Bay Al-Inah Bay Al-Wafa Hatt Wa Ta-Jjal Indexation of Loan and Riba

OTHER KINGS OF RIBA
1. BAY AL-INAH
2. BAY AL-WAFA
3. HATT WA TA-JJAL
4. INDEXATION OF LOAN AND RIBA
Bay al-inah
 One person sells some object at credit for a price and then re-
purchase it at less price for cash
Two situations: 1st Situation
A sells commodity for 100 of six month Purchase B

at credit
Then purchase at 80 Rs. At cash Receive 80 Rs.
In actual A gives 80 Rs. loan, creditor debtor of 80 Rs.
A will get 100 after six month
20 Rs. Is interest
Bay al-inah
Two situations: 2nd Situation
A sells commodity at 80 Rs, for cash Purchase B

Then purchase at Rs.100 for six month credit
In actual A receive Rs. 80 loan A is debtor B gives Rs.80 loan creditor
A give 100 after six month B will get 100

20 Rs. Is interest
1. Sale is used as cover for riba

2. Two sales in one.
Bay al-Wafa
 One person who needs money sells a property at cash and promise to
purchase it in future at same price, buyer gets benefits from that
property that period
 Not allowed because in real it is case of pledge and benefit from

pledge property is not allowed.
Hatt wa ta-jjal
Discount against time is not allowed
Example: A sell a commodity at one year credit and says if you pay with
in 6 month you will get 5% discount.
Three opinions about Hatt wa ta-jjal:
1. Allowed (hadeeth)
2. not allowed (because money against time)
3. Allowed if it is not condition in contract
Hatt wa ta-jjal
 Example: A sell a commodity at one year credit for Rs.1000 and says if
you pay with in 6 month you will get 5% discount. It is not allowed.
 if it was not a condition and creditor give some discount at the earlier
time of payment. it is allowed.
Indexation of loan and riba
 If Debtor gives some extra amount to creditor to compensate the

effects of inflation, and normally CPI(consumer index number) is used
to measure inflation.
 Muslim Scholars are divided regarding the validity and legitimacy of
indexation of loans:
Arguments of Proponents: Arguments of Opponents:
1. Justice and Fairness 1. Garar and Jahl
2. Principle of Redress of Harm 2. Injustice and Unfairness
3. Giving Full Measures
CHAPTER 10
Defect of Consent and its effect on

Contract
GROUNDS OF THE DEFECTS
 Mistake
 Fraud
 Duress
 Coercion
MISTAKE
Mistake is generally defined as a “belief that is not in accord with the

facts”.
Categories of Mistake:
 Genus (Substance) of the object
 Substantial Quality of the object

Genus (Substance) of the object
 An Example is the sale of corundum (yaqut). If a stone is

sold as being corundum but turns out to be only glass the
sale is void, the reason being the difference between glass
and corundum.
Substantial Quality of the object
An example of a mistake in the substantial quality is where a

person purchase a piece of cotton as Egyptian cotton, which
turns out to be Japanese Cotton. Similarly, when a person
purchase a book believing that it is for a particular author
and it turns out to be of another author, he suffers from
mistake of substantial quality.
Effect of Contract with Mistake
 The Muslim jurists are unanimous on the point that a mistake bearing on genus
renders a contract invalid as in the case of corundum. As for mistake that relates
to substantial quality , they hold that it makes contract voidable at the option of
the party that suffered from mistake.
 The distinction between the categories of substantial and non-substantial has
been made mainly with regard to usufruct of the object – the use to which it is
intended to be put ; and principally to the object the contracting party in mind
when he forms the contract.
 For Example an instance is the buying of an animal for its meat, which the
purchaser later discover to be blind. Here the purchaser cannot avoid the
contract , because the defect of blindness is hardly pertinent to the intended use
of the subject matter of the transaction, that is, to obtain meat.
Effect of Contract with Mistake
 Mistake with regard of substantial quality affects those contracts

only which admit of revocation such as commutative contracts. It,
however, does not affect the contracts, which do not accept
revocation such as contract of “marriage”.
 Mistake concerns non-substantial quality where the object is of the
same substance as that contracted for, and the representation
made by the seller as to its quality is false. For instance , a seller
presents an object as a ruby, which is later found to be yellow. Sale
valid but not binding on the purchaser.

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OTHER KINGS OF RIBA

A sells commodity for 100 of six month Purchase B

A will get 100 after six month

A sells commodity at 80 Rs, for cash Purchase B

In actual A receive Rs. 80 loan A is debtor B gives Rs.80 loan creditor

A give 100 after six month B will get 100

1. Sale is used as cover for riba

 Not allowed because in real it is case of pledge and benefit from

 If Debtor gives some extra amount to creditor to compensate the

Defect of Consent and its effect on

Mistake is generally defined as a “belief that is not in accord with the

 Substantial Quality of the object

 An Example is the sale of corundum (yaqut). If a stone is

An example of a mistake in the substantial quality is where a

 Mistake with regard of substantial quality affects those contracts

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