Summary Article 8

“The Principles of Gharar in Bai Bithaman Ajil

Contract” by Siti Salwani

Group 11

24th August 2010

Nur Ashikin Baharin(0621262)

Nur Idayu Abd Razak(0626712)

Sharifah Fara Difla Syed Fareid(0625658)

 Summary of The Principles of Gharar in Bai Bithaman Ajil Contract

by Siti Salwani Razali

This article discusses about gharar and the effects in the Bai Bithaman Ajil Contract. Besides

that, this article also raises the issue on the probability of gharar involved in the process of Bai

Bithaman Ajil which is regarding with the purchases of assets which is not yet in existence. First

of all, BBA is a contract of deferred payment basis at an agreed selling price which includes a

profit margin agreed by both parties. Houses, commercial property, cars, machinery and many

more can be financed under the BBA concept. However, it would be no problem or dispute if the

asset is in existence, but there will be a problem if an asset like a house is under construction or

to be constructed which is not in existence during the conclusion of the contract. Thus, there is

some situation that the asset purchased may not be completed and delivered to the purchaser. So,

this will result to the existence of gharar in Bai Bithaman Ajil contract. In a contract of sale,

gharar give us the meaning of uncertainty and ignorance of one or both of the parties over the

substances of the object which exist at the time of the contract. In addition, the prophet stated

that gharar is prohibited in transactions. There are three reasons that cause BBA can amount to

gharar. Firstly, is this type of contract does not fulfill the requirement of subject matter under

Islamic law of contract. The muslim jurists have stated several conditions for subject matter to

become valid which are the subject matter must exist, the subject matter can be delivered and the

subject matter can be ascertained. Secondly, it is similar to Bay’ Ghaib. In BBA contract, buying

the asset which is not in existence is similar with Bay’ Al Ghaib. Lastly, it will result to a huge

loss to the purchaser. This is when the transaction is not complete. In conclusion, BBA should be

clearer in terms of ownership in order to avoid dispute, or any unfair action towards the society

and to help the Islamic banking in becoming reliability and integrity in serving the society.