(4-18) Buying and selling of a commodity already sold under Murabaha mode

(4-18) Buying and selling of a commodity already sold under Murabaha mode

Question (1)

A client has approached us to purchase a vehicle on credit Murabaha from a certain source. 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. Having checked the transaction, it was clear that we would be buying a vehicle whose first owner is indebted to the Kuwait Finance House for this car.

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, 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,

Source:

Kuwait Finance House, Book of Fatwas in Economic Issues, Parts (1), and (2), Fatwa No.(327).

Question (2):

We sell a car to a client. Due to his dire need to cash, we allow him to dispose of the car according to the procedures followed. 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. It is likely that such a process might be repeated with another client.

What is the Shari'ah opinion with regard to repetition of ownership of a single car by more than one client, selling and buying and not as debit transfer?

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.

Source:

Kuwait Finance House, Book of Fatwas on economic issues, Parts (1), and (2), Fatwa No.(339).

Question (3):

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. Please provide the Shari'ah opinion with regard to this transaction.

Answer:

No objection to this issue in so far as Shariah conditions of Murabaha sale are honored in both cases. We have explained these conditions in other occasions earlier. The deal is not part of Ayna sale wherein the first client would sell the commodity on credit and buys it from him on immediate cash price lesser than the first price.

Muslim scholars agreed in the prohibition of Einah sale if intended to be on usury. The disagreement between the scholars happened to

be on the accuracy of the contract from judicial view. The majority conceive that the contract is void for being a cover up of the prohibited usury. 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. Imam Al-Shafie and some other scholars opine that the contract is accurate judicially. They leave aside the prohibited intensions to be judged in the life hereafter. According to their views, evidences are not sufficient basis for judgment on contract nullification.

Source:

International Islamic Bank, Book of Fatwas Manual on Banking Transactions, Publisher, Movement of Islamic Economy, Fatwa No. (6).

(4-19) 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. 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.

Fourth: The buyer requests that the land remain registered under the bank's name to be waived in future in favour of either the client or some one else or alternatively the bank would grant the buyer an authorization to dispose of the land as he may wish.

Answer

In order for a Murabaha contract to be proper, the commodity must

be sold to the buyer. Since the sale object in this case is a property whose ownership cannot be transferred to the other party, and its sale cannot be effected unless it is registered at the concerned department. Thus, unless such requirements are fulfilled, the client cannot be considered as a buyer and the bank will not be considered a seller. However it should only be deemed as an agreement on a sale contract, but such an agreement would not preclude the bank from entering into the contract if the price soared. Likewise, it wouldn't prevent the client from declining if the price goes down or for any other given reason. 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 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

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 (1), and (2), Fatwa No. (28).

(4-20) The Price of a commodity bought by the bank Question:

An accredited auto agency in Kuwait provides all suppliers, including those in the commercial sector, with Suburban automobiles for an amount of (…….. K Dinars). 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 (……) 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. As such, if the promising buyer insists to follow that method, we shall request that we can not be involved in this dealing, and he 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. As such, if the promising buyer insists to follow that method, we shall request that we can not be involved in this dealing, and he

Source:

Kuwait Finance House, Book of Fatwas in economic issues, Parts (1), and (2), Fatwa No.(328).

(4-21) 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.

Source: Kuwait Finance House, Book of Fatwas in economic issues, Parts

(1), and (2), Fatwa No.(306).