Islamic Rulings on Trade
Mufti Abu Muhammad ‘Ali Asghar ‘Attari Madani
1. Forcefully taking money from school students
Q: What do the noble scholars say about this matter: a private school organises exams for its students. Once the results are announced, the highest achieving students are awarded prizes. To buy the prizes, the school obliges every student to make a monetary contribution. Prizes are then purchased from the money that has been collected. Is it correct for the school to collect money in this way?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: In this case, it is impermissible for the school to forcefully collect money from the students. In fact, it amounts to unrightfully taking the wealth of another Muslim. Therefore, if the school wishes to award the children with prizes, it should take the funds from the school budget. They should not forcefully demand money from the parents of the children. It is stated in Radd al-Muḥtār:
لا یجوز لاحد من المسلمین اخذ مال احد بغیر سبب شرعی
“It is impermissible for a Muslim to take the wealth of another without a reason permitted by Islamic law.”[1]
If, however, they acquire the money through donations or fundraisers, and only encourage people to contribute instead of forcing them, it is permissible. There is no harm in adopting this method.
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
2. Can the investment manager (muḍārib) increase the wages of his employees?
Q: What do the noble scholars say regarding this matter: Zayd and Bakr formed a passive partnership contract (muḍāraba) in which Zayd, the investor (rabb al-māl), provided the capital while Bakr, the investment manager, contributed his skills and labour. Bakr used the capital to start work and employed workers due to a need. Bakr intends to raise their wages, but he does not want to inform Zayd, as Zayd will not agree to it. Is Bakr permitted to increase the wages of his employees without Zayd’s consent?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: In passive partnership contracts (muḍāraba), the investment manager can employ workers, if there is a need, and remunerate them according to the industry standards. Therefore, if Bakr feels a genuine need to increase the employees’ wages, he may do so, but not so much that would incur a great loss. If he increases the wages beyond the industry standards, he will have to compensate the loss.
Bahār-i-Sharīʿat states: “The investment manager cannot operate in a way that causes a loss ˹to the business˺…[2] If the investment manager spends more than what he needs, the amount that is not usually paid must be compensated.”[3]
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
3. Selling a rented house
Q: What do the noble scholars say regarding this issue: Zayd rented his house to Bakr for a year. Approximately six months later, Zayd found a suitable buyer for the property. Zayd sells the property and informs the buyer that the house is being rented for another six months. However, he does not inform Bakr that the house is being sold. When Bakr became aware of this, he refused to vacate the property before the agreed lease term of one year had been completed. Is it correct for Bakr to insist on remaining in the house?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: In the aforementioned scenario, Bakr’s demand is correct. When Zayd rented his house to Bakr for a year, it is incumbent upon Zayd to honour the tenancy agreement. Although Zayd’s sale of the house is valid, it cannot be actioned without Bakr’s consent because it is his right to live in the house for the remainder of the lease term. The buyer can either wait six months for the lease term to end before paying for the property, or he can nullify the sale with immediate effect.[4]
It is stated in Bahār-i-Sharīʿat: “Selling that which is kept as a guarantee (rahn) or that which is given to someone for a fee is dependent on the permission of the pledgee (murtahin) or tenant/hirer (mustaʾjir). Meaning, it is permissible if they permit it, and the buyer can nullify the transaction if he wishes. If the tenant/hirer permits the transaction, it is valid, but it cannot be removed from his possession until the money from the buyer is received.”[5]
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
4. Taking goodwill money when selling a shop
Q: What do the noble scholars say about this matter: A person is selling a shop and states he will be taking a separate payment of goodwill because of how long it has been established for. Can he ask for a separate payment of goodwill along with the purchase price?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: Stipulating a separate payment of goodwill is impermissible, as per Islamic law, because goodwill is not a commodity, but a form of acquiring benefit by receiving additional payment. There is a simple way of fulfilling the legal requirements in the given scenario. The prices for the shop and goodwill should not be specified separately. Rather, the buyer should take everything into account and set one price. The seller can then choose to accept or reject the offer. Without a doubt, corner shops are more expensive than shops located between other buildings. However, this does not mean one price is given, for the shop and another is given due to it being on the corner. Rather, a collective offer is given and the deal is struck with ease.
Imam Ahmad Raza Khan رَحْمَةُ الـلّٰـهِ عَلَيْه writes: “Individual perks/exclusivities cannot be owned or traded.”[6]
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
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