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The Principles and Practices of Shariah in Islamic Finance - page 29 / 49

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Rescheduling of payment schedule

Cost disclosure

Effect of non-disclosure of cost

1

  • 44.

    The payment of the Murabahah may be rescheduled to suit the financial position of the purchase orderer or for any other reason except an increase in amount to the selling price due to the extension of time or market condition is not permissible.

    • 5.3

      Disclosure of Purchase Price (Trusteeship)

  • 45.

    The purchase cost of the asset payable by the IFI to the seller shall be disclosed to the purchase orderer before concluding the Murabahah contract. The cost shall include the purchase price and expenses related to the acquisition of the assets or goods.

  • 46.

    The failure of the IFI to properly disclose the purchase price as cost to determine the mark-up to the purchase orderer shall render the Murabahah contract null and void ab initio.

Illustration 12: Intentional Misrepresentation of Purchase Price

An IFI agrees to provide Murabahah financing of RM150,000 for a vehicle at a disclosed cost of purchase of RM100,000 and mark-up of RM50,000. Additional information obtained by the customer from the supplier indicates that the cost of vehicle is RM90,000. The Murabahah contract is null and void ab initio due to the failure of disclosing the actual cost of purchase.

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