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Article (Fiqh): Validity of Business Transactions in Islam, Conditions (Shuroot)

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  • Article (Fiqh): Validity of Business Transactions in Islam, Conditions (Shuroot)

    Benefits From Kitaab al-Bay' (Part 2)
    (The Book of Business Transactions)
    Based on Hidaayatur-Raaghib of
    Shaykh 'Uthmaan ibn Ahmad an-Najdee [d.1100]

    Six Conditions (Shuroot) for the Validity of Business Transactions in Islamhttp://www.bakkah.net/articles/fiqh-...ng-selling.htm

    [ In the Name of Allaah, the Most Merciful… ]

    The following necessary conditions must be fulfilled for a business transaction to be considered valid and binding in Islam:

    1 - At-Taraadhee (Mutual Agreement)

    Both the buyer and the seller must willingly agree to all details of the transaction, due to the statement of the Prophet (sallallaahu 'alayhe wa sallam):
    "Verily business transactions are only (valid) by way of mutual agreement." [1]
    Thus, someone being forced to buy or sell property invalidates the transaction, however there is an exception to this. Shaykh Saalih al-Fawzaan states, "And if someone was justly forced into a sale, then it is legitimate. An example of this is when a judge forces someone to sell his property to pay his debt." [2]

    2 - Jawaaz Tasarruf al-'Aaqidayn (Both Participants are Allowed to Engage in Transactions)

    Both the buyer and the seller must be people who are legitimately allowed to engage in business transactions. They must both be free (not slaves), adults (not children who have not reached puberty), sane, and rational.
    Shaykh 'Uthmaan an-Najdee said, "So the buying and selling of a child or a fool without the permission of his caretaker is invalid. If he gives permission, then it is valid, however it is not permissible to give permission without any benefit. And their transactions involving small things take effect even without permission." [3]

    3 - Milk al-Ma'qood 'Alayhe (Ownership of Property Being Traded)

    Both parties in the transaction must own the property they are trading, due to the statement of the Prophet (sallallaahu 'alayhe wa sallam):
    "Do not sell what you do not have." [4]
    However, a person may sell something on behalf of another with his permission. In this case, he is considered to be in the place of the owner of the property, since he is his authorized representative.
    A person may not sell something he does not own by taking the money for it at the time of the sale, and then going to purchase it afterwards and then deliver it. Shaykh Saalih al-Fawzaan relates that such a transaction is invalid by way of scholarly consensus. [5]
    However, a person may take money from someone to go and buy property for him, as he is not selling anything himself in this case, he is merely a representative.
    [ The first three conditions are regarding the participants in the sale. Now let us look at conditions that relate to the property changing hands:]

    4 - Ibaahah al-Intifaa' bil-Mabee' (Permissibility of the Goods)

    That which is being sold must be something that is halaal(permissible) in its origin. Shaykh Saalih al-Fawzaan states:
    "So it is not permissible to sell what is haraam (impermissible) like intoxicants, pork, musical instruments, maytah (meat not slaughtered correctly), due to his statement (sallallaahu 'alayhe wa sallam):
    "Verily Allaah has prohibited the sale of maytah, intoxicants, and idols." [6]
    This hadeeth is agreed upon (by al-Bukhaaree and Muslim), and in a hadeeth collected by Aboo Daawood:
    "He has prohibited intoxicants and their price, and He has prohibited maytah and its price, and He has prohibited pork and its price." [7]
    So it is not permissible to use the oil or fat that is (originally) najas (impure, ie. from a pig or maytah) or has become impure (ie. by mixing with something najas), due to his statement (sallallaahu 'alayhe wa sallam):
    "Verily when Allaah prohibits something, He prohibits its price." [8]
    And in the hadeeth that is agreed upon (by al-Bukhaaree and Muslim): The Prophet (sallallaahu 'alayhe wa sallam) was asked, "Have you seen the grease of maytah, that it makes a good coating for sea vessels, it is used to tan skins, and it is used in people's lamps?" He replied:
    "No, it is haraam (impermissible)." [9]
    [ End of quote from Shaykh Saalih al-Fawzaan ] [10]

    5 - Maqdoor 'alaa Tasleemihi - Dispensibility

    The goods must be things that can be handed over at the time of the sale. Thus, it is not permissible to sell a bird flying in the sky, even if it is expected that the bird will return (ie. like a trained eagle), unless it is within a large cage. Similarly, it is not permissible to sell a fish in the sea, unless it is in an enclosed area that it can not escape from. The point is that the buyer must be certain that he will be able to hand over the goods when the sale is made. It is also not permissible to sell a lost item, or something that the seller is not certain if it is still in his possession or not. If the buyer is not totally capable of handing over the goods, then this is a kind ofgharar (?) that the Prophet (sallallaahu 'alayhe wa sallam) prohibited. [11]

    6 - 'Adm al-Jahaalah (The Absence of Anonymity)

    Both the goods and the price must be something clearly known to both participants in a sale. Selling an unknown or unspecified item, like "one of the sheep in the pen," or "one of the garments on display," without specifying the actual item, is a kind of gharar referred to in the previously mentioned prohibition. [11]
    Similarly, it is not permissible to sell a known item for "a stack of bills," or a "bag of coins," since, in this case, the price is unspecified. So neither the goods nor the price may bemajhool (unknown), as both participants must clearly know what they are receiving and what they are giving.
    Based on this, it is not permissible to sell a baby animal in the womb of its mother, since it is not known if the baby will be strong and healthy or sickly, nor is its gender known (something that affects the price of animals), nor is it even known if the baby will survive delivery.

    Summary

    A valid business transaction in Islam is the exchange of known, specified, halaal (permissible) property, based upon the mutual agreement of the two free, sane, adult owners who are capable of handing over what they are trading.
    And Allaah knows best.

    FOOTNOTES

    [1] Saheeh Sunan Ibn Maajah (#2185)
    [2] al-Mulakh-khas al-Fiqh-hee (2/9)
    [3] Hidaayatur-Raaghib (p.468)
    [4] It was collected by Aboo Daawood in his Sunan (#3503), and it was declared saheeh by Al-Albaanee. It was also collected by At-Tirmithee, an-Nasaa'ee, and Ibn Maajah.
    [5] al-Mulakh-khas al-Fiqh-hee (2/9)
    [6] Saheeh al-Bukhaaree (#2236) and Saheeh Muslim(#4024)
    [7] Sunan Abee Daawood (#2485); it was declared saheehby Al-Albaanee
    [8] On the authority of Ibn 'Abbaas (may Allaah be pleased with him), the Messenger of Allaah (sallallaahu 'alayhe wa sallam) said:
    "May Allaah curse the Jews! Verily Allaah had forbidden them from the use of oils and fats (from maytah), so they sold them and ate from their profit. And when Allaah has forbidden a people from the consumption of a thing, he has (also) prohibited them from its price."
    It was collected by Aboo Daawood in his Sunan (#3488), and Al-Albaanee called it saheeh.
    [9] Saheeh al-Bukhaaree (#2236) and Saheeh Muslim(#4024)
    [10] al-Mulakh-khas al-Fiqh-hee (2/9)
    [11] Saheeh Muslim (#3787)
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