Common use of Method of Financing Clause in Contracts

Method of Financing. Under the arrangement of Tawarruq and the Bank’s financing procedure, the arrangement is concluded in the following manner:- (a) Purchase of the Asset by the Bank. The Customer will issue a Purchase Request to the Bank and the Bank (at its own capacity) will proceed to purchase the Commodity at the price which is equivalent to the Bank’s Purchase Price. (b) Purchase of the Asset by the Customer from the Bank Thereupon, the Bank will subsequently sell the Commodity to the Customer where the Customer shall pay the Bank’s Selling Price on deferred basis. (c) Execution of the Murabahah Sale Contract (i) To conclude the sale of the Commodity, Bank and the Customer will execute the Murabahah Sale Contract where the beneficial ownership of the Commodity together with the right to take delivery of the Commodity including all the risks and liability shall immediately pass from the Bank to Customer. (ii) The Commodity when purchased by the Customer from the Bank shall be on “as is where is” basis where both, the Bank and the Customer are mutually agree to waive any right of warranty and any claim of defect liability in respect of the Commodity against the Bank. (iii) The Murabahah Sale Contract may be terminated by either the Bank or the Customer upon occurrence of breach of specific terms of the Murabahah Sale Contract or subject to mutually agreed terms between the Bank and the Customer, whereupon, the Commodity will be returned to the bank and the Bank’s Selling Price (less Ibra’ (rebate)) will be returned to Customer. In the event that the Commodity has been sold to the third party, an amount equivalent to the value of the Commodity will be return to the Bank. (d) Sale of the Commodity by the Customer If the Customer wished to sell the Commodity to a third party for cash and on spot basis, the Customer may appoint the Bank as agent to undertake such transaction on behalf of the Customer pursuant to Master Agency Agreement. (e) Effect Nature and Scope of agency (i) The Customer may appoint the Bank to be its agent to execute the Murabahah Sale Contract and/or sell the Commodity for and on its behalf (ii) The Customer may requests the Bank to provide several quotations as to the price of the Commodity prior to the Bank selling or purchasing the Commodity as an agent for the Customer.