Abu Dawud

Benefits and Issues:
Explanation:
In clarification of this, the esteemed jurists say that if someone says, “The cash price of this item is one hundred rupees, and the credit price is two hundred rupees,” and both parties proceed with the transaction, but do not clearly specify whether it is to be cash or credit, then this will be considered two transactions in one deal. In this, since a single price is not determined, the sale is invalid (fasid).

The second scenario is that someone says, “I sell you this item for one hundred rupees, on the condition that you sell me your such-and-such item for fifty rupees.” This too is two transactions in one deal, and the intention is to acquire the other item at a cheaper price. This contains an element of interest (riba). This scenario, like the one mentioned in the above chapter, is a means of adopting interest (riba) through a legal trick (hila).

Allamah Ibn Athir rahimahullah has also written another form of two transactions in one deal: that one person gives five hundred rupees to another, saying, “Give me a sack of wheat in one month.” But when the time comes, he is unable to provide the wheat, so the other says in advance, “Sell me that sack, and I will give you two sacks after one month.” This is outright interest (riba). Moreover, it is also the sale of a non-existent item (ma’dum), which is not permissible.

It should be noted that in the first scenario, if both parties agree upon a single price and then separate, there is no harm. This sale will be completely valid. The majority of scholars and jurists hold it to be permissible. Therefore, according to these jurists, a difference in price between cash and credit is permissible, and thus business on installments is also permissible.

However, a group of scholars does not consider this permissible. In their view, the difference in price between cash and credit, in light of the words of the hadith (fa lahu awkasuha aw al-riba) (), clearly contains the possibility of riba (interest). Therefore, installment-based business is not free from the suspicion of riba (interest). If this is the case, then it is better to avoid such business in any case. Similarly, purchasing items on installments is also contrary to what is preferable (khilaf awla). And Allah knows best.