The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase

Ownership transfer is significant in Islamic hire purchase (IHP) operation as it enables customers to own the asset at the end of lease (ijarah) contract. The ownership transfer in Islamic hire purchase transaction usually takes effect by executing a sale contract. The execution of sale contract in...

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Bibliographic Details
Main Authors:	Muhammad Zin, Hakimah, Salamon, Hussin, Abdullah, Nurdianawati Irwani
Format:	Conference or Workshop Item
Language:	English
Published:	Universiti Kebangsaan Malaysia 2015
Subjects:	BP140 Islamic law (Fiqh) HG3368 Islamic Banking and Finance JF491 Legislation. Legislative process. Law-making
Online Access:	http://irep.iium.edu.my/76078/ http://irep.iium.edu.my/76078/ http://irep.iium.edu.my/76078/8/76078The%20Application%20of%20Sale%20Contract.pdf

id	iium-76078
recordtype	eprints
spelling	iium-760782019-12-05T06:26:55Z http://irep.iium.edu.my/76078/ The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase Muhammad Zin, Hakimah Salamon, Hussin Abdullah, Nurdianawati Irwani BP140 Islamic law (Fiqh) HG3368 Islamic Banking and Finance JF491 Legislation. Legislative process. Law-making Ownership transfer is significant in Islamic hire purchase (IHP) operation as it enables customers to own the asset at the end of lease (ijarah) contract. The ownership transfer in Islamic hire purchase transaction usually takes effect by executing a sale contract. The execution of sale contract in ownership transfer to be Shariah-compliant must comply with Shariah requirement otherwise it may leads to Shariah issue. The paper aims to investigate the extent to which the banks’ practices on the application of sale contract are in compliance with Shariah requirements. It examines Shariah requirements on the application of sale contract under Shariah legal framework and compares with banks’ actual practice. The study employs qualitative method of study comprised of document analysis by analyzing Shariah legal framework as well as documents of Islamic hire purchase facility of six financial institutions in Malaysia. The study found that the banks’ practices on the application of sale contract are in compliance with Shariah requirements whereby the sale contract is executed separately from the lease contract in a correct order and the transaction is proved in written documentation. However, there are different practices among these banks in terms of the sales contract documentation adopted. Therefore the paper suggests that a comprehensive guideline together with a standard sale contract document which is specifically applicable for ownership transfer in Islamic hire purchase transaction should be prepared. It is hope that the existence of such a comprehensive guideline on the sales contract documentation can enhance good governance and ensure sustainable development of Islamic finance. Universiti Kebangsaan Malaysia 2015 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/76078/8/76078The%20Application%20of%20Sale%20Contract.pdf Muhammad Zin, Hakimah and Salamon, Hussin and Abdullah, Nurdianawati Irwani (2015) The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase. In: Persidangan Kebangsaan Ekonomi Malaysia ke-10 (PERKEM 10), 18th-20th September 2015, Melaka. http://www.ukm.my/fep/perkem/pdf/perkem2015/PERKEM_2015_2A1.pdf
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	BP140 Islamic law (Fiqh) HG3368 Islamic Banking and Finance JF491 Legislation. Legislative process. Law-making
spellingShingle	BP140 Islamic law (Fiqh) HG3368 Islamic Banking and Finance JF491 Legislation. Legislative process. Law-making Muhammad Zin, Hakimah Salamon, Hussin Abdullah, Nurdianawati Irwani The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase
description	Ownership transfer is significant in Islamic hire purchase (IHP) operation as it enables customers to own the asset at the end of lease (ijarah) contract. The ownership transfer in Islamic hire purchase transaction usually takes effect by executing a sale contract. The execution of sale contract in ownership transfer to be Shariah-compliant must comply with Shariah requirement otherwise it may leads to Shariah issue. The paper aims to investigate the extent to which the banks’ practices on the application of sale contract are in compliance with Shariah requirements. It examines Shariah requirements on the application of sale contract under Shariah legal framework and compares with banks’ actual practice. The study employs qualitative method of study comprised of document analysis by analyzing Shariah legal framework as well as documents of Islamic hire purchase facility of six financial institutions in Malaysia. The study found that the banks’ practices on the application of sale contract are in compliance with Shariah requirements whereby the sale contract is executed separately from the lease contract in a correct order and the transaction is proved in written documentation. However, there are different practices among these banks in terms of the sales contract documentation adopted. Therefore the paper suggests that a comprehensive guideline together with a standard sale contract document which is specifically applicable for ownership transfer in Islamic hire purchase transaction should be prepared. It is hope that the existence of such a comprehensive guideline on the sales contract documentation can enhance good governance and ensure sustainable development of Islamic finance.
format	Conference or Workshop Item
author	Muhammad Zin, Hakimah Salamon, Hussin Abdullah, Nurdianawati Irwani
author_facet	Muhammad Zin, Hakimah Salamon, Hussin Abdullah, Nurdianawati Irwani
author_sort	Muhammad Zin, Hakimah
title	The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase
title_short	The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase
title_full	The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase
title_fullStr	The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase
title_full_unstemmed	The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase
title_sort	application of sale contract as a mechanism of ownership transfer in islamic hire purchase
publisher	Universiti Kebangsaan Malaysia
publishDate	2015
url	http://irep.iium.edu.my/76078/ http://irep.iium.edu.my/76078/ http://irep.iium.edu.my/76078/8/76078The%20Application%20of%20Sale%20Contract.pdf
first_indexed	2023-09-18T21:47:34Z
last_indexed	2023-09-18T21:47:34Z
_version_	1777413552653467648

The application of sale contract as a mechanism of ownership transfer in Islamic hire purchase

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