General Rules regarding Selling and Buying transaction
All praises be to Allah, peace and prayer of Allah may always be upon Prophet Muhammad, his family, and his companions.
The contract of sale and purchase has been a tool to exchange goods between sellers and buyers. The seller gets the payment money, and the buyer gets the goods. As the consequence, the seller can use the money he got from the transaction, and the buyer can also use the goods he bought.
That is the basic rule of all contracts of sale and purchase. But there are several important points that you should know before you use your goods. Hence, it is hoped that you could act according to your competence without breaking the rules and shari’a laws. Here I’ll mention several important stipulations that a buyer must be aware of.
First stipulation: Transfer of ownership
We’ve already understood that the main benefit of sale and purchase contract is to transfer the ownership of the traded goods. Hence, goods that you’ve legally sold belong to the buyer, and you are not rightful anymore to use it but by his permission, as none has the right to use it but by that buyer’s permission.
This stipulation applies although the buyer has not paid the goods at all yet, or just paid half of its price. Therefore, if you think that you need to make use of the goods until a certain time period, you are allowed to ask his permission to use it until the agreed time limit. It is as Jabir Ibn Abdillah -may Allah be pleased with him- did, when he sold his camel to the Messenger of Allah -peace and prayer of Allah be upon him.
Jabir -may Allah be pleased with him- told that one day he was riding on his tired camel, thus he planned to release that camel. But before he executed his plan, suddenly the Messenger of Allah -peace and prayer of Allah be upon him- who previously was in the end of the group- managed to catch up with him. After that, the Messenger of Allah -peace and prayer of Allah be upon him- prayed for him and beat the camel that Jabir -may Allah be pleased with him- rode. Out of the blue, Jabir’s camel transformed into a nimbler and more agile camel than it used to be.
After he saw that Jabir’s camel became agile once again, the Messenger of Allah -peace and prayer of Allah be upon him- said to Jabir -may Allah be pleased with him-,”Sell your camel to me for 40 dirhams.” Jabir -may Allah be pleased with him- refused the offer of the Messenger of Allah -peace and prayer of Allah be upon him- and said, “No.” But the Prophet -peace and prayer of Allah be upon him- said again, “Please sell your camel to me.” After this second offering, Jabir sold his camel for 40 dirhams, but he stipulated that he was permitted to ride it until he arrived at his house. And when he arrived at his house, Jabir -may Allah be pleased with him- immediately handed his camel over and the Messenger of Allah -peace and prayer of Allah be upon him- paid the price.” (Narrated by al Bukhari, no. 2569 and Muslim, no. 4182).
Look, how Jabir -may Allah be pleased with him- felt the need for requiring to be able to keep riding on his camel even though he had sold it. This attitude shows that without this requirement, he couldn’t ride on that camel anymore, because the ownership had been transferred.
Second stipulation: The benefit and loss of goods
As a direct consequence of the first stipulation, every benefit of the goods will be the right of the buyer after the transaction was agreed. And vice versa, all losses or damages of the goods will be his responsibility. This stipulation has been stated by the Messenger of Allah -peace and prayer of Allah be upon him- in the following hadith:
‘Aisha -may Allah be pleased with her- narrated: “One day there was a man who bought a slave. Not before long, he found a defect on that slave. Because he didn’t want to suffer any loss, he returned him to the seller. As a result, the seller complained (to the Messenger of Allah -peace and prayer of Allah be upon him- and said, “O Messenger of Allah, he had hired my slave.” then the Messenger of Allah -peace and prayer of Allah be upon him- answered his complaint, saying, “A profit is a reward of responsibility/warranty.”
In this story, the Messenger of Allah -peace and prayer of Allah be upon him- strictly said that the use of goods is the reward and a direct consequence of your ownership of that goods. Hence, as a buyer, you should be ready to accept this stipulation, and as a seller, you should also accept this reality willingly.
Brother, this stipulation fully applies if you already handed over the goods that became the object of contract to the buyer. But you haven’t give the goods to the buyer, then the contract hasn’t been completed yet, and as a consequence, any risk of damage to the goods is your responsibility as the seller.
This ruling applies in trading of goods other than fruits or grains that are still on its trees. As for fruits and grains that were ripen but still on the trees, and then for some reason the harvest was failed, all risks become the responsibility of the seller. This law applies even if the seller have given a chance (handing over) to the buyer to harvest the fruits or grains that he has bought. This exception is based on a hadith of the Messenger of Allah -peace and prayer of Allah be upon him- :
`If you sell some fruit to your brother then it is stricken with blight, it is not permissible for you to take anything from him. Why would you take your brother’s wealth unlawfully?”'(Narrated by Muslim, in hadith no. 1554)
This law applies because the buyer hasn’t fully accepted the goods that he bought, even though you’ve given him, the chance to harvest it. The harvest failure came out of the power of men. Hence, if you still insisted to take his payment, whereas the buyer have failed to get the fruits that he bought, it means that you have taken his wealth without rewarding anything to him.
Third stipulation; Regarding reselling
Among the consequences of goods ownership is that the buyer is rightful to use the goods that he bought, including by reselling it. However, there are three prohibitions to avoid regarding process of reselling goods that you’ve bought.
The first prohibition: Don’t resell it to the seller
In several occasions, due to certain reason, the buyer resell the goods that he has bought to the seller. Reselling to the first seller would surely raise a big question, regarding why and what is the benefit of it? Thus, it is normal if Islam wary of such practices.
Generally, reselling goods to its first seller has, at least, two possibilities:
First: Buying goods with postponed payment and reselling it with cash payment. If this is what happened, then such practice is a real pitfall of usury. That is because usually, the first seller sold his goods with rather higher price, but he could buy it back with a lower price since he paid it in cash. And this practice is what-so-called “‘enah transaction”, which is evidently forbidden. The Messenger of Allah -peace and prayer of Allah be upon him- said,
“When you enter into `Enah transactions, take hold of the tails of cattle, and are content with farming, and you forsake Jihad , Allah will cause humiliation to prevail over you and will not withdraw it until you return to your religion.”’ (Narrated by Abu Daud, hadith no. 3464).
Second possibility: The hadith above also hints that if the reselling happened with cash or postponed payment with the similar or higher price from the first selling, then the status is alright. That is because the fear of having usury practice occurred doesn’t materialize, hence there is no reason to prohibit this kind of selling. It is in accordance with the saying of the Messenger of Allah -peace and prayer of Allah be upon him- below:
“Whoever gains two selling deals in one transaction, should use the lowest price, if not, then he has committed usury.” (Narrated by Abu Daud, hadith no. 3463).
The second prohibition: Don’t Resell the goods at the place of the first seller
The goods you’ve bought are basically yours, thus, you should be the one to fully responsible over whatever happened on it. As you could gain profit from it, you should also suffer the loss it might cause, as explained above. But sometimes, due to the desire to minimize the risk, some merchants did resell the goods they had bought whereas the goods were still at the place of the first seller.
You might guess, who’ll want to buy goods from you, whereas you and the goods you’ve bought were still at the place of the first seller. Logically, what profit will the buyer get from you, while they can directly buy it from the first seller?
By thinking about this, you could see that in such practice, i.e., reselling goods which were still at the place of the first seller, there was a gap for an usury practice to take place. Usually, those who were willing to buy goods from the second seller while they already arrived at the first seller’s place were people who couldn’t afford to pay in cash.
Hence, in essence, the second seller was merely lending the second buyer some money, and that second seller would get some profit from that money that he had lent.
From Ibn `Umar who said: “I bought some olive oil in the marketplace, and when it came into my possession I was met by a man who offered me a good profit for it, and I wanted to make a deal with him, but a man behind me took hold of my arm. I turned around and saw that it was Zaid bin Thâbit. He said: `Do not sell it where you bought it until you take it to your place, for the Messenger of Allah-peace and prayer of Allah be upon him- forbade selling merchandise where it were bought, before the merchants moved them to their places.”’ (Narrated by Abu Daud, hadith no. 3501, classed good by al Albani in his book, “Shahih Sunan Abu Dawud”, hadith no. 3499)
Third Prohibition: Don’t sell the goods before you receive it
Among the things that supposed the be cautious of before you resell the goods that you had bought was the existence of the goods. If you haven’t received the goods you’ve bought, since it was still in delivery process, or even production process, you weren’t allowed to resell it until you fully received it. That is to close any gap where usury practices might sprout. You could imagine, if the buyers were allowed to resell the goods the had bought before receiving it, then the next buyers would also do the same, and so on. And if it ever happened, you could certainly guess that the usury practices would be unavoidable, the usury practices in the form of money created some more money without any transfer of goods or service.
Ibn Abbas -may Allah be pleased with him- said, “The Messenger of Allah -peace and prayer of Allah be upon him- said, “Whoever buys foodstuff, shouldn’t sell it back until he fully received it'”. Ibn Abbas said, “And I think that every other stuff is similar to the foodstuff.” (Narrated by Bukhari, in hadith no. 2025 and Muslim, hadith no. 1525).
Thawus was curious about this prohibition, thus he asked his teacher, who happened to be Ibn Abbas -may Allah be pleased with him- :
“I asked Ibn Abbas, ‘How is that so?’. He answered, “That is because what really happened was the selling of dirham with dirham, whereas the foodstuff was postponed.” (Narrated by Bukhari, no. 2025).
Ibn Hajar explained the saying of Ibn Abbas -may Allah be pleased with him-, “If someone bought certain foodstuff with the price of 100 dinars, for example, and he had paid the price to the seller, whereas he hadn’t received the foodstuff that he bought, then he sold it to another person with the price of 120 dinars, and he received the price directly, whereas the foodstuff was still at the place of the first seller, then it seemed like this man had bought/exchanged his 100 dinars with 120 dinars. And based on this interpretation, this prohibition applies not specifically on the foodstuffs.” (See: “Fath al Bari” by Ibn Hajar al Asqalani, 4:348-349)
Fourth stipulation: It is not allowed to cancel a sale or a purchase
Among the consequences of selling and buying contract was that both parties were not allowed to cancel any contract between them without permission of the second party. It should apply as long as there were no defect on the goods or fraudulence.
“Believers! Honor your bonds!” (QS. Al-Maidah/The Table Spread: 1)
The generality of this verse comprises the contract of selling and buying, thus you are obliged to fulfill the contract that you’ve agreed. The Messenger of Allah -peace and prayer of Allah be upon him- explained it clearly to his companions, in his saying:
“When two people transacted, each of them has the right to choose as long as they haven’t parted and were still together, or one of them offered a choice to his friend. If one of them offered the other a choice, then they transacted based on the offered choice, the transaction was considered as finished. If they parted after the transaction, and none of them cancelled the contract, then the transaction was completed.” (Narrated by Bukhari, hadith no. 2006 and Muslim, hadith no. 1531).
Fifth stipulation: The seller is free to determine the price
Among the consequence of your ownership of certain goods that you’ve bought, you were rightful to choose any price to tag to the goods. As you were also free to determine the margin of profit that you hoped you would get from its selling. That is because there was no single indication that limited the target of profit of the selling. The story below was one of the indication that supported this point:
Urwah al Bariqy -may Allah be pleased with him- told, “The Messenger of Allah -peace and prayer of Allah be upon him- gave me one dinar to buy a goat to be slaughtered, or a goat. With that one dinar, I bought two goats, and I sold back one of them with the price of one dinar. After that, I came to him, bringing a goat and one dinar.” When he found out this smart action of his companion, the Messenger of Allah -peace and prayer of Allah be upon him- invoked blessing upon the trading of Urwah, to the extent that if he bought some dusts, he would surely get some profit from it.” (Narrated by Bukhari, hadith no. 3443).
I wish that this brief explanation about several rulings for selling and buying contract will benefit you. Thus, you could understand well about the studies regarding the law of transaction that became the theme of this rubric. And by Allah permission, in the next issue, I will present you a theme about leasing contract. And Allah knows best.
Sheikh DR. Muhammad Arifin Baderi
Source of reference: Al Furqon magazine, 6th edition, year eleven, 1433 H/2012
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