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Sales & Transactions

The very basic definition of sale is as following:

بالتراضی بالمال المال مبادلة

Sale: “Exchange of Maal (property) against Maal (property) with mutual consent”

Further they describe Maal (property) in following words:

الحاجة لوقت یدخر و القلب الیه یمیل ما
Maal: “That towards which heart inclines and can be stored for the time of need”.

With the above mentioned two definitions the following reasonings can be deduced:

1) In order for a sale to happen not only exchange is necessary but it must also take place with mutual consent between the two parties. (Buyer and Saler)

2) That thing towards which heart does not incline or cannot be preserved is not “Maal”. For example : dirt, urine, promise.

Types of Sale: According to the islamic law sale can be divided into four categories: Mutlaq, Salam, Muqaidah, and Sarf.

Mutlaq Sale:

To sell a good in exchange of money.  For example transaction of food with currency. This type of sale is the most common sale, as it  happens generally.

Salam Sale:

To sell money in exchange of good. This type of sale occurs when merchandize is being given later and money is paid in advance. This type of sale is rare. For example money received in advanced for crops which will be paid later. The difference between Mutlaq and Salam is that: in Mutlaq the good is merchandize and money is the price, whereas in Salam the money is merchandize and good is price.

Muqaidah Sale:

To sell a good in exchange of other good. For example: exchange of rice with wheat.

Sarf Sale:

To sell money in exchange of money. For example transaction of gold with gold, silver with silver or currency with currency. (Gold and Silver are considered to be original money basically)

What does Islamic Law states regarding these four types of Sales.

In a common type of sale (Mutlaq), payment can be made on time or it can be deferred as long as the time period of deferment is known.

In the second type of sale (Salam) the merchandize is treated as a price (Payment) and it is deferred while the money is paid in advanced. For example to sale milk, bricks, rice, wheat etc which will be available at specified time.  This sale will be valid only if money is handed over in the meeting of agreement.

In the third type of sale (Muqaidah) if  any thing that is weighed or volumed is exchanged with same type of thing like wheat with wheat or rice with rice then both should be equal in quantity (quality will not be considered) and both must be paid in same meeting of agreement otherwise will be Riba, and if it is exchanged with other thing like wheat with rice or book with cloth then they can be more or less in value but possession from both party is required in same meeting for this sale to be valid.

In Sarf Sale if Gold is sold in exchange of Gold or Silver in exchange of Silver then they must be equal in quantity, and both party must hand over both exchanges to each other before separation. Otherwise this sale will be void. And if Gold is sold in exchange of Silver then they can be more or less in quantity, but possession from both party is required at the same location of agreement for this sale to be valid. But if Gold or Silver is sold in exchange of a currency they can be more or less in value, and possession of one of them is required in same meeting. But exchange of currency with other currency can be done any way.

What is the criteria of a sale in terms of its soundness and validity?

The islamic ruling related to validity or invalidity of a  sale is distributed in to four types:

Jaiz (Valid & permissible), Mauqoof (held in abeyance) Fasid (corrupt),  and Batil (totally invalid).

Jaiz (Permissible): This type of sale is common permissible sale which takes place with offer and acceptance (agreement over a specified/pointed islamically permissible thing in exchange of declared price).

Mauqoof (Deffered): This type of sale takes place when something is sold without the permission of its owner.

Fasid (Corrupt): This type of sale is corrupt sale. If some thing which is Maal according to Ahle Kitaab and not Maal in Islamic Sharia is sold in exchange of other merchandize, will be Fasid (corrupt), for example to sell wine in exchange of bread. Or if corruption is in some thing other than acceptance, offer and merchandize, or there is any condition against requirement of sale and purchase then it is Fasid (corrupt) for example to sell a fish while it is in river or a flying bird or any thing not in control to be handed over,  or to sell some food with condition to give it to some one for free, all these sales are Fasid (corrupt), though merchandize in this sale comes in ownership after agreed possession, but it is not allowed to use it, but both parties have to dissolve this agreement.

Batil (Void):  If any one of two exchange (merchandize or price) is not Maal (a thing that can be sold) at all then this sale is Batil (Void), for example a free man, blood or dead animal is sold, also if some thing which is Maal according to Ahle Kitaab and not Maal in Islamic Sharia, is sold in exchange of money will be Batil (Void) for example to sell wine in exchange of money. Also any Rukn (Pillar) of sale (offer or acceptance) is missing then it is Batil, for example an insane person or very small child did it. Also to sell some thing did not come into existence yet is Batil (Void)

What are some important rulings to keep in mind in terms of merchandise and price.

It is necessary for the buyer to understand the quantity of merchandize he is buying. But unlike the currency, merchandize can be pointed at in order to be specified, thus the requirement to verbally describe the merchandise drops.

In any form of payment (i.e money, gold or silver) the price is supposed to be known in terms of its quantity, quality and attributes (if it puts an effect on the value).

What are some other examples for items which cannot be merchandise?

What ever fits the definition of “Maal” can be merchandize and whatever doesn’t fit the definition of “Maal (Good)’’ cannot be merchandize according to the Islamic law. In other words anything which is islamically impermissible, it cannot be merchandise. For example beer, pork, insects, dead or  rotten animals and blood are not considered to be “Maal”.

“ May the business affairs of Muslims be corrected and reformed according to the Shariah” .