Please identify and analyze the legal issues raised by the port construction and postconstruction plan, including the Port Contract with APC.

   From the given scenario it can be noted that legal issue is raised by the port construction is related to the delivery of funds. It shows that the Nima’s government is not able to collect funds for the construction company. According to the agreement, the port will be owned by 50%-50% by the government of Nima and also the APC. Another legal issue was related to the validity of the contract and it is about for 10 years. Due to this port profit will be shared equally between the two parties. But if there is any loss that will be paid by the Nima government.

2.      The name of Islamic contract is leasing. In this contract two parties are involved in therein. In this case, it is between the Nima’s government and the port construction company. According to this law leasing, the port constructing company has an option keep the asset according to the contract.

a.       There are some essential terms required to render the contract between Nima’s government and port construction. The first one is agreement. In this there are two terms are present that are acceptance and offer. Moreover, the next essential term is related to capacity. This team is required to be understand by both Nima’s government and also port Construction Company. The next important term is related to consideration. According to this term, some important values for contract will be shared properly. Another thing is that there is no need to provide benefit to the other party without any contract. Moreover, the next term is related to ending a contract. It will show the time when this contract will be end between the two parties. Like according to this case, contract will be end between Nima’s government and Construction Company will be end after 10 years.

b.      There are some payment terms that are available under the contract are given below

The first one is related to the cash in advance. This means that the government has to pay some amount in cash to the company. The next payment term is cash against documents. The next term is related to letter of credit. It will show how to issue a letter to the contractor. Moreover, it will also give information how to pay the letter of credit. There is another payment term used for the contract is open account.

3.      The main issue about the toll bridge is that the Nima’s government is hiring a separate contractor for it. Moreover all of this land is owned by private company and citizens of Nima. Therefore, there is need to cleared that place for the construction of toll bridges. According to the shari’ah, if there is any issue related to the construction on the private place. Then government has to pay for all payments for the toll bridge project.

4.      According to the condition of Nima government it is not absolutely correct. This is because the government is required to pay the payment of their houses and also commercial places. This government is required to pay the payment and make a contract of 10% sharing profit from the toll bridge for 10 years. It is according to the Islamic shari’ah. This is because the private places are consisted of homes and commercial area. Therefore, they are losing their place due to this bridge. Therefore, government has to take certain actions against it.

Question 2

1.      It is important for Jams to understand that many things of Islamic banking are a bit different as compared to the traditional banking. According to the scenario, there is single most appropriate Islamic financing option for Jams through which he can easily purchase the yacht. According to the Islamic financing there is only one option and it is related to fixed-income instrument. This is because lending with interest payment is not allowed in Sharia. This shows that there will be no conventional bonds are used in Islamic finance. In Islamic finance there is another bond and it is called as sukuk. It shows that if Jams wanted to purchase that yacht then he must go for the fixed income instrument. So, it is critical for Jams to make a decision by keeping these facts in mind, otherwise he will not be able to make a better decision.

2.      Yes, Islamic law prohibits the banks from any kind of security. This is the reason why they are demanding for the fixed-income instrument. It can be noted that usury is completely prohibited in Islam according to the Sharia law. This shows that there is no need to give BMW sedan as the security for the bank. For that case, Jams just have to focus on the fixed-income instrument and pay it according to it in a perfect way for getting the ownership of the yacht. However, the situation could have been quite different for James, if he would have been dealing with other traditional banks. It is the facility just provided by the Islamic Banks, which he can well and truly avail, which will have less financial pressure on him. James was already wondering and worried for his home and BMW, and if Islamic banks would have asked the same thing, then there would be no difference between a traditional bank and an Islamic bank.

3.      According to the Islamic law, there is no need of paying Jams for paying the bank in instalments over the period. For that case, Jams just have to sign a contract with the bank about the fixed-income instrument. Due to this it will become extremely easy for Jams to pay whole payment of the yacht without any instalment. However, there can be an optional situation, if James is willing to pay it in instalments, then Islamic bank may consider his request in this regard.

4.      It can be noted that if jams is not able to pay the banks according to the payment terms agreed with the banks. According to the Islamic law, the bank will take some actions against him. The first one is related to the penalty. It shows that Jams has to pay some money as a fine for late payment. It is a common practice for both traditional and Islamic banks to charge some penalty if a person is not able to pay his liable amount in a given time period. James can’t complaint about this penalty, because when he will make a contract with the bank, they will clearly mention a range of penalty and other things, if a person is not able to pay as per agreed terms in the contract

On the other hand, if Jams are making more delay in payment, then the bank will lend a warning letter for late payment. In this letter there is complete information is present what kind of action can be taken by the bank in case of more delay in the payment.

Moreover, if there is more delay in the payment then this case will moved towards the court. This means that Jams has to go to court for resolving this issue of payment. In that case, the fine rate will be increase more and also court can take certain serious action against him. He may end it in jail on wrongdoing. Therefore, it is required for Jams to pay the payment according to the agreed payments given by the bank. Otherwise, he should be ready to face the consequences. So, this is important for anyone making a contract with the bank that they should always read terms and conditions carefully, and then follows them to avoid any issues or legal action.

5.      It can be noted that there is no circumstance in which bank is able to provide Jams with a credit and it is related to early payment of the debt. According to the payment method in Islamic finance it is good to provide credit to the person who is paying debt before time. There is one Hadith with a weak narration about this discount.  But in Islamic finance, Riba is totally prohibited in Islam. There is an scenario when Riba was not prohibited in Islam after second Hijrah. It shows that the Jew was given discount on early paying of the debts.