Monthly Archives: October, 2012

Rulings for Taxes and Working in Tax Institution


Assalaamu’alaykum warahmatullaahi wabarakaatuh

Now I’m working in general directorate of taxes. I got this job after I finished my undergraduate program in an official college, thus I have to serve for official duty for about 10 years.

I want to ask:

What is the ruling for taxes in Islam?
What is the ruling for incomes that I receive from being employee in this taxes institution?
What is your advice regarding my position?

Thank you,

May Allah the Exalted always bestow His mercy upon you.

From: Maeda D Candra
working in tax institution

All praises be to Allah, peace and prayer may always be upon Prophet Muhammad, his family, and his devoted companions.

Brother Maeda D.Candra, may Allah always bestow His mercy upon you and your family.

Islam, religion that you believe in and you love, is a religion that truly respects the human rights and their possession. Thus, Islam does not allow anyone to take over other people’s right without their willingness.

يَا أَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا أَمْوَالَكُم بَيْنَكُم بِالْبَاطِلِ إِلَّا أَن تَكُونَ تِجَارَةً عَن تَرَاضٍ مِّنكُمْ وَلَا تَقْتُلُوا أَنفُسَكُمْ إِنَّ اللَّهَ كَانَ بِكُمْ رَحِيمًا

“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 Nisa’/The Women: 29)

As the messenger of Allah also had verified this matter in many of his sayings, including a hadith below:

لاَ يَأْخُذْ أَحَدُكُمْ عَصَا أَخِيهِ، وفي رواية: مَتَاعَ أَخِيهِ لاَعِبًا أَوْ جَادًّا فَمَنْ أَخَذَ عَصَا أَخِيهِ فَلْيَرُدَّهَا إِلَيْهِ. رواه أبو داوج والترمذي وحسنه الألباني

“Do not one of you take the stick of his brother -in another narration:property of his brother – whether in playing or in truth. And whoever has taken the stick of his brother, should return it to him.” (Narrated by Abu Dawud, At Tirmidhi, and classed good by Al Albani)

That is the teaching of this beloved sharia.

And whoever violates this law, will be treated according to Islamic laws, in this world and in the Hereafter.

Punishment in this world, for example, is hand amputation for stealers, or crossed amputation for robbers, and so on.

وَأَيْمُ اللهِ لَوْ أَنَّ فَاطِمَةَ بِنْتَ مُحَمَّدٍ سَرَقَتْ، لَقَطَعْتُ يَدَهَا. متفق عليه

“Indeed, by Allah, if Fatima, daughter of Muhammad stole, I would certainly cut her hand.” (Muttafaqun ‘alaih)

إِنَّمَا جَزَاءُ الَّذِينَ يُحَارِبُونَ اللَّهَ وَرَسُولَهُ وَيَسْعَوْنَ فِي الْأَرْضِ فَسَادًا أَن يُقَتَّلُوا أَوْ يُصَلَّبُوا أَوْ تُقَطَّعَ أَيْدِيهِمْ وَأَرْجُلُهُم مِّنْ خِلَافٍ أَوْ يُنفَوْا مِنَ الْأَرْضِ ذَٰلِكَ لَهُمْ خِزْيٌ فِي الدُّنْيَا وَلَهُمْ فِي الْآخِرَةِ عَذَابٌ عَظِيمٌ(33)

“Those who wage war against Allah and His Messenger, and go about the earth spreading mischief – indeed their recompense is that they either be done to death, or be crucified, or have their hands and feet be cut off from the opposite sides or they be banished from the land. Such shall be their degradation in this world; and a mighty chastisement lies in store for them in the World to Come.” (Qs. Al Maidah/The Table Spread: 33)

Based on this principle, Islam disallows any charge without legal reason, such as tax. Tax, or in Arabic language is termed by “Al Muksu” is one of the forbidden charges in sharia, and those who commit it are threatened with Hell torments:

إِنَّ صَاحِبَ المُكْسِ فِي النَّارِ. رواه أحمد والطبراني في الكبير من رواية رويفع بن ثابت رضي الله عنه ، وصححه الألباني.

“Verily, the tribute collectors will enter the Hell.” (Narrated by Ahmad and At Thobrani in his work, “Al Mu’jam Al Kabir”, from narration of Ruwaifi’ Ibn Thabit -may Allah be pleased with him- , and classed sahih by Al Albani)

There are only four kind of charges in monetary administration of Islamic country:

Zakat Mal (obligational charity) and zakat of soul. This charge only obliged for muslims. I believe you are already familiar to it’s detail and distribution.

Al Jizya (Tribute), charged for souls, is obliged for the people of scriptures who live in Islamic country.
Al Kharaj (a kind of land taxes), charged for people of scriptures who use the land that belongs to the Islamic country. Income from both of these charges for people of scriptures who live inside Islamic country is used to fund the governance of Islamic country.

Al ‘Usyur or Nisful ‘Usyur. Al ‘Usyur (that is 1/10) is a charge on merchant from countries of disbeliever (a disbeliever who live in disbeliever countries and there are no peace treaty between his country and Islamic country, or even disbeliever country that against the Islamic countries). About 1/10 of their revenue from trading activities in Islamic country is taken. As for nisful ‘usyur (1/20), is charged on merchants from ahl zimmah, that is disbelievers who live in Islamic country.

Those are the charges that being acknowledged in Islam. If we compare between tax and the three kinds of charges in Islam, we might see that it resembles the second, third, and fourth charges (Al Jizya, Al Kharaj, Al ‘Usyur or nisful ‘usyur).

Whereas tax is an obligation of all citizens, without noticing any difference in religion. Thus, this is certainly against the shari’a law.

Islamic country supposed to differ the treatment to it’s citizens according to their religion. By this, muslims supposed to be charged with zakat for their wealth and soul, including zakat of trading, and the non muslims should be charged with Al Jizyah, Al Kharaj and Al “Usyur or Nisful ‘Usyur”, respectively.

The fact is that zakat in our country is still far from well-maintained, whereas Al Jizya and Al Kharaj are imposed to all citizens, thus it is not strange for you to pay taxes for your meal, your selling, and so on.

My advice is that you, brother Maeda D Candra should try to propose to move to other institution that is not dealing with taxes or bankings, even though your official level might be lowered. If you can’t take this solution, it is better for you to quit this job and seek other jobs that evidently legal in Islam. Believe, that if you leave an unlawful job in the cause of Allah, Allah will certainly show you the way out from this problem and a lawful and better job than your current job.

وَمَن يَتَّقِ اللَّهَ يَجْعَل لَّهُ مَخْرَجًا {2} وَيَرْزُقْهُ مِنْ حَيْثُ لَا يَحْتَسِبُ وَمَن يَتَوَكَّلْ عَلَى اللَّهِ فَهُوَ حَسْبُهُ إِنَّ اللَّهَ بَالِغُ أَمْرِهِ قَدْ جَعَلَ اللَّهُ لِكُلِّ شَيْءٍ قَدْرًا . الطلاق 2-3

“Allah will find a way out for him who fears Allah, and will provide him sustenance from whence he never even imagined. Whoever puts his trust in Allah, He shall suffice him. Surely Allah brings about what He decrees; Allah has set a measure for everything.” (Qs. At Talaaq/The Divorce: 2-3)

In the past, our scholars used to say:

مَنْ تَرَكَ شَيئاً لله عَوَّضه الله خَيراً منه

“Whoever left a thing in the cause of Allah, Allah will surely replace it with a better one.”

And Allah knows best.


Ustadz Dr. Muhammad Arifin Badri, M.A.
Article of

Global Econimic Crisis and It’s Solution (Part. 2 – End)

The third Source of crisis: Currency Trading

Allah the Exalted have created mankind with together with their weaknesses. It is impossible for anyone to be absolutely independent, thus he or she is able to fulfill all of his or her own needs. To fulfill the necessities, we often need other people.

Mankind uses money as an interaction tool, exchanging benefits, and valuing other people’s use. And the most appropriate substances to play this role are gold and silver. Gold and silver are valuable goods with an eternal economical values and this fact is agreed by all people. Gold economical value is not determined by market’s trust of other factor. The value is determined by the gold itself, because it is a good that has been agreed by all people as valuable good.

Since the main goal of money making is to serve as a standard for values of goods and services, Islamic law has been very strict with the currency exchange process (1).

The messenger of Allah -peace and prayer of Allah be upon him- said:

“Do not sell gold for gold but the similar ones, and do not add one side thus it’s amount is more than another side. Do not sell silver for silver but the similar ones, and do not add one side thus it’s amount is more than another side. And do not sell things in cash by (to be exchanged with -translator) the non cash things.” (Narrated by Al Bukhari and Muslim).

Ibn Rusyud Al Maliki said: “The problem of currency exchange is the most complicated of usury problem. The effect is that people who work in currency exchange business will be difficult to escape from usury. People who are able to be safe from it are those who are truly pious and knowledgeable of the lawful and unlawful in currency exchange. And it is known that their number are small. It is not strange that in the past time, Al Hasan (Al Bashri) said: ‘If you asked for a drink, and you are brought a drink from the house of currency trader, do not drink it. Previously Al Ashbagh refused to stand in the shade of the tent of the currency trader. Ibn Habib explained about the reason for Al Asbagh’s deed: Because most of them are falling into usury.” (2)

The people of today are tasting the bitter and the Terrible destructions afflicted upon them due to currency exchange. They are loosing the gold standard for the values of their goods and services. They trade the currency and leave the values to the market law or trust, just as the other traded commodities. If the demand of a currency increased, it’s exchange value will be increased as well, and if the demand decreased, so as the value.

Some of the forex trader speculates through a short sell method, that is by buying a currency in certain amount, and by debt. This kind of transaction usually lasts only for a day, thus in the afternoon, the buyer should sell the currency back to first seller (broker).

For example: Suppose that in the opening session at the morning, the exchange rate of Rupiah (IDR) to US dollar (USD) is $US 1= Rp. 10.000. A forex trader named Mr. Ahmad bought some rupiahs, for example, about IDR 150 billions from a broker with the price of $US 15.000.000 (fifteen million USD), and during the morning session Mr. Ahmad did not pay anything from his dollar to the broker, and the broker did not give the rupiahs of Mr. Ahmad as well. At the afternoon, in the closing session, if the exchange rate of rupiah got stronger, that is $US 1= 9.990,- , Mr. Ahmad would get money from the broker about IDR 10 x 15.000.000 = IDR 150.000.000,- (one hundred million rupiahs) as the profit.

In contrast, if at the afternoon session the exchange rate of rupiah got weaker, to $US 1= IDR 10.010,-, Mr. Ahmad should pay IDR 150.000.000,- to the broker, as the loss he suffered.

These practices are commonly found at the forex markets, and these practices destroy the exchanged values of traded currencies. Moreover, if it is done intentionally, and with a bad intention.

Global Econimic Crisis and It’s Solution

The messenger of Allah – peace and prayer of Allah be upon him- said:

“Indeed, on the Hereafter the merchants will be resurrected as the wicked ones but the pious merchant, perform righteous deeds, and honest. “ (Narrated by At Tirmidhi, Ibn Hibban, Al Hakim, and classed sahih by Al Albani).

That is what happened at the forex trading, and some cruel parties intentionally try to crush other country’s currency rate, in various ways.

A real example is the current condition, when the economic crisis strikes the USA, the US government does not want to suffer it alone; thus the government instructs all of the US citizens -particularly the US companies that investing their capitals abroad- to withdraw the capitals (3). The impact of this policy is the soaring rate of USD at the world forex markets, while the other currencies are failing.

A non cash forex trading as stated in the example above is clearly contradicting the previously mentioned hadith, and is a form of usury (riba nasi’ah).

It is understandable then that the government of Indonesia strictly ban the short sell model for forex trading, to maintain the stability of rupiah’s exchange value.

In this occasion, I (the author) think I need to praise the brilliant proposal offered by Prof. Dr. Mahatir Muhammad (ex-prime minister of Malaysia) to OKI, that is for the OKI members to get back using dinars as their currencies. By using dinar as currency, Islamic countries will be easier to maintain the stability of it’s exchange rate, and restrict the moves of the speculators, particularly the wicked ones. The exchange rate of dinar can not be manipulated by the wicked speculators since manipulating it’s value means to destroy the price of gold across the world. And if the gold itself is no longer valuable, all the other things will be valueless either.

Brother, what is happening to world’s economy of today is no other than the realization of Allah the Exalted’s decree, which can be translated as,

“Allah deprives interest of all blessing, whereas He blesses charity with growth.” (QS Al Baqarah/The Cow: 276)

And the saying of Allah’s messenger -peace and prayer of Allah be upon him-:

“Indeed the usury, although it is plenty in number, will eventually be scant.” Narrated by Imam Ahmad, At Thabrani, Al Hakim, and classed hasan (good) by Ibn Hajar and Al Albani.

Hence, the only solution to save mankind from this global economic crisis is by applying the Islamic law (sharia) thoroughly. By applying sharia in all aspects of life, for example in economy; the justice, prosperity, and stability in all of it’s aspects will be achieved. Because sharia is the only one that truly realizes the justice and truth in all aspects of life.

“Allah has promised those of you who believe and do righteous deeds that He will surely bestow power on them in the land even as He bestowed power on those that preceded them, and that He will firmly establish their religion which He has been pleased to choose for them, and He will replace with security the state of fear that they are in. Let them serve Me and associate none with Me in My Divinity. Whoso thereafter engages in unbelief, such indeed are the ungodly.” (QS An Nuur/ The Light: 55)
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Global Econimic Crisis and It’s Solution (Part. 1)

All praises be to Allah the Exalted, peace and prayer be upon our prophet Muhammad -peace and prayer of Allah be upon him- his family, and all of his companions.

Dear brother, Surely we still remember the terrible disaster that struck our country, on the land of Nanggroe Aceh Province in particular, several years ago; Tsunami waves that took hundreds of thousands of lives, and destroyed the results of civilization of the people there.

Some of us might said that The Tsunami is the worst disaster ever written in their life history,

However, that terrible disaster is starting to be forgotten by some other people. Moreover, some analyst argued that the disaster indeed deserves to be forgotten, since people of the world are now facing a more terrible calamity; the global crisis of economy that strikes every country’s economy, including our beloved country, Indonesia.

Some experts in economy had delivered their analysis and proposed sensible solutions, even the economic experts from across the world keep on working synergistically to find a solution and way out of this crisis. However, until today, they cannot figure out the best cure to end the current crisis.

It is not strange then that some of economy analysts stated that this global economic crisis will still occurred until some times ahead.

As it is commonly known, the crisis started from the United States of America, the reference of economy for most of the countries nowadays; a fact that makes this crisis even more bitter and harder to endure. This crisis has forced one by one of the giant companies of that superpower country to collapse, from the Lehman Brothers, the fourth biggest banking investment company, to General Motors (GM), Ford, and Chrysler, which are commonly dubbed as the ‘Big Three’ (Three biggest automotive companies in America).

Through this writing, I would like to take a little part in depicting the crisis better. And By this writing, I would like to find the real root of problems according to Islamic perspective.

gobal econimic krisis and it's solution

The first source of crisis: Bad credit of Housing in America

Since decades ago, the United States of America (USA) has been introduced to the Act of Mortgage, an act that regulates the ownership of houses through credit payment (similar to house ownership credit or KPR in Indonesia).

Based on this act, every citizen of USA who has met certain criteria, is allowed to buy houses by using this act of mortgage.

Based on this act of mortgage, the client will have a very long period of payment (up to tens of years) to settle their credit. Not only a prolonged payment period, but the interest rate is also very low, around 6 percent.

Not feeling enough by the mortgage act, the US government also gives tax dispensation to the house creditor. Such dispensation is valid for all buyer of housing projects, without making difference between the first hand buyer from the second hand or more buyers.

By these easiness, real estate business of US was growing fast, and the price of land and housing were heavily expensive. It is not strange then that various entities centered in US or out of US were tempted to invest their money in this field.

For information, that among the consequences of this mortgage act is that: someone who got a credit to buy a house, should hand over the house to the creditor. He or she may live in that house but not yet owning it, as long as the credit has not yet been settled. If the buyer is unable to pay for his or her credit installments, he or she should leave the house and the credit agreement will be considered invalid. The house will be confiscated and become the property of the creditor (banks or crediting companies).

Because the ownerships of the houses during the credit time were still own by the bank or crediting companies that gave the loans, bank used this opportunity to insure the houses to other banks or companies. And the similar thing also done by the second hand bank, and so on, thus it formed a chain of insurances.

Amidst that situation, an unpredictable thing happened. Due to various factors, the number of clients who failed to pay their credit increased dramatically. As the effect, the number of confiscated houses increased to a number that was out-of-calculation.

The result of the numerous debtor who failed to settle their credits, was that the number of marketed houses increased double fold; the newly built houses plus the confiscated houses.

In this condition, a market law of “Increasing number of supply means decrease in price” applied. Inevitably, the prices of insured houses to the first hand creditor of bank and the next creditor decreased as well. The result was a progressive declining of the value of the insured houses, unmatched the credited fund.

This condition has dragged a giant company such as Lehman Brothers to undergo a financial crisis. Because the insuring process of the houses occurred in chain, other banking institutions that were involved in the vicious cycle of that housing credit and insurance were also crumbled.
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Principles of Trading in Islam (Part. 2)

Types of Contract and It’s various law consequences

Among the principle that shall be recognized by every businessman or businessman-to-be, is to recognize various types of contracts, and it’s law consequence. This is important to know and always be considered, since based on my own experience, by mastering these contracts and each of it’s consequence, we’ll be easier to understand various sharia law regarding these contracts. [Division of these contracts is extracted from several references as follow: Qawaidh Ibn Rajab Al Hambaly 1/375, principle no.52, & 2/418, principle no. 105, Al Muwafaqat by As Syathiby 3/199, As Syarhul Mumti’ by Sheikh Ibn Uthaymeen 8/278, 9/120, 127-129, Ad Dirasyat As Syar’iyah li Ahammil uqud Al Maliyyah Al Mustahdatsah, by Dr. Muhammad Musthofa As Syinqity 1/73-89]


If we notice the goals or aims of various of contracts occurred between two or more people, we’ll be able to divide the contracts into three types:

First: The contract that was made to gain profits, thus every one who performed the contract will always be aware that his partner in contract continuously trying to get profits from their contract.

This contract usually contains a bargaining process, thus each partner involved in it wont be surprised or feel sorry if one day he finds out that his partner is able to get profits from their contract.

Real example of this type of contract is selling and buying (trading), renting, trading partnership, tillage of land (contract of musaaqah), etc.

Basically, Islamic law justify this type of contract.

Second: The contract that is aimed to give credits, aids, services, or assistance to other people. Or, in another word, the non-profit contracts.

Usually, people who sign for this type of contract usually in the need of help or afflicted by problems. Thus, they aren’t willing to let other people make use of their troubled position, to gain profits from the aids they gave.

Real examples of this type of contract are: debt contracts, deposits, loans, charities, gifts, marriage, etc.

Due to it’s basic aim, The sharia doesn’t allow for anyone to gain profits from it.

يَمْحَقُ اللّهُ الْرِّبَا وَيُرْبِي الصَّدَقَاتِ وَاللّهُ لاَ يُحِبُّ كُلَّ كَفَّارٍ أَثِيمٍ

“Allah deprives interest of all blessing, whereas He blesses charity with growth. Allah loves none who is ungrateful and persists in sin.” (Qs. Al-Baqarah/The Cow: 276)

In this verse, Allah the Exalted threaten the usurer and after that mention the rewards of the charity giver. This is a clear sign for us that usury is against charity. This fact is strengthen by the following verses:

يَا أَيُّهَا الَّذِينَ آمَنُواْ اتَّقُواْ اللّهَ وَذَرُواْ مَا بَقِيَ مِنَ الرِّبَا إِن كُنتُم مُّؤْمِنِينَ . فَإِن لَّمْ تَفْعَلُواْ فَأْذَنُواْ بِحَرْبٍ مِّنَ اللّهِ وَرَسُولِهِ وَإِن تُبْتُمْ فَلَكُمْ رُؤُوسُ أَمْوَالِكُمْ لاَ تَظْلِمُونَ وَلاَ تُظْلَمُونَ . وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَى مَيْسَرَةٍ وَأَن تَصَدَّقُواْ خَيْرٌ لَّكُمْ إِن كُنتُمْ تَعْلَمُونَ

“Believers! Have fear of Allah and give up all outstanding interest if you do truly believe. But if you fail to do so, then be warned of war from Allah and His Messenger. If you repent even now, you have the right of the return of your capital; neither will you do wrong nor will you be wronged. But if the debtor is in straitened circumstance, let him have respite until the time of ease; and whatever you remit by way of charity is better for you, if only you know.” (Qs. Al-Baqarah/The Cow: 278-280)

Thus, it is mentioned in a famous principle in jurisprudence that:

كل قرض جر نفعا فهو ربا

“Every debt that yields profits, is a usury.” (See: Al Muhazzab by As Syairazy 1/304, Al Mughny by Ibn Qudamah 4/211&213, As Syarhul Mumti’ 9/108-109, etc)

Third: The contract that serves as a guarantee for the payable rights. Hence, this contract usually performed together with debt contract, and it is not permitted for the creditor to take advantage from the guaranteed goods. If the creditor got profits or advantage from it, he is considered to commit usury, as explained in the principle above.

Furthermore, property and it’s usage belong to the owner, and no one is allowed to use it without permission and willingness of that owner.

لا يحل مال امرئ مسلم إلا بطيب نفس منه. رواه أحمد والدارقطني والبيهقي، وصححه الحافظ والألباني

“Properties of a muslim is unlawful but by his willingness.” (Narrated by Ahmad, Ad Daraquthny, Al Baihaqy ; classed sahih by Al Hafizh Ibnu Hajar and Al Albani)

What excluded from the general scope of this law is, if the profit is required at the time of trading or renting or similar contracts to it [2], by owed payments. (See: Majmu’ Fatwa Al Lajnah Ad Daimah 14/176-177, fatwa no: 20244)

For example, A sold a car to B with a price of IDR 50.000.000,- and the settlement was due after a year, with a house as the guarantee. If, during the signing of selling contract A required to be able to settle in the house for a year until the due date, and B agreed with the requirement, then A was rightful to use that mortgaged house of B. Because, by this practice, basically, A has sold his car for IDR 50.000.000,- plus the renting fee of the house for a year.

But if the contract has already been signed, A wouldn’t be allowed to use the house, with or without permission from B, since by using the house, A would get profits from the credit he gave and this is a form of usury, as mentioned by the principle above.

Examples of such contracts are: mortgaging (ar rahn), warranty (kafalah), testimony, etc.

Advantages of knowing the division of contracts in terms of it’s goals

By understanding this type of division, we’ll be able to understand the reason and wisdom beneath the prohibition of usury, as well as to understand the wisdom beneath distinction between usury and selling and buying contract.

الَّذِينَ يَأْكُلُونَ الرِّبَا لاَ يَقُومُونَ إِلاَّ كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا

“As for those who devour interest, they behave as the one whom Satan has confounded with his touch. Seized in this state they say: “Buying and selling is but a kind of interest,” even though Allah has made buying and selling lawful, and interest unlawful. Hence, he who receives this admonition from his Lord, and then gives up (dealing in interest), may keep his previous gains, and it will be for Allah to judge him. As for those who revert to it, they are the people of the Fire, and in it shall they abide.” (Qs. Al Baqarah/The Cow: 275)

One or several of the benefits of knowing the division of contracts in terms of it’s goals will be seen when a feud happened due to defects in objects of a contract. Because such defect will strongly influence the process of the first type-contract. But it’s existence will have no influence on the second and third type of contracts.


Contracts and agreement occurred between men, in terms of the basic attribute of the contract, could be classified into two big groups.

First: Contract that binds both parties

The meaning of “bind” here is that if a contract has been finished by fulfilling all of it’s requirements, the consequence of such contract should be obeyed and no one might cancelled it without the willingness of the second party, unless there is a defect in goods that became the object of contract.

Among the examples of such contracts are selling and buying contract, marriage, etc.

Second, Contract that binds only one party, thus the first party is not deserved to cancel the contract without permission and willingness of the second party, but the second party is rightful to cancel the contract whenever he likes.

Among the examples of these contracts is: Mortgaging contract. In such contract, the creditor deserves to return the mortgaged goods he received whenever he likes, while the debtor who is also the owner of the mortgaged goods do not have any right to cancel the contract without permission from the creditor.

Third: The non-binding contract

That is a contract where each of the party involved is rightful to cancel the contract whenever suits him even without permission of the second party, and without any defects in the object of that contract.

Among the examples of this type of contract are: contract of trading partnership, profit sharing system, deposit, loans, will, etc.

Benefits of knowing the division if contracts in terms of it’s consequence

By knowing this division, we’ll be able to understand the law of various controversies occurred in society due to a dispute about who’s responsible of the damages happened in the goods that become the object of a contract.

Among the benefits of knowing the division of contracts from this perspective is that: we’ll understand the law of canceling the already-signed contract, because at the first type of contract, it is not allowed for anyone from both parties who have signed the contracts to cancel it unless by the permission of the second party.

While at the second type of contract, for the bounded party, it is not rightful to break or cancel the contract without any permission of the second party, but the second party deserves to cancel it whenever it likes even though without permission of the first party.

And at the third type of contract, both parties deserve to cancel the contract, without permission from the other party.

There are still many kind of divisions of contract in various terms, but I think that the most important to know are the previously discussed divisions.
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Principles of Trading in Islam (Part. 1)

Brother, we are Indonesian people, who get used to practice the madzhab of Imam Ash Shafi’i, thus, we should consequently perform his guidance below:

مَنْ أَرَادَ الدُّنْيَا فَعَلَيهِ بِالعِلْمِ، وَمَنْ أَرَادَ الآخِرَةَ فَعَلَيهِ بِالعِلْمِ

“Whoever desires the worldly benefits, shall be knowledgeable, and whoever desires the benefits in the Hereafter, also shall be knowledgeable.”

A very beautiful advice that deserves to be written with golden ink. What will happen to us if we do things, either in religious or worldly affairs, without sufficient knowledge?

In religious affairs, doing things without knowledge will sink us into committing innovations. And in worldly affairs, we may perform unlawful things, which will plunge us into doom.

Long before that, Caliph Umar Ibn Khattab -may Allah be pleased with him- had given his advice to all muslims:

اَ يَتَّجِرُ فِي سُوْقِنَا إِلاَّ مَنْ فَقُهَ وَإِلاَّ أَكَلَ الرِّبَا. ذكره ابن عبد البر بهذا اللفظ.
ورواه مالك والترمذي بلفظ: لاَ يَبِعْ فِي سُوْقِنَا إِلاَّ مَنْ قَدْ تَفَقَّهَ فِي الدِّينِ. حسنه الألباني

“None should trade in our markets but the knowledgeable one, because if not, he’ll certainly will consume usury.” (This statement with such text has been cited by Ibn Abdil Bar Al Maliki)

And this statement also was narrated by Imam Malik and Imam At Tirmidhi with a slight textual difference: “None should trade in our market but those who have sufficient religious knowledge.” (Classed hasan by Al Albani).

Imam Al Qurthuby Al Maliki explained: “One who’s not knowing about the laws of trading, although his deeds are not prevented, doesn’t deserve to be fully trusted in managing his wealth. That is because he can not differ the unlawful from the lawful trading, a forbidden from a legal transaction. Also he is susceptible to do practices of usury and other forbidden transactions. This is also applied for infidels who live in Islamic countries.” (Ahkaamul Qur’an, by Imam Al Qurthuby Al Maaliky 5/29)

principles of trading in islam


Interactional relationship between men, whether it is in accordance with sharia or not, is unlimited. Every place and period has it’s own distinct form and model of interactions among them that is different to other place and time period. Hence, it is not a wise thing to confine and limit that form of interaction to a specific form. That is why there is no indication that confine the interactions among men in Islamic shari’a. This is an evident fact, and be known to every one who understands Islamic shari’a, even just a bit of it.

One of the proof is a principle in Islamic jurisprudence that states:

الأصل في الأشياء الإباحة، حتى يدل الدليل على التحريم

“The original (basic) law for every things is permitted, unless there is indication that shows the forbidden state of it.”

This principle is supported by some indications from the Qur’an And sunnah, among it is the decree of Allah the Exalted:

هُوَ الَّذِي خَلَقَ لَكُم مَّا فِي الْأَرْضِ جَمِيعًا ثُمَّ اسْتَوَىٰ إِلَى السَّمَاءِ فَسَوَّاهُنَّ سَبْعَ سَمَاوَاتٍ وَهُوَ بِكُلِّ شَيْءٍ عَلِيمٌ

“It is He Who created for you all that is on earth and then turned above and fashioned it into seven heavens. He knows all things.” (QS Al Baqara/The Cow: 29)

And the saying of the messenger of Allah -peace and prayer of Allah be upon him-:

أنتم أعلم بأمر دنياكم. رواه مسلم

“You’re more knowledgeable about your worldly affairs.” (Narrated by Muslim).

As for indication that specifically related to trading, is the decree of Allah the Exalted:

وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبا

“Even though Allah has made buying and selling lawful, and interest unlawful.” (QS Al Baqara/The Cow: 275)

And the messenger of Allah -peace and prayer of Allah be upon him- also said,

إذا تبايع الرجلان فكل واحد منهما بالخيار ما لم يتفرقا وكانا جميعا

“If two men are doing transaction, each of them has the right to choose, as long as they are not yet separated, and still together (in one place).” (Narrated by Al Bukhary no: 4917, and Muslim no: 1531, from a hadith narrated by Ibn Umar -may Allah be pleased with him)

عن رافع بن خديج قال: قيل يا رسول الله! أي الكسب أطيب؟ قال: عمل الرجل بيده وكل بيع مبرور. رواه أحمد والطبراني والحاكم وصححه الألباني

“From Rafi’ Ibn Khadij, he said:” It is said (to the messenger of Allah- peace and prayer of Allah be upon him-) O Messenger of Allah! What income is the best? He replied, “An income from the work of one own hand, and every righteous trading.” (Narrated by Ahmad, At Thabrany, Al Halim, and classed sahih by Sheikh Al Albani. There are also plenty hadith that have similar content to this hadith).

Scholars have also agreed that trading is a lawful job, and this agreement has became a well known part of Islamic sharia. One of the proof is that every scholar who wrote about Islamic jurisprudence or, hadith, always make a specific chapter to discuss various problems regarding trading.

Based on these indications, the scholars stated that the basic law for all trading is legal and lawful, as long as it doesn’t transgress the limitations of sharia.
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