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Differences Between AITAB And Conventional Hire Purchase

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3. Differences Between AITAB and Conventional Hire Purchase

The conventional hire purchase law was made long before the AITAB concept originated. The conventional hire purchase contract has been practiced for the last two centuries in Europe and other countries. But the AITAB concept is of recent origin, just few decades ago. There is not much difference between the AITAB and and the conventional hire purchase contract which is found in the Hire Purchase Act 1967 (Malaysia) (HPA 1967), as stated earlier.
There are major similarities between the conventional hire purchase and AITAB with only some small differences. There are as follows:
i. AITAB contract is based on shariah principle and it includes many provision from the HPA 1967. Whereas, in conventional hire purchase is based on the Hire Purchase Act 1967. ii. Under the AITAB, during the ijarah (lease) contract the rensponsibilities for bearing maintainance costs (for example repair cost) rests with the lessor, unless, the agreement provides otherwise. Whereas, in conventional hire purchase the market practice states that the lessee is to bear the maintainance costs. iii. The asset to be leased under the AITAB contrat must be deemed halal under the shahriah. It must not involve haram (prohibited) elements, such as …show more content…

There is a differences between the conventional and the Islamic Hire Purchase Law (IHPL) on transfer of ownership in the hire purchase asset. It is to be noted that the conventional and the AITAB have similar meaning and implication on the hire purchase law in shariah. Some Muslim scholars raise the issue on how transfer of the ijarah property should be completed. Whether the transfer would be automatic under the hire purchase contract or a separate sale contract should be prepared and signed by the parties. In this regard, some Muslim scholars mention that the transfer of ownership in the ijarah goods (by way of sale) must be evidence in a separate contract as has been mentioned

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