Murabaha Questions and Answers

Murabaha Questions and Answers Assignment example
Finance & Accounting
Pages 4 (1004 words)
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Name: University: Course: Tutor: Date: Murabaha Question One It is allowed for the client to reject the goods bought by a bank under Murabaha agreement due to defect in the goods. Under Murabaha, the seller discloses the costs and profit charged there. The price of the sale can be spotted and deferred.


Murabaha is a contract of trust, thus, the goods must be of the quality agreed between the bank and customer. The bank bears the risks that the goods may develop a defect or may be destroyed, since Murabaha is executed at the second sale. The customer can reject the goods if they contain defects or for the reasons of unsatisfactory performance (Hayes and Vogel 141). Question Two It is prohibited to sell Waqf (endowments) since they are not owned by a specific person and for any sell to be valid; the owner must be unambiguously identifiable. Istibdal, which is the sale of Waqf land, can be entered in Murabaha agreement, since the proceeds are used for the purchase of another land to be used for the Waqf purposes. However, according to Hanbalis, the benefits of Waqf cannot be obtained where the land is ruined, barren or is a mosque that is not used for prayers (Iqbal and Greuning 40). Question Three A bank conducting a purchase under a Murabaha contract may open a documentary credit in a foreign bank and receive commissions. Fiqh Academies prefer the prevention of banks taking the commission since it may demand the value of the guarantee in case of buyer defaulting on the agreement (Schoon 32). ...
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