The Lawful and Unlawful in regards Business Transactions

Allah has created human beings in a state of dependence upon one another. Each individual does not own all the things he needs ● Allah has directed people toward exchanging goods and utilities through buying and selling because such transactions make social and economic life function smoothly and encourage people to be productive. ● Various types of transactions and exchanges of property were current among the Arabs at the dawn of the Prophet's mission. He approved and confirmed such types of transactions which did not conflict with the principles of the Shari'ah and disapproved and prohibited those business practices which were against the purposes and aims of the Shari'ah. ● The prohibitions were due to specific reasons, as, for example, trading in haram goods, transactions involving fraud or exorbitant profits, or injustice to one of the contracting parties.

Trading in goods which are normally used for committing sin is haram Trading in goods which are normally used for committing sin is haram. ● Examples would be to sell swine, intoxicants, and other prohibited foods as well as; idols, crosses, statues, and the like. ● Permitting the sale or trade of such articles implies promoting and propagating them among people, and consequently encouraging them to do what is haram, while prohibiting their sale implies suppressing and ignoring them, thereby preventing people from coming into contact with them. The Prophet said, ● "Surely, Allah and His Messenger have prohibited the sale of wine, the flesh of dead animals, swine and idols," ● (Bukhari and Muslim.) ● And also, ● "When Allah prohibits a thing, He prohibits (giving and receiving) the price of it as well." ● (Ahmad and Abu Daoud.)

The Prophet also forbade any kind of transaction which could lead to a quarrel or litigation due to some uncertainty or which involved an unspecific quantity to be exchanged or delivered. This includes the sort of transaction in which there is no guarantee that the seller can deliver the goods for which he receives payment. Accordingly, the Prophet forbade accepting money for something which is not in your possession The Prophe observed that people sold unripened fruits which were still in the fields or orchards; if the crop were destroyed by blight or some natural calamity, the buyer and seller would quarrel over who was to bear the loss. Hence, the Prophet prohibited the sale of fruit until they were clearly in good condition. He said: "Tell me why, if Allah withholds the fruit, any of you should take his brother's property." (Bukhari and others.)

However, not every sale involving what is unknown or uncertain is prohibited; for example, A person may buy a house without knowing the condition of its foundation or what is inside the walls. What is prohibited is selling something about which there is an obvious element of uncertainty which may lead to dispute and conflict, or may result in the unjust appropriation of other people's money. Again, if the risk of uncertainty is small—and this is determined by experience and custom—the sale is not prohibited.

Islam also's for us to set the prices for out goods based on what is reasonable and just for the time When the prices became high in the Prophet's time and people asked him to fix prices for them, he replied, “Allah is the One Who fixes prices, Who withholds, Who gives lavishly, and Who provides, and I hope that when I meet Him none of you will have a claim against me for any injustice with regard to blood or property.” (Reported by Ahmad, Abu Daoud, al-Tirmidhi, Ibn Majah) (Reported by Ahmad, Abu Daoud, al-Tirmidhi, Ibn Majah) With these words the Prophet declared that unnecessary interference in the freedom of individuals is injustice and that one should meet Allah free of blame for such a thing. If, however, any artificial forces, such as hoarding and manipulation of prices by certain merchants, interfere in the free market, public interest takes precedence over the freedom of such individuals. In such a situation price control becomes permissible in order to meet the needs of the society and to protect it from greedy opportunists

If price control compels people to sell their goods at a price which is not acceptable to them or denies them the reasonable profit permitted by Allah, it is haram. ● If, on the other hand, price control establishes equity among people, for example, by forcing sellers to accept a price equal to that commanded by other comparable commodities and restraining them from taking more than this, it is allowed—indeed necessary. ● Accordingly, if merchants are selling a commodity in the customary fashion without any wrong-doing on their part and the price subsequently rises due to the scarcity of the commodity or due to an increase in population (indicating the operation of the law of supply and demand), this circumstance is from Allah, in which case to force them to sell the commodity at a fixed price would be unjust compulsion.

Islam also condemns hoarding ● Freedom for individual and natural competition in the marketplace is guaranteed by Islam. Nevertheless, Islam severely condemns those who, driven by ambition and greed, accumulate wealth at the expense of others and become rich by manipulating the prices of food and other necessities. This is why the Prophet denounced hoarders in very strong words, saying, ● "If anyone withholds grain for forty days out of the desire for a high price, Allah will renounce him." ● (Reported by Ahmad, al-Hakim, Ibn Abu Shaybah, and al-Bazzar.) ● He also said, "If anyone withholds goods until the price rises, he is a sinner." (Reported by Muslim.)

Another practice related to hoarding which was prohibited by the Prophet was a townsman's selling on behalf of a man from the desert. ● The price of goods may be cheaper in the country as opposed to the city so to sale on behalf of one another would be unjust and is considered a means of hoarding. The Prophet said: ● "If people are left alone, Allah will give them provision from one another," ● This means that the market, its prices, and sales, should be left free to respond to internal economic forces and natural competition without manipulation. ● When Ibn 'Abbas was asked about the meaning of "A resident must not sell for a man from the desert," he replied, "The resident should not be a broker for him." ● (Reported by al-Bukhari.)