BBA-Bai Bi Thamanaajil

Definition

Majallah - as Bay’ al-Muajjal.
BBA is a sale contract in which the payment of the price is deferred and payable at a certain particular time in the future
In Pakistan, Bangladesh, is called by MURABAHAH

Usage

can be implicated in any sale contract, including musawamah, and murabahah
BBA is not a kind of sale; rather it refers to the manner of payment via a deferred payment basis, be it a lump sum payment or installments
BBA can be applied for any types of sale except Salam

Increasing the price due to the deferment

•G1 - majority of jurists - is allowed.
•Ibn Rushd said: “The time has been given a share in the price
increase is permissible because it is against the commodity and not against money Thefore FOREX only can be on spot
•G2 - argued that BBA opens the back door/ camouflage to interest based transactions practice of BBA amounts to the prohibited “two sales in one”
•Siddiqi : overriding legal maxim that “anything leading to something prohibited stands prohibited”
•Council of Islamic Ideology (Pakistan) - not be advisable to use it widely or indiscriminately

Modus Operandi/ Application Malaysia

Refer IB 1005
Houses/shop houses, Land, Motor vehicle, Consumer goods, personal financing, etc
purpose :
1-to acquire a certain asset
2-is to make available a certain amount of cash – personal financing, refinancing

* the exact Shariah contract used is not BBA per se, rather it is another contract known as bai’ al-Inah

ISSUE 1
appointing the customer as the agent of the bank

invalid because in contract of exchange (mu’awadat),
same individual X become an agent or representative to two different parties at the same time (simultaneously).
lead to fraud - probably the said house does not exist
However, the bank can appoint the customer as its agent/representative to purchase a house from
the developer but the same customer is not allowed to purchase the said house for himself.

ISSUE 2:
Compensation Clause

Contemporary jurists are of different opinions.
G1 - Some jurists - the price should not be increased for the purpose of compensating the bank.
G2 - one opinion (said to be of the Malikis) allows this increase if the default was without a valid reason. as part of the punishment to the buyer, can deter
*shall not form part of the income of the seller/the financier.
*bound to spend it for a charitable purpose on behalf of the buyer.
accepted by the majority of contemporary jurists
G3 – SAC BNM & SC - Malaysia : allowed the imposition of one percent penalty rate on late payments
this money can form part of the income of the bank.
considered as ta’widh (compensation)
cannot be compounded

ISSUE 3:
Cross Default

SAC of BNM has allowed the imposition of such a clause provided that the client agrees to its incorporation in the financing document

ISSUE 4:
Validity of Provisions

The SAC of BNM rules that the clause to this effect is allowed provided that the invalidity of that clause would not affect the pillars or essential elements of the contract itself

ISSUE 5:
Selling of the Non-existent

If the opinion of the majority of jurists is to be applied, the BBA facility on property under construction is not allowed.
If If the opinion of Ibn Taymiyyah and Ibn al-Qayyim - will it pass the test of certainty of delivery?
recommended - parallel istisna

ISSUE 6:
Transfer of Ownership

the transfer of ownership and the taking of possession must truly happen
The possession, could be construed according to the custom
BBA in Malaysia, the execution of PPA and PSA in the facility should result in transfer of ownership, irrespective of whether the registration of the transfer is made or otherwise.

ISSUE 7 Floating Rate BBA

Ibra’ features
pay not more than the ceiling price that has been agreed upon upfront.