Laws of Trade
Mufti Abu Muhammad Ali Asghar Attari Madani
(1) Plots of land purchased to be sold for a wedding are also considered trade goods
Q: What do the scholars of Islam say about the following matter: a person purchased some plots of land with the intention of selling them when his children grow older so that he can use the money to fund their weddings. Must zakat be paid on these plots? If yes, then how much must be given?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: The plots of land which are purchased with the intention to sell at the time of a child’s wedding, as mentioned in the scenario above, are considered trade goods, because they were purchased with the intention to sell. Therefore, in the case of becoming a possessor of niṣāb (the threshold for paying zakat) and a full year passing by whilst remaining in possession of niṣāb, it will also be necessary to give 2.5% of the market value of the plots as zakat along with the other zakatable assets.
It is stated in al-Durr al-Mukhtār:
(وما اشتراه لها) ای للتجارة (كان لها) لمقارنة النية لعقد التجارة
“Whatever is purchased to trade becomes a trade good due to being linked to the intention of trading.” (Durr Mukhtār, vol.3, p.272)
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
(2) Tailor preparing clothes by way of istiṣnāꜤ
Q: What do the scholars of Islam say about the following matter: usually, tailors only sew clothes and take payment for this. However, there are some tailors who also keep fabric at their shop. They show this fabric to their customers, and if they like it and wish to get it sewn by them too, the tailor will give them the option to not have the fabric cut from the roll, but to place an order to make clothes from that fabric. The tailor will tell them that he will prepare the clothes in accordance to their specifications and charge them such-and-such amount. According to shariah, is this type of deal between the tailor and customer valid?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: Normally, the person who wishes to have some clothes sewn brings the fabric to the tailor, which is then sewn by him, and the payment is made. However, if somebody wishes to make an agreement in accordance with the details mentioned in the question, this can be valid as a transaction of istiṣnāꜤ (order sale). This is because in a transaction of istiṣnāꜤ, the responsibility of making the product and the materials used for it is that of the maker. Therefore, if the type of fabric, the style of sewing, the design, the total cost and anything else that can become a point of dispute for either party, are clearly stipulated, then this will be valid by way of a transaction of istiṣnāꜤ.
It is stated in Durar al-Ḥukkām:
أن يكون العمل والعين من الصانع وإلا فإذا كانت العين من المستصنع فهو عقد إجارة مثال: إذا قاول شخص خياطا على صنع جبة، وقماشها وكل لوازمها من الخياط فيكون قد استصنعه تلك الجبة وذلك هو الذي يدعى بالاستصناع۔ أما لو كان القماش من المستصنع و قاوله على صنعها فقط فيكون قد استأجره والعقد حينئذ عقد إجارة لا عقد استصناع
“If the work and the materials are provided by the maker, [then this is a transaction of istiṣnāꜤ,] and if the materials are provided by the one who requests something to be made [i.e. the customer], then this is an agreement of ijārah. For example, if a person makes an agreement with a tailor to have a thobe sewn, in which the fabric and all other necessary things are the responsibility of the tailor, then this is a form of istiṣnāꜤ. However, if the cloth is provided by the customer, and the agreement is only for him [the tailor] to sew it, then this is ijārah, not istiṣnāꜤ. (Durar al-Ḥukkām Sharḥ Majjalat al-Aḥkām, vol.1, p.115)
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
(3) Which things should be considered when buying a plot of land in instalments?
Q: What do the scholars of Islam say about the following matter: can plots be purchased on instalments, and can the condition of incurring a penalty fee be stipulated for late payments?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: Buying and selling a plot of land in instalments is permissible, so long as the price of the plot and the duration for payment are mentioned. In addition, there should be no condition stipulated which opposes the rules and principles of trading and results in the transaction becoming impermissible. It is also agreed that it is only permissible to buy or sell a plot which is present and is in such a place where it can be pointed out to the buyer that this is your plot; it should not merely be a file.
Usually, those who sell plots in instalments prepare a chart displaying the price and payment schedule for the plot, which details the initial payment and the subsequent monthly payments. This is a good method, as no ambiguity remains regarding the price and the duration of payment.
If, instead of the price and the duration of payment, various packages with prices are mentioned without specifying a single package, then such a transaction is not permissible. An example of this would be if it is said that if you pay all the instalments in one year, it will be such-and-such amount; if you pay all instalments in two years, it will be such-and-such amount; if you pay all instalments in three years, it will be such-and-such amount.
It is not permissible to make a deal stipulating that the longer it takes to pay, the payment must then be made according to the package commensurate with delayed payments. This is because in such a deal, neither is the price of the plot specified, nor is the duration of payment, whereas for the transaction to be valid, both the price of the plot and the duration of the payment must be specified.
In order for this deal to be valid according to shariah, it is also necessary that incurring a penalty (involving wealth) for making a late payment is not stipulated. This is because taking a penalty fee due to late payment of an instalment is a form of usury, which is haram.
It should be clear that finalising a deal without stipulating the price of the plot or the duration of payment, or by stipulating the condition of a penalty for late payment, is impermissible and a sin; it is necessary to nullify such an agreement and form a new one.
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
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