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Late Payment Charity Undertaking

A unilateral undertaking by the Buyer — late charges are given to charity, not to the Seller

Signed by: Buyer

In short. The buyer's undertaking that any late charge is paid to a named charity and never kept by the seller. This is what keeps a late charge from becoming interest on a delay.

Signed electronically

This is sent to you for electronic signature when you reach that step, and never signed on this website. You'll have it in front of you, in full, before anything is signed.

1. Why this document exists

In a conventional credit agreement, a late fee is income for the lender. That creates an incentive for the lender to profit from the borrower’s difficulty, and treating money as generating more money because of delay is exactly what this transaction is structured to avoid.

The approach used here follows established Islamic finance practice: the Buyer voluntarily undertakes to pay a fixed amount to charity if a payment is late. The amount is a discipline, not a source of profit. The Seller never keeps it.

2. Undertaking

I, (the “Buyer”), in connection with the Murabaha Vehicle Sale and Installment Payment Agreement dated , 20, voluntarily undertake as follows:

  • If any installment is not paid within the Grace Period stated in the Sale Agreement, I will pay a late charge of $ for that occurrence.
  • The late charge is capped at $ in any calendar month and shall not exceed % of the missed installment.
  • I direct that the entire late charge be paid to the charitable organisation named in Section 3, and I acknowledge the Seller has no right to keep any part of it.
  • The late charge is in addition to, and does not replace, the missed installment itself, which remains payable in full.
  • The late charge does not increase the Total Sale Price and is not profit to the Seller.

3. Nominated charity

Charitable organisation
Tax-exempt registration number, if any
Alternative organisation if the first is unavailable

The organisation must be one in which neither the Seller, the Buyer, nor Bysmillah has a financial interest, and to which none of them is related in a way that returns benefit to them.

4. Handling and evidence

  • The Seller shall collect the late charge separately from installment payments and shall not commingle it with the sale proceeds.
  • The Seller shall remit collected late charges to the nominated organisation at least once every calendar quarter.
  • The Seller shall retain receipts and shall provide them to the Buyer within fourteen (14) days of a written request.
  • If the Seller fails to remit, the Buyer may pay the charity directly and set the amount off against the late charge obligation.

5. Documented costs are separate

This undertaking does not prevent the Seller from recovering documented, out-of-pocket costs actually incurred because of the delay — for example, a bank fee on a returned payment. Such costs are reimbursement of an actual loss, are payable to the Seller, and must be evidenced by a receipt. The Seller may not charge for its own time.

6. Enforceability note

7. Signature

I make this undertaking voluntarily, having understood it.

Buyer signature: Date:

Print name:

Acknowledged by Seller (as to the obligation to remit, not as beneficiary):

Seller signature: Date:

Print name:

This is a self-help form, not legal advice. Bysmillah is not a law firm and is not a party to this document. Obtain independent legal advice before signing.

Last updated August 2026