Selling in installments

Egypt's Dar Al-Ifta

Selling in installments


We reviewed request no. 2563 for the year 2005 which includes the following:

    A person buys commodities from stores and sells them in installments to his clients i.e. a client asks him to buy a certain commodity from a certain store and they both proceed to the store to purchase it. He [pays for the commodity in cash and] sells it to his client in installments but with an increase in price. Please note that this person does not have a store, outlet or any commodities. What is the ruling for this type of transaction?


    It is established in Islamic law that it is permissible to sell either for immediate payment or for a payment deferred to a specified date. An increase, in price in exchange for deferred payment, is permissible according to the opinion of the majority of scholars. This is because this transaction is a kind of murabaha—a legally valid sale in which it is permissible for the seller to stipulate an increase in price in exchange for a deferred payment. Even though deferring payment does not equal real currency, in murabaha there is an increase in price when a specific date is mentioned in exchange for deferment. The goal of this type of transaction is attaining an agreement between the two parties if there is no objection to the sale and if people—buyers or sellers—are in need of it.

    The ruling

    This transaction is valid because the person who buys the commodities is considered a middle man who purchases a product and owns it—either effectively or in reality—and then sells it to his client in installments and with an increase in price in exchange for deferment to a known date. There is no harm if this man does not operate out of a store or outlet or does not have the products. What is meant by the legal texts which prohibit selling what one does not own, selling before coming into the ownership or before transfer of ownership is the assurance of the delivery of the goods to the client and avoiding the possibility of dispute. And these are existent in the scenario mentioned in the question wherein there are no disputes between the three parties and the client's rights are preserved.

    Allah the Almighty knows best.

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