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DIFFERENCES BETWEEN BAI' I'NAH AND TAWARRUQ

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nurul aqila

on 10 December 2013

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Transcript of DIFFERENCES BETWEEN BAI' I'NAH AND TAWARRUQ

DIFFERENCES BETWEEN
BAY' AL-'INAH AND TAWARRUQ

DEFINITION
a) Imam As-Syafie :
It is a credit purchase of an asset which is later sold to the original owner or a third party , weather at a deferred or spot, higher or lower price than the first contract, or for an exchange of goods.

b) Ibn Qudamah :
It is an asset with a deferred price, and buys back the same asset at a lower price.

c) It is a bargaining (musawamah) sale and purchase contract without disclosing or referring to what the cost price is.

d) Bai' Inah is conceptually refers to a sale of an asset, which is later repurchased at a different price, whereby the differed price is higher than the cash price.

DEFINITION OF BAY' AL-INAH

Literal meaning of Bay' 'Inah

Loan or advanced payment

Technical meaning of Bai' Inah

The selling of an asset with a mark up price on deferred payment with the intention to sell the same asset to the debtor with the lower price, which is meant to settle his debt.



FORMS OF BAY' 'INAH
1) That someone bought the other person a certain price of goods by installment , and the seller requires him to sell (again) with the item to be lower than the price of the first sale.

2) That the item is sold installment , and when the goods are held by the buyer ,it is offered for resale in return for money , then the original sellers buys it back at a cheaper price than he original sale price

MODUS OPERANDI
Majma Fiqh Islami
15th Meeting – Permitted
17th Meeting – Prohibited
Latest Decision – Classical Tawarruq is allowed
Organized tawarruq is not allowed
Shari’ah Supervisory Council of ABC bank – approved tawarruq for liquidity purposes.

Tawwarruq is permitted,
Syeikh Abdullah b.Sulaiman al-mani, Dr. Musa Adam Isa, Dr.Usamah Bahr, Dr.Sulaiman Nasir al-Ulwan

“Allah has permitted sale and prohibited riba”
(Al-Qur’an – 2:275)
Hanbali and many other scholars permitted Al-Tawarruq
Dr.Rafik Yunus al-misri
- If all the three parties involved have known that the main objective of the customer fro entering the tawarruq transaction is to obtain the cash money, then all of them are sinful.

- if the two of the parties have known that the seller has used the transaction for get the cash, both of them are sinful. However, if they do not know the real intention of the seller, then they are not sinful.

- A person is allowed to do tawarruq in the case of necessity.

Definition and Literal Meaning of Tawarruq

The term Tawarruq is derived from the word al-warq or al-waraqa, which means minted dirham or any silver that issued to serve as a medium of exchange, in this concept it is designated to someone who has an abundance of silver coins. In another term tawarruq comes from “masdar” the verb taqarruqa is said Tawarruq al-hywan which it means the animal at the leaves . The term of basically tawarruq comes from the word wariq as it mentions in surah Al Kahfi: 19


MODUS OPERANDI OF
BAI’ INNAH

“Ali (r.a) has stated: Ibn Musa has said that this is what we have been told by Hushaim. The prophet PBUH has said ‘A time is certainly coming to mankind when people will bite each other and a rich man will hold fast what he has in his possession (his property), though he was not commanded for that. Allah the almighty said: (and do not forget liberality between yourself) and those who are forced will contract sale while the prophet PBUH forbade forced contract, one which involves some uncertainty and the sale of fruit before it is ripe’”


ARGUMENTS ON PROHIBITED (cont.)

Imam Ahmad ibn Hanbal – Prohibited (Haram)
Imam Muhammad bin Hasan Al-Shaibani (Hanafee) – Discourage (Makruh)
Imam ibn Taimiyyah – exceptional dealing (permitted only in the case of necessity (Dharurat)

ARGUMENTS ON PROHIBITED

Argument permissible of Tawarruq

Tawarruq we can divide into two:
- classical tawarruq (Al-Tawarruq at-Fardi)
- organized tawarruq (Al-Tawarruq al- Munazzam).

Classical tawarruq is defined as the purchase of a commodity possessed owned by the seller for a delayed payment, where upon the buyer resell the commodity for cash to other than the original seller in order to acquire cash (al-wariq).

The contemporary definition on organized tawarruq is the transaction that a person(mustauriq) buys commodity from local or international market at a deferred price .Simultaneously,he (mustauriq) will ask the financier in his own capacity or through his agent or by special agreement with mustauriq to rearrange the sale transaction usually at a lower spot price.

Tawarruq technically is the purchasing of a commodity on credit by the mutawarriq (seeker of
cash) and selling it to a person other than the initial seller (3rd party) for a lower price on cash
(Dusuki, 2008).

“So send one of you with this silvery coin of yours to the town.”




Which it means Dirhams made of silver. However, there are two different accents in the Arabic language (wariq-warq). Furthermore, Tawarruq and the verb derived from al-warraq are not directly traceable in the Arabic language linguists mention only variable nouns, as an al-Iraq (which applied to become rich) and al-istiraq (which applied to a man who is seeking Dirham or money). So the scholars invent the term of tawarruq for the one who may be pressure himself on how to obtain “al-wariq” or cash money.

DEFINITION AND FORMS OF TAWARRUQ

BAY' INAH VIA CREDIT CARD

a) Imam As-Syafie :
It is a credit purchase of an asset which is later sold to the original owner or a third party , wether at a deferred or spot, higher or lower price than the first contract, or for an exchange of goods.

b) Ibn Qudamah :
It is an asset with a deferred price, and buys back the same asset at a lower price.

c) It is a bargaining (musawamah) sale and purchase contract without disclosing or referring to what the cost price is.

d) Bai' Inah is conceptually refers to a sale of an asset, which is later repurchased at a different price, whereby the differed price is higher than the cash price.


DEFINITION

ORGANIZED TAWARRUQ

CLASSICAL TAWARRUQ

2) That the item is sold installment , and when the goods are held by the buyer ,it is offered for resale in return for money , then the original sellers buys it back at a cheaper price than he original sale price

1) That someone bought the other person a certain price of goods by installment , and the seller requires him o sell (again) with the item to be lower than the price of the first sale

There are two types of shapes for bay’inah

2)Unlawfulness argue bai’ inah

1) As-Syaafi’iyah allows bai’ inah in a second.

Indeed,jurists have different opinions on the applicability of the second form can not contain any condition

3) The ultimate truth is not making sales,the sale of photocopier paper out of the office and not the original,while the prophet forbade the sale of products that do not perform at the handover,if the animals are delivered,received when out of the cage,if handed the keys home,if the office items already transferred from his office.But does the buyer have to know which one machine he bought

2) Use Syafi’yyah Opinion on inah first form,while ‘inah second form allowed by syafi

1) Do bai’inah with conditional (Banned by all scholars)

Malaysian Banking System claimed adopt aqad transactions,bai’ul inah,buy a computer from a bank provided the bank resale,no bank for the sale of property such as office copy machines and so on.So it seems that the banking system is taking shape inah first in our discussion above

DEFINITION AND FORM OF TAWARRUQ
Literal Meaning of Tawarruq
Tawarruq is derived from the word al-warq or al-waraqa
which means minted dirham or any silver that issued to serve as a medium of exchange, in this concept it is designated to someone who has an abundance of silver coins. In another term tawarruq comes from “masdar” the verb tawarruqa is said Tawarruq al-hywan which it means the animal at the leaves . Surah Al-Kahfi:19
Technically meaning
Tawarruq technically is the
purchasing
of a commodity on credit by the mutawarriq (seeker of cash) and
selling
it to a person other than the initial seller (
3rd party
) for a lower price on cash(Dusuki, 2008).

Form of Tawarruq
1)Classical tawarruq
is defined as the purchase of a commodity possessed owned by the seller for a delayed payment, where upon the buyer resell the commodity for cash to other than the original seller in order to acquire cash (al-wariq).
2)Organized Tawarruq

the transaction that a person(mustauriq) buys commodity from local or international market at a deferred price .Simultaneously,he (mustauriq) will ask the financier in his own capacity or through his agent or by special agreement with mustauriq to rearrange the sale transaction usually at a lower spot price.
Classical Tawarruq
Organized Tawarruq
Argumentation
Argument Permissible
“Allah has permitted sale and prohibited riba”
(Al-Qur’an – 2:275)
Hanbali and many other scholars permitted Al-Tawarruq
Dr.Rafik Yunus al-misri
- If all the three parties involved have known that the main objective of the customer for entering the tawarruq transaction is to obtain the cash money, then all of them are sinful.

- if the two of the parties have known that the seller has used the transaction for get the cash, both of them are sinful. However, if they do not know the real intention of the seller, then they are not sinful.

- A person is allowed to do tawarruq in the case of necessity.

Majma Fiqh Islami
15th Meeting – Permitted
17th Meeting – Prohibited
Latest Decision – Classical Tawarruq is allowed
Organized tawarruq is not allowed

Shari’ah Supervisory Council of ABC bank – approved tawarruq for liquidity purposes.

Tawwarruq is permitted,
Syeikh Abdullah b.Sulaiman al-mani, Dr. Musa Adam Isa, Dr.Usamah Bahr, Dr.Sulaiman Nasir al-Ulwan

ARGUMENTS ON PROHIBITED

Imam Muhammad bin Hasan Al-Shaibani (Hanafee) – Discourage (Makruh)

Imam ibn Taimiyyah and Ibn Qayyim –Haram, exceptional dealing (permitted only in the case of necessity (Dharurat)

“Ali (r.a) has stated: Ibn Musa has said that this is what we have been told by Hushaim. The prophet PBUH has said ‘A time is certainly coming to mankind when people will bite each other and a rich man will hold fast what he has in his possession (his property), though he was not commanded for that. Allah the almighty said: (and do not forget liberality between yourself) and those who are forced will contract sale while the prophet PBUH forbade forced contract, one which involves some uncertainty and the sale of fruit before it is ripe’”

Differences and similarities
BAI' INAH VIA CREDIT CARD
ARGUMENT IN BAI' INAH
-It was reported by Abu Sa’id al-Khudri and Abu Hurayrah r.a. that the Messenger of Allah appointed a man as his agent in Khaybar.He brought some junayb (good quality) dates to the Prophet ,who asked him, “Are all the dates of Khaybar like this?” The man replied, “No, I swear by Allah, O Messenger of Allah; we exchange a saa’ of this kind of date for two saa’s of another (lower in quality) and two saa’s of this for three saa’s”. Allah’s Messenger said, “Do not do that! Sell (your) batch (of dates) for dirhams and then pay for the junayb dates with the dirham”. (Sahih Bukhari). Their angle of reasoning from the hadith is that something may be unlawful if its format is not in line with the format endorsed by Shari’ah,but if we are able to reshape it to a format approved by the shari’ah, it becomes permissible. Tawarruq is an authentic form of trade transaction characterized by its conditions and essential elements, and it is free of any factors that would render it useless or invalid because its aim is to achieve monetary liquidity so that people may not fall into riba.

-The initial assumption for transactions is that they are lawful unless there is proof that prohibits such a particular transaction, whereas there is no known Shari’ah proof that forbids this one. Therefore, those who argue that tawarruq is lawful are not required to provide evidence. The burden of proof lies on those who prohibit tawarruq sales because they are the one rejecting the initial assumption of permissibility for transactions.
 
-Necessity calls for this kind of transaction, for not everyone who wants to borrow money finds someone to lend it to them.
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