Authored by Dr. Muhammad Zia-ur-Rahman Azmi (رحمه الله)
Explanation of the Issue
This matter is referred to by scholars as "Tawarruq", which is outlined as follows:- Definition:
A person sells an item they own and possess to someone on deferred payment for a fixed price. The buyer takes possession of the item and then has the freedom to use or sell it. This is often done by individuals in need of cash. - Permissibility:
According to the correct scholarly opinion, this type of transaction is permissible under Islamic law. It is supported by Quranic verses:
- "وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا" (“Allah has permitted trade and prohibited usury.”) [Surah Al-Baqarah: 275]
- "يَا أَيُّهَا الَّذِينَ آمَنُوا إِذَا تَدَايَنتُم بِدَيْنٍ إِلَىٰ أَجَلٍ مُّسَمًّى فَاكْتُبُوهُ"
(“O you who have believed, when you contract a debt for a specified term, write it down.”) [Surah Al-Baqarah: 282]
Conditions for Tawarruq to Be Permissible
- Ownership and Possession of the Goods:
The seller must own and physically possess the goods before selling them. If the seller attempts to sell goods they do not own or have not taken possession of, the transaction becomes invalid. This is based on the Prophet’s (ﷺ) statement:
"لا يحل سلف وبيع، ولا بيع ما ليس عندك"
(“It is not lawful to combine lending and selling, nor to sell what you do not possess.”)
(Sunan al-Tirmidhi, Hadith No. 1234; Sunan al-Nasa’i, Hadith No. 4611) - Prohibition of Immediate Resale to the Original Seller:
- The buyer must not sell the item back to the original seller at a lower price than the deferred price agreed upon.
- Reselling to the original seller at a lower price is considered a form of Bay’ al-‘Inah (a usurious sale) and is prohibited because it serves as a trick to enable riba (usury).
- Independent Handling of the Goods:
- The buyer must take full possession of the goods and transfer them to the market or another location. Reselling the goods without possession or at a loss to the original seller constitutes prohibited actions.
Prohibition of Bay’ al-‘Inah (Usurious Sale):
- In Bay’ al-‘Inah, the original seller buys back the goods from the buyer at a lower price than the deferred payment. This is forbidden because it is a deceitful means of engaging in riba (interest).
Conclusion:
The transaction of Tawarruq is permissible only if:- The goods are owned and possessed by the seller.
- The buyer does not resell the goods to the original seller at a lower price.
- All parties adhere to Islamic guidelines to avoid engaging in usurious practices.