Subject : Murabaha Contract of Sale is Permissible in Sharia

Fatwa Number : 429

Date : 03-01-2010

Classified : Current Financial Issues

Fatwa Type : Search Fatawaa

Question :

I purchase household appliances, cell phones, furniture, and the like in cash and sell them in installments for a higher price. I also deliver the item to the buyer`s house. In case an item got damaged before being delivered to the buyer, the latter isn`t liable for it. Moreover, I take no compensation from the buyer in case he/she backed out of the deal and they are free from liability. Is this kind of transaction permissible?

The Answer :

All perfect praise be to Allah the Lord of the Worlds. May Allah`s peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

The above form of sale is permissible if the asker adhers to the conditions he mentioned above. According to scholars, this is called {Murabaha for the purchase orderer}. The most important conditions in this sale transaction is that the financing party takes actual possession of the commodity before selling it to the buyer and it is liable for any loss or damage. Moreover, not compelling the purchaser to take the commodity if he/she decided to back out of the deal before receiving it and paying for it. If these conditions are met, then this kind of transaction is permissible.

Al-Shafie says: "If a person shows a commodity to another and tells him to buy it for him in return for a certain profit and he does then this sale is permissible. However, the buyer may go on with the deal or back out of it." { Al-Umm, vol.3/pp.39}. And Allah The Almighty Knows Best.

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