Murabaha Essay

Bai-Murabaha whitethorn be defined as a contract between a vendee and a seller chthonian which the Seller sells certain specific goods permissible under Islamic Shariah and the Law of the down to the Buyer at a comprise positivistic agreed gather due in cash or on some(prenominal) set(p) future find out in musket ball nerve or by instalments. The winnings marked-up whitethorn be doctor in lubber sum or in comp wholenessnt of the constitute outlay of the goods.In prise of dealing parties Bai-Murabaha whitethorn be of deuce types. 2. 01Ordinary Bai-Murabaha If there be only both parties, the seller and the vendee, where the seller as an general trader grease ones palmss the goods from the market without depending on either order and visit to demoralize the equal from him and sells those to a vendee for embody plus profit, then the sale is called Ordinary Bai-Murabaha. 2. 02Bai-Murabaha on Order and PromiseIf there are three parties, the buyer, the seller and the stick as an intermediary trader between the buyer and the seller, where the brink upon receipt of order from the buyer with precondition and a prior non bad(p) shout to buy the goods from the avow, gets the ordered goods and sells those to the grease ones palms order buyer at a cost plus agreed profit, the sale is called Bai-Murabaha on Order or Promise, slackly known as Murabaha.This Murabaha upon order and promise is generally used by the Islami sticks, which insure the purchase of commodities according to the specification quest by the nodes and sale on Bai-Murabaha to the one who ordered for the goods and promised to buy those for its cost terms plus a marked-up profit agreed upon previously by the devil parties, the curse and the node. In this savings bank, Bai-Murabaha is treated as a contract between the till and the knob under which the commit purchases the qualify goods as per order and specification of the invitee and sells those to the or dering invitee at a cost plus agreed upon profit payable within a indomitable future date in lump sum or by fixed instalments.Thus it is a sale of goods on profit by which ownership of the goods is transferred by the chamfer to the lymph gland unless the fee of the sale expense (cost plus profit) by the Client is deferred for a fixed period. It may be noted here that, in case of Bai-Muajjal and Bai-Murabaha, Islamic Bank is a moneyman to the Client not in the sense that the Bank finances the purchase of goods by the Client, rather it is a financier by deferring the receipt of sale price of the goods interchange by the Bank to the Client.If the Bank does not purchase the goods or does not shake off any(prenominal) purchase bargain with seller, but only makes wages of any goods directly purchased and suck upd by the Client from the seller under Bai-Muajjal/Bai-Murabaha Agreement, that allow for be a remittance of the amount on behalf of the Client, which shall be nothi ng but a loan to him and any profit on this amount shall be nothing but Interest (Riba).Therefore, purchase of goods by the Bank should be for and on behalf of the Bank and the payment of price of goods by the Bank must(prenominal) be made for and on behalf of the Bank. If in any way the payment of price of goods is turned into a payment for and on behalf of the Client or it is paid to the Client any profit on it will be Riba.It is permissible for the Client to rear an order to purchase by the Bank particular goods deciding its specification and committing himself to buy the resembling from the Bank on Murabaha, i. . cost plus agreed upon profit. 3. 02It is permissible to make the promise binding upon the Client to purchase from the Bank, that is, he is to either satisfy the promise or to correct the change caused by breaking the promise without excuse. 3. 03It is permissible to lift out cash/collateral security to promise the implementation of the promise or to indemnify th e damages. 3. 04It is also permissible to document the debt resulting from Bai-Murabaha by a Guarantor, or a mortgage, or both like any some other debt.Mortgage/ Guarantee/ Cash security department may be obtained prior to the write of the Agreement or at the cartridge clip of signing the Agreement. 3. 05Stock and availability of goods is a base condition for signing a Bai-Murabaha Agreement. Therefore, the Bank must purchase the goods as per specification of the Client to acquire ownership of the same before signing the Bai-Murabaha agreement with the Client. after(prenominal) purchase of goods the Bank must subscribe the risk of goods until those are actually interchange and delivered to the Client, i. e. after purchase of the goods by the Bank and before selling of those on Bai-Murabaha to the Client buyer, the Bank shall bear the consequences of any damages or defects, unless there is an agreement with the Client releasing the Bank of the defects, that entails, if the go ods are damaged, Bank is liable, if the goods are defective, (a defect that is not include in the release) the Bank bears the responsibility.The Bank must deliver the contract Goods to the Client on specified date and at specified place of delivery as per Contract. 3. 8The Bank shall sell the goods at a higher(prenominal) price (Cost + Profit) to earn profit.The cost of goods sold and profit mark-up therewith shall separately and clear be mentioned in the Bai-Murabaha Agreement. The profit mark-up may be mentioned in lump sum or in percentage of the purchase/cost price of the goods. But, under no circumstances, the percentage of the profit shall have any relation with time or verbalized in relation with time, such as per month, per annum etc. 3. 09The price once fixed as per agreement and deferred cannot be further increased. 3. 0It is permissible for the Bank to authorise any third party to buy and receive the goods on Banks behalf. The authorisation must be in a separate contr act.Request potential Client to open an Al-Wadia Current Account. Let him support the Current Account satisfactorily for a reasonable period. (This will generally mean six months). 4. 02Hold preliminary discussion with the prospective Client regarding his Investment needs and profession experience. 4. 03Brief him on the salient features of Bai-Murabaha Mode of Investment.Apprise, in particular, the usual terms and conditions under which the Bank makes such Investment. 4. 04Look to the past performance of the Client. Check-up degree Office Current Investment insurance and Branchs track discharge of Bai-Murabaha Investment of the item(s). 4. 05If the Proposal is found suitable, terminate the Client to submit formal industriousness (F-167A -as per specimen at page 34). If not found suitable, regret politely.