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The Principles and Practices of Shariah in Islamic Finance - page 38 / 49





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75. The purchase orderer who promised to purchase and to take delivery of asset but refused to enter into the Murabahah transaction upon purchase made by the IFI as per agreed terms shall be held liable for breach of Wa d and shall compensate for related actual costs incurred by the IFI for the disposal of the asset to a third party and the shortfall in the disposal price compared to the purchase price.

Illustration 20: Liability of Purchase Orderer on Wa d

A purchase orderer applies to an IFI to acquire a machine which costs RM50,000 through a Murabahah contract. The IFI approved his application and requested the purchase orderer to sign a unilateral promise to buy the machine after the acquisition of the machine by the IFI. After the IFI purchased the machine, the purchase orderer refused to buy the machine from the IFI and hence breached the promise (Wad). IFI disposed of the asset at RM45,000 and incurred an additional disposal cost of RM2,500. IFI shall be compensated for RM7,500 by purchase orderer.

76. The purchase orderer at the stage of Wad may act as a Kafil (guarantor) to the IFI to guarantee the safe delivery of the asset by the supplier to the IFI. Any loss incurred due to late delivery of the asset to the IFI shall be borne by the purchase orderer as the Kafil. Damage or defects that arise after the delivery of the asset to the purchase orderer shall not be covered under this guarantee arrangement.

Breach of Wad (Promise) to

receive the asset

Purchase orderer as Kafil for timely delivery of asset


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