Bai Al-Muajjal is a contract between a Buyer and a Seller under which the Seller sells certain specific goods permissible under Islamic Shari‘ah and Law of the land to the Buyer at an agreed fixed price payable at a certain fixed future date or within a fixed period in lump sum or by fixed instalments. The seller may also sell the goods purchased by him as per order and specification of the Buyer. In the case of Bank, Bai-Muajjal is treated as a contract between the Bank and the Client under which the Bank sells the goods(purchased as per order and specification of the Client) to the client at an agreed price payable at any fixed future date in lump sum or within a fixed period by fixed instalments.
Features of the Bai’ Al-Muajjal:
- It is a Credit sale of goods by which ownership of the goods is transferred to the Client (by the Bank to the Client) but the payment of sale price by the Client is deferred for a fixed period.
- In this case, there should be a purchase agreement (Bai Al-Muajjal Agreement) between the Bank and the seller of the goods; else it will be assumed that the Bank is making payments to the seller of the goods on behalf of the client which is similar to providing loan facility to the client and any excess on this amount shall be nothing but interest (RIBA)
- It is permissible for the Client to offer his interest to the Bank to purchase goods mentioning detail specification and should committee to buy the same from the Bank on Bai’ Al-Muajjal basis (deferred payment sale at fixed price)
- The Bank should purchase the goods as per specification of the Client to acquire ownership of the same.
- After purchase of goods the Bank should bear the risk of goods until those are actually sold and delivered to the Client, i.e., after purchase of the goods by the Bank and before selling of those based on Bai’ Al-Muajjal to the Client, if the goods are damaged or defective, Bank should be liable and bear the responsibility of damage unless there is an agreement with the Client to release the Bank from such responsibilities.
- It is permissible for the Bank to sell the goods at one agreed price which will include both the cost price and the profit. Unlike Bai’ Al-Murabaha, the Bank may not disclose the cost price and the profit mark-up separately to the Client.
- It is permissiblefor the Bank to take Cash/Collateral security as guarantee to keep the promise or to indemnify the damages.
- It is also permissible for the Bank to document the investment details by a guarantor or through mortgage or both. These formalities can be obtained before or at the time of signing the Agreement.
- Once the price is fixed as per agreement it can not be further increased.
Categories of Proposal under Bai’ Al-Muajjal
- Bai’ Al-Muajjal Commercial
- Bai’ Al-Muajjal Industrial
- Bai’ Al-Muajjal Agriculture
- Bai’ Al-Muajjal Real Estate
- Bai’ Al-Muajjal Import/Export
- Bai’ Al-Muajjal Scheme