A Forced Transaction
My village is situated on the coast. Many of the villagers here work as local fishermen, and still many of them don’t have enough fund to provide the fishing equipments, such as machines, fishnet, etc. Usually, they borrow some money to provide those equipments from the skipper of fishmonger, with the consequence that they have to sell the result of their catches to the borrower. And usually, the selling price to the skipper is slightly cheaper than the market price. Whereas the debt should be settled periodically without any added interest. Sometimes, after the last payment, the skipper gives them some discount, for example from IDR 5 millions, the debt is discounted to IDR 4.5 millions only.
According to Islamic perspective, what do you think about this case? May Allah reward you with goodness.
Sender: Abu Yumna, from Lamongan, Indonesia
The Islamic shari’a stands firmly upon the fairness and it forbids oppression. Thus, every kind of oppression is forbidden in Islam. This principle also applies in social interactions among society, particularly in trading, in which the transaction should be done by the willingness of both parties and without any force. Therefore, Allah declared, which can be translated as,
“Believers! Do not devour one another’s possessions wrongfully; rather, let there be trading by mutual consent; and do not kill yourselves. Surely Allah is ever Compassionate to you.” (QS an-Nisaa/The Women:29)
Thus, Islam forbids the forced trading in which one of the party involved is forced to sell or to buy the traded goods. What have you mentioned earlier is one of the many conditions and profit taking system that many muslims still do toward their own brothers. Based on the information in your question, we could infer two things:
- The money lending is carried out without interest, but it binds the borrower to give some profit to the one who lends the money, in the form of cheaper price compared to the market/common price.
- Fishermen or the indebted ones are forced to sell their goods to the skipper because they are forced to accept the debt offer to fulfill their needs.
From these statements, we could conclude law as follow:
- Credit system as mentioned in this question is among the forbidden ones, since the creditor take profit from the credit he gives through the sale and purchase contract that benefits him. If it was not for the desire to get cheaper prices, he will not lend the money. It is included in a principle of Islamic jurisprudence established by the scholars, which stated that “All debts that require profit is usury.” That is because the contract of debt is one of the social, non profit contract that is meant to help others and ease their burden, thus it is forbidden to take any profit as a required return in that contract.
- Had it considered it as an advance payment for goods at a certain tempo, which is known as the salam transaction, then the trading system that you’ve questioned has deviated a lot from that system. Among the deviations are:
- In a salam contract, the buyer merely gives the criteria and qualities of the wanted goods, and the material of the goods itself will be up to the seller, whether it is taken from his own catches or not, an aspect that is not exist in this system.
- In a salam contract, the value of the goods and its number has been determined on the place of transaction, whereas in this system, both values and numbers determined after the goods are there.
- The signed contract is debt contract, and not sale and purchase contract.
Therefore, it is obvious that this system is not included as salam contract that is allowed in Islam.
It seems like, from both possibilities, all shows that there is violation of shari’a principle in the mentioned system, whether it is considered as debt contract or sale and purchase contract. In the end, it is just a trick done by the financier (the skipper) to make use of the hardship of the fishermen, thus they will be forced to sell their catches to him with a price that suits his will. And this is evidently a forced sale and purchase contract.
Sheikh DR. Muhammad Sulayman Al Asyqar, a world class expert in Islamic economy stated, “But it is important to notice that there are some rich, modal owners, who will use the hardship of others to gain profit, at the time when burdens and necessities urged the farmers or businessmen to find fast cash. Then, they use the salam contract to press down the price to its lowest. Had it not for that motive, they would surely turn down that modal offer. Such practice is a foul one and it is forbidden, since it is included in what-so-called “bai’ al-Mudhthar” (selling and purchasing goods in forced condition).”. And Allah knows best.
. See: “Buhuts Fiqhiyah Fi Qadhayaa iqtishadiyah Mu’asharah” 1/189-190.
Answered by Ustadz Kholid Syamhudi. Lc