(7) Unauthorization (Fedalah) in Murabaha

(7) Unauthorization (Fedalah) in Murabaha

(7.1) Unauthorization (Fedalah) in Murabaha Transactions Question (1):

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 "Al- Barakah Company" before entering into a contract with the vehicle manufacturing company and before paying it the advance payment. Thence submitted his application to "Al-Barakah Company" in order to enter into the transaction with the remaining percentage of share which he did not pay yet. 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 10% of the vehicle value in behalf of himself and 90% as an unauthorized person (Al-Fodoli) in behalf of the company, i.e. on the basis of the

unauthorized person's purchase (Shiraa Al-Fedoli), This type of disposition depends on the decision and approval of the other party (on behalf of whom the purchase is made) if he approved this act, then it will be valid, hence the Company is free to accept or reject it. In case of approval the Company will own 90% of the vehicle and is obliged to pay its share in price, thereby the partnership of the vehicle (which is Shirkat –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. However, each party is entitled to sell his share to the other party in Murabaha mode or in normal sale or lease it, a lease that end into ownership. The selling of the share can be at once or in partial basis (Diminishing Partnership). This principle is applicable within the minimum extent. It is not a general principle, as it is based on the intent which is hidden and can not be verified.

Source:

Dallah Al-Barakah Group, Development and Research Department, " Book of Shari'ah Fatwas and Answers in Banking Applications", part (1), Fatwa No. (62).

Question (2):

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. He got the initial approval from Kuwait Finance House. Then he himself went to the supplier and received the agreed upon vehicles without obtaining an order issued by Kuwait Finance House to the supplier. 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?

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. Hence, upon the acceptance of Kuwait Finance House of this behaviour, the other normal procedures regarding this transaction should be completed.

Source:

Kuwait Finance House, Book of Fatwas on economic issues, part (1), and (2), Fatwa No. (17).

Question (3):

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?

Answer:

It is permissible, provided that Kuwait Finance House accepts such behaviour from this unauthorized (Fedoli) client.

However, the client by this behaviour is considered as an agent. Hence, the sale is concluded for the benfit of Kuwait Finance House since later permission is considered like prior agency.

Source:

Kuwait Finance House, Book of Fatwas on economic issues, part 1 and 2, Fatwa No. 24.

(8)

Provisions of Profit in Murabaha Transactions