Murabahah
The
Word Murabahah has been derived from the Arabic Word Ribah which means Profit. It can be denoted as sale with Profit. It
is a specific kind of a sale where the seller sells and asset to a buyer at a
profit. The profit added is agreed upon by the buyer and the seller. It is
therefore the obligation of the seller to disclose to the buyer the amount that
he/she purchased the asset so that they can agree upon the profit and the price
to sell the asset. This can be Proven from the Quran at: “And Allah has
permitted trade” [2:275]. .( "وَأَحَلَّ اللَّھُ الْبَیْعَ وَحَرَّمَ الرِّبَ ا" (البقرة: 27
What
is Musawamah and how does it differ from Murabahah?
Musawamah
is a kind of a sale where the seller does not disclose the cost of the asset
that he/she is selling to the buyer. The seller therefore is under no
obligation at all to disclose the buying price for the commodity to the buyer
during price negotiations. This happens mostly when it is difficult to
determine the cost of the product or when the cost is included in a pool of
other products. The major distinction between Murabahah and Musawamah is that
the seller does not disclose the initial cost of the asset in question.
What
is Bai’ Mu’ajjal (sale on deferred payment basis)?
This
is a type of sales of goods where the bank purchases products on behalf of the
buyer. The bank then sells the goods to the buyer at a profit with the option
of the buyer to pay for the goods in installments that are agreed upon by the
bank. The buyer can also be asked to sign a promissory note but the bill or the
note cannot be sold to a third party at a different price from its face value.
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