Islamic Ruling on Buying and Selling Through Auctions

Author: Dr. Muhammad Zia-ur-Rahman Azmi (رحمہ اللہ)

Permissibility of Open Bidding in Auctions

In transactions involving auctions or open bidding, there are detailed rulings based on the situation:
  1. Open and Competitive Bidding:
    • If the bidding process is open, where items are publicly auctioned, bids are called out, and higher offers are sought, it is permissible for a person to outbid others.
    • This practice aligns with the Sunnah, as the Prophet Muhammad (ﷺ) oversaw several such transactions and said:
      "Who will offer more?"
      [Sunan Abu Dawood, Hadith No. 1641; Sunan al-Tirmidhi, Hadith No. 1218]
    • This type of auction is considered lawful because the process is transparent, and everyone is given a fair chance to bid.
  2. Prohibition After a Deal is Finalized:
    • If the auction or sale process has concluded, and the seller (or their representative) has agreed to sell to a particular buyer, it is not permissible for someone else to step in and offer a higher bid.
    • This is based on the Hadith of the Prophet (ﷺ):
      "Do not bid over your brother's bid."
      [Sahih Muslim, Hadith No. 1408]
    • Such an act is considered unethical and disrupts the trust and fairness of trade practices.

Key Principles

  1. Transparency in Transactions:
    Open and competitive bidding, where all participants have equal opportunity, is permissible and encouraged for fairness.
  2. Respect for Finalized Deals:
    Once an agreement is reached, intervening to offer a higher price is prohibited, as it undermines trust and fairness in business dealings.
  3. Ethics in Trade:
    Islam emphasizes honesty and fairness in commerce, discouraging practices that lead to disputes or harm relationships.

Fatwa Reference

This ruling is supported by Sheikh Saleh Al-Fawzan's explanation in "Al-Muntaqa," page 54, which provides a detailed commentary on this matter.
 
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