Fundamental Aspects Of Trading In Islam

Introduction

It is incumbent for Muslims to be aware in religious affairs which involve their lives in this world, among these is the dealings related to trade. Trade is by far the common means by which wealth is acquired and Islam recognizes its role. In this regard a Muslim should learn the rulings of trade before embarking on it to avoid himself from engaging in what is prohibited. There are many verses in the Quran and the Prophet sayings which highlight the significance of trading for example, Allah says: “It is no sin for you that ye seek the bounty of your Lord (by trading)…”[footnoteRef:2] [2: Quran 2:198]

The Prophet (Peace be upon him) said, ” May Allah be kind to a man of gentle dealings when he sells, when he purchases and when he gives decision.”[footnoteRef:3] [3: bukhari]

Islamic definition of Trade

In Arabic the word ‘Tijarah’ which means trade can be linguistically be translated to mean selling and buying in order to gain profit. In Islamic jurisprudence, trade would mean the ‘exchange of commodities based on mutual agreement of two, free, sane, adult owners who capable of handling over what they are trading’.[footnoteRef:4]Through trading is permissible in the Quran and Sunnah there are set conditions put forth to validate the transaction in accordance to the shari’ah. These conditions involve the persons trading and the goods been traded. [4: www.islamitijara.com fiqh-ul-muamalat]

Conditions in regards to the participants

1. Mutual consent

Allah has ordered[footnoteRef:5] that the transaction should be based on willingness to sell and buy, hence forced transactions render them invalid. [5: Surat nisa 4 ayah 29 “unless it be a trade with your mutual consent”]

2. Permissibility to engage in trade transaction

Both should be free (not slaves), adults (those who have reached puberty), sane and accountable. The transaction is deemed valid with a non-muslim, as being Muslim is not a necessity.

3. Ownership

The traded property should be owned by the parties[footnoteRef:6], however one can authorize a representative to sell or buy on his behalf. [6: The prophet said “do not sell what you do not have(or posses)Ibn majah 2187 3/30]

Conditions in regards to the goods

1. Goods must be permissible in shari’ah

It is forbidden for a Muslim to trade in goods which are haram as mentioned in Quran and Sunnah. Goods such as carrion, blood, pork, intoxicants and idols are impermissible to sell.[footnoteRef:7] [7: Quran 2:173 ]

2. Availability of the goods

The commodity been traded must be available or be certain that they can be handed over when the sale is concluded, with the exception for salam and istisna’.

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3. The goods should not be anonymous

The specifications of goods and price should be known to both participants. Selling or buying unknown or unspecified goods is engaging in gharar[footnoteRef:8] which is prohibited. [8: The sale of what is not present.]

Ownership in Islam

Ownership (al-milkiyyah) is an Islamic legal term which signifies the relationship between a human being and property which renders the property specifically attached to him, hence, giving the owner the right to deal in that property unless there is legal impediment preventing him from such dealing (al-zuhaily, 2003:417).the Hanafis have defined ownership as a more general concept than property due to their consideration of usufruct of the property.

Islam does not forbid private ownership and it did not leave it unconstrained. Allah has forbidden the infringement of private property which has been acquired legally. (Quran, 4:29). However jurists have permitted political rulers to limit or impose regulations to the rights of ownership if that is beneficial to the society. They may also confiscate legally acquired property to meet social needs by stipulating a fair compensation.

Ownership can be generally of three main types: total and partial (sharikat al-milk) or in other words complete and incomplete. In total ownership the owner enjoys the legal rights connected with the ownership as well as the usufruct while partial ownership does not enjoy full rights as in total ownership. The other type is the communal or public ownership where an individual has no right to exclude another person unless it is legally acquired and converted into person.

Possession in Islam

In Islam Allah is the owner of all things, man only possesses the benefit of them in a manner permitted by shari’ah. The person who possesses all benefits of a thing is the absolute owner hence the person who has partial possession is designated by special name such as tenant or borrower. Possession could be classified either as legitimate (yad muhikka) or illegitimate (yad mubtila). Usurping is impermissible in Islam (Quran 2:188) that means taking other’s possessions in a forceful way, seizing them through unjust disputes and false oaths.

Possession is of considerable practical importance. For example if two persons are involved in a dispute over the ownership of a thing and one of them has the object in his possession, the burden of proof falls upon the other person, since possession is an outward indication of ownership until the contrary is proved.[footnoteRef:9] [9: Majid khadduri Herbert liebesny origin and development of Islamic law the lawbook exchange, ltd,2008 overt]

Differences between possession and ownership

Though both ownership and possession can be defined as the act, state, or right of possessing something there is a difference between the two. While possession is having physical custody or control of an object, ownership is the right by which something belongs to someone. Ownership gives the right to possession while possession does not necessary give right to ownership except in special cases for example where the property is ownerless. In this case the possession of such a property tends to become ownership.

Ownership can be transferred by means of a contract for example in case of the sell of property or inheritance while possession can be transferred less technically since those rights belong to the owner.

Significance of ownership in trade transaction

As mentioned earlier in the conditions of the trade to be valid is that goods must be in possession and available at the time of transaction. The prophet prohibited the sell of an item which is not in one’s possession; this is because such kind of transaction will involve the exchange of money for money while the commodity is not available and that is riba.

The prophet also forbade selling of the product in the place where it is bought until the merchants have taken it to their own places; this is to establish their ownership and to validate further transactions.

Conclusion

Despite Islam permitting trade it has laid down regulations to establish fairness and justice in transactions to the befit of society. The shari’ah entails a Muslim to be aware of his connection to Allah and to fear Him and to seek lawful means for his sustenance.