Merchandise must possess certain attributes if it is to be legally sold. The Traditions of the Prophet Muhammad (peace and blessings of Allah be to him) provide material for the following classification of these attributes. However, it is from the later Islamic scholars that we learn their more detailed categorisation.
Pure substances which are considered to be ritually and legally clean, wholesome and, of course, marketable and are objects of legal value. In the Traditions from the Prophet it is reported that he ruled that all properties which are regarded as unclean religiously cannot therefore be sold, as for example dogs (except hunting dogs), intoxicants, pigs, carcasses of the animals not ritually slaughtered, idols, blood, and so on. They cannot be benefited from and are prohibited by the Islamic credo.
PRICE-FIXING
In pre-Islamic times, rich traders fixed prices for goods as they wished, in order to make large profits. Such acts caused a lot of hardship to people.
Al-tasir means the fixing of prices of goods for the purpose of doing justice to the seller as well as not causing difficulty to the customers or purchasers. But the public authority in most cases is not allowed to fix the price. The Prophet is reported to have said: “The cheapness and the high level of price are from God and surely I love to meet God with no injustice to anyone on me.”
In another Tradition, a man asked the Prophet: “(Could you) fix the price of the foodstuff for us?” The Prophet is reported to have replied: “Surely the high level of price and its cheapness are in the hand of God, and I surely hope to meet Him and no one (among you) should request of me any inequity (or act of injustice) in blood (in case of homicide or retaliation) or property (in cases of business transactions).”
Umar bin al-Khattab said: “Whoever comes to our land with merchandise, he can sell it as he wishes, he is our guest till he goes out; he is our example (or model).”
He also said: “Whoever sells (his goods) in our market, we are his guarantor.”
It is reported that Umar bin al-Khattab passed by Hatib bin Abi Balta’ah who had been underselling some of his raisins in the market. Umar bin al-Khattab said to him: “Either increase the price or leave our market.”
According to al-Zurqani, Umar ordered Hatib to increase the price of his raisins to what the other merchants were asking in the same market or that he should leave the market to avoid causing hardship or disadvantage and loss to other merchants. Any interference or intervention on behalf of the public authorities will subject manufacturers and consumers, or traders and purchasers, alike to injustice. As a result productivity will stagnate and business activity will stop. This will surely endanger public and private interest alike.
According to al-Shaybani, this indicates that Muslim public authorities have no right to fix prices for Muslim traders or others, nor to compel sellers to do so. On the other hand, the public authorities have the right to fix prices whenever they think it essential to do so, especially to prevent exploitation.
HOARDING OF FOODSTUFF
Legally, al-ihtikar is storing foodstuffs up or withholding them in expectation of a rise in their prices. Some adept merchants in the Arabian Peninsula in pre-Islamic times bought a whole caravan loaded to capacity with goods and stored up these foodstuffs with the object of selling them in time of scarcity to make maximum profits and to dictate the price. Furthermore, some of the Arab merchants during this time bought commodities from any travellers who were carrying their foodstuffs to the market, and stored them until they could sell them at a very high price.
Not all hoarders are sinners. The hoarder in fact contributes and he is considered beneficent. He stores goods in periods of plenty and sells them in times of shortage when there is comparatively more demand for them. As such he is sharing in production, for he preserves goods for a certain period to maintain a constant supply in the market. However, those hoarders who withhold goods in the market from a genuine consumer for the purpose of creating artificial scarcity and then taking undue advantage of the helplessness of poor people are to be condemned as sinners. Such selfish hoarders who are devoid of human feelings deserve condemnation, especially the hoarders of foodstuffs who exploit the poor.
The Prophet (peace and blessings of Allah be to him) is reported to have condemned hoarders when he said: “No one hoards but the traitors (i.e. sinners).”
However, in another Tradition, it is reported that the Prophet was safekeeping or storing some maintenance of foodstuffs for his family for one year, then he entrusted the remainder of his dates as the trust of property of God. This shows that storing foodstuffs up for maintaining one’s own family is not considered hoarding.
It is from the Companions that we get a clear idea of the kind of legal discussions that were taking place on this subject. Umar bin al-Khattab said: “There is no hoarding in our market, and men who have excess gold in their hands should not buy up one of God’s provisions which he has sent to our courtyard and then hoard it against us. Someone who brings imported goods through great fatigue to himself in the summer and winter, that person is the guest of Umar. Let him sell what God wills and keep what God wills.”
Umar bin al-Khattab also said: “Do not sell in our market as a hoarder.”
In another report, Umar bin al-Khattab, the Caliph, was going to the mosque one day when he saw foodstuff scattered about and asked: “What is the food doing here?”
The people said: “It was brought to us.” To which Umar replied: “God would bless this foodstuff and the man who procured it.” One man said: “O Commander of the Believers! But it has been hoarded.” Umar asked: “Who hoarded it?” They replied that it was Furukh, the client (mawla) of Uthman and also a client of Umar. Later, Umar sent someone to ask these two men to speak to him. He asked them: “What induced you to hoard the food of Muslims?” They replied: “O Commander of the Believers! We bought it with our own money and then sold it.” Umar then said: “I have heard that the Prophet said: ‘Whoever hoards food from Muslims, God will punish him with bankruptcy or with leprosy’.” Thereupon Furukh was reported to have said: “O Commander of the Believers! I give my word before God and before you that I will never do it again.” However, Umar’s client said: “Verily we bought it with our own funds and we will sell it.”
The above account indicates that Umar did not accept the principle of freedom of trade as a justification for hoarding, despite the argument of his client. The prohibition of hoarding had already been established by the Prophet; therefore no logical justification could be accepted. The client of Uthman abandoned the practice of hoarding, but Umar’s client continued this practice, since Umar merely advised him but took no practical steps to prevent it. Umar also considered that hoarding amounted to heresy or apostasy based on the following Qur’ānic verse: “And any whose purpose therein (in Makkah) is profanity or wrong-doing – them will We cause to taste of a most grievous penalty.” (22:25)
In spite of that, Abu Dharr al-Ghifari used to keep or store some provisions for his family when there was a scarcity of food. This indicates that the storing of foodstuffs for provision of the family in time of scarcity was allowed. However, the Companions continued to prohibit hoarding as opposed to storing. Uthman bin Affan forbade hoarding, and Abdullah bin Amr bin al-Aas used to say: “No man but the sinner (khati), or the oppressor (baghi), waits to sell foodstuff in time of scarcity.”
Basically, every hoarder is cursed or damned (malun) and everyone who procures or imports foodstuff is blessed or prosperous (marzuq). This was held by Saud bin al-Musayyab. However, according to Sufyan al-Thawri, there is no harm if a hoarder buys foodstuffs from market in the country in order to procure them.
Moreover, there is no harm if a merchant sells his foodstuffs when there is comparatively more demand for them after storing them during a period of plenty, without any intention of jeopardising the stability of their price in the market. In such cases, he is not considered a hoarder.
OUTBIDDING
The Arab merchants used to practise outbidding (al-musawamah) after a contract had been agreed between traders. This practice caused disputes and disagreement, especially between brothers or others.
This type of sale had been commonly practised in the market of Dumat al-Jandal and at the international seaport market of Daba, in Oman. Islam forbids outbidding after the vendor has accepted the offer of another person, even though the offer may not yet be irrevocable. As a step to prevent this pre-Islamic practice, the Prophet is reported to have said: Do not let any of you bid against each other (outbidding in order to raise the price).
Malik said: The explanation of the Prophet’s words: “Do not let any of you bid against each other”, is that it is forbidden for a man to offer a price over the price of his brother when the seller has inclined to the bargainer…
He continues: There is no harm, however, in more than one person bidding against each other over goods put up for a sale.
Al-Shaybani added: It is culpable to persuade a seller to cancel any contract which has been made between him and a third party in order to buy the goods at a high price, before the third party has bought or left them.
TRICKERY
According to al-Shafii and al-Shaybani, al-najsh (trickery) means that one offers a high price for something without intending to buy it but just to cheat another person who really does want it. A person may collaborate with the seller to offer high prices in front of the buyers to cheat them, in which case both this man and the seller are sinful. The seller may lie to the buyer that he, i.e. the seller, has previously bought the goods at a certain price which is in reality higher than the actual price. This type of fraudulent transaction was widely practised among the Arabs in pre-Islamic times. It was reported that the Prophet had prohibited al-najsh or al-tanajush.
Malik said: Al-najsh is to offer a man more than the worth of his goods when you do not mean to buy them and someone else follows you in bidding.
No comment appears to have been made by the Companions. Among the Successors, only Umar bin Abd al-Aziz forbade al-najsh in a sale.
CONCEALING OF DEFECTS AND CHEATING
Concealing of defects (ikhfa al-ayb) and cheating (al-ghishsh) was a common and widespread practice among the traders in pre-Islamic times. It was reported that, one day, the Prophet (peace and blessings of Allah be to him) was passing by a man who was selling foodstuff. The Prophet asked him: “How is your business?” The man told the Prophet about his business. Then, it was revealed to him, “Put your hand in it (foodstuff).” He put his hand in it and his hand got wet. After realising the man was concealing defects and cheating, the Prophet said: “Surely, whoever deceives in business transactions, is not (or does not behave like) one of us.”
Condemnation of such practices by Shurayh and Ma’mar bin Rashid, two of the Successors, is on record.
EXACTING FULL MEASURE AND WEIGHT
The Madinans had been notorious, in pre-Islamic times, for giving short measure. The Prophet is reported to have said: “Weigh (and level the scale) and get it right.”
The Prophet (peace and blessings of Allah be to him) is also reported to have said: “O Muhajirun (the emigrants)! There are five things which may befall you and I pray to God that you may escape them: moral decay never openly shows itself among a people but they suffer from pestilence and disease such as their fathers have never known; they do not use light weights and measures but they are smitten by famine and the injustice of rulers….”
It was reported that Abdullah bin Abbas said: “O you non-Arabs, assemble together! You are entrusted with two responsibilities, which have destroyed other people before you, they are measure and weight.”
Ali bin Abi Talib came across a man who was weighing saffron. He was weighing out more than the balance and then reducing the amount to make the balance equal. Ali said: “Weigh the saffron out equally first and then make it heavier as you wish.”
According to al-Qurtubi, the order of Ali was to level the scale first to be accustomed to it and then to distinguish the obligatory from supererogatory acts.
Once, Abdullah bin Umar passed by a trader and he said: “Fear God and be absolutely equitable with measure and weight….” Also, according to al-Sanani, Abdullah bin Umar saw a man who appeared to be weighing out something in excess. Abdullah said to him: “Woe unto you! What is this?” The man said: “God ordered you to be fair (perfect).” Abdullah replied: “But God prohibited transgression.”
Abdullah bin Mas’ud passed by a man who was weighing the commodity and the weight was in excess, Abdullah levelled the scale and said: “What a perfect (or an excellent) weighing, after you have got it right you may add whatever you wish.”
The above reports demonstrate that the Companions were very particular about weighing and measuring in any trade or business transaction, as had been the Prophet (peace and blessings of Allah be to him).
According to Ibrahim al-Nakhai, there was no harm in making the weight of goods heavier in favour of a purchaser. Possibly this statement indicated that anyone could make his weight of goods heavier, in favour of a purchaser, in any business transaction, after first weighing out the goods to make the balance equal. This was suggested by the Companions, in order that the level of the scale should be established first. In doing so, a man can distinguish between obligatory and supererogatory acts. However, Ikrimah sternly advised, especially the merchants, to be equitable in the use of weight and measure and to fear God’s punishment.
The profit belongs to him who bears responsibility (Al-Kharaj bi al-Daman): The purchaser has the right to return goods if he discovers any defect, and all the right of usufruction and other benefits from the goods during his possession belongs to him. The Prophet is reported to have said: “The profit belongs to him who bears responsibility.” It seems that this practice originated after Islam.
This included wool and milk. In the case of monetary transactions or agricultural produce, if they were consumed or damaged the price or value only of the original had to be returned. Umar bin Abd al-Aziz added that any yield, service, or produce, should be returned together with the defective goods.
The Prophet is reported to have ordered remittance of payment of any yield stricken by calamity. The Prophet is also reported to have said: “If you have bought from your brother any fruit, which was then damaged by any calamity (disease), you are forbidden to take (from him) anything (the commodity). For what (exchange) shall you take your brother’s property without any right?”
It was also reported that Sa’d bin Abi Waqqas had sold his orchard. This orchard was later stricken by a crop disaster and the purchaser had subsequently taken the price or value of the orchard from Sa’d. According to al-Shafii, remission in the form of payment should be made after the purchaser has possessed such crops or fruits and has found defects in them. However, crop damage is not considered a defect in goods. In such cases the seller is allowed to take back his defective fruits or to give back the price to the purchaser.
According to al-Shaybani, Sa’d bin Abi Waqqas was reported to have purchased grapes from’ Abd al-Rahman bin Awf in al-Aqiq. Later, Sa’d produced evidence that the grapes he had bought had been eaten by locusts (all of them or most of them). The case was brought before Uthman bin Affan, the Caliph, who decided that Abd al-Rahman bin Awf should pay full price as compensation to Sa’d.
Uthman said: This is part of God’s property which He has bestowed on him (Sa’d) (by returning this property to him in the trial) and He has tested you (Abd al-Rahman) in this way.
Ali bin Abi Talib opined that crop damage was whatever causes loss of a third or more for the purchaser.
According to Sufyan al-Thawri, anyone who sold fruit after showing evidence of its quality, has to replace or remit it, if the purchaser found the fruit had been stricken by disaster.
PROTECTION OF THE TRADERS’ RIGHTS
(a) In pre-Islamic times, the following circumstances sometimes arose: A townsman might see a stranger arriving with objects of prime and general necessity for a sale at the current rate of the day, and he might in order to retail them at a higher price persuade that stranger to transfer all of the goods to him. Or a shrewd townsman might go out of town to meet people bringing their goods to the town and buy these products at the cheapest rate (before these people became aware of the current rate) and sell them at the highest or exorbitant price, or the entrepreneurial practice of tradesmen intercepting an incoming caravan, which had not yet arrived at the centre of a town, and making enormous profits from dealing with the caravan members because of the latter’s lack of knowledge about local prices. They were known as talaqqi al-jalab, talaqqi al-rukban, talaqqi al-sila or talaqqi al-buyu.
In relation to this unjust practice, there are Traditions as follows: “The townsman should not sell on behalf of a man from the desert (with a view to take advantage of his ignorance of the market conditions of the city).” Yet in another Tradition: “Even if on his own father’s or brother’s behalf.”
The prohibition of any transaction between a townsman and desert-dwellers also implies the inclusion of transactions between families of the desert and families of the town.
The Prophet is also reported to have said: “Do not go out to meet the traders (from a caravan carrying merchandise).”
And whoever meets him and buys goods from him, whenever he (the trader) arrives at the market he has the right of option.
The Prophet is reported to have forbidden going out to meet riders, i.e. traders carrying merchandise, until it is brought into the market.
The prohibition of this transaction is general, whether between a townsman and a desert-inhabitant or others. According to al-Shaybani, such an act will cause difficulty and hardship to other countrymen, but if there are lots of goods and it does not cause any difficulty, such an act is permitted.
Abdullah bin Abbas declared that a townsman should not become the broker of an inhabitant of the desert. Umar bin al-Khattab ordered the merchants that they should inform desert traders about the market price of their goods and lead them to the market.
The above reports suggest that the transaction between a townsman and a desert-dweller was not permitted, even acting as their broker was disallowed except when the traders from the desert knew the price and conditions of the market. This law had been promulgated by the Prophet and continued to be practised by the Companions to avoid any sort of unfairness in business transactions towards new traders, especially those from the desert.
Muhammad bin Sirin, Ibrahim al-Nakhai, Sa’id bin al-Musayyab, Ta’us, al-Sha’bu and Ata bin Abi Rabah prohibited any contract of transaction concluded between a townsman and a desert-inhabitant, i.e. in specific words a townsman became the broker of a desert-dweller or a country trader. This was also held by Umar bin Abd al-Aziz. However, Mujahid allowed such transactions or contracts, provided the desert-dweller knew the market price and the situation of the market. This ruling was agreed to by Ibrahim al-Nakhai. The latter based his opinion on the ruling of Umar bin al-Khattab that the merchants from the desert ‘should be informed of the market price and taken to the market to inspect the conditions of the market.
According to al-Hasan al-Basri, there was no harm in buying goods from the desert-dweller, but it was not allowed to become a broker or from the desert to sell the goods on his behalf.
Muhammad bin Sirin was of the opinion, in the case of talaqqi al-jalab or talaqqi al-rukban, that the traders had the right of option of revocation of contract on arrival at the market, if they were not satisfied with the transaction which had been concluded. Further, Umar bin Abd al-Aziz considered such a contract to be trickery (najsh).
In such a case, the transaction was invalid. To explain further, al-Shabi said that the distance, in the case of talaqqi al-jalab or talaqqi al-rukban, between the market and the place where the transaction was concluded, had to be less than the distance at which a traveller was allowed to shorten his prayers. If the transaction was made at a distance further than that, it would be valid and permissible.
Ikrimah, al-Shabi, al-Hakam bin Utaybah, Muhammad bin Sirin and Sufyan al-Thawri all held the opinion that if excess goods were contracted, the purchaser was liable to return that excess to the vendor.
If, on the other hand, the transacted goods were found, with the purchaser, to be short or less than the amount of goods contracted, the vendor was, likewise, liable to compensate such shortage to the former. This view was elaborated by the Successors. Neither the Prophet nor the Companions made any ruling on this matter or there does not seem to be any earlier discussion of this matter.
If a price has been offered by two prospective buyers, the contract should be made with the first. But if the first bidder is not known, or absent, then the transacted goods will be given to the one who is holding them. This was the opinion of Shurayh and Muhammad bin Sirin. Sufyan al-Thawri, however, added that if the first bidder was not known, the goods would be returned to the vendor. It seems that neither the Prophet nor the Companions left any precedent for such sales. This was an extended ruling which was introduced by the Successors.
A sale must be on the basis of mutual consent. It is mentioned in the Qur’ān: “… But let there be amongst you trade by mutual goodwill” (4:29). It therefore follows that sale by force is invalid. If a sale is made by another person, without any authority from the real owner, negotiorium gestio, then such a transaction is also invalid.
SALE BY AUCTION
According to Malik, there is no harm in more than one person bidding against another over goods put up for sale. According to Ibn Hazm, such a sale is not an outbidding after a contract has been agreed (al-musawamah), neither is it trickery (al-najsh). Such a contract was called bay’ al-muzayadah (sale by auction), which had commonly been practised by the Arabs in pre-Islamic times. The Prophet is reported to have bought a man’s cup and a saddle-blanket in auction.
No comment seems to have been made by the Companions. Among the Successors, Mujahid permitted such a sale, whether the commodity was inherited or not, sold to beneficiaries or otherwise. He said weapons were usually sold by auction among the Muslim community. According to Ata bin Abi Rabah, he witnessed people seeing no harm in selling war booty by auction (bay’ al-muzayadah).
But Muhammad bin Sirin did not allow selling inherited goods by auction other than between the beneficiaries. It may be assumed that Muhammad bin Sirin did not allow such transaction if it was made before division of the inherited property and allowed that transaction (if the property had not yet been divided), to the beneficiaries only.
It appears that, on the one hand, this contract rejects any element of outbidding which may cause injustice to other buyers, but, on the other hand, such a contract may profit the vendor who may raise the price from its original one as a result of competing bidders. Therefore, this transaction may give advantageous results to both parties.
[Extracted from the author’s book Sales and Contracts in Early Islamic Commercial Law]