Kembaraxtra-Islamic Finance: Time of Delivery – Problems and Solutions

Kembaraxtra-Islamic Finance: Time of Delivery – Problems and Solutions
Case 1: Murabahah Transaction with Delay

Problem: Ahmad buys a car via Murabahah, but delivery is set one month later.
Solution:
1. Delivery must be immediate since the car exists and is identified.
2. If Ahmad still wants later possession, the bank can sell the car now and then lease it back (Ijarah) until delivery.
3. Alternatively, the bank can hold the car in trust (Wakalah) until Ahmad collects it.
Outcome: The contract remains valid without breaching Shariah principles.

Case 2: Salam Contract for Wheat

Problem: Farmer agrees to deliver wheat in six months under Salam; Bilal pays in full now.
Solution:
1. Full upfront payment is required (Bilal pays immediately).
2. Wheat must be clearly specified (quality, grade, weight, delivery date).
3. Farmer must deliver on the due date, or compensate in value if unavailable.
Outcome: Both parties are protected — farmer gets capital, Bilal secures future wheat.

Case 3: Istisna’ for a Factory Building

Problem: Corporation contracts a builder to deliver a factory in 18 months.
Solution:
1. Contract terms must specify materials, design, and completion date.
2. Payments may be staged (milestone-based).
3. If the builder delays, penalties (ta’widh) may apply if agreed upfront.
Outcome: Risk is minimized and delivery obligations are enforceable.

Case 4: Currency Exchange with Deferred Settlement

Problem: USD to MYR exchange, but one side delays settlement by 3 days.
Solution:
1. Currency exchange must be spot (immediate).
2. If spot delivery is not possible, use a wa’ad (promise) contract to exchange later, and execute Sarf only on the actual settlement date.
3. Alternatively, use a Shariah-compliant forward structure like Wa’ad-based FX Hedging.
Outcome: Riba al-Nasi’ah is avoided, ensuring compliance.

Case 5: Musawamah Sale with Deferred Delivery

Problem: Laptop sold under Musawamah, but delivery in 2 months.
Solution:
1. Spot delivery must occur; otherwise, the contract is invalid.
2. If future delivery is intended, restructure as Salam (buyer pays in full, laptop delivered later) if item is generic, not specific.
3. Or use Istisna’ if the laptop is custom-built.
Outcome: The deal can proceed by adjusting the contract type.

Case 6: Salam for Perishable Goods

Problem: Buyer pays upfront for strawberries, delivery in 2 weeks.
Solution:
1. Exact description (weight, freshness grade, packaging) must be specified.
2. Delivery date fixed to avoid disputes.
3. If strawberries perish before delivery, farmer must source equivalent or return funds
Outcome: Risk-sharing is fair, avoiding Gharar.

Case 7: Istisna’ for Customized Software

Problem: A company contracts a developer for accounting software delivery in 6 months.
Solution:
1. Specifications (features, compatibility, functions) must be clearly listed.
2. Delivery milestones can be set for testing phases.
3. If software is defective, developer must rectify or provide compensation.
Outcome: Software qualifies under Istisna’ as “manufactured work.”

Case 8: Wadiah with Deferred Delivery

Problem: Gold to be deposited in Wadiah, but custodian delays possession until next week.
Solution:
1. Delivery must be immediate to establish Wadiah.
2. If delay is unavoidable, a temporary safekeeping contract (Amanah) can be agreed until full transfer.
3. Alternatively, use a Murabahah or Salam sale if actual transfer is intended later.
Outcome: The deposit arrangement remains Shariah-compliant.

Case 9: Currency Exchange via Online Platform

Problem: Online exchange deducts USD instantly, but EUR credited after 24 hours.
Solution:
1. Both currencies must be settled on the spot (even electronically).
2. The platform must upgrade to instant settlement systems (e.g., RTGS or blockchain-based transfer).
3. If delay persists, classify the contract as invalid Sarf and restructure as a promissory arrangement until both sides deliver simultaneously.
Outcome: Compliance is restored through technological fixes.

Case 10: Parallel Salam for Agricultural Produce

Problem: Bank enters Salam to buy rice in 6 months, and another Salam to sell rice in 7 months.
Solution:
1. Contracts must be independent — the second Salam cannot depend on the first.
2. Bank bears full risk of non-delivery in the first Salam.
3. If farmer defaults, bank must source rice elsewhere to honor the second Salam.
Outcome: Parallel Salam provides liquidity without Shariah violation.

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