In the Name of Allāh,

the Entirely Merciful, the Especially Merciful

Praise is due to Allāh, Lord of the worlds, may the blessings and peace be upon our master Muḥammad, the last of prophets, on his family, and all his companions.

Resolution Nos. 40–41 (2/5 and 3/5)

Keeping a Promise and Murābaḥah to the Purchase Orderer

The Council of the International Islamic Fiqh Academy of the Organization of the Islamic Conference, holding its 5th session in Kuwait City, State of Kuwait, on 1–6 Jumādā al-Ūlā 1409h (10–15 December 1988),

Having examined the research papers submitted by the Academy’s members and experts concerning Keeping a Promise and Murābaḥah to the Purchase Orderer,

Having listened to the in-depth discussions on the two subjects,

Resolves

First: Murābaḥah to the purchase orderer is permissible on goods that are already in the physical possession of the seller, as required by Shariah, provided the seller carries the risk of loss before delivery or the consequences of returning the purchased goods due to concealed defects or any other reasons justifying the return of the goods after their reception, provided the conditions of the sale are met and with the absence of any impediments.

Second: According to Shariah, a promise (made unilaterally by the purchase orderer or the seller), is morally binding on the promisor, unless there is a valid excuse. It is however legally binding if made conditional upon the fulfillment of an obligation, and the promisee has already incurred expenses on the basis of such a promise. The binding nature of the promise means that it should be either fulfilled or a compensation be paid for damages caused due to the unjus- tifiable non fulfilling of the promise.

Third: Mutual promise (involving two parties) is permissible in the case of Murābaḥah sale provided that the option is given to one or both parties. Without such an option, it is not permissible, since in Murābaḥah sale, mutual and bind- ing promise is like an ordinary sale contract, in which the prerequisite is that the seller should be in full possession of the goods to be sold, in order to be in conformity with the ḥadīth of the Prophet SAW forbidding the sale of anything that is not in one’s possession.

Recommendations

Having noted that most Islamic banks devote most of their business to financ- ing through Murābaḥah to the purchase orderer, the Academy recommends:

First: Activities of Islamic Banks shall be expanded to cover all the develop- ment mechanisms of economy particularly by sponsoring industrial and com- mercial projects, through individual initiatives or Muḍārabah or Murābaḥah, with other partners.

Second: Practical aspects of Murābaḥah to the purchase orderer shall be studied by Islamic Banks with the aim of working out the basis for safeguarding against any pitfall in the application process and to help upholding general or private Shariah rulings governing transactions of Murābaḥah to the purchase orderer.

Indeed, Allāh is All-Knowing.