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Agency Contract For Murabaha
Why is an agency contract executed for a Murabaha?
Since Islamic banks do not have the expertise or the manpower to actually purchase the asset, they appoint the client as an agent to procure the asset from the supplier on their behalf. The client as the bank's agent acts as a trustee and utilizes the money given by the bank for the intended purpose, which is to buy the specified Murabaha goods. Throughout the period of agency the customer acting as agent executes on behalf of the bank and, barring negligence, during this period the bank assumes the risk of asset ownership.

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