(4-2) Goods not allowed for Importation Except for the Purchase orderer

(4-2) 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.g. 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. These provisions are procedural ones and have no relationship with the contracting essence. Meantime, it is important to observe the administrative requirements in terms of this transaction's feasibility because lack of honoring the promise will lead to keeping the sellor under the 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. These provisions are procedural ones and have no relationship with the contracting essence. Meantime, it is important to observe the administrative requirements in terms of this transaction's feasibility because lack of honoring the promise will lead to keeping the sellor under the

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. Additionally, this transaction is dubious as the banks activities are confined to financing operations only.

Source:

Kuwait Finance House, Book of Fatwas on Economic Issues, Part (1), and (2), Fatwa No.(305).

(4-3) Liability of Goods Damage Prior to Delivery Question (1):

A client has approached Kuwait Finance House on the intention of buying certain goods. 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.

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. The Finance House, on its turn, should revert to the exporter or the insurance company, whichever it prefers.

In case of a partial or total damage, which may cause the goods to

be used as intended, then, this will be considered as a loss. But if it be used as intended, then, this will be considered as a loss. But if it

Source:

Kuwait Finance House, Book of Fatwas on Economic Issues, Part (1), and (2), Fatwa No.(142).

Question (2):

With reference to the provisions of Article No. 22, Para A & B of the bank regulation No. 13 for the year 1978, I would like to advise you that the bank was not exposed to any loss in the joint investment operations for the year 1982 except for a loss of 749,295 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

Murabaha method to the former. A Murabaha sale contract has duly been signed with the purchase orederer.

Second: Based on the aforementioned contract hereinabove (item No. 1), the client has requested the bank to procure sanitary ware from abroad on Murabaha.

Third: The bank has opened documentary credit for goods importation from abroad. The client has urged the bank to have the goods insured against consignment loss only. 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.

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. Such high installments would negatively influence the client's profit, bearing in mind 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. Such high installments would negatively influence the client's profit, bearing in mind

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. Breakage damages were estimated at 2374 Dinars.

Sixth: The client claimed the bank to compensate him against value of the damaged goods for not delivering the entire shipment to the designated delivery point. 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 50% of the loss while the client would incur the remaining 50%.

Seventh: In view of the above settlement, the net loss value incurred by the bank has amounted to 295,794Dinars after having deducted the profit generated from the Murabaha transaction.

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 1982. The matter will be presented to the board of directors for ratification.

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. Damage value was estimated at 2374 Dinars.

Upon request of the client for compensation for damaged goods, negotiations have been carried out resulting in an amicable solution to the effect that the bank would bear 50% of the loss while the client, too, would shoulder the remaining 50%. After having put the transaction profit aside, the bank was liable for

…………..Dinars taking into consideration that the damage has resulted due to force majeure in which the buyer was not involved.

It is understood that the Islamic bank regulation requires that imported goods be totally insured even if they are insured against damage prior to delivery. Shari'ah on the other hand do not necessitate insurance coverage. 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). This is because if the sold goods were damaged before being received, in such case it is definite that the seller is the guarantor.

According to Article No. 25, para E, of the Jordanian Islamic bank regulation No. 13/1987, the board of directors enjoys powers including the following:

Ratification of settlements, reconciliations and acceptance of arbitration in cases approved by the bank management. Therefore, the board of directors is empowered if such settlemant is proved accurate to ratify the settlement, approve it and record the loss Ratification of settlements, reconciliations and acceptance of arbitration in cases approved by the bank management. Therefore, the board of directors is empowered if such settlemant is proved accurate to ratify the settlement, approve it and record the loss

Source:

Jordan Islamic Bank for Finance & Investment, Book of Fatwas, Part (1), (2), Fatwa No.(34).

Question (3):

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.

Source:

Fatwas of the Shari'ah Board of Qatar Islamic Bank, Fatwa No. (44).