Search
Generic filters
Filter by Categories
Accounting
Banking

Islamic Finance




Ba’i wa Shart


Arabic (بيع وشرط) for “sale with a condition”. Technically, it refers to a sale contract (aqd al-ba’i) in which an unusual or unexpected condition is stipulated so that the seller or the buyer is given an extra “undue” benefit. For example, the seller could impose a condition that the buyer allows him to use a property of his (of the buyer) for one month free of charge. This type of sale is prohibited by shari’a because of the addition of a condition which, as such, amounts to implicit riba.

In general, conditions can be classified in four categories:

  • A condition that nullifies itself and the sale altogether, i.e., one that contradicts the contract effect such as the stipulation of non-delivery. This condition is invalid ab initio.
  • A condition that is invalid per se, but nevertheless doesn’t render the contract void. An example is the stipulation of a defect-free subject matter (in sales that involve items other than animals).
  • A condition that is valid per se and doesn’t render the contract invalid such as one which is equivalent to khiyar (option) or which stipulates the presentation of rahn (pawning), or which stipulates freedom from defects in animal sales.
  • An implicit condition that can be inferred from the contract itself. An example is the sale of unripe fruits (i.e., before they are fully ripe).


ABC
The last three decades have witnessed the modern rebirth of Islamic finance both in terms of literature and practice. Islamic banks and ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*