All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
The Sharia committee of the General Iftaa` Department has completed discussing the rules of "the contract of Murabah to the purchase orderer (plot of land) via a certain party (Bank/financier), in addition to the "Promise to Murabah sale contract." Both of which are annexed to the book entitled "The Sharia Guide" issued by that party. The Committee highly values the efforts which the virtuous scholars in charge of those contracts had exerted in their bid to eliminate any violations of Sharia included therein.
However, We found a problem in "the fourth rule of the contract" which states: "The first party shall pledge responsibility for any damages that befall the commodity before its delivery to the second party as well as returning commodity in case of hidden default. In both cases, the first party shall have the right to refer the second party to the first seller."
The problem, here, is that referring the second party (Purchase orderer) to the first seller in case commodity was damaged before its delivery contradicts with the Sharia requirements of the Murabah contracts. In valid contract of Murabaha to the purchase orderer, the first party (Bank/financier) is the seller who is required to guarantee the commodity against any damages before it is taken possession of by the purchase orderer. This is according to the view of the majority of the scholars. Thus, it is unlawful to leave this condition out as doing so renders this contract invalid. It is also unlawful because it gives the impression that the first party had neither received nor taken actual possession of the commodity in question. It is well-known that taking possession of the commodity as well as receiving it is amongst the condition upon which the validity of the Murabah contract rests. This is so in order for the first party to be able to sell the commodity for a profit. However, with the consent and permission of the second party, and in case it was established that the first party is liable for the debt, it is permissible for the latter to refer the former to the first seller in accordance with the conditions stated by jurists in this regard."
We (Iftaa` Department) recommend restricting the second rule of the Murabah contract with the phrase: "For what is left of the bills" since it stated that claiming all the bills before the competent judicial authority is an existing right of the first party." And Allah the Almighty knows best.