Professional Documents
Culture Documents
CONTENTS
1. INTRODUCTION
2. LEGAL EVIDENCE OF AL-BAI BITHAMAN AJIL FROM AL-QURAN AND
SUNNAH OF RASULULLAH SAW
3. THE OBJECTIVES OF AL-BAI BITHAMAN AJIL
4. TENET OF AL-BAI BITHAMAN AJIL
5. CONCEPTUAL MODEL OF AL-BAI BITHAMAN AJIL.
6. AL-BAI BITHAMAN AJIL AS A FINANCIAL FACILITY
PRACTICE BY ISLAMIC BANK IN MALAYSIA.
7. THE LEGAL ISSUES OF AL-BAI BITHAMAN AJIL
INTRODUCTION
INTRODUCTION
And Allah has permitted trade and forbidden riba.
O you who believe! Whenever you give or take credit (tadayantum) for a stated term,
set it down in writing.
SUNNAH :
(a)
(b)
In another Hadith, it was narrated by Aisha RA that the Rasulullah SAW bought
a meal from one Jew with deferred payment, and Rasulullah SAW mortgaged
his iron shirt which is made from iron.
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(i)
providing financing for the purchaser who could not afford make
the full payment of the purchase price of the purchased goods
upfront so as to reduce the hardship and burden for the purchaser
in providing the full payment of purchase price to purchase the
goods;
Subject matter, exist during the time of purchase, known by the seller
and the purchaser, lawful and permissible or halal under Shariah,
the seller is the owner of the subject matter and the subject matter
could be delivered to the purchaser which include the transfer of
ownership; (BBA is subjected to the condition for transaction for nonribawi items only. If involve ribawi items, the ribawi items have to be
of different categories and types).
Aqad which are ijab and qabul, must be absolute, decisive and
definite language to be made in one session.
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CONCEPTUAL MODEL OF
AL-BAI BITHAMAN AJIL
BBA is a sale of good with deferred payment at agreed selling price agreed by the
seller and the purchaser.
Under BBA the goods is delivered by the seller to the purchaser on the spot. The
payment of the purchase price by the purchaser to the seller is on deferred payment
or postponed to an agreed future either
(i)
(ii)
(iii)
(iv)
Any increament of the selling price of goods under BBA is a profit for the seller and it
was agreed between the seller and the purchaser. Thus, it does not involve any
attachment of interest or riba as in the conventional deferred installment payment
for example Riba Nasiah.
The selling price offer by the seller to the purchaser is either in form of -
(i)
(ii)
(a) The Property Purchase Agreement (PPA), Islamic bank purchase the
property from the purchaser at the purchase price, which usually the
amount of financial facility required by the purchaser.
(b) The Property Sale Agreement (PSA), the customer undertake and
guarantee to re purchase of the financed property for the Islamic bank at
the agreed selling price between the Islamic bank and the purchaser.
(c) Some other important documents to be executed by the purchaser for the
Islamic would be the security documents for securing the installment
payment of the facility amount are as follows
(i) Legal Charge, for the property with individual titles; or
(ii) Deed of Assignment and Power of Attorney executed by the
purchaser in favour of the Islamic bank, for the property under master
title and has yet to be issued with individual titles; and
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Facts: Zulkifli bought a double storey link house through BBA from his employer at
that time for the sum of RM 346,000. Then, Zulkifli resigned and at his request, the
BBA was restructured. Under the revised BBA the banks selling price of the house
was RM992,363.40 payable over a period of 25 years
Issue : (i)What is the amount Zulkifli has to pay the bank in the event of default
(ii) In the event of a default before the end of tenure, could the bank claim as
part of the sale price or bank selling price the profit margin for the
unexpired tenure of the facility
o Decision : Granting the order for sale and reducing the amount of repayment
o
Principles : (i)
If the customer is not given the full tenure to pay the selling price,
then the bank is not entitled to claim for the bank's profit margin for the full tenure, as
to allow the bank to do so would mean that the bank is able to a earn a profit twice
upon the same sum at the same time.
(ii) The profit margin charged on the unexpired part of the tenure is unearned profit
and not actual profit, and therefore cannot be claimed under BBA.
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Arab Malaysian Finance Berhad V. Taman Ihsan Jaya Sdn Bhd & Ors;
Koperasi Seri Bukit Cheraka Berhad (Third Party) [2009] 1 CLJ 419
Facts: Tmn. Ihsan S/B obtain BBA facility from AMFB. Tmn. Ihsan S/B
defaulted in the payment of the bank selling price and AMFB applied for
an order for the sale of property.
Issue : Tmn. Ihsan S/B argued the letter of offer, PPA, PSA and the
Arab Malaysian Finance Berhad V. Taman Ihsan Jaya Sdn Bhd & Ors;
Koperasi Seri Bukit Cheraka Berhad (Third Party) [2009] 1 CLJ 419
Legal implication:
Sections 51to 58 of the CBA further clarify and enhance the Shariah
governance framework for Islamic Financials Intitutions in Malaysia (see
Hasan, 2010: 105-108). The CBA provides a clear and precise legal
framework for Islamic finance, particularly regarding the legal status of
Shariah resolution and the Shariah Advisory Council (SAC) as the highest
authority on Islamic banking and finance.
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Facts: Two sets of appeal went to Court Of Appeal. It was decided that
BBA contact was valid and enforceable. The cases were sent back to
High Court to decide on the quantum of claim and amount due. BIMB
was unsatisfied with the decision and appealed to Court of Appeal
Issue : Whether there is an obligation for the defendant to pay full sale
price stated in the Property Sale Agreement irrespective of a premature
termination
Decision : Claim to recover full sale price was granted
Principles : (i)BBA are sale contracts and the court must give full effect
to the same
(ii) Ibra is applicable in early settlement cases and not in default
cases
(iii) The bank is allowed to claim balance sale price
(iv) Court should not interfere with the contract if there is no vitiating
factors to do so
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CONCLUSION
BBA has attracted different and various interpretation of the courts in its
decision which is finally demonstrate the level of understanding of people at
large especially the judges on the subject of BBA as a mode of financing
facility by Islamic bank.
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