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The Principles and Practices of Shariah in Islamic Finance - page 17 / 49





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Basis of legitimacy

General permissibility of sale in the Quran

General permissibility of sale in the Sunnah

Consent of majority Mus im

Analogy on the permissibility of awliyah sale

Section 4: Legitimacy of Murabahah Contract

  • 13.

    The legality of Murabahah is deduced from the Quran, the Sunnah of the Prophet Muhammad (SAW), the consent of the majority of Muslim jurists and Qiyas (analogy).

    • 4.1

      The Quran

  • 14.

    The Quran generally allows the sales contract. Among others, the Quran says to the effect that“…and Allah permitted trade and prohibited usury”(2:282).

    • 4.2

      The Sunnah of The Prophet Muhammad (SAW)

  • 15.

    There is no direct juristic authority from the Sunnah of the Prophet (SAW) on the legitimacy of Murabahah sale. It is deemed permissible based on the general permissibility of sale in Islamic law. The Prophet Muhammad (SAW) was reported to have said: “The best earning is what man earns with his own hands and from a permissible trade” (Narrated by Hakim).

    • 4.3

      The Consent of The Majority Muslim Jurists

  • 16.

    Islamic jurisprudence literatures indicate that the legitimacy of Murabahah is based on the consent of the majority Muslim jurist.

    • 4.4

      Analogy (Qiyas)

17. Since the Prophet Muhammad (SAW) has approved the Tawliyah sale (sale based on cost price), the sale on mark-up will be equally permissible on the basis of analogy on the Tawliyah sale. The determination of cost and making the cost known to the buyer are common in both the Tawliyah and Murabahah sale.

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