Bai Muajjal

Bai' Muajjal is the Arabic equivalent of "sale on deferred payment basis". The deferred payment becomes a debt payable by the buyer in lump sum or in installments as may be agreed between the two parties. In Bai' Muajjal, all those items can be sold on deferred payment basis which come under the definition of tangible goods where quality does not make a difference but the intrinsic value does. Those assets do not come under definition of capital where quality can be compensated for by the price and Shariah scholars have an 'ijmah' (consensus) that demanding a high price in deferred payment in such a case is permissible. The following are the conditions of a valid Bai’ Muajjal:

The price to be paid must be agreed and fixed at the time of the deal. It may include any amount of profit agreed between the parties.

Complete/total possession of the object in question must be given to the buyer, while the deferred price is to be treated as a debt due from him.

Once the price is fixed, it cannot be decreased in case of earlier payment nor can it be increased in case of default.

In order to secure the payment of price, the seller may ask the buyer to furnish a security either in the form of mortgage or in the form of any other item.

If the commodity is sold on installments, the seller may put a condition on the buyer that if he fails to pay any installment on its due date, the remaining installments will become due immediately.