FINANCIAL TRANSACTION Archives - DARUL IFTA LONDON

Usury/Riba

admin — Thu, 12 Aug 2021 12:38:13 +0000

Question: In short, my modest livelihood is from good and food deliveries. Therefore I use scooter as a mean of work transport. You may know using motor vehicle without insurance is criminal offence in the United Kingdom and could result a major problem being as resident. I also support the family and bear my expanses. My mother is a single parent. Firstly I need to insure the vehicle and the payment would be in monthly instalments the company charge APR on instalments if paid by monthly and I’m not in position to pay in the full amount. I need the advice for this matter.

Answer: APR (Annual Percentage Rate) on instalments is a form of interest charged annually rather than just a monthly fee/rate, hence this is not an administrative charge either. This charge is applied on a loan, mortgage loan, credit card, etc. Therefore, it is Haram to take interest based instalments plan whether this is to do with a insurance policy or other products as mentioned above.

Our suggestion is that you borrow the whole amount from any close family members, friends etc and pay in one go to avoid the interest and you can pay back slowly to your borrower(s).

If for any reason, you cannot manage to get the whole amount then last resort will be to do it by instalments as alternative. However, best is to avoid interest in any form.

wallahu a’lam.

Reference: Surah Al-Baqarah: 275

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Renting office place

admin — Tue, 16 Feb 2021 00:38:15 +0000

Question: One person rented a small place for short period of four months to use as temporary office. He paid two months’ rent but did not pay for following two months. At the end of the contract I demanded to pay my due two months’ rent but he denied by saying that it only used the office for two months and rest of the two months were empty. I insisted on the contract that he should pay full four months’ rent. My question is I’m I only eligible to get rent for the used two months or all four months as per the contract?

Answer: According to your statement if the office is capable of being used as office during the contracted period then, full four months’ rent will be payable as per contract, despite whether he uses for full four months or not.

References: [1] Radd al-Muhtar vol-9:15 [2] Al-Bahrur Raiq vol-8:8 [3] Badaius Sanai vol-5:18 [4] Almuhit al-burhani vol-11:225

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Negotiating Over The Sale Prices

admin — Tue, 16 Feb 2021 00:33:52 +0000

Question: We observe in many market places that customers have to bargain/negotiate for certain products, the seller states one price, and buyer counter offers with seller’s price and if not accepted, leaves the place without further negotiation. However, some sellers calls them back to sell it for buyers price, some returns back and takes it and others don’t. My question is that, is the buyer under obligation to buy the product at the stated price in any circumstances?

Answer: During the bargaining/negotiation, if the seller offers a price and buyer does not accept that price or even the buyer makes counter offer and has been rejected, this offer and acceptance is void. Similarly after the seller’s offer if the buyer leaves the place without accepting it or refuses to accept at this price then also, renders invalid in other words no contract has been formed. According to the narrative statement, at this point the offer and acceptance was not met therefore, buyer is not under any obligation to buy the product. So the person who returns back to buy it this will be regarded as a new offer and acceptance from the buyers prospective therefore, has a freedom either to buy it or reject it.

References: [1] Badaius Sanai vol-6:477. [2] Radd al Muhtar, vol-7:18. [3] Al-Bahrur Raiq, vol-5:412.

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Partnership Business

admin — Tue, 16 Feb 2021 00:27:39 +0000

Question: I want to start a business with a friend of mine by entering into partnership contract, with a capital amount of £40,000. I will contribute £22,000.00 and manage day to day task in the business and my partner will provide £18,000.00 only as a sleeping partner. However he is demanding 50% share of profit should be distributed amongst us. Is this authentic method in Islam for a partnership contract as above?

Answer: If your partner is contributing less than 50% capital and not participating in day to day business management, he cannot demand equal share in profit which is not permissible in Shariah. As per his capital contribution, he can take a profit of up to 45% and not more than that. Alternatively, if he also contributes in managing the business then profit can be equally shared despite his less contribution in capital money.

References: [1] Badaius Sanai vol-5/83 [2] Al-Bahrur Raiq vol-5/272 [3] Al-Mabsut as-Sarakhsi vol-11/159

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