The role of khiyar al-'ayb in al-bay' bithman ajil financing

The widespread application of al-bay' bithaman ajil (BBA) contract in the Islamic banking business today requires a serious reexamination. This is to see that the welfare of consumers is protected, which all Islamic contracts must provided for. It is made by way of making the existence of 'iwad in profit arising from BBA or murabahah transactions evidently clear. One of the component of 'iwad is the right of the buyer to annul the contract when a defect is evident in the product sold, namely Khiyar Al-'Ayb. It follows that the contract of BBA must include the provision of Khiyar Al-'Ayb as the natural right of the buying party. This paper has argued that this right was not granted by the Islamic bank who is acting as the selling party to the BBA contract. It has thus undermined the legal maxim Al-Kharaj bil- Daman, which all selling parties taking part in the contract of al-bay', including al-bay' bithaman ajil, must readily observed. _x000D_ (Abstract provided by journal/author; www.islami