Understanding Islamic Finance - Doha Academy of Tertiary Studies

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152 Understanding Islamic Financeit would be unjust not to purchase the commodity by using Khiyar al Ro’yat. 96 Shaikh AlDhareer writes in this regard:“The Hanafis and the Shafi’is have held in one view that the sale is not binding on the buyer.Upon viewing, he can revoke it or ratify it. It means that he has the option of (rejecting) uponseeing the object even if it is found to be consistent with the manner described; for not seeing theobject obstructs the completion of the transaction. Since this sale is known as the sale with theoption of seeing, it must include such option. The Malikis and the Shafi’is have held, in one oftheir views, and so did the Hanbalis, that the sale is binding on the buyer should he find the objectcorresponding to the way earlier described to him. But if he found it different, he has the optioneither to ratify the sale or to revoke it. This is a manifestly cogent view”. 97In Salam and Istisna‘a, Khiyar al Ro’yat is not available if the goods are according to thespecifications already stipulated.In the case of Murabaha to Purchase Orderer, the client would have the options of defectand specification/quality. If the assets or the goods required by the client are not accordingto the stipulated specification or have any material defect, the client will have the right notto purchase the goods as per his promise, and if Murabaha is executed, he will have theright to rescind the sale unless the bank gets a certificate of fitness just at the time of thesale after giving the client sufficient opportunity to examine the asset.6.13 SUMMARYA valid sale contract must fulfil the following requirements.1. The parties must enter into the contract voluntarily with full/free consent.2. Both parties must be fully competent – intellectually sound adults.3. The subject of the sale must be a property of value acceptable in Sharīáh – it must bepure, lawful (Mubāh), clean, wholesome and, of course, marketable and having legal andcommercial value. From the Sharīáh perspective, its underlying cause must be lawfuland it must not be proscribed by Islamic law nor a nuisance to public order or morality.4. The seller must be the owner of the object being sold, or he must be authorized to sellby dint of contracts like partnership, agency or guardianship (of a minor).5. The seller must be in a position to deliver the goods.6. Both parties must take cognizance of the object of the sale by examining or by adequatedescription.7. The price must be precisely determined and known to the parties at finalization of thecontract.8. All permissible goods can be purchased/sold on credit in exchange for cash – the countervalues not being homogenous. This means that all goods that are not of the Thamankind can be sold for currency on credit.9. The credit price of a commodity can be more than its cash-n-carry price. But the pricemust be precisely determined when the sale contract is completed. In the case of latepayment by the debtor in a credit sale, the seller cannot get any compensation from thebuyer.96 Ibn Hazm, 1988, 7, p. 216.97 Al-Dhareer, 1997, p. 33 (quoting from Al-Bada’i, 5/392; Al-Muhazzab, I/263; Al-Muntaqa or Al-Muwatta, 4/287).
Trading in Islamic Commercial Law 15310. Money cannot be traded as a commodity and financial transactions must be supportedby genuine trade or business-related activities.This chapter has also discussed elements of Gharar and the prohibited sales due to theinvolvement of Gharar and Riba. The Sharīáh position of Hiyal (legal ruses) and Bai‘ al‘Inah have been discussed to describe the possible limits within which products can bedeveloped by Islamic banks. The concept of option (Khiyar) and its relevance to the Islamicbanking business has also been discussed in some detail.
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Understanding Islamic FinanceMuhamm
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AcknowledgementsCredit for this wor
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Part IFundamentals
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2Distinguishing Features of the Isl
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1. Ownership of commodities and wea
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3The Main Prohibitions and Business
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The Main Prohibitions and Business
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10Forward Sales: Salam and Istisna
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Forward Sales: Salam and Istisna‘
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12Participatory Modes: Shirkah andi
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Measurement at the end of the finan
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13Some Accessory Contracts13.1 INTR
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16Takaful: An Alternativeto Convent
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GlossaryAhādith: Plural of Hadith,
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Glossary 487Bai‘ bil Wafa: Sale w
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Glossary 489Hukmi (Qabza): Construc
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Glossary 491Khiyar al-Shart: A righ
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BibliographyEnglish SourcesAAOIFI (
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English Sources 499Hasanuz Zaman, S
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English Sources 501Somerville, H. (
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