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Subject : Observations on the Engineers Association`s Contract of Murabaha to the Client Ordering the Purchase

Fatwa Number : 2848

Date : 28-08-2013

Classified : Transactions & Marketing

Fatwa Type : Search Fatawaa

Question :

What is the ruling of Sharia on the attached Murabah contract to the client ordering the purchase?

The Answer :

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

After reflecting on the terms of the attached Murabah contracts, We would like to highlight the following observations:

First: A promise was repeatedly described as contract, so this description should be removed to prevent confusion between a contract and a promise. Moreover, it isn`t permissible to consider the promise contract as part of the sale contract or to sign both contracts together. Rather, the promise contract should be signed first, then, after the Engineers  association takes possession of the flat, the client ordering the purchase signs the sale contract.

Second: Article (7) of the promise contract of Murabah sale stated: "The second party pledges to pay (5%) from the amount of funding as administrative service allowance on annual basis." This percentage should be equal to the actual expenses, not intended as profit, and should be restricted to this in the above article.

Third: The Murabaha contract didn`t provide for taking possession of the flat or plot of land. Thus, it should be provided that the first party (Engineers Association) doesn`t have the right to sell the flat or plot of land to the second party unless after receiving it from seller in accordance with the rules of Sharia. Therefore, we recommend making the afore amendments. And Allah the Almighty knows best.



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