Wednesday, February 02, 2005

Conditions of sound sales transactions

The items exchanged must be described well enough to avoid conflicts

This is because ignorance of description lead to conflicts that prevent delivery and acceptance of the goods, which is a required part of any transaction. The knowledge required can be achieved by description (e.g. if it is a box or the warehouse) or by pointing. With regard to description:

Description of price

  • If the price was mentioned without stating the currency, then the common currency is considered to be intended, e.g. Kuwaiti Dinar in Kuwait.
  • If someone sold something for "its value", then the sale is corrupt since the price is unknown, even if the evaluator is specified.
  • If someone sold something at a percentage markup, e.g. 10% over the purchase price, then the sale is corrupt unless the price is known in the contract session.
  • If the good sold was destroyed after being sold at an uncertain price, then the buyer must replace it, or if it is not something of uniform quality, pay the seller the market value for the goods. This is the case for all unsound sales transactions.

Knowing which item is being sold and the option of specification

If the seller said "I sell you one of these four pieces of clothing for such and such a price", then the sale is invalid in any case. However if he said "three pieces" or "two pieces", then the sale is valid if he said "on the basis that you opt to choose the one you want". This should all be onsound according to the apparent analogy that the goods are unknown, just like in the case of choosing between four pieces. At a more subtle level, however, this choice is like the conditional option to return the goods (which is allowed) in that both of them are strongly needed to defend oneself against being duped. This need however, is covered sufficiently by the choice between three, namely bad, medium and good, as is also according to customary practice in the markets. This option is called "option of specification", and is different from the "option to return goods" in that the first is inherited and the second is not. Both however, need a specified period.

The option of specification requires a specified price for each piece, a specified period, and specified goods of no more than three to choose from.


There are three types of options in trade:

  1. Option upon seeing the goods. This is the option to cancel the sale upon seeing the goods, if they were bought by description.
  2. Option of flaws. This is the option to return the goods when a flaw is discovered that would normally require a reduction in price if known.
  3. Option of return. This is the stated option to cancel the deal from either the buyer's or the seller's side.
  4. Option of specification.

Selling by weight, volume or unknown quantity

  • Things sold by weight can be sold by volume and vice versa, or by grabbing a quantity of what is normally sold by a specified weight or volume. This is provided it is not trading goods of the same kind (such as wheat for wheat, gold for gold, or silver for silver), due to the danger of riba.
    • Beneficial Note: If one buys something sold by weight or volume on the condition that it is a certain weight or volume, then one must either be with the seller when measuring, or measure it another time before eating it or selling it. The reason is the hadith of Ibn Maajah that might be translated as "he forbade selling wheat until two measures have occurred, the measure of the seller and the measure of the buyer," and because any excess weight or volume belongs to the seller.

Description of separatable goods of even quality

These are goods that are not harmed by being separated from each other and are of even quality and sold by weight, volume or count. These goods can be sold without separating the goods at transaction time, but one must specify the quantity.
  • If someone made a sales contract to buy sugar at the price of 1 dollar per Kg., then he must state the total quantity wanted if the sales is by verbal contract. If it is not stated, then the contract is for 1 Kg. The same is the case for anything sold by count, weight or volume that is of uniform quality.
  • If someone sold a batch of flour for 50 cents per kg on the condition that the total batch pointed out is 100 kg. then: if it turned out to be 101 kg he needs to return 1 kg. to the seller. if it turned out to be 99, then the buyer gets 50 cents back or cancels the deal.
All even goods are handled in this way.

Selling goods of uneven quality by piece

Goods that are harmed by being separated from each other, or goods of uneven quality sold by length or count, need to be pinpointed in the contract session, and it is not enough to specify a price per piece or per square meter, unless one buys the entire quantity.
  • If someone made a sales contract to buy a horses from a flock at USD 10,000 per horse, then he must specifically select those he want. If the contract was made without specifying, the transaction will be corrupt. This is true for anything counted that is not of uniform quality and of things that are sold by area size, such as land and cloth.
  • If someone agrees to buy 99 horses out of a flock of 100, for USD 1000 per piece, then this is invalid. The reason is that the 99 are unknown, and conflict may arise in specifying them. The same is true for 100 square meters out of 150 of a piece of land; one must specify the 100.
  • If someone bought what is sold piece by piece and is of uneven quality, such as animals or watermelons, and the count turned out to be more than what was stated in the sale, then the sale is unsound. However, the transaction is mended by mutual agreement to rectify the number or that the seller agrees to include the extra piece(s).

Selling things that are harmed by separation

If someone sold a piece of land for USD 10,000 on the basis that it is 100 square meters, then:
  • If it turned out to be 99 square meters, the buyer can choose between paying USD 10,000 or cancelling the deal.
  • If it turned out to be 101 square meters then there is no cancellation or change in payment.
The reason is that this was merely a faulty description, so the buyer gets a choice because he was duped. The proof of it being a faulty descrition is that the size of the land affects the price per square meter, just the way better or lesser quality does. This is unlike flour, wheat, raisins, and the like.

In other words, the buyer gets a choice if the land turned out to be smaller than specified, just like he would in all cases where he specified a certain quality and found that it was missing. E.g. if someone bought white bread and found that it was brown. There is no option to increase or decrease the price based on a mere quality, because the price is in return for the thing itself, whereas qualities merely follow the thing.

However, if the price per square meter was verbally specified, e.g. if someone sold a piece of land for USD 10,000 on the basis that it is 100 square meters, and each square meter is at the cost of USD 100, then:

  • If it turned out to be 99 square meters, the buyer can choose between paying USD 9,900 or cancelling the deal. This is because by specifying the per area price, the area size has become like the thing itself, just like in the case of selling wheat.
  • If it turned out to be 101 square meters, the buyer can choose between paying USD 10,100 or cancelling the deal. He does not have the option of separating out 1 square meter, because although each square meter has become like the thing itself in this deal, it still has the element of being a quality in that splitting the land affects its value per square meter.
All things sold by weight and volume that are harmed by being split are like the selling of land. For example,
  • If someone bought a bracelet from platinum or silver and the weight of the bracelet was stated at 100 grams, then there is no option for the buyer if it turned out to be heavier, but the buyer can cancel the deal if it was found to be less.
  • If the price for each gram was stated for the platinum, e.g. USD 10 per gram, then the price is increased or decreased according to the difference in weight. This is unlike the case of gold and silver jewelry if the gram price is stated.

Selling gold or silver jewelry when the price per gram is specified

If the bracelet was made of gold or silver, and the price the situation changes, because these two metals are currencies by nature, so we have to meet the rules of currency transactions if the price per gram is stated, since it is no longer just a quality of the jewelry. So if a gold bracelet was sold at USD 10 per gram and the stated total was 100 grams, and it was found to be 99 grams, then the buyer has the option to cancel or get back USD 10, like in the case of platinum. In addition, if it was found to be 101 grams, then if the buyer and seller did not depart, the buyer can choose between paying another USD 10 or cancel the deal, also just like in the case of platinum. However, if they left one another and only then it was found that the bracelet was 101 grams, then the deal is invalid for the extra gram, because delayed payment is invalid in currencies, and he has the option to cancel the deal, because sharing the ownership of a good is a flaw in the good.

The proof is what was related of Umar's sayings, "don't sell silver coins for gold if one of them is present and the other not," and, "if he asks you to wait for him to go to his house, then don't wait" (Malik), and "the Prophet (may Allah raise his rank) said 'gold for silver is ribaa except hand to hand." A non-verified story states that Umar said, ".. and if he (the counterpart in the currency transaction) jumps from the ceiling - jump with him." (Al-MabsuuT).

An additional reason is that the Prophet (may Allah raise his rank) forbade selling "credit for credit" (al-Haakim), so at least one of the parties must take their part, because currency is not specified other than by receiving them. The proof that it is only specified after receiving is that if Zaid said to Umar, I sell you this bike for this USD 100 in my hand, and Zaid accepted, he may still give him a different 100 dollar bill for the bike? As for the second part, it must also be received, because they are both both are equal in terms of needing to be received, so having one received, and not the other looks like giving more value to one of them, and this gives the meaning of riba; an undeserved increase in a transaction. This meaning of riba must be avoided because Umar said "the Aayah of ribaa is among the last that descended, and Prophet Muhammad didn't give us enough detail for us to be freed from analogy in deriving all its judgements, so avoid ribaa and the doubt of ribaa."