Monday, November 20, 2017 - 2 Rabi' al-Awwal 1439

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Home » Fatwas » Financial Transactions » Selling

Selling what one does not own

A woman put out an advertisement for her work as a merchant in the following manner:
She shows her clients the commodities she has or describes to them those which she does not have. She then purchases the items they choose and sells them to her clients in installments with profit. Please note that some people consider such transactions to be forbidden. They maintain that she is not entitled to trade in all commodities and that she must have the commodities in her possession and not merely buy them according to her clients' wishes. According to them, such transactions do not subject her to loss which is among the conditions of trade.

Answer


Based on the opinion of the majority of scholars, it is established in Islamic law that transactions involving selling for either immediate or deferred payment for a determinately known maturity date are valid. This is because such transactions are a form of murabaha.

What is murabaha?

It is a transaction sanctioned in Islamic law in which it is permissible for the seller to stipulate an increase in price in return for deferring payment. This is because even though the deferment does not equal real currency, in murabaha there is an increase in price in exchange for deferment when a specific date is mentioned. Conditions include:
- Attaining an agreement between the parties involved.
- There is nothing to prevent such a sale.
- The people are in need of it, whether they are buyers or sellers.

Trading in commodities

The claims that a merchant is not entitled to trade in all commodities but must stick to one product and that his trade must be subject to loss amount to speaking on behalf of Allah without knowledge.

Selling what one does not have

It is valid to sell a commodity before taking possession of it in the context of a salam transaction (buying in advance) which involves selling described merchandise which the seller is under obligation to deliver to the buyer. Its permissibility is evidenced by the Qur`an, sunnah, and scholarly consensus.

Allah the Almighty says,
O ye who believe! When ye deal with each other, in transactions involving future obligations in a fixed period of time … [Al-Baqarah: 282]
Ibn Abbas (may Allah be pleased with them both) said, "This verse was revealed in relation to salam sale."

The Prophet said, "Whoever enters into a [salam] contract for dates should do so for a determinately known measure, weight and date" [recorded by Al-Bukhari and Muslim]. A salam transaction is most manifest in a sale involving a conventional commodity such as a refrigerator of a certain brand, capacity, color and features.
The kind of sale mentioned in the question can be amended in the following manner:
- The merchant agrees with the buyer on the commodity the latter wishes to buy from him;
- The merchant buys it first;
- The merchant then sells it to his client.
In this instance, the transaction is considered the permissible sale of a commodity in the merchant's possession and not from among the prohibited transactions involving the sale of absent goods. Furthermore, the buyer can accompany the merchant to the place from where he will buy the desired commodity. Then the merchant buys the commodity and sells it to the buyer on credit. The merchant may also commission the buyer to buy the commodity on his behalf in cash. The buyer then purchases it from him and pays in installments. There is no doubt concerning the lawfulness of this transaction — it benefits both parties and facilitates matters for both without contravening Islamic law.

The ruling

Based on the above, this woman's work is permissible if conducted in the manner described above.
Allah the Almighty knows best.

 
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