1.

0 INTRODUCTION

1.1 DEFINITION BAY AL-‘INAH

Bay Al-‘Inah is a shariah contract where the seller sells and repurchases assets.

In this transaction, the seller sells the asset to the buyer for cash and then the seller buys

it back at a fixed price value which is higher than the cash sale price. This transaction is

also carried out when the seller sells the asset to the buyer at a deferred price and

subsequently repurchases it in cash at a lower price than the deferred selling price.

1.2 PILLARS OF BAY AL-‘INAH

1. Seller and buyer

2. Merchandise or goods

3. Price

4. Sighah – offer and acceptance (ijab and qabul)

1.3 FEATURES CONDITIONS OF BAY AL-‘INAH

Bay' al-'inah is allowed if the following conditions are met:

-The transaction of Bay Al-'Inah must closely adhere to the Shafie school's accepted

method.

-The item being transacted could not be in a ribawi (interest based) item.

-Before selling the item back to the original seller, the buyer must receive it (take

possession of it).

There are 2 contracts which are contract of sale and contract of purchase. Both contracts

feature two separate contracts, one for sale and the other for buy-back. Both contracts
must be self-contained, and the aqad is performed in a sequential manner, making it

legitimate according to proper regulations.

2.0 BODY OF THE CONTENT

2.1 ISSUES ON THE CONTRACT

1. Incorrect sequence of aqad (to tie the contract) in sale and purchase contract

between client and bank which means the aqad procedure is not in a proper

sequence among both contracts.

In this case, the issue has arisen as a result of pre-signing the contract, in which the client

(buyer) has accepted in signing both contracts before finishing the first. The first aqad

(contract) must be accomplished first, followed by the second contract, according to

Shariah regulations. This is because according to current Shariah regulations, the first

agreement must be signed by both contractual parties, namely the bank and the client, to

conclude the first contract, which is then followed by the second contract.

2. The concept of this contract has legal issue.

The Bay Al Inah concept has legal issues which there are different opinion views from

Islamic Scholars. This is because of the meaning of Bay Al-‘Inah itself where the contract

is for sale and buy back but at higher price. So, the high price is known as profit and is

classified as ribawi(hilah). Referring to the condition of Bay Al-Inah, there is customers

confusion for this contract when they want to choose doing personal financing contract.

This contract has legal problem that is being debated by Islamic scholars. Bay Al-‘Inah
has stated that, the condition in this concept must not be in terms of ribawi. It is because

ribawi is unlawful practice (haram) and Islam has prohibited riba.

According to Islamic Scholar, there are 2 groups Islamic Scholars who forbade this

concept and those who allow this concept to be used.

1. Those who allow the concept: Including Imam Shafie and supported by Ibn Hazm

and the Shariah Advisory Council of Bank Negara Malaysia

2. Those who forbid the used of the concept: Imam Hanafi, Maliki and Hanbali also

the same decision was adopted by the Accounting and Auditing Organization for

Islamic Financial Institutions(AAOIFI) Shariah council and the majority of the

Shariah Advisory Councils in Malaysia and Brunei.

CONCLUSION

To conclude, Bay Al-‘Inah is understood as a transaction that involves selling and then

repurchasing an asset between 2 parties to obtain cash. This sale and purchase involve

two different contracts over the asset. There is also a price difference on this concept as

the first sale price is lower than the second sale price. As a result, it is essential to

understand the fundamentals and features of the Bay Al-'Inah so that the transactions

employed in accordance with Shari'ah are founded by Islam and are free of conflict. Apart

from that, the aqad process for both parties must also follow the Islamic shariah that has

been set, so that the concept applied in the daily life of the Malaysian community, need to

follow the compliant and smooth especially in Islamic banking and finance services and

products. Therefore, it is important to know the basics and elements of Bay al-'inah so that

the transactions used in compliance with the Shari'ah have been set in Islam and have no

conflict especially when in Islamic banking and finance services and products. The
concept of Bay Al-‘Inah is disputed by Islamic Scholars because there are differences of

views and opinions according to sects from foreign scholars and Malaysian scholars

whether this concept is valid or invalid because some think the element of riba (hilah) is

used.
 REFERENCES
Definition of "Bai al-'inah ". (n.d.). IslamicMarkets.com. Retrieved May 23, 2022, from

https://islamicmarkets.com/dictionary/b/bai-al-inah

ISSUES IN BAY' AL-'INAH AND BAY' AL-DAYN AND PROPOSAL FOR OTHER CONCEPTS

AVAILABLE IN ISLAMIC COMMERCIAL LAW TO BE EMPLOYED AS ALTERNATIVES

IN CONTEMPORARY ISLAMIC FINANCE. (2010, February 27). ARZIM NAIM.

Retrieved May 23, 2022, from

http://arzim.blogspot.com/2010/02/issues-in-bay-al-inah-and-bay-al-dayn.html

Mohd Fuad Md. Sawari, Nik Azizu Nik Abdullah, Mustafa Mat Jubri @ Shamsuddin, &

Akhtarzaite Abdul Aziz. (2018). ISSUES OF BAI’ AL-‘INAH IN THE CONTEMPORARY

ISLAMIC FINANCIAL PRODUCTS AND ITS SOLUTIONS ACCORDING TO THE

SHARIAH PRINCIPLES. http://seajbel.com/wp-

content/uploads/2018/05/SEAJBEL15_231.pdf