by exchanging of two notices the first notice to show that the client has executed the agency and purchased the goods from the company whereas the second notice is the answer thereof from the company which confirms that it has sold the goods in murabaha as well as includes the specification of price and profit
*on the other hand the signature of the client on the invoice which shows that he is the purchaser and the company signature on the invoice to show that it s the seller is not enough as there should be available a clear document showing execution of purchase and selling which might be a separate contract murabaha contract or exchange of offer and acceptance notices intending murabaha as shown in paragraph e above

*question is it shariah permissible to enter into a murabaha finance transaction with a client of an interest based bank through the latter answer this method may theoretically satisfy the minimum steps required for a shari ah compliant murabaha transaction in which the bank authorizes the client to purchase as an agent and sells to himself in murabaha besides informing the bank to that effect
*it is similar to the procedures of purchase agency conducted through international banks and affiliate companies whereby they purchase products and sell them to their clients or to themselves

*if the relation of the client with the interest based bank is a murabaha transaction then what is the role of the islamic bank and what profits it will obtain and why hence the interestbased bank either plays the role of the agent of the islamic bank and takes specific commission runs the murabaha procedures through its client and the whole profit returns to the islamic bank
*for example the money may be delivered directly from the bank to the seller in lieu of the client whose role must be confined only to the conclusion of contracts of purchase and selling to himself a sharp line should be drawn between the steps of purchase and selling even for a short time which can be achieved by sending a telex or fax which shows that purchase agency has been implemented and then selling to himself have been executed

*otherwise the bank has to conclude a mudarabah contract between the islamic bank the owner of the money and the interest based bank the mudarib provided that both parties have to abide by the shari ah dealings in execution and follow up of the contract besides financial accounting and auditing

*question if one a client of qatar islamic bank wants to import some goods from europe to saudi arabia for example is it shariah permissible for the bank shariah to authorize the purchaser or any of his employees to receive and deliver such goods provided that the client bears all costs incurred thereof answer the bank is not permitted to authorize the purchase orderer but it is permissible to authorize a clearance office and include the expenses of clearance within the total cost source fatwas of shari ah board of qatar islamic bank fatwa no
*question a client asked the bank to purchase materials and sells them to him in murabaha mode

*authorize the purchase orderer and give him the required money in cash to purchase the required material from a third party answer it is impermissible to give the cash money to the client to purchase the goods through a murabaha transaction but rather the bank has to purchase the goods possesses the same and resells them to the client
*question is it permissible for the bank to authorize the purchase orderer in a murabaha transaction to be its agent answer based on the fifth recommendation issued by jeddah islamic figh academy resolution no d which reads as follows a

*following the committee review of the first fatwa of the first albarakah forum no that it is permissible to authorize a person as agent to purchase a specific commodity and sells it to himself at a given price specified by the principal the committee sees that this fatwa is about the general agency of absolute sale and does not include the particular case of authorization by the bank to the purchase orderer in murabaha transactions as murabaha sale has its own specific considerations which are different of those of absolute sale whereas the bank should have a prominent and basis role to play in purchasing the commodity to
*to reduce as far as possible the use of murabaha to purchase orderer and limits it to such transactions that fall under the supervision of the bank and which are free of risks of violation of governing shari ah rules as well as to expand in other investment modes such as mudarabah partnership musharaka and lease ijarah transactions besides periodical evaluation following up and utilization of such fields and making use of the acceptable cases of mudaraba to enable control dealings and to provide accurate auditing of the results

*hence the committee is of the view to adopt the opinion of the impermissibility of agency to the purchase orderer in case of murabaha transactions
*itself in the first place then possesses it and resells it to the purchase orderer in an effort to avoid interest based financing and in order that the guarantee which justifies profit would not vanish

*appointment of the shipping company as an agent question is it permissible for the bank to appoint the shipping company as its agent to receive the goods outside qatar if the client requested so in case the bank has no agent in the designated delivery place answer there is no objection in such case to appoint the shipping company as an agent of the bank to receive the goods
*source fatwas of shari ah board of qatar islamic bank fatwa no

*based on the consideration of this matter and after reviewing the articles of the general agreement of murabaha trading the board decided to disapprove this request as the issuance of the title deed and ownership documents in the name of al rajhi company as it is internationally known is a proof of ownership by al rajhi company of such goods which are included in such documents otherwise the whole matter will tends to be a fictitious transaction particularly that the other party is the beneficiary of the goods and their ownership will eventually be transferred to him
*source shari ah board collection of shari ah fatwas al rajhi investment banking company resolution no

*the authorization of the bank by the client to complete and sign the murabaha contract question a client in the kingdom of saudi arabia opened a murabaha credit deposited an advance payment and based on his trust on us left the required documents which is murabaha contract signed in blank to be filled in and finalized after the arrival of the shipment documents
*the contract will be completed in by the credit department on the arrival of the documents answer it is permissible to authorize an employee of kuwait finance house in his personal capacity to complete the contract with the kuwait finance house

*the case of the purchase orderer acting as distribution agent of the exporter question is it permissible to pay the commission value in cash then add its value to the price of the goods or deduct same from the total price of the goods and charge him on the net value only and calculates the net profits accordingly bearing in mind that some clients insist to pay the commission value in cash because it is related to the activities of the agencies and has no relation with trading in goods answer it is permissible to pay the commission value of the imported goods trading agency based on the fees of the purchase orderer and murabaha
*what ever the case is the kuwait finance house is entitled to include this value in the costs and add it to the price besides the profit

*the kuwait finance house in paying this commission value to the trade agent has a separate capacity independent of the promise and murabaha process as it is here acts as a payment agent of the exporter in paying the amount due from the exporter to the trade agent who is himself the orderer
*source kuwait finance house book of fatwas on economic issues part and fatwa no

*insurance of sold commodity in murabaha transaction question how far is it permissible for a client to insure a commodity in murabaha transaction answer the board views that insurance is permitted with islamic insurance companies in the countries that have islamic insurance companies
*accordingly the bank may insure goods sold to its dealers provided that insurance value should be added to the cost

*question please provide us with the shari ah opinion regarding the permissibility for the bank to insure the vehicles sold by the bank in murabaha transactions considering that in the event of any accident to the sold vehicle then the bank will deduct only its due amounts from the client and in case the insurance amount exceeded the bank dues it will return the excess to the client
*answer the shari ah board has reached a conclusion that the client is not entitled to insure commodities imported in murabaha transactions but rather the bank is to conduct this procedure as it is responsible for the arrangement of the commodity to the client and so bears the whole risk

*question in the event that the bank insured the goods which are the subject matter of murabaha then should the value of the insurance be included in the cost of the goods before calculating the rate of profit of the bank ie the profits in such case are calculated in accordance with specific rates out of the goods value and including the insurance value or the profits of the bank are calculated according to particular rates of the cost of the goods without the insurance value then the latter be added to the profits so that the
*answer no objection for the bank to insure the vehicles sold to its clients in murabaha transactions provided that the compensation should be charged for the account of the purchaser client as well as it may deduct such costs from the amounts due to the bank if there was a prior agreement in that respect

*profit in this case becomes profits specific percentage of the cost of goods insurance value and inform the customer accordingly answer the board approved the first case in which the profits should be calculated out of the value of the goods including the value of insurance
*however doctor ali also has asked to register his disagreement with this view as he supports the second view on this subject matter

*is it permissible for him to purchase some goods from this lessee in murabaha mode through the bank answer it should be ascertained that the lease is real and not fictitious and that the lessee is the actual owner of the goods which are the subject matter of the murabaha transaction and the bank has to be sure of the transfer of the goods from the store so as not be used as a preclude to deceptive practices which violate shari ah rules
*the case of the seller who is the lessor to the client and the owner of the commercial register question a store is owned by a businessman and the commercial register is in his name

*shipment documents question the question is about the procedures followed by the bank in the event of the arrival of the goods prior to the arrival of the documents answer the board approved the procedures being followed in such cases which include handing over the goods to the customer until the arrival of the documents then the value of the murabaha contract is calculated at the exchange prevailing at the time of discount by the correspondent bank
*source fatwas of shari ah board of qatar islamic bank fatwa no

*bills of lading question is it permissible to finance murabaha import transactions according to bill of collection provided that the bank has made prior agreement with the exporter the beneficiary answer the board explained that the bank is allowed to enter into such transactions provided that the role of the bank should be clear since the outset of the transaction with regard to the sequence of the procedures according to shari ah in the sense that the objective and aim is to provide the expenses of the documentary credit
*source fatwas of shari ah board of qatar islamic bank fatwa no

*hence is it permissible to hand over the goods to the client pursuant to a letter of guarantee issued by us and at our expenses to the shipping company until the arrival of the goods to know the actual cost and hence be able to conclude the contract with the purchase orderer answer it is permissible to hand over the goods which were promised to be sold in murabaha transaction if such goods arrived before the arrival of the documents
*in such a case the purchase orderer might ask the clearance of the goods prior to the arrival of the documents whereby we fail to conclude the sale contract because we do not know the cost of the goods and the other expenses

*hence the ruling here is that if the goods are damaged in his custody then he has to warrant it at an amount equal to its value or to the price whichever less ie to estimate its value and compare it with its price then whichever less is taken as the warranty value

*kindly read the terms and approve it with a copy to be sent to the purchase orderer answer since what has happened between the client and the kuwait finance house is nothing but a desire and promise then it is possible at any time prior to the signing of the contract to change the mutual desire to other form of contracting with the agreement of the two parties and in this case it is permissible based on the agreement of the two parties to enter into a contract through bargaining irrespective of the capital in the estimation of the price as well as the statement of the previous promise as murabaha bearing in mind that the proposed wording to promise and desire is
*thence is it allowable in such case to change the mode of sale from murabaha sale transaction to bargaining sale please find attached herewith a copy of a contract for the sale of goods through bargaining

*answer the board considered that the receipt of invoices in the name of the bank is one of the main pillars of the process of murabaha as these invoices are the basic documents that prove the ownership and possession of the goods by the bank hence the board opined that for the second case which concerns the arrival of the documents before or at the goods arrival since the invoices are issued in the name of the client the documents should be rejected and the goods shall not be delivered to the client unless the bank gets either by mail or by telex new invoices issued in the name of the bank
*with regard to the first case which is the arrival of the goods prior to the arrival of the documents and the bank was forced to allow the client to clear the goods through a customs clearance permit then the documents were received with a violation of being issued in the name of the client the board has set forth the following provisions to issue the clearance permit for the client first to ensure that the credit did not state the name of the client

*fourth if the beneficiary did not send any notice and upon the client request to issue a customs clearance permit then a telex shall be sent to the beneficiary requesting him to notify the bank with the details of the invoice with regard to its value and its issuance in the name of the bank

*until the correspondent bank replies the telex of the bank particularly if the client submitted his application on wednesday or thursday as friday is a holiday of us while saturday and sunday are holidays in foreign countries a matter that delays the delivery of the goods to the client
*the board opines in principle that the invoices shall be issued in the name of the bank but if they are issued in the name of the client then this is considered an exceptional case that can not be taken as a reference

*non receipt of invoices in the name of the bank question is it permissible to complete the execution of the promise to purchase and complete the sale of murabaha for goods imported from abroad under a documentary credit which did not show the name of the islamic bank as a buyer in its bills while the bill of lading has been in the name of the bank answer the board opines that in order to avoid recurrence of such cases the documentary credit should essentially be opened in the name of the bank and should not show the name of the client
*however in the case before us the board allowed to submit another invoices in the name of the bank even if the invoices are received by the telex provided that this telex invoice cancels the previous invoice

*however the board has accepted the proposal of the general manager to pursue this technique on a limited scale at the beginning and then be subjected to evaluation according to results

*question to what extent is it permissible to execute the murabaha transaction in case the goods arrived prior to the arrival of the documents and the bank was forced to allow the client to clear the goods pursuant to a customs clearance permit and then documents received with a violation ie they are issued in the name of the client and to what extent is it allowable to execute the murabaha transaction in case of the arrival of the documents before or at the arrival of the goods while the invoices are issued in the name of the client
*with regard to the case before us which is the non receipt of invoices on the name of the bank the board has approved the submission of invoices on behalf of the bank even if the invoices are received through the telex provided that the invoice sent by the telex cancels the invoice previously received

*answer the board considered that the receipt of invoices in the name of the bank is one of the main pillars of the process of murabaha as these invoices are the basic documents that prove the ownership and possession of the goods by the bank hence the board opined that for the second case which concerns the arrival of the documents before or at the goods arrival since the invoices are issued in the name of the client the documents should be rejected and the goods shall not be delivered to the client unless the bank gets either by mail or by telex new invoices issued in the name of the bank
*with regard to the first case which is the arrival of the goods prior to the arrival of the documents and the bank was forced to allow the client to clear the goods through a customs clearance permit then the documents were received with a violation of being issued in the name of the client the board has set forth the following provisions to issue the clearance permit for the client first to ensure that the credit did not state the name of the client

*fourth if the beneficiary did not send any notice and upon the client request to issue a customs clearance permit then a telex shall be sent to the beneficiary requesting him to notify the bank with the details of the invoice with regard to its value and its issuance in the name of the bank

*until the correspondent bank replies the telex of the bank particularly if the client submitted his application on wednesday or thursday as friday is a holiday of us while saturday and sunday are holidays in foreign countries a matter that delays the delivery of the goods to the client
*the board opines in principle that the invoices shall be issued in the name of the bank but if they are issued in the name of the client then this is considered an exceptional case that can not be taken as a reference

*what would be the status of the goods for which forged documents were submitted would the kuwait finance house be held responsible bearing in mind that the client has admitted his responsibility for the behaviour of the exporter and warranted the appropriate execution of the operation
*in this case of nonarrival of goods compensation is made by the insurance companies later they revert to the shipping company which have damaged the goods

*as such the promising buyer would be liable to guarantee for any damages hereto but he can not be held bound for the purchase contract which he promised because the subject matter of contract has been either nullified or defective

*when the client was asked to pay compensation for the declaration and guarantee signed by him as a guarantor of the supplier the client expressed some reservations on that how he would be liable for compensation while we have sent him a letter confirming the goods delivery answer claiming compensation is related neither to the mutual promise nor to the contracting procedures or delivery
*instead it is a result of a previous warrant where the promising party has guaranteed the exporter for adequate performance and that the client would be liable for whatsoever consequences regarding the exporter s violation of specifications or restrictions which entail financial commitments that are known as darak guarantee

*is it permissible for the kuwait finance house to ask the seller of the property to directly register the property in the name of the purchaser or it is required to first register it with the ministry of justice in the name of the kuwait finance house and then reregister it in the name of the purchaser answer there is no need to repeat registration if the property has been sold after purchasing it and before the registration from the seller to the
*transfer of ownership of goods from the seller to the buyer without registering them in the name of the bank question a property is purchased for the benefit of kuwait finance house by virtue of initial sale contract from a person in kuwait

*as this is the case is it in contradiction with any shari ah controls of murabaha sale transactions answer it is not permissible for the client to open the credit by himself in case of murabaha sale but the bank is the body to open the credit in its name as well as the goods should arrive in the name of the bank and the bank in turn endorses all relevant documents after concluding the selling contract
*the name according to which the credit will be opened question the bank issues bills of lading and clearance permits clearance of goods under murabaha transactions in a wording which indicates that the client has opened the credit considering that the credit is opened in the name of the bank until the client receives the goods

*bearing the expenses of the cancelled credit question please provide the answer regarding who will bear the expenses of a cancelled documentary credit of murabaha transaction if it is cancelled by the purchase orderer or if the purchase promise was not executed for reasons related to the exporter answer the board is of the view that should the execution of the purchase promise failed due to reasons related to the promiser then he has to bear the expenses and the costs of the actual damages incurred thereof
*source fatwas of shari ah board of qatar islamic bank fatwa no

*the difference between the currency of the credit and the currency of the murabaha question how to conclude contracts for selling commodities in documentary credits deferred to the bank answer documentary credit maintained by the bank in its favour regarding murabaha transactions for the purchase orderer if its value will be paid by the bank on deferred date in currency that is different from the currency specified in the murabaha contract then this transaction according to shari ah should not be executed on murabaha basis as it was not possible to determine the cost of goods in the currency specified in the promise
*the shariah alternative is one of the following two things first either to carry out the murabaha transaction based on the currency specified in the credit as well as the client can

*then if the bank paid the credit value and discovered injustice in it against the bank or the client after knowing the cost then there is no objection for both parties to agree in a timely manner without any previous collusion to increase or decrease the sales price as an amendment to the price specified in the previous contract
*second or conduct the sale transaction on the basis of bargaining whereas the bank estimates the price that deems in his favor and agree with the customer to enter into a contract of sale based on this price

*hence there is no room for another bank to be involved in this transaction because if it intervened it will be the purchaser of the goods from the client pursuant to the prices that the client guaranteed for the exporter which he shall immediately pay and hence resell same the goods to him for a higher credit

*therefore in such case the role of the bank is confined to mere financing against a specific interest even if it is called profit because this sale is not concluded between the bank and the exporter and between the bank and the client as in the case of murabaha financing but it is between the client and the exporter and the bank has just paid the price without any role by it in the purchase contract
*thus the transaction turns into a forbidden ayna sale as the request of the client to open the credit at his agent bank is considered as acceptance of purchasing from the client addressed to the exporter who expresses his acceptance by sending the relevant documents or the goods similar to it is the sending of documents to other bank for collection

*question please provide us with the shari ah opinion regarding the possibility of financing a sold deal answer it is clear that this process is absolutely prohibited because it is based on the purchase of debt as the deal was concluded between the seller and the buyer and the price is recorded as a debt against the buyer
*therefore there is no room for any mediation process whether in murabaha basis or in other mode leaving only the option of purchasing the debt with the offered profit margin which is shari ah prohibited and impermissible

*however the correct procedure is to authorize the client to purchase the commodity on behalf of the company before purchasing it to himself in order to enable the company resells it to him on credit basis
*hence in such case the process can not be conducted on murabaha basis because the purchase was already concluded in favour of the customer and any involvement will be just financing on interest and not based on a commodity purchased by the company and sold through murabaha transaction

*the seller of the villa is nullified and refunds or waives the advance payment or convince the seller to pay it back to the client and promise to provide the alternative buyer and that the company should purchase the villa before the conclusion of murabaha sale contract with the client
*question is it permissible in shari ah rules for a client to purchase for himself and for others by way of intrusion fedalah answer based on the information received from the person following up the transaction that the murabaha financing applicant has already

*based on the above mentioned information the behaviour of the client in conclusion of the purchase contract is of dual nature capacity as he purchased of the vehicle value in behalf of himself and based on intrusion purchase shiraa al fodoli it is a disposition which depends on the decision and approval of the other party in behalf of whom the purchase is executed
*expressed his willingness to purchase a vehicle through the company he put in mind to submit his application to al barakah company before entering into a contract with the vehicle manufacturing company and before paying it the advance payment

*however each party is entitled to sell his share to the other party in murabaha mode or in normal sale as well as entitled to lease his share to the other a lease that ends into ownership

*however any expression which implies termination of the previous contract may be used such as to say we have agreed to cancel the previous contract regarding a

*hence what do we call the reply of the importer to accept the offer of the exporter and does the sale transaction completed based on this acceptance or is it just a promise answer if the client received a price quotation from the exporter which is valid for a specific period of time and the client replies by acceptance during this period then the quotation and the acceptance form a contract
*in such case the kuwait finance house is not allowed to engage in this transaction at all but if the acceptance of the client is focused on some imported goods shown in the quotation and there is a condition presumption or custom showing that the prices of the

*to resolve the consequences of the application of the fatwa regarding the missed opportunities for many concluded operations and after deliberation on the subject matter and proposal to resort to rescission iqala between the client and the exporter in a proved way which is free of any condition that binds the kuwait finance house to substitute him even if the client has the desire to conduct the process through him
*question with reference to the answer of the board stated in its eighty fifth minutes regarding the abstention of engagement in any process transaction that was previously agreed upon between the client and the exporter through the signing of the client on the acceptance of the quotation for a fixed term that was issued to him by the exporter

*question is it permissible for the purchaser from the kuwait finance house through murabaha transaction to make an agreement with the principal seller of the goods the exporter to return the goods to him in the event of non sale of all or part of it and replace it with another type or obtain its value in cash considering that the kuwait finance house knows that
*as this is a new transaction between the purchaser who entered into murabaha transaction with the kuwait finance house and the exporter then it is a separate sale contract or barter based on a previous independent mutual promising

*yet due to his desire to buy the promising purchaser undertakes to pay a sum of dinar provided that the seller sells the property to kuwait finance house according to the evaluation price conditioned that the purchase orderer after registration of the property in his name pays the difference between the evaluation price and the price set by the seller
*then based on a survey of property it has been found that the current value of the property which is the subject matter of the murabaha is not more than dk

*however if the transaction is completed and before the conclusion of the contract with the seller we got to know about this agreement with the seller then the kuwait finance house has the option either to sell to the promisor or not

*collusion to return the amount to the client minus a specific commission question murabaha transaction in the commercial sector is conducted through the following steps it commences by the client goes to any local showroom in kuwait and chooses the required commodity such as furniture electrical devices or any other type of items and obtains the price offer that should be addressed by the exporter to the kuwait finance house
*however it was noted and made sure that some clients agree with those showrooms to obtain cash money in lieu of goods in which case the client requests the showroom to send a fictitious offer to the kuwait finance house without any intention to get any goods or even part of it

*hence please provide us with the shari ah opinion regarding this transaction if we discovered this type of dealing after the completion of the transaction

*earnest money paid by the client to the exporter question how can kuwait finance house be involved in a murabaha transaction whereby the client has already paid an earnest money to the exporter answer if a promising purchaser has paid an earnest money before his desire to deal with the kuwait finance house then it is impermissible for the kuwait finance house to be involved in such a transaction unless such earnest money is recovered and the contract between the client and the exporter if any is terminated
*this is in case of new dealers with kuwait finance house but for old dealers who repeated this conduct kuwait finance house shall not deal with them unless a period elapses during which they

*source kuwait finance house book of shari ah fatwas on economic issues part and fatwa no
*reflect obligation towards methods and standards of kuwait finance house

*what action can be done do we accept the process or not answer it is not permissible as the goods must be in the name of the kuwait finance house otherwise the whole process will become a mere financing and this is wrong

*what is the action to be taken answer it is permissible in such case to purchase the house which is promised to be resold to the husband as each of them is an independent person but the value of the property should be investigated and see if it is suitable then the house shall be purchased by the kuwait finance house and resold to the husband for fear of collusion between the couple to purchase the house at a high price and the husband backs out of his promise thereafter
*later on we found that this person is the woman s husband who leases this house from his wife and he does not pay her the rent

*using the client license to import goods from the exporter question is it permissible for the kuwait finance house to use the commercial license of the client who authorized the use of its license to purchase printing machines from the exporter and promised to purchase such machines from us after we possess them answer there is no shari ah objection regarding this matter provided that there should be no condition for the kuwait finance house to sell same to the person who authorized the use of its license but kuwait finance house should have the option of selling it to him or to others
*source kuwait finance house book of shari ah fatwas on economic issues part and fatwa no

*modes of participation between banks in the murabaha contracts question please provide the shariah opinion regarding the permissibility of participation with other islamic banks in murabaha transactions answer there are numerous types that can be applied for participation with islamic banks in the transactions conducted by the bank first the first mode the bank enters into agreement with the islamic banks mudharabah or musharakah agreement according to allocated percentage of profits against its efforts and confined to its share profit in financing
*second the second mode the bank enters into a general frame agreement to set forth the provisions of dealing with the clients and then agrees with the islamic bank on the

*third the third mode the bank purchases the commodity to be sold then before the selling enables other banks to participate as partners which is a kind of partial undertaking or partnership and carries out the selling by itself as an agent for them
*the participation of islamic banks can be made in the form of setting standing instructions of contribution with a specific amount of money in each transaction conducted with the client

*services of charities question the committee of african muslims or other charitable committees in the country offer charitable projects and endow them as waqf to muslims applicants such as digging of wells in africa construction of mosques or printing and distribution of books and quran free of charge as well as many other services
*is it permissible for kuwait finance house to purchase some of these services and sells them to the citizens who want to purchase in murabaha mode to achieve profits for both kuwait finance house and the client who wants to offer charitable works in comfortable installments

*is it permissible to pay in cash the wages of that contractor and consider it as murabaha sale in addition to the murabaha sale of building materials answer the committee sees that the first part of the question regarding the sale of building materials in murabaha is permissible whereas the second part of the question regarding the payment of wages of building contractor in cash to be added to the murabaha sale of the building materials is shariah impermissible because wages thus have become a debt and debt could be paid only in its kind otherwise it changes into usury
*labor services question a client requested us to provide him with different types of building materials in murabaha sale and at the same time asked us to pay in cash the wages of the construction contractor until the completion of the construction project

*let us put the question in another way if murabaha means possession of goods and selling them to the purchase orderer is it permissible to possess services constructively and then sell them to the purchase orderer answer murabaha in the cost of labor is not possible yet if the bank wants to finance all the operations of the project it may enter through muzara sharecropping mudharabah or musharakah modes

*should the costs of agricultural operations exceed the capital of the partnership then the bank is entitled to ask the client to pay his percentage of share in the excess amount
*hence the bank is not allowed to finance the cost of labor through murabaha transaction as well as the purchase orderer is not allowed to have constructive or actual possession of it as they are mere services and not a commodity offered for purchase

*this other party buys from kuwait finance house the equipment on a profit margin and the equipment value is not registered on the buyer s account irrespective of the sale being in cash or credit until the equipment are installed in the building
*it should be noticed that the building where the equipment are installed is not a property of kuwait finance house instead it is the property of another party

*it buys the air conditioning units from the exporter on mutually agreed terms on condition of installation and it desires and agrees with the exporter on the payment method depending on the agreed installation stages

*hence is it allowable to include in the price of murabaha the expenses of installation or should they be deducted from the value of the machine answer there is a general rule in the sale of murabaha that must be understood and applied ie the sale of murabaha is the sale of trust
*however the seller may ask a profit calculation based on the purchase price plus other expenses but if he said i sell you the goods and the profit should be based on purchase price only then it is inadmissible to add any other

*if the goods which are the subject matter of murabaha require installation service and we accepted the condition of the client then we import the goods and install them in the specified site in accordance with the request of the client and in this case it is permissible to add all costs to the price
*hence sale to the client is based on murabaha ie based on the price of the goods plus the cost but we must state frankly that the cost of the goods plus the installation will be so and so a

*question a customer desires to buy some machines from kuwait finance house provided the payment to the exporter is as follows upon delivery after days of delivery pursuant to a letter issued by him confirming the receipt and installation and after the installation and commissioning of the machines and ensuring their workability as it is clear that the credit value includes the price of the goods plus the cost of installation and operation without identifying each separately what is the responsibility of kuwait finance house towards the installation
*answer the board is of the view that this work is shariah permissible but if the sale is in murabaha mode then it is not permitted to mention in the contract that this is the price but rather to be mentioned that it costs the seller so and so

*the responsibilities and commitments are assigned between the parties of the contracts as the exporter is responsible towards kuwait finance house for the delivery of machines and installation whereas kuwait finance house is responsible towards the buyer

*however the sold materials are the goods with the condition of installation which is a well accepted condition in such contracts which is specified in the price
*question we have executed a murabaha transaction with one of our clients which included an assignment of fitting aluminum as per provisions of a contract signed between us and a contractor

*answer if the provisions of the construction contract concluded between kuwait finance house and the contractor stipulate that if there are issues whose completion is of interest then the price shall be determined as in the contract price and kuwait finance house has to pay the value of the new works to the contractor
*with the foregoing in mind may kuwait finance house pay value of the additions to the contractor and sells them to the client taking into consideration that we have already completed our contract with the client and closed his records

*calculation of profits on insurance service question how far is it permissible for the bank to calculate its profits on insurance paid by it to non islamic insurance company insurance of vehicles purchased from the bank is conducted to cover the period of deferred installments in behalf of dubai islamic bank and this is done in two ways first the bank either pays the value of insurance and in this case includes it within the total value of the murabaha and then calculates its profits
*is it permissible for the bank to pay the insurance value to non islamic insurance company and enter it into the transaction value second or the client pays in cash the value of the insurance or otherwise the insurance is conducted through him

*is it admissible for the bank to pay the insurance value to clients who are dealing with non islamic insurance company and enter it into the transaction value answer the bank is not permitted to pay the value of insurance for clients dealing with non islamic insurance companies as long as there is an islamic insurance company as this encourage dealing with nonislamic insurance companies besides the bank is considered as a contractor with such companies as far as it has paid them the value of insurance and obtained the profits
*case the value of insurance will not be considered in calculation of the profits of the bank occasionally the bank pays the insurance value to non islamic company include it in the value of the transaction and then out of which calculate its profits

*profit on the service associated with the commodity question is it permissible for the bank to buy a taxi with a plate number and sells it considering that the plate number itself has a value that is independent of the car price meaning that the price of the vehicle purchased by the bank without plate number is different from the price of the vehicle with a plate number answer purchase of a taxi with a plate number that increases its price compared to the one without a plate number in a murabaha sale is permissible and does not contain any violation of the provisions of shari ah rules
*source opinions of the shari ah board of dubai islamic bank fatwa no

*repetitive murabaha within a specific ceiling question what is the figh view on what is known as repetitive murabaha within a specific ceiling which gives the client a power of attorney to purchase on behalf of the bank and sell to himself at an agreed upon fixed profit and a specific ceiling answer this mode of murabaha is special mode which is mostly applied to customers of small scale business and retailers who need to purchase miscellaneous and repetitive materials which make it difficult to revert to the bank for each operation to make a separate contract
*the reference of permissibility of such mode of murabaha is the permissibility of authorization of the client as agent by the bank to purchase on behalf of it and based on this agency the client sells to himself at a previously agreed upon fixed profit and ceiling this is the majority opinion

*question please advice shari ah opinion about the attached form appendix of sale contract for the purchase orderer particularly with respect to the following is it permissible according to shari ah to set a period of time for the contract of sale of murabaha made with the purchase orderer the client whereby the latter is limited by specific ceiling appropriations and through this ceiling appropriations he can concludes several transactions with the bank against sufficient guarantees the proposed amendments are first article no
*source kuwait finance house book of shari ah fatwas on economic issues parts and fatwa no

*without recourse to the third party and or the second party it only notifies the second and or third parties of any modifications to those provisions answer as for the clarification on the amendments taken by the board of directors to the terms of a murabaha contract regarding identification of time for a murabaha contract what appears to me that this contract is a partnership on a trading matter in accordance with an agreement between the two parties
*however jurists have different points of view regarding the permissibility of determining a specific time for the contract of partnership or mudaraba for example five years

*in view of the above mentioned facts i here by support the opinion that timing of murabaha contract is permissible based on the approval of the two parties if it is essential for the interest of the bank
*the jordanian civil law took the views of jurists who permitted timing of both partnerships and mudaraba as stated in articles and

*for the year regarding the possibility to apply the measure of direct proportionality in calculation of profits depending on the length of the repayment period offered to the purchase orderer the explanation of the question types of goods and commodities that traders are dealing with differ in regard to the speed of the disposal and method of payment of the price
*of these goods some are sold in cash or within a period not exceeding weeks whereas other are sold on credit for periods of two to six months however some of them need periods of at least one year up to two years

*in the light of this need the management of the bank sees that there is a necessity to expand the scope of murabaha on the basis of reduction of the rate for short term transactions and increase of the rate for long term transactions
*however the practice showed that this time limit can not cover various requirements in view of the fact that there are some types of goods which are ready for disposal within a period not exceeding two months and at the same time there are other types of goods which are non saleable unless being distributed with in a period of up to two years

*with a modest profit within while the equipment dealer will not content itself with a profit less than because of the different nature of the discharge of goods and speed of turnover in the market answer having taken cognizance of the well recognized shariah references and based on the study of the topic of the inquiry the following is considered first the profit should be known for both the seller and the buyer in order to have a valid murabaha transaction
*third the scholars said that if the seller said to the buyer i have sold you these goods at a price of ten on the spot and fifteen on credit provided that the option will be for the buyer then the sale is valid

*therefore since the board of directors of the islamic bank is authorized for the management of the bank and has the right of discretion as set out in its act and compliant with the shari ah rules besides what is required by the most likely interest then what appears to me that according to shari ah there is no objection regarding the application of the measure of direct proportionality in calculation of profits depending on the length of the repayment period given to the purchase orderer as well as on the type of goods and the possibility of sale or reimbursement provided that the buyer has to know how much profit is required
*fourth the scholars noted in the murabaha provisions that the profit is considered based on the capital while in the case of sale on credit the price is based on the sold material and as well on the term

*question what is the shariah opinion regarding the basis on which the margin of murabaha is calculated as stated in page of banking tariff which indicates that banks have to apply the margin of murabaha against the actual contribution of the bank in financing after deduction of the value of the down payment margin of seriousness paid by the customer answer sale in murabaha contracts is effected after the bank purchases and owns the goods then offer same to the purchase orderer at agreed upon profit provided that the latter has to pay part of the value of the goods that equal to a specific percentage of the price as down payment and the remaining value paid in installments
*this down payment is part of the price of the goods and not part of the amount paid by the bank and so it is not called the margin of murabaha

*in the event the murabaha margin is changed then it is not a condition to liquidate the previous murabaha and settle its due amounts and reopen the new facility margin as it is possible to enter into a new debt while keeping the debt of the earlier transaction pending or its maturity is confirmed but it should remain as a trust with the debtor in order to be carried out as a balance to the new transaction
*second however in the case of execution of a murabaha transaction as per the framework then according to shari ah there is no room to increase or decrease its profit margin to be connected with the increase or decrease of its term

*it is permissible for the bank to subrogate its client in the investment and gives the client his money and the profits of the period that had elapsed from the date of investment and then the bank receives the profits of the remainder period during which its money had subrogated the money of the client
*subrogation of the client by the bank before the settlement of the debt question the bank undertakes on behalf of some clients to invest their money in international murabaha transactions based on an agency contract that is dedicated for this purpose

*answer subrogation of the bank in place of its client in an international murabaha transaction or in part of it after the bank had carried out the deal of the murabaha and prior to the settlement of the client of his debt resulting from the purchase of the goods on credit is not shariah permissible because the investment have already been effected based on carrying out the transaction and there remains only the debt which is receivable from the debtor of the murabaha
*then for the creditor to get his capital or part thereof from the bank before maturity date against an excess amount which is the profit of the transaction or part of it is considered as spot sale for a credit sale of its kind to another party who is not the debtor with an increased amount versus period of time a case which is considered as a state of usury

*accordingly is it permissible for the bank to receive an acknowledgement from the customer to be attached to the contract that allows the bank to sell the vehicle and deduct its dues if he or she failed to pay three installments as stipulated in the contract answer the acknowledgement stated in the question as reflected in its text is considered as power of attorney to the bank to dispose of the vehicle although the bank is the seller
*second to obtain a verdict to sell the vehicle to meet the entire rights of the first party of the price and return the rest or in the event of non fulfillment of the selling price of the whole dues to claim the balance from the second party

*that the bank guarantees applied in selling vehicles in murabaha are sufficient to preserve its rights
*source fatwas of shari ah board of dubai islamic bank fatwa no

*pursuant to the contract between the bank and the vehicle purchaser the bank received the vehicle which was estimated to have a cash price of dirhams and then re sold it on credit at a value of ten thousand and nine hundred and fifty dirha miss will the profits obtained by the bank as a result of the re sale of the vehicle on credit to the others be considered as his right or belong to the debtor customer answer since the buyer has paid a portion of the price and then failed to pay the remaining installments and the bank confirmed the
*profits from the sale of commodity under the contract question which party is entitled for the profit of a sold vehicle when its owner ceased paying its value a customer who had bought a vehicle in murabaha transaction from the bank paid part of its price and then failed to repay the rest and so had stopped payment

*continuing inability of the client to repay therefore the bank has the right to recover the vehicle based on the contract between it and the buyer
*the bank has the right if so desired to sell the vehicle to others in murabaha transaction and the profit resulting from this sale is a pure property of the bank

*bearing of the expenses incurred before the cancellation question please provide the answer regarding who will bear the expenses of a cancelled documentary credit of murabaha transaction if it has been cancelled by the purchase orderer or in case the purchase promise has not been executed for reasons related with the exporter answer the board is of the view that should the execution of the purchase promise failed due to any reasons related with the purchase promiser then he has to bear the expenses and the costs of the actual damages incurred thereof
*source fatwas of shari ah board of qatar islamic bank fatwa no

*is the client entitled to recover the full amount of the profits of the transaction or do the bank deserve to deduct a portion of it and

*as it is shari ah permissible to compensate the seller for the benefit obtained by the buyer in the event of the rejection of defected sold material compared to the situation of altasseryah and pursuant to the prophet saying whoever buys a sheep to milk it and found that it could not be milked for a long period musrah he has three alternatives either to keep it return it or return it to the owner along with one sa measure of dates
*therefore the board according to shari ah opinion sees no objection for the bank to obtain a portion of the profits of the murabaha and the rest returned to the client provided that this portion should be fairly estimated in accordance with the work and expenses incurred by the bank

*cancellation in order to enter into executed transactions question please provide shari ah opinion about a client seeking murabaha financing for purchasing an already sold villa answer according to the client s request this process has been entered into by the customer with the seller of the villa who paid an advance payment and completed the purchase for himself and in his name
*however the correct procedure would have been to authorize the client to purchase the commodity on behalf of the company before purchasing it to himself in order to enable the company to resell it to him on credit basis

*consequently there is no way to finance this transaction in compliance with shari ah unless the contract between the client and the seller of the villa is nullified and the advance payment is returned or waived pr either convincing the seller to return it to the client based on a promise to provide an alternative buyer then the company should purchase the villa before the conclusion of murabaha sale contract with the client
*yet the seriousness of nullification of the contract should be confirmed and should not be connected with the purchase of the villa by al barakah company

*subject introduction general rules and principles of murabaha general provisions of murabaha steps and procedures of murabaha contract suspicions raised on murabaha contract timing of murabaha contract general terms of murabaha transaction for the purchase orderer amending the articles of murabaha contracts actions and agreements associated with a contract provisions of foreign exchange in international murabaha registration of murabaha transaction at the exchange rate prevailing on the day of purchase from the exporter
*buying currency from a client during payment to the exporter selling price for the client purchase orderer inclusion of bank employees costs basis of charging selling price to the client customs clearance cost offering special prices to certain categories of clients adding bonus amount payable to distributors

*buying and selling of shares in a company client guarantee for commodity soundness

*selling goods on murabaha before possession re evaluation of commodity buying and selling of a commodity already sold on murabaha mode buying and selling of lands without registration the price of a commodity bought by the bank ignorance of the commodity specifications purchase of travel tickets and selling them on murabaha existence of damage deficiency or otherwise relieving the exporter from defects found in goods delay of goods arrival conditions regarding installation of the contracted commodity
*murabaha in shares doubtful prohibited commodities hypothecation of commodity sold in murabaha mode damages resulting from delay of goods delivery delay in payment of goods price to the first seller establishment and selling of a company on murabaha basis expropriated property deals contracted prior to murabaha contract between the client and the bank commodity storage expenses and demurrage penalty etc


 ''Please note, This is an auto generated summary based on sentances position in the document and other factors''
== DOCUMENT WORD ANALYSIS ==
=== Main Category ===
: AlHuda Material\islamic economics


=== KeyWords ===
contract finance goodacceptable purchase murabaha fatwa client shariah price transact kuwait permissibility sale source profit islam issuance commodities promise credit



== RELATED DOCUMENTS ==
:[[Fatwa on Murabahah]] 
:[[Shariah Opinion (Fatwa)]] 



== DOCUMENT REFERENCES ==


=== Number of Pages ===
512


=== Published Date ===
2007-06-18 14:15:24


== Full Document ==


[http://45.40.136.134/~hodhood/HodHoodDocuments/IslamicFinance/IslamicEconomics/Fatwa%20on%20Murabahah.pdf.pdf Read the Full Document]


[[Category:Islamic Finance]]

[[Category: Islamic Economics]]