Purchase of Goods on Credit

The Islamic bank may be a counterparty to a customer in a cost plus profit sale (murabaha).

The requirements for this transaction are that:

  • the customer knows the cost of the goods paid by the bank
  • the item sold may not be money
  • the bank’s profit may be a percentage of the cost or a fixed amount — this must be specified and known by the customer
  • the customer may pay the bank on an installment or deferred basis
  • the bank must take possession of the goods before transferring them to the customer
  • the bank must bring to the customer’s attention any defects
  • in case of defect
    • the customer may cancel the sale or
    • alternatively the bank must pay the customer damages