Definition of Bai Tawaruq
Bai means sale,
an agreement between two parties which is the buyer and the seller to transfer
the ownership from the seller to the buyer in exchange of price or payments. (Kettell,
2010)
The term of
tawarruq was not known in the early days of Islam, either during the era of
Prophet Muhammad s.a.w .Furthermore the term of tawaruq was commonly known
during the later period of and being used by the Hanafi school of law.Ibn
Tahmiyah is the one who first popularized the term of tawarruq.
Tawarruq
comes from the words “tawarraqa” means seeking for silver money or eat the
leaves. Literally the meaning of tawaruq is a contracts to buy goods or
commodity with deferred payments and sell the goods to others parties with
immediate money with the lower prices (Bakri,
Mahmod, & Ghafar, 2016). Another definition of bay tawaruqq
according to
Rahman, is asked for wariq. Wariq is made
money of silver. Shafie scholar defines tawarruq as selling the commodity or
goods with the deferred payments and then buy it back with the immediate
payments. (Rahman,
2018)
Islamic jurisprudence defines
tawarruq as a form when the parties A buy the commodity from the seller for a
deferred payments and then resell that commodity to the buyer B with the
immediate payments but the price was lower than the original price. (Alkhamees,
2017)
Central Bank of
Malaysia defines bai tawaruq consist three parties or two sale and purchase
contracts. The seller, sell the commodity or asset to buyer with deferred
payments, Subsequently the purchaser of the first sale will sell the same asset
to the third part by the cash(Tawarruq Concept Paper, 2015). According to Hafizah Samanal, OIC
(Organization of the Islamic Conference) defines tawarruq as a commodity was
bought by somebody (Mustawriq) based on deferred payments and sells it to the
other person or the third parties not the same person which is not the first
and second parties with the immediate payments. (Tijani, 2013)
As the
conclusion for the definition of Bai Tawarruq is between three parties.First
party is the seller that sell the goods
or commodity with deferred payments and the second party sell the commodity to
the third parties with immediate payment or by cash.
The Prophet said: “When are human are
involved with dinars and dirhams, and for sale on ‘inah and follow a cow (busy
with livestock or live activist), and left jihad fi sabilillah, Allah will
lower them, they not be raised until they return to their religion.” (Narrated
by Ahmad)
While Imam al-Syafi’I and Zahiri’s views
is bay inah sale is permitted. There are several evidences:
Firstly, Allah said: “…. Allah permitted trade and
forbidden usury..” in Surah al-Baqarah versus 275.
Based on the verse above, all kind of
trade that follow the pillars and conditions of contract is valid regardless of
the intent of the seller. (Dr Mohd Sabri Abdul Ghafar, 2016)
Abu yusof and some scholars of the
Shafi’I schools also permitted bay inah sale because is not contradictory to
Shariah principles. Imam Shafi’I ruled that the story of Zayd ibn al-Aqram as
discussed above is not valid hadith. This is due to the weakness in its
transmission (sanad). In al-Umm, Imam Shafi’I ruled that when a person sells an
asset for a certain period and the buyer receives it, then there is nothing
wrong if he buys back the asset from whom he sold at a lower price. (Mohd
Herwan Sukri, 2015)
Shariah Advisory Council of Bank Negara
Malaysia has decided that bay inah sale are permitted with some statements
which are bay inah shall follow rhe pillars and conditions of contract, should
be for the benefit of the people who want to make financing from islamic
banking and hilah that use in bay inah sale of contract is valid and not
against religion. (Dr Mohd Sabri Abdul Ghafar, 2016)
Sources of Bai Tawarruq
First and foremost, the sources of
bai tawarruq is based on verses from Al-Quran (AL-Baqarah : 275) :
Meaning: And Allah has permitted trade and has forbidden interest[1]
As we know that
Muslims are instructed to deal with free-riba with any transactions and abandon
any transaction that leads to riba. That’s was the most important for any
transactions in Islam.Based on general meaning of the verse is the activity of
the tawarruq is permissible because it’s kind of trading activity. The parties
resell the commodity maybe need the cash or common activities. (SACBNM,
n.d.)
There is no
direct legitimacy from the hadith regarding the tawarruq. Its deemed
permissible based on the general permissible law of sales in Islamic law. But
the contemporary scholars are permissible bai tawarruq because of the scholar
view such as Hanbali and Syafie scholars. (Ahmad
et al., 2017)
According to
Shafie reason that tawaruq permissible
is Allah has allowed the sale and purchase and forbidden the interest but the
subject must sell to third party. (Ahmed,
2014)
Other than that
Shariah Advisory Council of Central Bank of Malaysia in its 51th meeting dated
July 2005, has resolved that financing product based tawarruq is permissible
and as an alternative to bai inah. (BNM,
n.d.) Majority of scholars allow
transactions of bai tawaruqq such as Hanafi school, Imam Shafie and Imam
Al-Nawawi. (Nurhisam,
n.d.)
Types of Bay al-Tawarruq
First, tawarruq hakiki it is
also known as tawarruq fiqhi or tawarruq klasik or tawarruq fardhi. Tawarruq
hakiki occurs when a person purchases an item in a deferred payment and then
sells it to another person in cash. Majority scholars consist of Hanafi,
Shafi’I and Hanbali scholar permitted tawarruq hakiki. Fiqh Academy OIC in 15th
session that was held on September 1998 permitted tawarruq hakiki based on this
reason. In Al-quran in Surah al-Baqarah, verse 257, tawarruq hakiki is one of
the part in types of sale trade that permitted in the verse. It is also do not
have any factors that may causes invalid. Based on fiqh method: “the origin of
something in the muamalat field is permitted”. Tawarruq hakiki it should be
valid or permitted because there are no verse in al-quran or hadith that say it
forbidden. It also different from bay inah sale because there are three parties
involved in two transaction made separately. Tawarruq also fulfill the needs of
individuals to legally earn money. (Dr Mohd Sabri Abdul Ghafar, 2016)
In tawarruq hakiki, third
parties do not have relation at all with the first seller. In this case, the
first seller cannot be associated with the cash sale made by the buyer of the
goods thereafter. (Ab. Mumin Ab. Ghani, 2006)
Second, tawarruq munazzam is
almost same with tawarruq hakiki from the point in sale goods. However, the
different is the first seller normally is Bank islam which will manage the sale
of goods purchased by bank customers to third parties. Therefore, the customer
does not play any role as the owner of the goods but only receives cash from
the bank. Customer only need to clear the payment of the goods gradually to the
bank within the stipulated period.
But, Fiqh Academy OIC in 17th
session that was held on December 2003 has fixed the tawarruq munazzam cannot
be equated with tawarruq hakiki. In the 19th session was held on
April 2009 has determined that tawarruq munazzam prohibited with several reason
which are it is included in the form the banned hilah. Then tawarruq munazzam
similar with bay inah sale that can lead to usury. Lastly, tawarruq munazzam
transaction did not fulfill condition of sale contract because the buyer
(customer bank) did not know the goods in shape and type that he buy while not
receiving the accepting (taslim) and hold (qabad) the item. It only deal with a
sale document that exchanged hands from one party. Actually, the same goods has
been used as tool to allowed the sale and purchase transactions. (Dr Mohd Sabri
Abdul Ghani, 2016)
Prohibited Elements in Bay Tawarruq
1. Involve Hilah into Riba
There are elements that had been
prohibited in any transactions in Islam. First and foremost, the prohibition
elements are Riba. The definition of riba is increase, addition, expansion and
growth. (S.Thomas,
2006)
Meaning:
O you who have believed, do not consume usury, doubled and multiplied, but fear
Allah that may you successful.
Generally the
meaning of the verse,Allah prohibited us to involve with riba because its bring
to injustice to any parties in the contracts. It’s not only on tawarruq
contract but with any transaction and contracts.
2. Using gold and silver as
commodity
In tawarruq
contracts, the assets shall not be traded in tawarruq such as gold,silver and
currencies because in Islamic transactions we cannot make or proceed the
transactions with ribawi items.(BNM,2015) This is because in the bay tawaruq
contracts there are deferred payments and we know that the currencies and gold
is invalidate the whole contracts if involved with the deferred payments.
3. Forced Sale
The most
important in any transaction is both parties are willingness to do any
transactions, anyone
cannot force the others people to involve in any contracts and payments that
they don’t want. Based on the meaning Al-Quran in verses 29 of An-Nisaa Allah
said “only in lawful business by mutual consent”. (Hassan & Mahlknect, 2011)
Conditions of Bay Tawarruq
Based
on Afdhoul Ragman b Che Ani, due to the prohibition and controversy that had
been putted onto bay Inah, tawarruq was introduced as an alternative to replace
bay Inah itself. Compared to bay Inah, tawarruq involve three parties which are
tripartite agreement which seems to be more transparent as the buyer is not the
seller himself, but the first buyer which is commonly the customer will have to
sell the commodity to the third person. This transaction seems to be more
transparent than bay Inah.
First
condition of bay tawarruq is the ownership of the commodities. The seller must
own the commodity before selling it to the buyer. As we can see, we as customer
must first own the assets or subject of tawarruq before appoint bank as agent
to sell it to final buyer. If the parties in this contract fail to do soo, it
can lead to excessive gharar (Gharar Fahish) to occur and Gharar Fahish is indeed
prohibited in Islam.
Secondly,
the commodity is specified. The seller has to explain the details of the
commodities to the buyer. The explanation must include the characteristics of
the commodity such as the value, colour or the assets’ prices. This is actually
the pillars in nature of muamalah where the commodity must be specified. As we
know, in general Al-Mal is classified into tangible which is the assets that
can be seen and touch or corporeal (‘ayn) and intangible or non-corporeal
(ghayr al-ayn) such as manfaah and rights or we called as huqu. Tangible mal
can be classified mainly into first and foremost, valuable and non-valuable
property (mutaqawwam and ghair mutaqawwam), movable and immovable (al-manqul
and aqar), homogenous and non-homogenous (mithly and qimmiy) and lastly
perishable and non-perishable properties (istikhlaky and isti’mali). (Wahbah
Zuhaily, 1985)
Thirdly,
the possession of commodities. The commodities which are normally used in
tawarruq contract is movable assets or we call it as manqulat such as silvers,
rice or cements. About distinguishing between movable and immovable assets,
there are two different definitions given by two different scholars
respectively. Based on Hanafi scholars, movable or transferable item are things
which are defined as al mal that can be transferred from one place to another
place no matter if the items will be in its original condition and form or not
after moved to another place. Hence, we can see in this definition, a tree
become manqulat either if it change its shape into firewood or paper instead.
However,
based on Maliki scholars viewpoint, movable or transferable assets are defined
as any items that can be transfer from one place to another place without
changing their form or shapes. This include cars, books and laptop for example.
(Wahbah Zuhaily, 1985)
Fourthly,
avoiding Inah sales. As we know, Inah sale include two parties which is the
buyer and seller where after that the seller will be the buyer and the buyer
will be the seller. Islamic institutions had prohibit the sales between same
client because this can lead to hilah toward riba’ where riba’ is clearly
forbidden in our religion, Islam. Hence in bay tawaruq, in include three
parties which are original seller, the customer and final buyer. In this
transaction, bank reacted as an agent only or an intermediary between the
customers and two other parties. First of all, the customer will buy an asset
from the original seller by instalment payment with cost price plus profit.
After that, the client will appoint bank as an agent to sell back the
commodities toward the third party. The bank will sell it to the final buyer
with cash and give it to the customer.
Fifthly,
the details of time payment. The contract between the financial institution or
original seller and customer are based on instalment payment where the customer
have to pay by deferred payment and settle the payment on specific date. The
specific date indeed has to be clearly stipulated so that both parties do not
have any problem pertaining to time payment.
Sixthly,
to avoid usury. Riba is one of the most forbidden things in the eye of Allah
Azza Wajalla. There are a lot of ayah in Al Quran and also sunnah pertaining to
prohibition of riba’ in our daily lives. As we can see, Islamic Institutions
nowadays are institutions that can be accepted thoroughly by both Muslim and
non-Muslims around the globe because of their transparency in dealing including
avoid usury because usury itself consist injustice. Even though the system of
particular banks have the tendency to convert from conventional system to
Islamic system, but this phases require a lot of efforts. Banking with free
riba’ does not really mean profit less banking. However, Islamic Banks have to
work hard and efficiently in order to succeed in rising up Islamic system in
banking institutions. Allah Azza Wajalla had stated numerously the prohibition
of usury in contract. There is an ayah illustrated in surah Al Baqarah verse
275 :
“Those who apply
usury will not stand except as stands one whom the Evil one by his touch hath
driven to madness. That is because they say: Trade is like usury,” but Allah
hath permitted trade and forbidden usury. Those who after receiving direction
from their Lord, desist, shall be pardoned for the past; their case is for
Allah (to judge); but those who repeat (The offence) are Companions of the
Fire; they will abide therein (for ever).”[2]
Allah
Azza Wajalla also had stated in Al Quran Surah Al-Baqarah in verse 278 until
279 :
Oh you who
believe! Be afraid of Allah and give up what remains from Riba’ (usury) from
now onward if you are really believers. And if you do not do it, then take a
notice of war from Allah Azza Wajalla and His Messenger but if you repent, you
shall have capital sums. Deal not unjustly (by asking more than your capital
sums), and you shall not be deal with unjustly (by receiving less than your
capital sums)”
Allah
Azza Wajalla also had stated in Al Quran Surah An Nisa verse 135 pertaining avoiding
injustice in our daily lives:
“O you who
believe! Stand out firmly for justice, as witness to Allah ; although it
against yourselves, or your parents, or your keen, be rich or be poor, Allah is
a Better Protector to both (than you). Hence follow not the lusts (of your
hearts), tests you may avoid justice and
if you distort your witness or refuse to give it, verily, Allah is ever Well
Acquainted with what you do.” [3]
The
impact of riba’ is absolutely negative. It vanish and eliminate the social
value among individuals and by to only earn profit, people have just made
themselves slaves of the system to continuously struggle and work hard to earn
money to pay back the debts just for maximising their greed indeed. Those
irresponsible parties tend to urge more and more without have any feeling of
satisfaction and have shifted or transformed the focus from permissible ways
and means to any. This creates a very contra Islamic teachings which is
strictly prohibited and disliked by The Most Merciful Allah Azza Wajalla and
Prophet Muhammad (peace be upon him). (Razi M, 2008)
[1]
AlQuran Dan Terjemahanya,PercetakanZafar Sdn Bhd,Kuala Lumpur
[2] Al
Baqarah, verse 275
[3] Al-Nisa’,
verse 135
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