​Islamic Contract – Legality of Murābahah

​Islamic Contract – Legality of Murābahah

​Question 1: What is the basis for the legality of murābahah in Islam?The legality of murābahah is based on the general permissibility of trade in Islam as stated in the Qur’ān:
“Allah has permitted trade and prohibited ribā”
(Qur’ān, 2:275)
This verse establishes that trade and commercial transactions are lawful, provided they do not involve prohibited elements such as ribā (interest).

Question 2: What Islamic legal principles support the permissibility of murābahah?
The permissibility of murābahah is supported by:

1. Ijmā‘ (Consensus of Muslim Jurists) – Muslim scholars generally agree that murābahah is a valid form of sale.
2. Islamic Legal Principle –
   “The basic principle in financial transactions is permissibility unless there is clear evidence to the contrary.”

This principle means that all financial transactions are considered permissible unless explicitly prohibited by Islamic law.

Question 3: How is qiyās (analogy) used to justify murābahah?
The permissibility of murābahah is also based on qiyās (analogy) with tawliyah, a sale at cost price that was permitted by the Prophet Muhammad (SAW) (al-Bukhāri, 1422H, hadith no. 3905). Since tawliyah is permissible and murābahah shares similar characteristics, Muslim jurists conclude that murābahah is also permissible.

Question 4: Is there any direct evidence from the Sunnah regarding murābahah?
There is no direct juristic authority from the Sunnah of the Prophet Muhammad (SAW) specifically mentioning the legitimacy of the murābahah contract. However, Muslim jurists accept its validity because it complies with the general principles of Islamic commercial law and does not involve ribā.

Question 5: A case scenario relating to the legality of murābahah.
Fatimah wishes to purchase furniture for her office but does not want to take an interest-based loan. She approaches an Islamic financing company for assistance. The company purchases the furniture for RM10,000 and later sells it to Fatimah for RM11,500 on deferred payment terms. The company clearly discloses the original cost price and the RM1,500 profit margin before the contract is concluded.

This transaction is considered permissible because it is based on a valid sale contract, involves transparency in pricing, and does not contain elements of ribā.