BANK ALFALAH

ISLAMIC
DEPOSIT PRODUCT
 FALAH ISLAMIC CURRENT ACCOUNT

 Non remunerative account

 Customer is lender & bank is borrower
 Minimum initial deposit 1000/-
 no maximum limit. no restriction on deposits & withdrawals
 funds are payable to customer on demand
 zakat is not applicable
 pay order/demand drafts, cheque books, online banking is free for account holders

 CURRENT ACCOUNT OFFERED

o individuals
o sole proprietorship/ partnership
o company
o govt. entities
o NGOS
 BASIC BANKING FEATURES

 Based on concept of “Qard’

 Only be opened by resident Pakistani
 Available in Pak rupees only
 Minimum initial deposit RS 1000/-
 Non remunerative account
 No minimum balance requirement
 Maximum 2 chequing withdrawals are allowed, RS 50 charges will be applicable per withdrawal
over & above this exempted limit
 No zakat will be deducted in this account
 Statement of account will be issued once in a year

LIST OF SAVING ACCOUNTS

 Alfalah assan saving account
 Alfalah Islamic business way account
 Falah classic saving account \
 Falah mahana amdani account
 Alfalah musharaka saving account
 Falah business account

 ALFALAH ASAAN SAVING ACCOUNT

 To facilitate the banking industry to achieve the aforesaid objective.

 Asaan account for low risk customers.
 Asaan account will only be open either on current or saving category
 Only individuals can open Asaan account (single or joint account)
 Initial deposit requirement RS 100
 Total debit 500,000 per month & total credit balance limit 500,000
 Profit calculation basis on average balance of the month
 Profit payment semi annually
 Single tier (2.17%)

 ALFALAH ISLAMIC BUSINESS WAY ACCOUNT

 This product comes in two variants

o Deposit account
o Payroll account
 The aim of this product is to cater to businesses by making banking & operations simple &
flexible

Deposit account Payroll account

 Opened with RS 1000, but when you
maintain the monthly average balance
of RS 25000 you can avail a host of
free exclusive service
 For opening account, you need an
initial deposit of just RS 1000 and
employees will benefit from the free
include
o Cheque book, demand drafts, account
statement, E- statements, online
transaction, Alfalah debt card, sms
alerts,
o If customer don’t maintain 25000 in
their account, then free services on
this account will be charged
o Zakat is applicable
o RS 1 & above 0.06% (Dec 2016)
  FALAH CLASSIC SAVING ACCOUNT

 This is an orthodox account

 Simplest saving account
 Profit calculation basis on average balance of the month & profit payment are made semi
annually
 Initial deposit required 100 RS,
 no limit of maximum balance.
 Single tier is applied (2.17%)
 With-holding tax and zakat is applicable
 No restriction on deposit and withdrawals
 Pay order, cheque book, online banking is free for this account holder
 Product is offered to
 Individual
 Business man
 Govt. entities
 NGO
 FALAH MAHANA AMDNI ACCOUNT

 Premier saving deposit account (2008)

 Higher profit rates with on restriction on withdrawals
 Profit calculation basis of average balance of the3 month and profit payments are made at
monthly basis
 Initial deposit required RS 10000 and the maximum balance is RS 25 million
 Multiple tier is applying (2.17% to 3.46%)
 Withholding tax and zakat is applicable
 Pay order, cheque book, online banking is free for this account holders
 PMA account is offered to
 Individual
 Partnership
 Company
 Govt, entities
 NGOS

 FALAH MUSHARAKA SAVING ACCOUNT

 This account useful for those customer who have higher account turnover
 This product offers reasonable profit with on restriction on day to day transactions
 Profit calculation basis on average balance of the month
 Profit payments is made at monthly basis
 Initial deposit required RS 10000
  Maximum balance has no limit
 Multiple tier is applying (3.05% to 3.46%)
 Withholding tax and zakat is applicable
 Pay order, cheque book, online banking is free for this account holders

 Product is offered to
 Individual
 Partnership
 Company
 Govt, entities
 NGOS

 FALAH BUSINESS ACCOUNT

 This is saving account on which profit is calculated on daily basis

 Minimum balance for account opening RS 100000
 No maximum balance limit
 Multiple tier
 Profit calculated on daily balance and paid monthly
 There is no minimum amount requirement for profit eligibility
 Withholding tax and zakat is applicable
 No restriction on deposit and withdrawal
 Pay order, cheque book, online banking is free for this account holders
Product is offered to
 Individual
 Partnership
 Company
 Govt, entities
 NGOS

 ALFALAH ISLAMIC PREMIUM DEPOSIT

Newly introduced product to pitch the high net worth /financial institution & corporate customer

 Available in 1-year maturity & on monthly basis (1,3,6 month)

 Minimum investment is RS 5000,000/-
 No maximum balance limit
 Multiple tier
 Withholding tax and zakat is applicable
 Profit calculation on daily basis
  NOTICE PERIOD DEPOSIT CERTIFICATE
 Minimum investment requirement is RS 100,000/-
 No maximum balance limit
 Profit at maturity
 Withholding tax and zakat is applicable
 Available for 7 to 30 days
 Single tier (7 days 5.51 % 30 days 5.15 %)
 This product is offered to
 Individual
 Partnership
 Company
 Govt, entities
 NGOS
 TERM DEPOSIT CERTIFICATE
This product is issued against the placement of deposit for specific period of time as per the
choice of the customer
 This product is offered to
o Individual
o Partnership
o Company
o Govt, entities
o NGOS
 Type of tern deposit certificate
There is two type of term deposit certificate

Term deposit certificate – profit payment at Term deposit certificate – profit payment at
maturity monthly basis
 Fix deposit product  Available for 1 to 5 years’ maturity
 Available for 1,2,3,5 years  Long term investment with regular
 Designed for those clients who want to monthly income
place their investments for a specific  Minimum investment RS 100000/-
period of time  Multiple tier
 Profit % paid according to the tier in  No maximum deposit limit
which the investment falls  Profit payable on monthly basis
 Minimum investment RS100000  Withholding tax and zakat is applicable
 No maximum deposit limit  Product is offered to
 Profit is payable at maturity
 Withholding tax and zakat is applicable o Individual
 Product is offered to o Partnership
o Individual o Company
o Partnership o Govt, entities
o Company o NGOS
o Govt, entities
o NGOS
  ALFALAH 3-YEAR TERM DEPOSIT CERTIFICATE (MONTHLY INCOME
CERTIFICATE
This product is ideally suitable for those customer who wants to invest for a longer period of time with
regular monthly income

 Minimum investment is RS 100000/-

 Maximum investment RS 25 million
 Single tier (6.60%)
 Profit paid on monthly basis
 Withholding tax and zakat is applicable
 This product is offered to
o Individual
o Partnership
o Company
o Govt, entities
o NGOS
o
FOREIGN CURRENCY ACCOUNTS
There are three type of foreign currency account

Falah Islamic current account
 Non remunerative
account
 Based on the concept
of quard
 Customer is lender &
bank is borrower
 These funds are
payable to customer
demand
 Suitable for
businessman &
individual
 Available in US $,
pound, EURO
 INITIAL DEPOSIT
IS 100/-$ POUND
AND EURO
 \no maximum balance
limit
 Zakat is no applicable
 Cheque book is free
 No restriction on
Falah Islamic saving account
 This is saving
account for foreign
currency
 Simplest saving
account
 Single tier
 This product is
offered to individual
 Available in US $,
pound, EURO
 INITIAL DEPOSIT
IS 100/-$ POUND
AND EURO
 \no maximum
balance limit
 Zakat is no applicable
 Cheque book is free
 No restriction on
deposit and
withdrawals
 Profit calculation on
average balance of
Falah Islamic term deposit
certificate
 This is a fix deposit
product
 Available for 1,3,6
month & 1 year
 Single tier (multiple
tier on 3-month
category)
 Term deposit
certificate are offered
to all individual
 Profit payable at
maturity
 Initial deposit 1000$
 No maximum deposit
limit
 deposit and the month and paid
withdrawals semi annually

IJARAH
Means
‘to give something on rent’
the term Ijarah is used in two context
1. ‘To employ the service of a person on wages’
2. ‘Paying rent for use of an assist or property’

 PROCESS OF IJARAH

title transfer
to customer
customer at the end of
makes lease term
bank leases periodic
the asset payments
bank make
payment to
bank vendor
purchases
lease item
agreement
enters into
promise
for financing
bank
customer

 RULE OF IJARAH

 Promise to lease
o Master agreement
o Security deposit
 Acquisition of asset
o Agency
o Join ownership
 Execution of Ijarah
o Duration
 Subject matter
o Major maintenance
o Ordinary maintenance
o Insurance of the asset
 Lease rentals
 Guarantees
o Delay in payment
 Swelling of leased asset
 Termination of contract
 Renewal of the contract
 Transfer of ownership
DIFFERENCE BETWEEN CONVENTIONAL
LEASE & IJARAH

CONVENTIONAL LEASE IAJRAH

 Co-ownership bank & client
 All expenses are born by client
 Installment starts upon booking
 Installment are charged even if the asset is
not in running condition
 Is case of loss/theft of asset without the
negligence of client the client bears the
loss
 Absolute ownership of the bank
 Ownership expenses are borne by bank
 Rentals are charged only after delivery of
asset
 Rentals would be suspended if the asset is
not in running condition
 In case of loss/theft of asset without
negligence of client bank will bear the
loss

ALFALAH CAR IJARAH

 PRODUCT FEATURES

 No advance rentals
 No advance insurance
 No advance registration charges
 Tenure of 3 to 5 years
 Minimum financing of RS 2 million with maximum financing RS 6million
 Financing of both local and important vehicles
 Financing of used car
 Minimum security deposit of 20% with maximum limit of 75%
 Completion refund of security deposit in case of theft major accident of vehicle
 \no depreciation on parts in case of partial loss of vehicle

 ELIGIBILITRY CRITERIA

SALARIED INDIVIDUL SELF EMPLOYED

 With 1-year continuous employee  3 years’ experience
  2 years’ experience in case of
contractual employee
 Minimum salary of RS 25000 per
month
 Resident of Pakistan having minimum
age of 21 years
 Age should be more than 60 years at
the time of completion of lease for
salaried person
 Have a gross income exceeding 2
times monthly rentals
 Resident of Pakistan having minimum
age of 21 years
 Age should be more than 65 years at
the time of completion of the lease
foe self employed

CAR IJARAH PROCESS

 Application
 Verification
 Processing
 Approval
 Disbursement
 Vehicle delivery
 Post-delivery functions

AJARAH DOCUMENTATION & PRACTICAL

ISSUES

 SALE & LEASEBACK GUIDELINES

In sale 7 lease back transition customer requires finance for an asset already in the ownership of
the customer

 Sale & lease back may be allowed in following cases

o Financing of newly imported asset
o Replacement from conventional to Islamic financing
o Sale & lease back not allowed for the financing of old assets
 IJARAH DOCUMENTATION

LETTER OF UNDERTAKING LEASE

AGENCY TO LEASE AGREEMENT

UNDERTAKING
SALE DEED
TO PURCHASED

THE CONCEDPT OF SHIRLHA &

MUSHARAKAH
DM IN BUSINESS OF DM IN TRADE
SERVICES
 Creating joint
ownership in
asset e.g. cab
 Musharaka in the
in the income
generated
through the
service of cab
 Purchased of
different units of
the share of
financier by the
client at market
price or at a price
that us agreed at
the time of sale
 Sale of unit a
pre-agreed price
is not permissible
 The agreement  
simply a
musharaka where
two partner
invest different
amount of capital
in a joint
enterprise
 Purchased of
different units of
the share of the
financier by the
partner at market
price or at a price
that is agreed at
the time of sale
 Sale of unit a
pre-agreed price
is not permissible
 DIMINISHING MUSHRAKAH PRODUCT-ISLAMIC
BANKING GROUP
PRODUC PURPOSE MINIMUM MAXIMUM
T FINANCE FINANCE
Alfalah Purchase of already constructed hosing unit RS 2 Up to RS 50 million
home on diminishing musharaka basis
buying

Alfalah Purchase of land and subsequent RS 2 Up to RS 50 million

home construction thereon
constructio Construction of house if one owns the plot
n

Alfalah Renovation, extension, restoration, and RS 2 Up to RS 3.5 million

home enhancement of an already owned hosing or 40% of the
renovation unit building value after
completion of the
property whichever is
lower + eligibility of
the customer
Alfalah Taking over the exiting house finance RS 2 Up to RS 50 million
home BTF facility obtained by the customer frim other
financial institution

 TARGET CUSTOMER
 Salaried individual
 Business persons
 Self-employed professionals
 Expatriate salaried individuals
 BASIC ELIGIBILITY CRITERIA
 Pakistani national
 Available in the major cities of Pakistan
 Age between 23 years to 65 years
 Net monthly household income 50000, for salaried RS 100000/- for business man 400000
 Permanent employee having a continuous employment of 2 years or more and for business man
have 5 years satisfactory6 track record
 Must be tax payer

PRODUCT MINIMUM MAXIMUM DEBT/ EQUITY

 TENURE TENURE RATIO
Alfalah home buying 3 YEARS 20 YEARS 70% ( BAL-IBD) :
30% ( CUSTOMER )
Alfalah home 3 YEARS 20 YEARS 70% ( BAL-IBD) :
construction 30% ( CUSTOMER
Alfalah home 3 YEARS 7 YEARS UP TO 40% OF THE
renovation BUILDING VALUE
AFTER
VALUATION OF
THE PROPERTY
WITH MAXIMUM
OF RS 3.5
MILLION WHICH
EVER IS LOWER
Alfalah home BTF 3 YEARS 20 YEARS 70% ( BAL-IBD) :
30% ( CUSTOMER

Documentation requirement

Salaried individual Self-employed / business man Expatriate salaried individual

&high net worth individual
 3 passport size
photographs
 Copy of CNIC original
seen by the concerned
officer & NADRA
verified through verses
 Copy of last salary slip
pays lips duly attested
by the human resource
department of the
employer
 Salary certificate from
the employer showing
gross salary &
deductions
 Employment
verification from
employer on bank
format
 6 month bank statement
 3 passport size  3 passport size
photographs photographs
 Copy of CNIC original  Copy of CNIC original
seen by the concerned seen by the concerned
officer & NADRA officer & NADRA
verified through verses verified through verses
 Last 3 years’ income tax  Latest 2 SALARY Slips
returns  Employment certificate
 Certificate of sole  Attested copy of 3 years
proprietorship of tax returns
 Copy of partnership  1 years bank statement
deed  Attested copy of work
 Partnership NOC from permit
remaining partners  Irrevocable GPA
 Undertaking form favoring the bank
customer
 Corporate-confirmation
from C seen of share
holding
 HOME MUSHARAKAH PROCESS

MEETING WITH COMPLRTION OF RISK ANALYSIS OF

DATA CHECK
CUSTOMER APPLICATION THE CASE

LEGAL DECISION AT
DAC FROM DCC PDCs
DOCUMENTATION APPROPRIATE LEVEL

DISBURSEMENT OF HERE IS THE HAPPY MORTGAGE PROPERTY

FACILITY HOME FOERMALITIES INSURANCE

 DIMINISGING MUSHARAKAH
APPLICATION & DOCUMENTATION

 Diminishing musharaka can be used for

o Long & medium term fixed asset financing like plant, equipment, generators etc.
o Retail products like car financing, durable financing, hone financing
 Commercial premises include office premises factory premises, warehouses, shops, agricultural,
land, excluding such.
a- Land or building which is being purchased for the purpose of resale
b- Land which cannot be used for construction or agricultural purposes.
c- Land which is being purchased by the building to carry out construction project
 LEGAL DOCUMENTATION
o MUSHARAKAH AGREEMENT
o PAYMENT AGREEMENT
o UNDERTAKING TO PURCHASED MUSHARAKAH UNITS
o UNDERTAKING TOB SELL MUSHARAKAH UNITS
 TAKAFUL

 CONVENTIONAL INSURANCE
A way to provide security and compensation to what is valuable in the event of its loss

 According to Sariah rule there are two aspect of the conventional insurance
1. Conceptual aspect
2. Practical aspect
 So fore as the concept of insurance is concerned it is to cover the risk of loss or fortunate many
helping the unfortunate few
 The concept is not only recognized but also appreciated and rewarded by Islam
 Practical aspect
Conventional insurance is forbidden due two reason
1. Qimar or mayser
2. Riba
Qimar or mayser has been clearly prohibited by Quran & hadith
1. Khatar
2. Gharar
 Khatar
The participant contributes a small amount of premium in a hope to gain a large sum
 Gharar
the participant loses the money paid for the premium when the insured event does not occur
 RIBA
DIRECT RIBA excess on one side in case of exchange between the amount of premium
and the sum insured
INDIRECT RIBA the interest earned on interest based investments
 TAKAFUL

 Cooperative risk sharing for protection

 Clear segregation between participant & operator
 Sariah compliant investment strategies
 Avoidance is forgiven using tabarru
 Shariah advisory oversight
  DIFFERENCE BETWEEN INSURANCE & TAKAFUL

INSURANCE
 It is a business institution operated
venture based on the principles of
contract
 Risk transfer mechanism where the
insured substitutes certainty for
uncertainty
TAKAFUL
 It is a co-operative institution based on
the principles of ta awan
 Risk sharing mechanism as such on
transfer of risk is involved

MODELS OF TAKAFUL

PURE MUDARABAH WAKALAH MODEL WAQF BASED ON WAQF

MODEL ( HYBRID OF MODEL
MUDARABAH &
WAKALAH )
 The participant and the  Cooperative risk  The shareholders
operator enter into a sharing occurs among create a waqf fund to
mudarabah contract the participants extend the help to
from the beginning of whereas takaful those who want cover
the relation for operator earns a fee for against financial losses
indemnification and services  The participants
share of the  The operator earns an donate to the fund and
underwriting results upfront deductible fee the operator manages
 The surplus is shared and shares the profit of the fund
between the participant investments it does not  All underwriting
and the takaful share the results of results belong to the
operator in an agreed underwriting fund which itself has a
ratio  Operator may also legal entity
 This model allows the charge a fund
takaful operator to management fee and
share in the performance incentive
underwriter results fee
from operations as well
as the favorable
performance returns on
invested premium
  RE-TAKAFUL
 An Islamic alternative to conventional reinsurance based on a Shariah compliant approved
concept for reinsurance
 Takaful operator pays an agreed premium from its takaful fund to the re takaful operator in
return for the re takaful operator providing security for the assurance that the takaful operator
is protected

DEPOSIT STRUCTURE
 Current account deposit-product structure
 Based on the concept of qard
 IBG is borrower & customer are lender
 Principal is guaranteed qard
 Based on principal of mudarabah with the rules of Islamic Shariah
 Mudarabah partnership in which a person participates with his money & other with his
efforts
 Bank is the manager (mudarib) & the customer is an investor (rab ul maal)

 TYPE OF MUDARABAH
There are two type of mudarabah

AL MUDARABAH AL MUQAYYADAH AL MUDARABAH AL NUTLAQAH

(RESTRICTED MUDARABAH )
RAB-UL-MAL may specify a particular business
or a particular price for the mudarib in which case
he shall invest the money in that particular
business or place
( UNRESTRICTED MUDARABAH )
RAB-UL-MAL gives full freedom to mudarib to
undertake whatever business he deems fit

RAB-UL-MAL HAS AUTHORITY TO

oversee the mudarib activities and work with
mudarib if the mudarib consents

 CAPACITIES OF MUDARIB
AMEEN (trustee) the money given by rab-ul-mal and the assets required therewith are held by him as a
trust
WAKEEL (agent) in purchased goods for trade he is an agent of rab-ul-mal
SHAREEK (partner) in case the enterprise earns a profit he is a partner of rab-ul-mal who share the
profit in agreed ratio
ZAMIN(liable) if the enterprise suffers loss due to his negligence or misconduct he is liable to
compensate the loss
AJEER (employee) if the mudarabah becomes void due to any reason the mudarib is entitled to get a fee
for his services
DIFFERENCE BETWEEEN SHIRKAT AND MUDARABAH

SHIRKAT
 Investment from each partners
 Every partners bear loss according to
ratio of his investment
 Every partner can work for business
 Every partner’s liability is unlimited
 Asset given by the investor as an
investment all partners will be co-
owners of that asset so if the value of
that asset is increased all will get
benefit
MUDARABAH
 Investment from one partner while
other is working partner
 Investor cannot work for business
 Only rab-ul-mal suffers loss
 Investor is liable up to the amount of
investment
 Asset given by the investor as an
investment remains in the ownership of
investor before sale therefore if is
terminated at this stage mudarib is not
entitled to share in the exceeding price
of that asset

 TERMINATION OF MUDARABAH
1. Each partner can terminate mudarabah at any time
2. If a time period is fixed in mudarabah then all partners will be responsible for the completion of
this period
3. Physical liquidation is not necessary constructive can also be conducted

PREMIUM PAYMENTS
Premium are offered to stimulate higher deposit mobilization from high net-worth client in addition to the
normal share of profit
Rationales for offering premiums
 RULES
 premium are declared by the bank from its share of income as a mudarib voluntarily and will be
paid only if overall pool has earned profit
 premium is not allowed for specific customer rather across the board under SBP regulations
 premium will not be more than 2% over and above the actual return earned by the depositor based
on performance of the pool and respective weightages
 DISTINGUISHING BETWEEN ISLAMIC 7
CONVENTIONAL BANKING
Conventional banking
 Conventional banking princes’ money
 Is based on fixed return on both sides of
the balance sheet
 Does not involve itself in trade and
business
 Depositors get a fixed rate regardless of
the bank’s profitability thus insulating
them from the banks true performance
Islamic banking
 Islamic banking prices goods and services
which creates real wealth in the society
leading to economic well being
 Is based on profit sharing on deposits side
and on profit on assets side
 Actively participates in trade and
production
 Profit is shared with the depositor higher
the banks profit higher the depositors
income

SOURCES OF SHARIAH
SHARIAH lexical meaning; plain way
Technical meaning; the divine law
THERE ARE 5 SOURCE OF SHARIAH

QURAN SUNNAH IJMA QIYAS IJTIHAD

 Express  A word  Ijma  To apply a  LITERAL
injunction spoken or an means recognized MEANING
have no room act done or consensus rule of to exert one
for ratified by of the Shariah utmost effort
interpretation the holy scholars expressly  TECHNICAL
or ijtihad prophet of the mentioned in NEANING
 Implied  It is a source ummah the holy to exert
injunctions of law on a Quran and utmost effort
may be because the particular Sunnah to a to discover a
interpreted in holy Quran issue similar thing ruling of
different ways itself has or situation by Shariah in a
by way of made it way of particular
inference or obligatory analogy matter
ijtihad for every
believer that
he obeys and
follow the
holy prophet
 CLASSIFICATION OF RIBA
RIBA-UN-NASIYAH OR RIBA-AL-JAHILIYA RIBA-AL-FADI OR RIBA-AL-BAI
 That kind of loan where specified  Excess taken in exchange of specific
repayment period and an amount in commodities which are homogeneous
excess of capital is predetermined  Legal definition differs in every fiqh
 Premium paid the lender in return for his  Sell gold in exchange of equivalent gold
waiting /giving or taking of every excess
amount in exchange of a loan at an agreed
rate irrespective of whether it is low or
high

 TAPE OF RIBA

TIJARTI SOOD SARFI SOOD

SOOD-E-MUFRAD  Interest paid on loan taken for personal
 Interest paid on loan taken for productive need and expenses
and profitable purpose  Reinvestment of each interest payment on
SOOD-E-MURAKKAB
 Interest calculated only on the initial money interest to earn more interest
investment

LAW OF CONTRACT

Legal meaning of contract (aqd)

 A knot
 To bind
Essential elements of contract

 Contracting parties
 The words of the contract
 Object of contract
 CONTRACT

OFFER & ACCEPTANVE

 By words
 By acts
 By writing
 By indicating
SUBJECT MATTER
 Specified
 Quantified
CONTRACTORS
 NON –RESTRICTED
 SANE
 MATURE
WORDING OF CONTRACT
 Present
 Unconditional
 Non-contingent
CONTRACTING PARTIES
 Age of maturity
 Sane
Words of contract
The form through which a contract can be executed
 Spoken word
 Written word
 Deed
Object of contract
 Should be property of value
 Must have a value
 Can be owned
 Should not be under another’s right
ISLAMIC CONTRACT
 Islamic law is expressed not as a general theory of contract but as a set of rules for various
specific contracts
 The closed think to a general law of contract is the law of sale
 It is used by jurists as a prototype and analogy for all other contracts
  TYPE OF CONTRACT

UQOOD-E-MUAWADA UQOOD-E-GHAIR MUAWADA

 SALE  GIFT(HIBA)
 IJARAH  LOAN
 GUARANTEE

 CONTRACT OF ISLAM
 VALID CONDITION
1. A condition which is not against the contract is a valid condition
2. A condition which seems to be against the contract but is in the market practice is not
void. If its voidness is not proved with the clear injunctions of the holy Quran and
Sunnah
3. A condition that is against the contract and not in market practice but is in favor of
one of the contractor or subject matter the condition is void
4. A condition which is against the contract not in the market practice and not in favor
of any contractor that is not a void condition

RULE OF SALE
Sale definition in SHARIAH as
Exchange of a thing of value by another thing of value with mutual consent

Allah has permitted sale and prohibited Riba

 TAPE OF SALE
VALID SALE ( BAI VOID NON EXISTING SALE VALID BUT
SAHIH) EXISTING SALE BUT VOID DUE TO DISLIKED SALE
( BAI BAATIL) DEFECT ( BAI ( BAI MAKROOH)
FASID)

A sale is valid if all elements together with their conditions are presents

 Contract offer & acceptance, buyer & seller, conditions of contract

 Subject matter existing, valuable, usable, capable of ownership & delivery, seller must have title
risk, specific & quantified
 Price. quantified, specified & certain
 Possession. Physical, constructive
  BASIC RULES OF SALE
1. The subject of sale must exist at the time of sale
2. The subject of sale must be in the ownership of seller at the time of sale
3. The subject must be in the physical or constructive possession of seller at the time of sale
4. The sale must be instant and absolute thus a sale attributed to a future date or a sale contingent on
a future event is void
5. The subject of sale should be an object of value a thing having no value according to the usage of
trade cannot be sold
6. The subject of sale should not be a thing used for a haram purpose
7. The subject of sale should be specifically known and identified to the buyer. The subject of sale
must be identified by pointing out or by detailed specification which can distinguish it from other
things not sold
8. The delivery of the sale commodity to the buyer should be certain and should not depend on a
contingent or chance
9. The certainty of price is a necessary condition for the validity of the sale
10. The sale must be unconditional a conditional sale is invalid unless the condition is recognized as
a usual practice of trade

 PROMISE TO SALE
DIFFERENCE BETWEEN SALE AND PROMISE TO SALE

SALE PROMISE TO SALE

 A sale cannot be effected unless the above
mentioned condition are fulfilled
 But one you can promise to sale
something which is not owned by him
 The promise initially creates a moral
obligation
 If the promise has resulted in the promise
incurring some liability some jurists allow
that the promise be legally forced to fulfill
the promise
 In case of a promise to sell the sale
transaction will take place at a future date
through a separate offer and acceptance
 EXCEPTIONS TO THE RULS
 The above mentioned rules of sale are
relaxed in following two type of sale
1. Bai Salam
2. Istisna

VALID SALE
A VALID SALE CONTRACT EXHIBITS TWO FEATURES
A. Knowledge party’s full knowledge of the object of the sale
B. Existence a concrete sale object
Absence of these features introduces Gharar in the transaction