The Basic Islamic Rules for Trading
Author: Sajid Mahmood Ansari
All praise is due to Allah Almighty,
the Originator, the Sustainer of the universe and be His blessings upon
His last Messenger Muhammad bin Abdullah Al-Hashimi Al-Qurshi. And His all Apostles.
Islam is a complete code of life that
provides appropriate guidance for all spheres of life.
Economics affects human life most of all social activities. Islam has
given a perfect, unparalleled, and well-balanced economic system that
ensures the equity of rights for all human beings in the field of economics.
1. Islam versus Capitalism
Capitalism has encompassed the
majority of human beings today. It gives free hand to the capitalists to
exploit the natural and human resources for their own interests. The majority
of humans are like toys in their hands and they are free to grab the money by
hook or crook. The worst strategy they are following is to make money by taking
interest on loans. Contrary to this, Islam ensures a justified flow of liquidity
in society. It emphasizes the welfare of every human being, whether be his
race, color, language, or creed. Islam commands the Muslim state to govern all
the activities taking place in the open market and does not allow anybody to
deprive others of their rights.
2. Islam versus Communism
Communism deprives individuals of
their right of owning their own property. It unnecessarily interferes in
the personal life of the citizens and causes to concentrate all the liquidity
in the hands of the regime. The concentration of liquidity in a few hands in
communism deems worse than capitalism. The Islamic economic system neither
deprives the people of their property rights nor allows the liquidity to
condense in hands of the regime. In a Muslim state, people are free to have
commodities according to their needs, and traders can perform all activities
under the umbrella of the government, following a particular set of laws. This
paper should not be treated as a Fatwa (verdict), but simply as an effort to
explain one major aspect of the Islamic economic system.
The detailed comparison of Islam,
capitalism, and communism is beyond the scope of this paper, though, a brief
comparison is deemed necessary to understand the beauty of the Islamic system
of economics.
3. The Lawfulness of Trade & Commerce
Trade and commerce is one of the
major needs of life, while a society can’t exist without trade. So Islam has
permitted the trade in general, except for a few unlawful transactions.
Allah Almighty said:
“That is because they say, "Trade is [just]
like interest." But Allah has permitted trade and has forbidden interest.” [2:275]
4. The Lawful Transactions
Islam, particularly, the Hanbali
Fiqh, one of the four major schools of law, grants maximum freedom of
transactions, unless one is not deprived of his rights or nobody can exploit
the needs of the people through his money. Here are given certain rules that
manage the Islamic economic system.
Generally, all the trading contracts are lawful and permissible
that fulfill the following seven pre-requisites:
(i) Free consent of the parties:
Allah Almighty says:
“O you who have believed, do not
consume one another's wealth unjustly but only *in lawful] business by mutual
consent. And do not kill yourselves [or one another]. Indeed, Allah is to
you ever Merciful.” [4:29]
Abu Saeed Al-Khudri (May Allah be pleased with him) reported that
the Messenger of Allah (صلى الله عليه وسلم (said, “The trade accomplishes with the consent of the parties.”
[Sunan Ibni Majah: H.2185,
The Holy Qur’an and the Prophet (صلى الله عليه وسلم (did not mention any specific words
or statements to show consent, so whatever is considered ‘consent’ in the
customary trade, is sufficient;
though offering and acceptance,
either verbally or in written form is preferable to avoid any dispute. The
aforementioned Ayah alludes to this preference. So a transaction that is
accomplished by forcing someone unlawfully, is not a lawful transaction.
*Kashaful Qina’a: V.2,P.459+
(ii) Sanity of the Parties
The buyer and the seller should be sane and cognizant at the
moment of the transaction. Transaction operated by insane, drunken or a
minor (child) is invalid. So a person who is unfamiliar with the commodity to
be sold, the measuring scale, the market value or even the consequences of the
transaction, then the transaction is void.
*Kashaful Qina’a: V.2, P.463]
Allah Almighty said:
“And let him fear
Allah, his Lord, and not leave anything out of it. But if the one who has
the obligation
is insane or weak or unable to dictate himself, then let his guardian dictate
in justice.” [2:282]
Ali bin Abu Talib (May Allah be
pleased with him) reported that the Messenger of Allah (صلى الله عليه وسلم (said,
“The pen (of the commandment) has been taken away from three persons, i.e the
child until he reaches the age of puberty, the sleeping person until he awakes
and the mentally retorted until he recovers.”
[Musnad Imam Ahmad:H. 940,956,1183, Jami At-Tirmidhi:H.1423]
However, a transaction is valid from
a minor or an adolescent with consent of his Wali (custodian), for the
trade of inexpensive commodities in a lesser amount. *Kashaful Qina’a:
V.2, P.463]
Allah Almighty said:
“And test the
orphans [in their abilities] until they reach marriageable age. Then if
you perceive
in them sound judgment, release their property to them.” [4:6]
(iii) Merchandise and price should be a lawful commodity
The commodity or service to be sold and its price or fee should be
a lawful commodity, without a state of inevitable necessity. *Kashaful
Qina’a: V.2,P.464]
Allah Almighty said:
“O you who believe! Intoxicants (all
kinds of alcoholic drinks), gambling, Al-Ansaab (stone altars for
sacrifices to idols, etc), and Al-Azlaam (arrows for seeking luck or
decision) are an abomination of Shaytaan’s (Satan’s) handiwork. So avoid
(strictly all) that (abomination) in order that you may be
successful” [5:90]
The last part of the mentioned Ayah “So avoid (strictly all)
that (abomination) in order that you may be successful” leads to the
conclusion that one should avoid the forbidden things in all cases, including
trade. This fact has been mentioned in the following Hadith evidently:
A man gave the Messenger of Allah (صلى الله عليه وسلم (a
small skin full of wine, and the Messenger of Allaah (peace and blessings
of Allaah be upon him) said to him: “Do you know that Allaah, may He be
exalted, has forbidden it?” He said, No, then he whispered to another man.
The Messenger of Allaah (peace and blessings of Allaah be upon him) said:
“What are you whispering about?” He said: I told him to sell it. He said:
“The One Who has forbidden drinking it has also forbidden selling it.”
[Sahih Muslim:1579]
Abdullah bin Abbas (May Allah be pleased with them) reported that I saw the Messenger of Allah (صلى الله عليه وسلم (sitting
near the Black stone (or at a corner of the Ka'bah). He said: He (the
Prophet) raised his eyes towards the heaven and laughed, and he said: “May
Allah curse the Jews! He said this three times. Allah declared unlawful for
them the fats (of the animals which died a natural death); they sold them and
they enjoyed the price they received for them. When Allah declared eating of
thing forbidden for the people, He declares it price also forbidden for
them.”
[Musnad Imam Ahmad:H.2221, Sunan Abu Dawood:H.3488]
However, a few forbidden things have been exempted by the Prophet
(صلى الله عليه وسلم (including
the beast of burden like donkey or mule, beast or birds of prey for security or
hunting like tiger, cheetah, eagle, falcon etc and the skin of the dead
animals, is lawful to sell and buy because benefitting from these things is
permissible. *Kashaful Qina’a: V.2,P.464-465]
The pieces of evidence for which the aforementioned commodities
have been exempted are the following Hadiths:
Amir (May Allah be pleased with him)
reported that I saw the Messenger of Allah (صلى الله عليه وسلم (at
Mina giving the sermon on a mule and wearing a red garment, while Ali was
announcing.
[Sunan Abu Dawood: H.4073]
Anas bin Malik (May
Allah be pleased with him) reported that the
Messenger of Allah (صلى الله عليه وسلم ( used to visit the sick, attend funerals, accept the
invitations of slaves and ride donkeys. On the day (of the battle) of Quraizah
and Nadir, he was riding a donkey. On the day of Khaibar he was riding a donkey
that was bridled with palm fibers and beneath him was a packsaddle made of palm
fibers.
[Sunan Abu Dawood: H.4178]
Abu Hurairah (May Allah be pleased with him) reported that the Messenger of Allah (صلى الله عليه وسلم ( said: "Whoever acquires a
dog - with the exception of a dog to guard livestock, a hunting dog, or a
farm dog - each day a Qirat is deducted from his reward."
[Sunan Abu Dawood: H.1490]
Abdullah bin Abbas (May Allah be pleased with them) reported that the Messenger of Allah passed by a dead goat and said:
"Why didn't the owners of this sheep makes use of its skin?"
[Sunan Abu Dawood: H.4261]
This Hadith indicates that tanning is not a condition for using
a skin of the dead animals. The trade of
dogs is unlawful for the following authentic Hadith:
Abu Said Al-Ansari (May Allah be pleased with him) reported that
the Messenger of Allah (صلى الله عليه وسلم (forbade to take the price of dogs.
[Sahih Bukhari:H.2237, Sahih Muslim]
(iv) Transaction should be accomplished by the owner or his/her
agent.
One can’t sell the property of
another person without his consent, even in his presence and silence. However,
an agent can sell a person’s property on his behalf with his consent, even in
the absence of the owner.
Hakeem bin Hizam (May Allah be pleased with him) reported that the
Messenger of Allah (صلى الله عليه وسلم (said, “Don’t sell a thing that is not yours.”
[Musnad Iam Ahmad:H. 14887, Jami At-Tirmidhi:H.1232, Sunan Abu
Dawood:H. 3503, Sunan Nsai:H 4617, Sunan Ibni Majah:H. 2187]
Jabir bin Abdullah (May Allah be pleased with him) reported that I intended to go (on an expedition) to Khaybar. So I came to the
Holy Prophet (صلى الله عليه وسلم ,(greeted him and said: I am intending to go to Khaybar. He
said: When you come to my agent, you should take from him fifteen wasqs (of
dates). If he asks you for a sign, then place your hand on his collarbone.
[Sunan Abu Dawood: H.3632]
An agent can buy on the behalf of another person with his
consent.
Urwah Al-Bariqi (May Allah be pleased with him) reported that the Prophet (صلى الله عليه وسلم (gave him a Dinar to buy him a sheep, and he bought two sheep
for him, then he sold one of them for a Dinar, and bought a Dinar and a sheep
to the Prophet (صلى الله عليه وسلم .(The Messenger of Allah (صلى الله عليه وسلم (prayed for blessing for him.
[Musnad Imam Ahmad:H.19571, Sahih Bukhari:H.3652 Sunan Ibni
Majah:H.2493]
(V) The seller should be able to produce/provide the
merchandise to be sold.
The transaction is valid only if the
seller is able enough to produce or provide on demand the required product or
commodity. If he is improbable to produce or provide, the transaction is
invalid. Likewise one should not sell a specific commodity if he does not own
it, prior to buying it. *Kashaful Qina’a: V.2,P.469]
Abdullah bin Masood (May Allah be pleased with him) reported that
the Messenger of Allah (صلى الله عليه وسلم (said, “Don’t sell the fish that is still in the water (reservoir)
because that is cheating.”
[Musnad Imam Ahmad: H.3667]
(vi) The parties should clearly know about the commodity to be
sold without any ambiguity.
Both parties, the seller and buyer,
should know the merchandise to be sold, very well, either by looking,
tasting, smelling, touching it, or by the quality and characteristics mentioned
clearly. *Kashaful Qina’a: V.2, P.473-474]
Abu Huraira (Allah be pleased with him) reported that Allah's
Messenger (صلى
الله عليه وسلم (forbade a transaction determined by throwing stones and
the type which involves some uncertainty.
[Musnad Imam Ahmad:H. 2752, Sahih Muslim:H.1513
Abdullah bin Masood (May Allah be pleased with him) reported that
the Messenger of Allah (صلى الله عليه وسلم (said, “Don’t sell the fish that is still in the water (reservoir)
because that is cheating.”
[Musnad Imam Ahmad:H.3667]
This Hadith indicates that operating
a transaction of the whole fish in a limited reservoir, without knowing
the exact quantity and weight of fish, is unlawful due to a remarkable
ambiguity. It does not refer to a transaction of a definite amount or weight of
the fish prior to gaming.
Abdullah bin Abbas (May Allah be pleased with them) reported that Allah's Messenger (صلى الله عليه وسلم (came to Medina and the people used
to pay in advance the price of fruits to be delivered within one or two
years. The Prophet (صلى الله عليه وسلم (said, "Whoever pays money in advance for dates (to
be delivered later) should pay it for known specified weight and measure (of
the dates). [Sahih Bukhari:H.2239]
Abdullah bin Abbas (May
Allah be pleased with them) reported that the
Prophet (صلى
الله عليه وسلم ( came to Medina and the people used to pay in advance the price
of dates to be delivered within two or three years. He said (to them),
"Whoever pays in advance the price of a thing to be delivered later
should pay it for a specified measure at specified weight for a specified
period." [Sahih Bukhari:H.2240]
The price/fee should be clearly decided.
Both parties should know the price of the commodity or the fee
for a particular service being provided. *Kashaful
Qina’a: V.2,P.481]
Anas bin Malik (May
Allah be pleased with him) reported that the
Prophet (صلى
الله عليه وسلم (loved to pray wherever the time for the prayer was due even at
sheep-folds. Later on, he ordered that a mosque should be built and sent for
some people of Banu-An-Najjar and said, "O Banu An-Najjar! Suggest
to me the price of this (walled) piece of land of yours." They replied,
"No! By Allah! We do not demand its price except Allah."
[Sahih Bukhari: H.428]
Abu Bakra (May Allah be pleased with
him) reported that the Messenger of Allah (صلى الله عليه وسلم(
said,"Don't sell gold for gold unless equal in weight, nor silver for
silver unless equal in weight, but you could sell gold for silver or
silver for gold as you like."
[Sahih Bukhari:H. 2175,Sahih Muslim:H.1590]
