Skip to main content

Q&A: The Murabaha contract | Sheikh Ata’ Abu Rashtah

Assalamu Alaikum Wa Rahamatullah Wa Barakaatuu
Our Sheikh and Ameer, Ata Bin Khalil Abu Al Rashtah, my question is: what is the ruling on the profit sales contract (Murabaha)? Is it permitted, fasid, or batil (invalid)? It so happened that some of our brothers made an agreement using the Murabaha contract -after some time – they realised that it is invalid. The first party who paid the capital, received the same amount of the capital plus a half (in profit), now after realising the prohibition of the contract, he is demanding the rest of the profit. The Question: What is the nature of the contract in terms of permission and prohibition? Is the money that he received permitted or prohibited? Does he have the right to demand the remaining profit after taking the amount of the capital and a half, even though the brothers know that the basis of action is that they must be restricted to the Shar' rules.
Please benefit us and Jazak Allah Kul Khair. Abu Suhail, Berlin
From Muhammad Abdallah

Answer:
Wa Alaikum Assalam Wa Rahmatullah wa Barakaatuhu
What you called a Murabaha contract according to what came in your question where the owner of capital pays the money to another party for the purpose of trading with the money or deal with it and then gives him a guaranteed profit; this is not allowed in Islam.
What is permitted in Islam is when the owner of capital pays money to another party to trade with and they have an agreement upon a specific rate of profit share between them when there is a profit, and if there was no profit then both do not gain anything. If there is a loss the capital owner bears it as the other party who exerted his effort and traded would have lost his effort, i.e. it does not specify a guaranteed profit for the capital owner as we mentioned before.
This is what is called joint venture (Mudharaba).
A joint venture (Mudharaba) is one of the types of companies, because it is a company of money and body. The company is one of the transactions that Islam has permitted. On the authority of Abu Huraira that he said, that the Prophet صلى الله عليه وسلم said:
«إن الله يقول: أنا ثالث الشريكين، ما لم يخن أحدهما صاحبه، فإذا خانه خرجتُ من بينهما»
"Allah says: I am the third (party) of the two partners as long as one of them does not betray his partner, if he does then I abandon them" [Narrated by Abu Dawoud]
The Sahaba (ra) agreed that Mudharaba is permitted. Umar (ra) paid the money of the orphans by Mudharaba. This is mentioned in the Musanaf of Ibn Abu Sheeba.
Regarding the profit in Mudharaba, it is subject to the conditions depicted by both contracting parties.
As for loss, it is on the money. It was extracted by Abdul Razaq As-San'ani in his Musanaf from Ali (ra) regarding Mudharaba:
«الْوَضِيعَةُ عَلَى الْمَالِ، وَالرِّبْحُ عَلَى مَا اصْطَلَحُوا عَلَيْهِ»
"Loss is in money, and profit is based on what they agreed upon". Wadhee'a means loss.
For your information the term Murabaha in Shar' was mentioned in buying and selling contracts and not work contracts.Those who use Murabaha in work contracts between the capital owner and Mudharib, they use it out of its Shar'i place.
That is because Murabaha in the language means real profit, it is said: I sold the good by Murabaha or I bought Murabaha. In technical terms: for the seller to show the price he bought his products for sale and it should be for a known profit, it is from the Trust Sales because it relies on the trust of the seller in giving the information regarding what he paid for the product.
It is allowed in shar' because it is the buying with a profit on top of the cost price that the seller paid when he bought the product. If the seller says I will sell you this product with this much profit of the price that I bought the product for and the buyer is made aware of the price, and he accepts that, this is permitted because it is a known sale.
Your brother,
Ata Bin Khalil Abu Al-Rashtah
19 Rajab 1434 AH
29 May 2013 CE
The link to the answer from the Ameer's Facebook page:

Comments

Popular posts from this blog

An advice to Muslims working in the financial sector

Assalam wa alaikum wa rahmatullah wabarakatahu, Dear Brothers & Sisters, We are saddened to see Muslims today even those who practise many of the rules of Islam are working in jobs which involve haram in the financial sector. They are working in positions which involve usurious (Riba) transactions, insurance, the stock market and the like. Even though many of the clear evidences regarding the severity of the sin of Riba are known, some have justified their job to themselves thinking that they are safe as long as they are not engaged in the actual action of taking or giving Riba. Brothers & Sisters, You should know that the majority of jobs in the financial sector, even the IT jobs in this area are haram (prohibited) as they involve the processing of prohibited contracts. If you work in this sector, do not justify your job to yourself because of the fear of losing your position or having to change your career, fear Allah as he should be feared and consider His law regard

Q&A: Age of separating children in the beds?

Question: Please explain the hukm regarding separation of children in their beds. At what age is separation an obligation upon the parents? Also can a parent sleep in the same bed as their child? Answer: 1- With regards to separating children in their beds, it is clear that the separation which is obligatory is when they reach the age of 7 and not since their birth. This is due to the hadith reported by Daarqutni and al-Hakim from the Messenger (saw) who said: When your children reach the age of 7 then separate their beds and when they reach 10 beat them if they do not pray their salah.’ This is also due to what has been narrated by al-Bazzar on the authority of Abi Rafi’ with the following wording: ‘We found in a sheet near the Messenger of Allah (saw) when he died on which the following was written: Separate the beds of the slave boys and girls and brothers and sisters of 7 years of age.’ The two hadiths are texts on the separation of children when they reach the age of 7. As for the

Q&A: Shari' rule on songs, music, singing & instruments?

The following is a draft translation from the book مسائل فقهية مختارة (Selected fiqhi [jurprudential] issues) by the Mujtahid, Sheikh Abu Iyas Mahmoud Abdul Latif al-Uweida (May Allah protect him) . Please refer to the original Arabic for exact meanings. Question: What is the Shari’ ruling in singing or listening to songs?  What is the hukm of using musical instruments and is its trade allowed? I request you to answer in detail with the evidences? Answer: The Imams ( Mujtahids ) and the jurists have differed on the issue of singing and they have varying opinions such as haraam (prohibited), Makruh (disliked) and Mubah (permissible), the ones who have prohibited it are from the ones who hold the opinion of prohibition of singing as a trade or profession, and a similar opinion has been transmitted from Imam Shafi’i, and from the ones who disliked it is Ahmad Ibn Hanbal who disliked the issue and categorised its performance under disliked acts, a similar opinion has been tran