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The Principles and Practices of Shariah in Islamic Finance - page 18 / 49

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18. Murabahah is a contract that comprises several principal features namely: (i) price of Murabahah sale; (ii) asset of Murabahah sale; (iii) duty of full disclosure of cost and profit; and (iv) Wad (promise) to buy.

Pric , asset, disclosure of cost and Wad

5.1 Price of Murabahah Sale

19. The Murabahah sale price shall be determined based on the disclosed acquisition cost with an added mark-up amount or percentage to be determined prior to the conclusion of the Murabahah contract.

Murabahah sale price consists of original cost plus a mark-up

20. The mark-up, in the form of an absolute amount or a certain percentage of acquisition cost shall be determined and specified before the conclusion of the Murabahah contract. Any benchmark adopted to determine the mark-up shall be specified.

Determination of mark-up

21. The determination of the mark-up may either be based on an agreed percentage of acquisition cost or specified amount for a known and agreed currency.

Certainty of mark-up

22. The agreed mark-up that is determined shall not be subjected to price variation or affected by currency fluctuation as payment due is pre-determined at agreed currency.

Pre-determined fixed mark-up

Section 5: Features of Murabahah Contract

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