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CONTENT
DEFINITION
EVIDENCES
PILLARS
TYPES
DEFINITION EVIDENCES PILLARS OF BAY AL-TAWARRUQ TYPES OF BAY AL-TAWARRUQ CONDITIONS OF BAY AL-TAWARRUQ MODERN APPLICATION
CONDITIONS
APPLICATION
DEFINITION
DEFINITION
Literal:
Minted silver; seeking silver money
EVIDENCES
Technical:
Buying a commodity with deferred payment and selling it to a person other than the buyer for a lower price with immediate payment. Purchasing a commodity on credit and selling it to a person other than the initial seller for a lower price on cash
PILLARS
TYPES
CONDITIONS
APPLICATION
Tawarruq is a term commonly used by Hanbali school of law Other school mention the form of tawarruq under the rubric or bay al-ajal and bay al-inah
EVIDENCES
DEFINITION
EVIDENCES
Qiyas: Permissible based on analogy, the contract is similar to other sale and purchase contracts i.e. the transfer of ownership is taken place
PILLARS
TYPES
CONDITIONS
APPLICATION
EVIDENCES
PILLARS
TYPES
CONDITIONS
APPLICATION
EVIDENCES
CUSTOMER (Mutawarriq)
1 3 5 6
PILLARS
TYPES
BANK
2 4
CONDITIONS
APPLICATION
Original seller
Final buyer
TYPES OF AL-TAWARRUQ
DEFINITION
TAWARRUQ AL-FARDH
Define by OIC Fiqh Academy as the purchase of commodity possessed and owned by the seller for a delayed payment, whereupon the buyer will resell the commodity for cash to other than the original seller in order to acquire cash.
EVIDENCES
PILLARS
TAWARRUQ AL-MUNAZZAM
The process handle by the saller by which cash is acquired for the mutawarriq (seeker of cash). He does so by selling a commodity to him for a delayed payment, he then sells it on behalf for cash by taking the payment from the buyer and handling it over to themutawarriq.
TYPES
CONDITIONS
TAWARRUQ AL-MASRAFI
APPLICATION
Process where the IFI formally organises the sale of a commodity (other than gold/silver) between an international commodity market and the mutawarriq, for a delayed payment on a binding condition that may be stipulated in the contract or to the custom and norms guiding such a commodity
TYPES OF TAWARRUQ
TAWARRUQ
DEFINITION
TAWARRUQ AL-MUNAZZAM
The original seller act as an intermediary by selling the commodity for cash on behalf if the mutawarriq
AL-FARDI
Original seller does not play any role in the resale of the commodity and has no relation with the final buyer
EVIDENCES
PILLARS
The cash will be taken by the mutawarriq directly from the final buyer without the seller being involved The mutawarriq receives the cash from the original seller, to whom he owes the delayed price
TYPES
CONDITIONS The original seller has not information and relation with the final buyer The original seller might agree beforehand with the final buyer that he will purchase the commodity
APPLICATION
Accepted by majority of jurists (Hanafi, Maliki and Hanbali) and Majma al Fiqh al Islami
Rejected by majority of jurist. But accepted to be practice by current fiqh scholars and IFI Shariah Advisory Council
EVIDENCES
Commodity is specified.
The seller has to explain the details of the commodity to the buyer.
PILLARS
Possession of commodities.
The commodities which are normally used in the contract of organized tawarruq can be transferred from place to place and this kind of commodity is called a transferable commodity (manqulat). Examples include metals, cement, rice and cars.
TYPES
CONDITIONS
APPLICATION
EVIDENCES
PILLARS
Avoiding usury
The contracting parties have to be careful not to deal with commodities, which it is not permissible to exchange for deferment, otherwise, they would be involved in the usury by way of deferment (riba al-nasia).
TYPES
CONDITIONS
Delivery is immediate.
APPLICATION
As indicated previously, the contract of organized tawarruq is based on deferred or installment payment so if the delivery is deferred, the contract would then be a sale of debt-for-debt and this kind of sale is prohibited in Islamic law.
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APPLICATION
DEFINITION
EVIDENCES
PILLARS
Tawarruq or commodity murabahah as one of the popularly used principles to structure various Islamic financial instruments. Below list of some common Islamic financial instruments that are structured based on tawarruq:
Commodity murabahah deposit facility and placement Personal financing Asset financing Cash line facility BNM Islamic Accepted Bills (IAB) Islamic Private Debt Securities (IPDS)
TYPES
CONDITIONS
APPLICATION
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END OF CHAPTER
DEFINITION
EVIDENCES
PILLARS
TYPES
CONDITIONS
APPLICATION
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