Business transactions are done with mutual consent (taradhee) for mutually exclusive benefits where every party stands to gain. In order to ensure this object Islam has forbidden certain aspects. Certain products and services are made taboos. There cannot be any trading involving those items, despite mutual consent. Besides these forbidden (haram) products and services, certain other principles have been provided by the Qur’ān and the Prophetic traditions that have to be adhered to. The Islamic approach is that everything that has not been forbidden is permitted. If one knows what is proscribed, he is aware of what is prescribed.
Following are the forbidden business transactions and related principles.
- Causing harm or getting harmed (dharar)
- Misleading the other party (gharar)
- Gambling (maysir and qimar)
- Lack of material information leading to dispute (jihl mufdhi ilan-niza)
- Misrepresentation and causing wrong impression about the product (tadlees)
- False description of goods (taghreer)
- Excessive profiteering (ghaban)
- Impressing buyers by gestures and sales talk/ art of deceit (khulaba)
- Hoarding of food grains and essential items (ihtikar)
- Two-in-one transaction (baiatain fil bai)
- Profit without corresponding risk/authority/possession (kharaj without dhaman). It covers the cases where the product is not existing (bai madoom) or it is in the possession of any other person (malikil ghair).
- Interest (riba)
Any party which is sufferer on account of any wrong transaction gets the option (khayar) of recalling the deal and getting compensation in certain cases.
Islam stands for welfare of human beings and the above mentioned provisions are meant to ensure justice for all so that the desired prosperity in human society may be achieved.