Bay Al Inah

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Majority of ‘ulama in the Middle East do not agree with concept of the Islamic Accepted Bills or Islamic bonds as applied in Malaysia because it involves transactions such as bay’ al-inah.Most ulama’ in their opinions stated that Bay' al-inah is not valid (haram) because it is a device to legitimize riba’. However, Hanafi of the opinion that Bay' al-inah is only permissible if such transaction involving third party. Validates the contract of inah

refusing to give credence to motive and intention of the parties would be regarded to be prohibited (haram) or reprehensible (makruh) depending on the nature of the parties’ motive Hanafi, Maliki & Hanbali;

Contract of inah is invalid
a process that despite its legal appearance, conceals an inner motive of earning riba According to Shafi’i school such sales are to be allowed because, in the words of Imam Shafi’I, contracts are valid (Sahih) by the external evidence that they were properly concluded: the unlawful intention (niyya or qasd) of the parties is immaterial, it does not invalidate their act, unless expressed in that act. Al-Shafii illustrated his teachings with following example, which concerns the marriage of a man who intends to keep his wife for only a short period of time. That marriage is valid whereas a mut’aa marriage is invalid (Batil). The Shafii's considered that the intention of the parties is taken into account only when the invalid intention is explicitly mentioned in the contract. The Maliki and Hanbali jurists hold that the contract of Inah are not valid (Sahih) because, according to them; the motive of the parties to the contract determines the legality or illegality of the contracts, and in the sale under consideration the motive of the parties is illegal and, therefore, the sales are not valid because they constitutes a legal device (Hilah) to get a loan with interest which should be averted at all costs according to the Shariah. As Ibn Qayyim prohibited Bay al-inah...
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