Firstly: The cost-plus (murabahah) trade

1. Defining the “cost-plus” trade

Linguistically: “Murabahah” is the “mufa`alah” form of “ribh”. “Ribh”, “rabah”, and “rab?h” refer to growth and increase. One might say, “I gave him a murabahah for his commodity”, meaning “I gave him a profit”. If a person’s trade “rabihat”, it means they made a profit from it. Likewise, “arbahtuhu `ala sil`atihi”, means “I gave him a profit”.  One may say, “I sold the commodity to him for a profit of one dirham on every ten dirhams”, or “I purchased it for a profit”. [1517] Lisan al-`Arab by Ibn Manzur (2/442, 443).

Technically: It is taking possession of a commodity for the initial price plus an additional profit. [1518] For example, if a person buys a car for 100,000 riyals, and then another person approaches and says, “Sell it to me, and I will profit you 10,000”, so he sells it to him. Or, the second person might have said, “Sell it to me with a profit of one-tenth”, meaning, “for 110,000 riyals”. See Al-Hidayah by Marghinani (3/56), Tabyin al-Haqa’iq by Zayla`i (4/73), Al-Kafi fi Fiqh Ahl al-Madinah by Ibn `Abd al-Barr (2/705), Fath al-`Aziz by Rafi`i (9/5), Minhaj al-Talibin by Nawawi, p. 104, Al-Mughni by Ibn Qudamah (4/136), and Al-Sharh al-Mumti` by Ibn `Uthaymin (8/331).

2. The ruling on the cost-plus trade

A cost-plus trade for the initial capital plus a known profit

A cost-plus trade for the initial capital plus a known profit is permitted, [1519] The term “general profit” refers to a situation where someone says, for example, “I bought it for ten, and it will profit me a dinar.” This is a general statement of profit. In contrast, specifying the profit would be like saying, ‘It will profit me a dirham for every dinar’, and this category will be discussed in the following section. Ibn Juzayy said: “As for ‘murabahah’, it involves the seller informing the buyer of the cost price of the goods and then specifying a profit, either in a general manner, such as saying, ‘I bought it for ten, and it will profit me one dinar, or two’, or in a detailed manner, such as saying, ‘It will profit me a dirham for every dinar’, and so on.” Al-Qawanin al-Fiqhiyyah, p. 174. and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1520] Al-Hidayah by Marghinani (3/56) and Tabyin al-Haqa’iq by Zayla`i (4/73). Malikis, [1521] The Malikis state that it is permissible, but the preferred opinion [within their school of thought] is the opposite. Al-Taj wa al-Iklil by Mawwaq (4/488) and Mawahib al-Jalil by Hattab (6/432). Shafi`is, [1522] Fath al-`Aziz by Rafi`i (9/5) and Rawdat al-Talibin by Nawawi (3/528). and Hanbalis, [1523] Al-Mubdi` by Burhan al-Din Ibn Muflih (3/441) and Kashshaf al-Qina` by Bahuti (3/229). and a consensus was reported to that effect. [1524] Tabari said: “They unanimously agree that the murabahah trade is permissible.” Ikhtilaf al-Fuqaha’ li Ibn Jarir, p. 75. Ibn Qudamah said: “If someone sells an item in a murabahah trade, and it becomes known that there was an increase in his capital, then they should return the extra amount, deducting it from the profit. The concept of murabahah involves selling an item at the cost price along with a known profit. It is a condition that both the cost price and the profit are known. For example, if someone says, ‘My capital in this is one hundred and I hereby sell it to you, making a profit of ten’, this is permissible, there is no dispute about its validity, and we do not know of any scholar disliking it.” Al-Mughni (4/136).

Evidences:

Firstly, from the Book:

The Statement of Allah Exalted: “Allah has permitted trading.” [1525] al-Baqarah, 275.

Allah Exalted has permitted trade, and a cost-plus trade falls under this general endorsement. [1526] Tuhfat al-Muhtaj by Ibn Hajar al-Haytami (4/427).

Secondly, because there is a pressing need for this type of sale. The inexperienced individual who is not adept in trade relies on the actions of a knowledgeable and experienced person. Their satisfaction is achieved by acquiring what they purchased along with an added profit. Therefore, affirming its permissibility is necessary, and it is built upon trustworthiness and the avoidance of betrayal or suspicion. [1527] Al-Hidayah by Marghinani (3/56).

And thirdly, because both the price and the profit are known. [1528] Al-Mubdi` by Burhan al-Din Ibn Muflih (3/441).

A cost-plus trade for the initial capital plus a specific profit on every ten dirhams

A cost-plus trade for the initial capital plus a specific profit on every ten dirhams (for example) is permissible, [1529] The difference between this and the previous section is that here, the profit is explicitly specified. For example, one might say, “It will profit me a dirham for every dinar.” Ibn Juzayy said: “As for ‘murabahah’, it involves the seller informing the buyer of the cost price of the goods and then specifying a profit, either in a general manner, such as saying, ‘I bought it for ten, and it will profit me one dinar, or two’, or in a detailed manner, such as saying, ‘It will profit me a dirham for every dinar’, and so on.” Al-Qawanin al-Fiqhiyyah, p. 174. and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1530] The Hanafis stipulated that the price should be fungible, so that the profit and initial capital are of the same type. Al-Hidayah by Marghinani (3/56) and Al-Binayah Sharh Al-Hidayah by `Ayni (8/231). Malikis, [1531] Al-Taj wa al-Iklil by Mawwaq (4/490) and Minah al-Jalil by `Ulaysh (5/267). Shafi`is, [1532] Fath al-`Aziz by Rafi`i (9/5) and Rawdat al-Talibin by Nawawi (3/528). and Hanbalis, [1533] According to the Hanbalis, it is valid but disliked. Al-Mubdi` by Burhan al-Din Ibn Muflih (3/441) and Kashshaf al-Qina` by Bahuti (3/230). and was the view of a group of the predecessors. [1534] Ibn Qudamah said: “This was licensed by Sa`id ibn al-Musayyib, Ibn Sirin, Shurayh, Nakha`i, Thawri, Shafi`i, the People of Opinion, and Ibn al-Mundhir.” Al-Mughni (4/136). This is because both the capital and the profit are known, so it is as if someone were to say: “and the profit will be ten dirhams”. [1535] Al-Mughni (4/136).

A cost-plus trade with a variable price [1536] “Murabahah with a variable price” refers to selling at a deferred price with instalments. In this arrangement, the profit is specified only for the first instalment at the time of the contract. The profit for subsequent instalments is linked to an agreed-upon benchmark. The profit for the second instalment is determined when the first instalment becomes due, and similarly, the profit for the third instalment is determined when the second instalment becomes due, and so on until the end of the instalments. See the decision of the Islamic Fiqh Academy during its twenty-second session held in Makkah al-Mukarramah from 21-25 Rajab 1436 AH / 10-14 May 2015 CE, on the topic of “Sales or leases with variable pricing”.

A cost-plus trade with a variable price is not permitted, and this was stated in the decisions of the Islamic Fiqh Council of the Muslim World League, [1537] The decision of the Islamic Fiqh Academy during its twenty-second session held in Makkah al-Mukarramah from 21-25 Rajab 1436 AH / 10-14 May 2015 CE, on the topic of “Sales or leases with variable pricing”. the Accounting and Auditing Organisation for Islamic Financial Institutions, [1538] The Shariah Standard no. 8 of the Accounting and Auditing Organisation for Islamic Financial Institutions in Bahrain stated: “Every price for the goods in the sale of murabahah to the ordering party and its profit must be specified and known to both parties at the time of signing the sale contract. Under no circumstances should the determination of the price or profit be left to unknown or future variables. For instance, the sale cannot be concluded by making the profit dependent on the future LIBOR (London Interbank Offered Rate) level. However, it is permissible to mention an indicator from known indicators at the promise stage for reference in determining the profit. The profit in the murabahah contract to the ordering party should be determined based on a known percentage of the cost, and it should not remain linked to LIBOR or time.” Al-Ma`ayir al-Shar`iyyah, p. 213.   (LIBOR is the interest rate at which banks offer to lend funds to one another in the London market.) and the Shariah Committee of the al-Bilad Bank of Saudi Arabia. [1539] According to the Shariah Guidelines of the Shariah Committee of the al-Bilad Bank of Saudi Arabia, a bank is required to disclose the price and profit of the goods in a murabahah trade to the ordering party. It should be done in a manner where the total price of the goods is specified and known to both parties at the time of signing the sale contract. Under no circumstances should the determination of the price or profit be linked to future events or indicators, such as the LIBOR (London Interbank Offered Rate) or SIBOR (Singapore Interbank Offered Rate) indexes.

This is for the following reasons. [1540] The decision of the Islamic Fiqh Academy during its twenty-second session held in Makkah al-Mukarramah from 21-25 Rajab 1436 AH / 10-14 May 2015 CE, on the topic of “Sales or leases with variable pricing”. Firstly, the uncertainty of the price at the time of the contract is a major uncertainty leading to disputes and which brings with it danger and risk, rather than a minor, forgivable form of uncertainty.

And secondly, postponing the price makes it a debt owed by the buyer, and an increase in the index means an increase in the debt after its agreement, which makes it resemble usury.

3. Prerequisites of a cost-plus trade

The second buyer’s knowledge of the initial price

The second buyer’s knowledge of the initial price is a prerequisite of a cost-plus trade, and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1541] Tabyin al-Haqa’iq by Zayla`i (4/75), Al-`Inayah by Babarti (6/500), and Al-Fatawa al-Hindiyyah (3/3). Malikis, [1542] Al-Kafi fi Fiqh Ahl al-Madinah by Ibn `Abd al-Barr (2/705) and Minah al-Jalil by `Ulaysh (5/262). Shafi`is, [1543] Fath al-`Aziz by Rafi`i (9/8) and Rawdat al-Talibin by Nawawi (3/531). and Hanbalis. [1544] Al-Furu` by Ibn Muflih (6/258), Al-Insaf by Mardawi (4/321) and Kashshaf al-Qina` by Bahuti (3/229). See also Al-Mughni by Ibn Qudamah (4/136). This is because lack of knowledge about the initial price renders invalidates the trade, making knowledge of the price a necessary condition. Where this condition is not met, the transaction is invalid. [1545] Rawdat al-Talibin by Nawawi (3/531) and Kashshaf al-Qina` by Bahuti (3/229).

Knowledge of the profit

Knowledge of the profit is another prerequisite of a cost-plus trade, and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1546] Tabyin al-Haqa’iq by Zayla`i (4/75), Al-`Inayah by Babarti (6/500), and Al-Fatawa al-Hindiyyah (3/3). Malikis, [1547] Al-Kafi fi Fiqh Ahl al-Madinah by Ibn `Abd al-Barr (2/705) and Minah al-Jalil by `Ulaysh (5/262). Shafi`is, [1548] Fath al-`Aziz by Rafi`i (9/8), Rawdat al-Talibin by Nawawi (3/531), and Mughni al-Muhtaj by Shirbini (2/476). and Hanbalis. [1549] Al-Furu` by Ibn Muflih (6/258), Al-Insaf by Mardawi (4/321) and Kashshaf al-Qina` by Bahuti (3/230). See also Al-Mughni by Ibn Qudamah (4/136). This is because the profit is a part of the price, and knowledge of the price is a necessary condition for the validity of transactions. [1550] Bada’i` al-Sana’i` by Kasani (5/221).

For the capital to be a fungible item

It is not a necessary condition for the capital in a cost-plus trade to be a fungible, [1551] A fungible is anything that has an equivalent in the market without any considerable variation, and it is used as a standard. Examples include things that are sold by measure, weight, or number, and currency.   A non-fungible is something that either has no equivalent in the market or has one but with variation in value. For example, a mixed commodity, like wheat mixed with barley or corn, as well as horses, donkeys, sheep, cattle, watermelons, and similar items, where there is a considerable variation in prices due to the differences between them. See Al-Durr al-Mukhtar li al-Haskafi wa Hashiyat Ibn `Abidin (6/185) and Durar al-Hukkam by `Ali Haydar (1/121). and it is possible for the price to be a non-fungible. This was the position of the Shafi`is, [1552] If someone purchases goods outright and intends to sell them through a murabahah trade, the trade is valid if they use the expression “I hereby sell to you for the price I purchased it for” or “I hereby sell to you for the price I was charged.” In this case, it is necessary to inform the buyer that the item was purchased at a cost of such-and-such, and it is not appropriate to limit the disclosure to mentioning the value alone. Rawdat al-Talibin by Nawawi (3/532, 533) and Hashiyata Qalyubi wa `Umayrah (2/277). Hanbalis, [1553] Kashshaf al-Qina` by Bahuti (2/232, 233) and Matalib ‘Uli al-Nuha by Rahibani (3/131, 132). and the Malikis in some contexts, [1554] According to the Malikis, murabahah trades are permissible for non-fungibles according to certain conditions, and this takes several forms:   The first form: The price is described in the possession of the buyer. This form is valid according to them by consensus.   The second form: The price is specified and in the possession of the buyer. This form is also valid according to them by consensus.   The third form: The price is specified but in the possession of someone other than the buyer. This form is prohibited according to them by consensus.   The fourth form: The price is described but not in the possession of the buyer, and it cannot be collected. This form is prohibited according to them by consensus.   The fifth form: The price is guaranteed in the ownership of the buyer, but he is able to collect it. This form has differences of opinion among them. Ashhab said it is prohibited because it resembles a salam trade with spot delivery, which is not permissible in their school of thought. However, Ibn al-Qasim permitted it. Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/160) and Minah al-Jalil by `Ulaysh (5/263, 264). and it was the preferred opinion of Shawkani. [1555] Shawkani said: “Less stringent than this stipulation is the stipulation that the price, whether fungible or non-fungible, has been transferred to the buyer, and that he has gained it. In this case, there is no consideration for any of that. If his capital and profit are mentioned to him, that is sufficient, even if there is variation due to differences in times and places. This is because consideration is based on the time of the purchase in which the seller sold it to him. So, if this is mentioned, he has saved himself from deception and misleading.” Al-Sayl al-Jarrar, p. 546.

This is for the following reasons. Firstly, because the price becomes specified and described in the possession of the buyer, so its non-fungible nature does not harm, eliminating uncertainty about it. [1556] Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/160).

And secondly, because the non-fungible nature recalls its value at the time of sale, and its non-fungible aspect does not harm, eliminating uncertainty about it. [1557] Nihayat al-Muhtaj by Ramli (4/115, 116).

Validity of the initial contract

It is a prerequisite of a cost-plus trade for the initial contract to be valid, and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1558] Tabyin al-Haqa’iq by Zayla`i (4/61) and Al-`Inayah by Babarti (6/459). See also Bada’i` al-Sana’i` by Kasani (5/222). Malikis, [1559] According to the Malikis, when a contract is invalid, its consequences do not follow, and among its consequences is the ability to dispose of the commodity through sale, gift, and other transactions. Minah al-Jalil by `Ulaysh (5/25). Shafi`is, [1560] Fath al-`Aziz by Rafi`i (8/214) and Tuhfat al-Muhtaj by Ibn Hajar al-Haytami (9/107). See also Al-Ghurar al-Bahiyyah by Zakariyya al-Ansari (2/427). and Hanbalis. [1561] Sharh Muntaha al-Iradat (3/28) and Matalib ‘Uli al-Nuha by Rahibani (3/455). This is because a cost-plus trade entails selling for the initial price plus an additional profit, but an invalid transaction does not bestow ownership. Rather, it is obligatory to return the commodity of such a trade. [1562] Fath al-`Aziz by Rafi`i (4/122), Sharh Muntaha al-Iradat (2/312), and Kashshaf al-Qina` by Bahuti (3/245). According to the Hanafis, an invalid trade, even if it transfers ownership in general, is based on the value of the commodity or its equivalent, not its specified price, because of the invalidity of the pricing. See Bada’i` al-Sana’i` by Kasani (5/222). As for the Malikis, they hold the view that an invalid trade can convey a semblance of ownership, as it may be rectified by fulfilling conditions such as the transfer of possession, among others. However, they correct it based on its value, not an equivalent item. See Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/146) and Minah al-Jalil by `Ulaysh (5/26).

4. The occurrence of a defect in a cost-plus trade

If a defect is present in a cost-plus trade, it is obligatory for the first buyer to disclose it to the second buyer, and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1563] Al-`Inayah by Babarti (6/506, 507). See also Bada’i` al-Sana’i` by Kasani (5/223). Malikis, [1564] Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/164) and Minah al-Jalil by `Ulaysh (5/270, 271). Shafi`is, [1565] Mughni al-Muhtaj by Shirbini (2/79) and Nihayat al-Muhtaj by Ramli (4/116). and Hanbalis. [1566] Al-Iqna` by Hajawi (2/105) and Kashshaf al-Qina` by Bahuti (3/233).

Evidences:

Firstly, from the Sunnah:

`Uqbah ibn `Amir narrated: “I heard the Messenger of Allah g saying: ‘A Muslim is the brother of a Muslim, and it is not permissible for a Muslim to sell his brother a commodity in which there is a defect without disclosing that to him.’” [1567] Reported by Ibn Majah (2246), Tabarani (17/317; 877), and Hakim (2152) from `Uqbah ibn `Amir h. The wording here is from Ibn Majah. Graded sahih by Hakim, who said “according to the conditions of the two Shaykhs (i.e., Bukhari and Muslim), and Albani in Sahih Ibn Majah (2246), and graded hasan by Ibn Hajar in Taghliq al-Ta`liq (3/223). Ibn Kathir graded its chain hasan in Irshad al-Faqih (2/27).

Secondly, because selling without disclosing the occurrence of a defect makes the transaction subject to the suspicion of deception. If the buyer knew that the defect occurred in the hands of the seller, he would not have acquired it. [1568] Bada’i` al-Sana’i` by Kasani (5/223).

Thirdly, because in selling it with the defect having occurred in his hand, the seller retains a part of it. He cannot sell the remaining part without disclosure, just as if he had retained it through his actions or the actions of someone else. [1569] Bada’i` al-Sana’i` by Kasani (5/223).

Fourthly, because the desired item changes, as the occurrence of the defect diminishes the commodity from what it was at the time of sale. [1570] This is the evidence of the Shafi`is. Nihayat al-Muhtaj by Ramli (4/116).

And fifthly, disclosing the defect avoids deceiving the buyer. [1571] This is the evidence of the Hanbalis. Kashshaf al-Qina` by Bahuti (3/233).

5. The occurrence of a decrease or increase in a cost-plus trade

Reporting independent growth – such as fruits and offspring – in a cost-plus trade

It is not obligatory for the seller in a cost-plus trade to report independent growth, such as fruits and offspring, and this was the position of the Shafi`is [1572] Fath al-`Aziz by Rafi`i (9/19) and Rawdat al-Talibin by Nawawi (3/534). See also Al-Bayan fi Madhhab al-Imam al-Shafi`i by `Imrani (5/336). and Hanbalis. [1573] Al-Kafi by Ibn Qudamah (2/55) and Al-Insaf by Mardawi (4/319). See also Al-Mughni by Ibn Qudamah (4/137).

This is for the following reasons. Firstly, because the price paid is in exchange for the asset without its growth. [1574] See Al-Kafi by Ibn Qudamah (2/55) and Al-Mughni by Ibn Qudamah (4/137).

Secondly, because the seller is truthful in what he reports and did not deceive or entice the buyer, so it is permissible, as would have been the case if there had been no increase. [1575] See Al-Mughni by Ibn Qudamah (4/137).

Thirdly, because offspring and fruits are independent growth, so there is no prohibition against conducting a cost-plus trade without mentioning them, as is the case with selling a yield. [1576] See Al-Mughni by Ibn Qudamah (4/137).

And fourthly, because the growth occurred under his ownership, so it belongs to him. [1577] See Al-Bayan fi Madhhab al-Imam al-Shafi`i by `Imrani (5/336).

Reporting a defect in the commodity in a cost-plus trade

It is obligatory for the seller in a cost-plus trade to report a defect in the commodity, and this was the position of the majority: the Malikis, [1578] Sharh al-Zurqani `ala Mukhtasar Khalil (5/318, 319) and Minah al-Jalil by `Ulaysh (5/276). Shafi`is, [1579] Al-`Aziz Sharh al-Wajiz by Rafi`i (9/11) and Rawdat al-Talibin by Nawawi (3/533). Hanbalis, [1580] Kashshaf al-Qina` by Bahuti (3/234) and Matalib ‘Uli al-Nuha by Rahibani (3/132). and the Hanafis in some contexts. [1581] If there is a defect due to a celestial event, the actions of the one who bought from him, or the actions of the one who sold to him, then there is no obligation to disclose it. However, if the incident is caused by his actions or the actions of a third party, disclosure is required. Tabyin al-Haqa’iq by Zayla`i (4/78) and Al-Fatawa al-Hindiyyah (3/163). This is because the defective part corresponds to a portion of the overall price, so it is obligatory for the first buyer to inform of it in order to fulfill the stipulations of a cost-plus trade. [1582] See Minah al-Jalil by `Ulaysh (5/276).

6. The ruling on the appearance of dishonesty in a cost-plus trade

The ruling on the appearance of dishonesty regarding the value of the price in a cost-plus trade

If the seller is dishonest regarding the value of the price in a cost-plus trade, then the buyer has the option to either keep the commodity or return it. This was the position of the Hanafis, [1583] This was the view of Abu Hanifah and Muhammad. Al-Hidayah by Marghinani (3/56, 57). See also Bada’i` al-Sana’i` by Kasani (5/226). similar to the preponderant position of the Shafi`is, [1584] Rawdat al-Talibin by Nawawi (3/535) and Bahr al-Midhhab by al-Ruyani (3/128). a statement related from Ahmad, [1585] Kashshaf al-Qina` by Bahuti (3/231) and Matalib ‘Uli al-Nuha by Rahibani (3/128). and the preferred opinion of Ibn `Uthaymin. [1586] This applies if the seller was intentionally lying. Ibn `Uthaymin said: “If a person sells me a good for its initial capital, I ask him, ‘How much is its initial capital?’, and he says, ‘One hundred’, and then it becomes apparent that the actual initial capital was eighty, I have the option: if I wish, I may keep it, or if I wish, I may return it. This is the path that the author followed, [which was] a position related from Imam Ahmad. The established opinion is that there is no option. However, if it there is a middle-ground opinion in this matter, it is that if it is proven that the seller is a deliberate liar, the buyer should be given the option. This is considered a disciplinary measure for the seller and a punishment for him.” Al-Sharh al-Mumti` (8/333-334). This is because the buyer only consented to the contract with the stated and agreed upon price and therefore, he is not bound by the contract without it. He retains the option to return the commodity because the trade is not free from deception, as would be the case if a trade was not free from defectiveness if a defect in the commodity was discovered. [1587] See Bada’i` al-Sana’i` by Kasani (5/226).

The ruling on the appearance of dishonesty regarding the description of the price in a cost-plus trade [1588] He bought something defective, then sold it on a profit based on the initial price, without disclosing that he bought it in a defective condition. See Bada’i` al-Sana’i` by Kasani (5/225).

If the seller is dishonest regarding the description of the price in a cost-plus trade, then the buyer has the option to either keep the commodity or return it. This was the position of the Hanafis [1589] Bidayat al-Mubtadi by Marghinani, p. 138, and Al-Bahr al-Ra’iq by Ibn Nujaym (6/124). See also Bada’i` al-Sana’i` by Kasani (5/225). and Shafi`is [1590] Tuhfat al-Muhtaj by Ibn Hajar al-Haytami (4/432, 433) and Mughni al-Muhtaj by Shirbini (2/79). and a view of the Malikis [1591] Mawahib al-Jalil by Hattab (6/438) and Minah al-Jalil by `Ulaysh (5/272). and Hanbalis [1592] Al-Mubdi` by Burhan al-Din Ibn Muflih (3/444) and Al-Insaf by Mardawi (4/317). .

This is for the following reasons. Firstly, because a cost-plus trade is a contract based on trust, for the buyer relies on the seller and trusts him to inform about the initial price. Trust is required in this agreement and safeguarding it against dishonesty is a necessary condition. Therefore, its absence obligates the option for the buyer to keep or return the commodity, as would the presence of a defect in the commodity. [1593] See Bada’i` al-Sana’i` by Kasani (5/225).

Secondly, because the term is similar to the commodity, where you often find an increase in the price for the deferred period. The resemblance here is connected to reality, as if the buyer bought two items, selling one of them through Murabahah at their combined price. Undertaking Murabahah necessitates safety from such deception, so if it surfaces, the buyer is given the choice, similar to the case of a defect. [1594] See Al-Bahr al-Ra’iq by Ibn Nujaym (6/124).

And thirdly, because a cost-plus trade is built on trust, with the buyer relying on the seller’s judgment and being satisfied with what the seller is satisfied with, plus an increase. [1595] See Mughni al-Muhtaj by Shirbini (2/79).

7. A cost-plus sale to a purchase orderer (promiser) [1596] The difference between a murabahah sale agreed upon by the jurists and a murabahah sale to a purchase orderer (promiser) is as follows:   The murabahah trade agreed upon by the jurists involves transferring ownership of the commodity for an initial price along with an additional profit. This type of transaction falls under the category of trades of trust and is completed between two parties: the seller and the buyer.   On the other hand, the murabahah sale to a purchase orderer (promiser) occurs when an individual wishes to acquire a specific item but lacks the necessary funds to buy it. The individual approaches a bank, institution, or person and requests that the item be purchased for him. Subsequently, the item is bought from someone who acquired it through instalment payments. This transaction involves three parties: the person desiring the item, a bank or entity not in possession of the item, and the supplier who owns the item.

Definition of a cost-plus sale to a purchase orderer (promiser)

A cost-plus sale to a purchase orderer (promiser) involves the client and bank agreeing that the client will buy the goods with a specified profit and through instalment payments after the bank has purchased them. Alternatively, the client may merely promise the bank that he will purchase the goods with a specified profit. [1597] See the research on “Murabahah trades as conducted by Islamic banks” by Muhammad al-Ashqar, published in Buhuth Fiqhiyyah fi Qadaya Iqtisadiyyah Mu`asirah, by Muhammad al-Ashqar and others (1/71), and research related to the topic of murabahah trades of the purchase orderer published in Majallah Majma` al-Fiqh al-Islami, issue 5.

A cost-plus sale to a purchase orderer (promiser) if the promise is non-binding

A cost-plus sale to a purchase orderer (promiser) if the promise is non-binding is permissible, [1598] For example, if the buyer saying to the merchant or the bank: “Buy a commodity with the following specifications, and I will buy it from you, and I will give you this much profit. I will not pay you the price upfront or provide any deposit, and the commitment to purchase is not binding.” and this was the position of the Hanafis [1599] Al-Mabsut by Sarakhsi (30/204). See also Al-Makharij fi al-Hiyal by Muhammad ibn al-Hasan, pp. 40, 133. and Shafi`is [1600] Al-Umm by Shafi`i (3/39). , the preferred opinion of Ibn al-Qayyim, [1601] Ibn al-Qayyim said: “Example no. 100: A man says to another, ‘Buy this house – or this commodity – from So-and-so for such-and-such price, and I will give you this much profit.’ However, the buyer fears that he purchases it, the orderer might change his mind and not want it, but he will not be able to return it. The trick here is for the buyer to purchase it with the condition that he has the option to return it within three days, or more. Then, he says to the orderer: ‘I have bought it in line with what you mentioned.’ If the orderer takes it, [there is no problem,] but otherwise, the buyer can return it to the seller within the specified option period. If the orderer will also only purchase it with an option, the trick is to stipulate an option for himself or reduce the duration of the option that he initially imposed on the seller to allow enough time for him to return it if needed.” I`lam al-Muqi`in (5/430). and the view of some of the predecessors, [1602] Ibn al-Mundhir said: “They differed regarding one man saying to another: ‘Buy such-and-such a commodity, so that I can give you such-and-such profit.’ Some disliked this and forbade it, including Ibn `Umar, Ibn al-Musayyib, Ibn Sirin, al-Hasan, Nakha`i, Qatadah, `Ubaydullah ibn al-Hasan, Ahmad, and Ishaq. Al-Qasim ibn Muhammad and Humayd al-Taweel saw no harm in it, and Shafi`i permitted such a trade if the contract was valid and without any conditions.” Al-Ishraf (6/134). was stipulated by the Islamic Fiqh Academy [1603] Decision nos. 2 and 3 on the topic of fulfilling promises and murabahah sales to a purchase orderer: “The assembly of the Islamic Fiqh Academy, convened for its fifth session in Kuwait from 1-6 Jumada al-Ula 1409 AH / 10-15 December 1988 CE, after reviewing the research presented by members and experts on the topics of “fulfilling promises and murabahah sales to a purchase orderer”, and after listening to the discussions surrounding them, decided:   Firstly, a murabahah sale to a purchase orderer, if it occurs after the goods have entered the possession of the agent, and the required possession according to Shariah has been obtained, is permissible. This is as long as the responsibility for any damage lies with the agent before delivery and the consequences of defect rejection and similar issues that lead to returning the goods after delivery are attributed to the agent. Additionally, the conditions of the trade must be met, and there should be no prohibitions present.” Majallah Majma` al-Fiqh al-Islami al-Dawri – al-Dawrat al-Khamisah (2/1599). and the Permanent Committee [1604] The decision of the Permanent Committee stated: “If one person asks another to buy a specific car, for example, or one matching a specified description, and promises to buy it from them, and the one who was asked then purchases it and takes possession of it, it is permissible for the one who requested it to then buy it from them, either for cash or in deferred instalments with a known profit. This does not fall under the category of selling something one does not have, because the one who was asked only sold the commodity to the one who requested it after purchasing it and taking possession of it. There is no prohibition against him selling it to a friend, for example, either before buying it or after buying it but before taking possession of it.” Fatawa al-Lajnah al-Da’imah (13/153). , and was the basis for the judgement of Ibn Baz. [1605] Ibn Baz was asked about the ruling on a promise to purchase and whether it falls under usury, and he responded: “The promise to purchase is not an actual purchase; rather, it is a commitment to that effect. So, if a person desires to buy something, asks his brother to buy it for him, and then his brother sells it to him, there is no harm in that, so long as the [original] purchase was completed and possession was obtained, and then after that he sells it to seeking to buy it. This is based on the authentic hadith narrated by Hakim ibn Hizam h, who said: ‘O Messenger of Allah, a man comes to me asking for me to sell him something I do not have. In that case, should I sell it to him from the market?’ The Prophet said: ‘Do not sell what you do not have.’ This indicates that if someone sells an item to their brother after taking possession of it and having it with him, then there is no harm in that.” Majmu` Fatawa Ibn Baz (19/68). This is because if someone is requested to provide a commodity, he can sell it to the one who requested it after acquiring it and taking possession of it. [1606] Fatawa al-Lajnah al-Da’imah – First assembly (13/153). See also Al-Umm by Shafi`i (3/39).

A cost-plus sale to a purchase orderer (promiser) if the promise is binding upon both parties

A cost-plus sale to a purchase orderer (promiser) if the promise is binding upon both parties is not permissible, [1607] For example, if the buyer says to the trader or bank: “Purchase a commodity of such-and-such description and I will buy it from you and give you such-and-such profit.” The price is not handed over immediately, but the commitment to purchase is binding upon both parties. and this was the decision issued by the Islamic Fiqh Academy [1608] Decision nos. 2 and 3 on the topic of fulfilling promises and murabahah sales to a purchase orderer: “The assembly of the Islamic Fiqh Academy, convened for its fifth session in Kuwait from 1-6 Jumada al-Ula 1409 AH / 10-15 December 1988 CE, after reviewing the research presented by members and experts on the topics of “fulfilling promises and murabahah sales to a purchase orderer”, and after listening to the discussions surrounding them, decided:   Thirdly, the promise (which originates from both parties) is permissible in a murabahah sale provided that either one or both of the parties retains the option [to annul the transaction]. If there is no option, then it is not permissible, because a binding promise in a murabahah sale resembles a standard sale. In this case, it is a condition that the seller must be the owner of the commodity being sold, to avoid violating the prohibition of the Prophet g against selling what one does not possess.” Majallah Majma` al-Fiqh al-Islami, issue 5. and verdict of the Permanent Committee [1609] The decision of the Permanent Committee stated: “If one person sells a car to another before taking possession of it, the sale is not valid, regardless of whether he sold it for cash or on credit; if the profit is a percentage of the seller’s purchase price, such as one-third, or a specific amount; or if the buyer has paid a portion of the price or nothing at all; because he sold it before taking possession of it, or rather before even owning it. However, if they agree that he will sell it to him after owning and taking possession of it, then it is permissible, because a promise to buy is not the same as a contract to buy. After that, they can enter into a contract to fulfil the promise, but it is also permissible for the seller to sell it to someone else, just as it is permissible for the buyer to purchase a different car.” Fatawa al-Lajnah al-Da’imah (13/237). and Ibn Baz [1610] Ibn Baz was asked about the ruling on a promise to purchase and whether it falls under usury, and he responded: “The promise to purchase is not an actual purchase; rather, it is a commitment to that effect. So, if a person desires to buy something, asks his brother to buy it for him, and then his brother sells it to him, there is no harm in that, so long as the [original] purchase was completed and possession was obtained, and then after that he sells it to seeking to buy it. This is based on the authentic hadith narrated by Hakim ibn Hizam h, who said: ‘O Messenger of Allah, a man comes to me asking for me to sell him something I do not have. In that case, should I sell it to him from the market?’ The Prophet g said: ‘Do not sell what you do not have.’ This indicates that if someone sells an item to their brother after taking possession of it and having it with him, then there is no harm in that.   The same meaning is expressed in the statement of the Prophet g in the authentic hadith narrated by `Abdullah ibn `Amr ibn al-`As i, ‘It is not permissible to sell on the condition of a loan, have [two conditions within] one transaction, or sell what you do not have’, and the hadith of Zaid ibn Thabit i, who said, ‘The Prophet g forbade selling goods in the place they were bought until the traders transferred them to their camels.’   From the narrations we have mentioned, it is understood that if a person finds a commodity with Zayd or `Amr, whether it is a car, grains, clothes, utensils, or anything else, then there is no harm in him to buying and taking possession of it, so long as the seller has completed the purchase process and taken possession of the commodity themselves. However, the second buyer cannot sell them until he transports them to another location, whether to his home or to the market, and removes it from the seller’s location. After that, he can sell it if he wishes, acting in accordance with the mentioned hadiths and what Bukhari narrated in his Sahih from Ibn `Umar i, who said: ‘During the time of the Messenger of Allah g, we used to agree on the sale of food at the place of purchase until we moved it to our camels.’ And in another wording: ‘Until we moved it from the upper market to the lower market or from the lower market to the upper market.’” Majmu` Fatawa Ibn Baz (19/68). , and is indicated by the statements of the Hanafis, [1611] Al-Mabsut by Sarakhsi (30/204). Malikis, [1612] According to the Malikis, it is not permissible under any circumstances, even with a non-binding promise. Al-Taj wa al-Iklil by Mawwaq (4/406) and Mawahib al-Jalil by Hattab (6/296). Shafi`is, [1613] This is understood from the statements of Shafi`i. See Al-Umm by Shafi`i (3/39). and Hanbalis. [1614] The Hanbalis view selling something that you do not own as impermissible, and having a binding promise to purchase something before the seller has taken possession of it would fall into this category. Kashshaf al-Qina` by Bahuti (3/157) and Sharh Muntaha al-Iradat (2/10).

Evidences:

Firstly, from the Sunnah:

Hakim ibn Hizam h narrated: “I said: ‘O Messenger of Allah, a man comes to me asking for me to sell him something I do not have. In that case, should I sell it to him from the market?’

‘Do not sell what you do not have’, he replied.” [1615] Reported by Abu Dawud (3503), Tirmidhi (1232), Nasa’i (4613), Ibn Majah (2187), and Ahmad (15311). The wording here is from Ahmad. Graded sahih by Ibn al-`Arabi in `Aridat al-Ahwadhi (3/193), Nawawi in Al-Majmu` (9/259), Ibn Daqiq in Al-Iqtirah (99), Ibn al-Mulaqqin in Al-Badr al-Munir (6/448), Ibn Baz in Majmu` al-Fatawa (19/119), and Albani in Sahih Sunan Ibn Majah (2187). Ibn al-Qayyim in Zad al-Ma`ad (5/716) and Ibn Hajar in Tahdhib al-Tahdhib (11/424) said: “Memorized (mahfuz).”

The binding commitment in a cost-plus trade is similar to the trade itself. It is a necessary condition for the seller to own the commodity at the time of the sale, and in this case they do not, so it is an example of selling something one does not own. [1616] Majallah Majma` al-Fiqh al-Islami, issue 5. See also Al-Umm by Shafi`i (3/39).

And secondly, because it involves a form of uncertainty. If a person sells someone a specific item without owning it, then proceeds to buy it or deliver it to them, they will be wavering between getting it or not. This uncertainty resembles gambling and therefore is prohibited. [1617] See Zad al-Ma`ad by Ibn al-Qayyim (5/716).

Secondly: The at-cost (tawliyah) trade

1. Defining the “at-cost” trade

Linguistically: “Tawliyah” is derived from the root “wali”. One might say, “tawallayatu So-and-so”, meaning “I followed them and was pleased with them”. Or, “walitu of a child or woman”, meaning “I was made their guardian”. “Wallaytuhu tawliyah” means “I made him a guardian”, and from this we also get the “tawliyah” trade. [1618] See Tahdhib al-Lughah by Azhari (15/324, 325), Lisan al-`Arab by Ibn Manzur (15/414), and Misbah al-Munir by Fayumi (2/672).

Technically: Taking possession of a commodity for its original price, without increase or decrease. [1619] For example, if the seller says “I put this into your guardianship”, or “I sell it to you for my initial capital” or “for what I bought it for”. See Tuhfat al-Fuqaha’ by Samarqandi (2/105), Bada’i` al-Sana’i` by Kasani (5/135), and Kashshaf al-Qina` by Bahuti (3/229).

2. The ruling on the at-cost trade

The at-cost trade is permissible, and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1620] Al-Hidayah by Marghinani (3/56) and Al-`Inayah by Babarti (6/495). Malikis, [1621] Al-Taj wa al-Iklil by Mawwaq (4/485) and Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/156). Shafi`is, [1622] Rawdat al-Talibin by Nawawi (3/527, 528) and Mughni al-Muhtaj by Shirbini (2/76). and Hanbalis, [1623] Al-Furu` by Ibn Muflih (6/258) and Sharh Muntaha al-Iradat (2/51). and a consensus is reported to that effect. [1624] Malik said: “The people of knowledge unanimously agree that there is no harm in partnerships, at-cost trades, and mutual dissolutions in [the trade of] foodstuffs before they are received, so long as the price has been received from the other party in the partnership, at-cost trade, or mutual dissolution.” Al-Taj wa al-Iklil by Mawwaq (6/427).

This is for the following reasons. Firstly, because it is a sale like any other, meeting all the conditions for permissibility. [1625] See Al-Hidayah by Marghinani (3/56).

And secondly, because there is a pressing need for this type of sale. The inexperienced individual who is not adept in trade relies on the actions of a knowledgeable and experienced person, and their satisfaction is achieved by the equivalent of what they purchased. Therefore, affirming its permissibility is necessary. [1626] See Al-Hidayah by Marghinani (3/56).

3. The at-cost contract is a compensatory contract

The at-cost contract is a compensatory contract that entails the rulings of a trade. It is not permissible to sell in an at-cost trade something one has not taken possession of, and this was the position of the majority [1627] Ibn `Abd al-Barr said: “The majority of jurists and scholars of Hadith state that it is not permissible to sell any food item before it is received, and that mutual dissolutions, partnerships, and at-cost trades are not allowed in food transactions before the commodity is received in one of the [legitimate] ways [of receiving]. According to them, mutual dissolutions, partnerships, and at-cost trades are a form of sale.” Al-Tamhid (16/341). – the Hanafis, [1628] Sharh Mukhtasar al-Tahawi by Jassas (3/55), Al-Hidayah by Marghinani (3/56) and Al-`Inayah by Babarti (6/495), and Al-Binayah Sharh Al-Hidayah by `Ayni (8/231). Shafi`is, [1629] Rawdat al-Talibin by Nawawi (3/527, 528) and Mughni al-Muhtaj by Shirbini (2/76). and Hanbalis [1630] Al-Furu` by Ibn Muflih (6/258) and Sharh Muntaha al-Iradat (2/51). – and the preferred opinion of Ibn Hazm. [1631] Ibn Hazm said: “Partnerships, at-cost trades, and mutual dissolutions are all fundamentally forms of trade, and nothing is permissible in them except what is permissible in other forms of trades. This is the opinion of Shafi`i and our companions regarding joint partnerships and at-cost trades.” Al-Muhalla bi al-Athar (7/481). This is because it involves the exchange of wealth for wealth, establishing ownership for both parties, which aligns with the essence of a trade. Therefore, it is valid to consider an at-cost agreement as a form of trade. [1632] Al-Muhalla bi al-Athar by Ibn Hazm (7/481) and Mughni al-Muhtaj by Shirbini (2/76).

4. Prerequisites of the at-cost trade

The second buyer’s knowledge of the initial price

The second buyer’s knowledge of the initial price is a prerequisite of the at-cost trade, and this was the position of the majority: the Hanafis, [1633] Al-Hidayah by Marghinani (3/58) and Tabyin al-Haqa’iq by Zayla`i (4/79). Shafi`is, [1634] Rawdat al-Talibin by Nawawi (3/527) and Mughni al-Muhtaj by Shirbini (2/76). and Hanbalis. [1635] Kashshaf al-Qina` by Bahuti (3/229) and Sharh Muntaha al-Iradat (2/51, 52).

This is for the following reasons. Firstly, because an unknown price leads to disputes. [1636] Tabyin al-Haqa’iq by Zayla`i (4/79).

And secondly, because one of the distinctive features of the at-cost trade is that it is built upon the initial price, even though it adheres to the rulings of a standard trade. [1637] Mughni al-Muhtaj by Shirbini (2/76).

For the price to be a fungible item [1638] A fungible is anything that has an equivalent in the market without any considerable variation, and it is used as a standard. Examples include things that are sold by measure, weight, or number, and currency.   A non-fungible is something that either has no equivalent in the market or has one but with variation in value. For example, a mixed commodity, like wheat mixed with barley or corn, as well as horses, donkeys, sheep, cattle, watermelons, and similar items, where there is a considerable variation in prices due to the differences between them. See Al-Durr al-Mukhtar li al-Haskafi wa Hashiyat Ibn `Abidin (6/185) and Durar al-Hukkam by `Ali Haydar (1/121).

It is not a prerequisite for the price in an at-cost trade to be a fungible item, and this is the position of the Hanbalis [1639] Al-Iqna` by Hajawi (2/104), Kashshaf al-Qina` by Bahuti (3/232), and Matalib ‘Uli al-Nuha by Rahibani (3/131). and a view of the Shafi`is [1640] Tuhfat al-Muhtaj by Ibn Hajar al-Haytami (4/424, 425). See also Hashiyat al-Ramli al-Kabir `ala Asna al-Matalib (2/91). .

This is for the following reasons. Firstly, because the price becomes specified and described in the ownership of the buyer, so its non-fungible nature does not harm, eliminating uncertainty about it. [1641] Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/160).

And secondly, because the non-fungible nature recalls its value at the time of sale, and its non-fungible aspect does not harm, eliminating uncertainty about it. [1642] Nihayat al-Muhtaj by Ramli (4/115, 116).

5. The ruling on the appearance of dishonesty in an at-cost trade [1643] For example, if the seller says, “I bought this item for twenty”, and then it becomes apparent to the buyer that he actually bought it for ten.

The ruling on the appearance of dishonesty regarding the value of the price in an at-cost trade

If the seller is dishonest regarding the value of the price in an at-cost trade, then the buyer has the option to either keep the commodity or return it, and this was the view of Muhammad ibn al-Hasan [1644] Al-Hidayah by Marghinani (3/57). See also Bada’i` al-Sana’i` by Kasani (5/226). and similar to the preponderant view of the Shafi`is [1645] Rawdat al-Talibin by Nawawi (3/528, 535). See also Bahr al-Midhhab by Ruyani (4/572). . This is because the buyer only consented to the contract with the stated and agreed upon price and therefore, he is not bound by the contract without it. He retains the option to return the commodity because the trade is not free from deception, as would be the case if a trade was not free from defectiveness if a defect in the commodity was discovered. [1646] See Bada’i` al-Sana’i` by Kasani (5/226).

The ruling on the appearance of dishonesty regarding the description of the price in an at-cost trade [1647] By purchasing something on credit and then selling it in at-cost trade for its original price without clarifying that it was purchased on credit. See Bada’i` al-Sana’i` by Kasani (5/225).

If the seller is dishonest regarding the description of the price in an at-cost trade, then the buyer has the option to either keep the commodity or return it, and this was the position of the majority – the Hanafis, [1648] Tabyin al-Haqa’iq by Zayla`i (4/78, 79). See also Bada’i` al-Sana’i` by Kasani (5/226). Malikis, [1649] The Malikis stated that the rulings for cost-plus sales and at-cost sales are similar in this regard. Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/160, 169, 170). See also Sharh Mukhtasar Khalil by Kharashi (5/179). and Shafi`is [1650] Mughni al-Muhtaj by Shirbini (2/79). – and a view of the Hanbalis. [1651] Al-Mubdi` by Burhan al-Din Ibn Muflih (3/444) and Al-Insaf by Mardawi (4/317).

This is for the following reasons. Firstly, because an at-cost trade is a contract based on trust, for the buyer relies on the seller and trusts him to inform about the initial price. Trust is required in this agreement and safeguarding it against dishonesty is a necessary condition. Therefore, its absence obligates the option for the buyer to keep or return the commodity, as would the presence of a defect in the commodity. [1652] See Bada’i` al-Sana’i` by Kasani (5/225) and Tabyin al-Haqa’iq by Zayla`i (4/78).

Secondly, because there is a portion of the price tied to a specified period which varies based on proximity or distance. [1653] See Sharh al-Zurqani `ala Mukhtasar Khalil (5/315).

And thirdly, because if the buyer takes the commodity with a deferred price, it involves an upfront payment that generates profit, constituting usury. [1654] See Al-Qawanin al-Fiqhiyyah by Ibn Juzayy, p. 174, and Mawahib al-Jalil by Hattab (6/437).

Thirdly: The partnership (ishrak) trade

1. Defining the partnership trade

Linguistically: It is to make someone else a partner to something. If one person “ashraka” another person in a trade, it means they included them along with themselves in the agreement. [1655] See Lisan al-`Arab by Ibn Manzur (10/449, 450) and Taj al-`Arus by Zabidi (27/224).

Technically: It is to buy something and then include another person as a partner, so that part of the commodity belongs to them for a share of the price. [1656] For example, if someone says, “I bought the car for 100,000 and I hereby include you as a partner with a 50%% stake for 50,000.” See Rawdat al-Talibin by Nawawi (3/528) and Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/156).

2. The ruling on the partnership trade

The partnership trade is permissible, and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1657] Hashiyat Ibn `Abidin (4/329). See also Bada’i` al-Sana’i` by Kasani (5/226). Malikis, [1658] Hashiyat al-`Adawi `ala Kifayat al-Talib al-Rabbani (3/156) and Minah al-Jalil by `Ulaysh (5/256, 260). See also Bidayat al-Mujtahid by Ibn Rushd (3/165). Shafi`is, [1659] Fath al-`Aziz by Rafi`i (9/4) and Rawdat al-Talibin by Nawawi (3/528). and Hanbalis. [1660] Al-Furu` by Ibn Muflih (6/258) and Sharh Muntaha al-Iradat (2/51). This is because it is a type of trade known by a specific name, just as cost-plus (murabahah) and cost-minus (muwada`ah) trades are known by specific names. [1661] Al-Hidayah by Marghinani (3/56) and Al-Mughni by Ibn Qudamah (4/89).

Fourthly: The cost-minus (wadi`ah) trade

1. Defining the “cost-minus” trade

Linguistically: “Wadi`ah” is the “fa`ilah” form with the meaning of the “maf`ulah” form; such that it is a verbal noun: wada`ahu muwada`ah. The “muwada`ah” is the waived portion of a trade, in the “mufa`alah” form derived from “wada`a”, “yada`u”. A “wadi`ah” is “a discount”, and to be “istawda`a” by something is to be “humbled” by it. [1662] See Tahdhib al-Lughah by Azhari (3/48), Al-Sihah by Jawhari (3/1299), and Al-Qamus al-Muhit, p. 771.

Technically: It is the transfer of ownership of a commodity for the initial price minus a deduction. [1663] For example, if a seller informs the buyer of his original outlay and then says: “I sell it to you for that, and I will give you such-and-such discount.” See Tuhfat al-Fuqaha by Samarqandi (2/105), Al-Mughni by Ibn Qudamah (4/143), and Tabyin al-Haqa’iq by Zayla`i (4/73).

2. The ruling on the cost-minus trade

The cost-minus trade is permissible, and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1664] Tabyin al-Haqa’iq by Zayla`i (4/73) and Al-Bahr al-Ra’iq by Ibn Nujaym (6/116, 118). Malikis, [1665] Hashiyat al-Dasuqi ?ala al-Sharh al-Kabir (3/159) and Minah al-Jalil by `Ulaysh (5/262, 263). Shafi`is, [1666] Mughni al-Muhtaj by Shirbini (4/429) and Nihayat al-Muhtaj by Ramli (4/112). and Hanbalis. [1667] There was one form of this which was disliked by the Hanbalis, which is for the seller to say: “I hereby sell this to you with a discount of one dirham on every ten.” Al-Furu` by Ibn Muflih (6/259), Al-Insaf by Mardawi (4/316), and Kashshaf al-Qina` by Bahuti (3/231). See also Al-Mughni by Ibn Qudamah (4/143). This is because it is a type of trade known by a specific name, just as cost-plus (murabahah) and at-cost (tawliyah) trades are known by specific names. [1668] See Al-Hidayah by Marghinani (3/56) and Al-Mughni by Ibn Qudamah (4/89).

3. The ruling on the appearance of dishonesty in a cost-minus trade

The ruling on the appearance of dishonesty regarding the value of the price in a cost-minus trade [1669] For example, if the seller says, “I bought this item for ten”, and then it becomes apparent to the buyer that he actually bought it for eight.

If the seller is dishonest regarding the value of the price in a cost-minus trade, then the buyer has the option to either keep the commodity or return it, and this was the position of the Hanafis [1670] This was the opinion of Abu Hanifah and Muhammad regarding a cost-plus sale, and they considered a cost-minus sale as falling under the same ruling. See Al-Mabsut by Sarakhsi (22/68) and Al-Hidayah by Marghinani (3/56, 57). See also Bada’i` al-Sana’i` by Kasani (5/226). and similar to the preponderant position of the Shafi`is [1671] According to them, a cost-minus sale is like a cost-plus sale. Tuhfat al-Muhtaj by Ibn Hajar al-Haytami (4/423) and Rawdat al-Talibin by Nawawi (3/535). See also Bahr al-Midhhab by Ruyani (4/572). . This is because the buyer only consented to the contract with the stated and agreed upon price and therefore, he is not bound by the contract without it. He retains the option to return the commodity because the trade is not free from deception, as would be the case if a trade was not free from defectiveness if a defect in the commodity was discovered. [1672] See Bada’i` al-Sana’i` by Kasani (5/226).

The ruling on the appearance of dishonesty regarding the description of the price in a cost-minus trade [1673] By purchasing something on credit and then selling it at a discount from its original price, informing the buyer of its original price and that he is being given such-and-such discount, but without clarifying that it was originally purchased on credit.

If the seller is dishonest regarding the description of the price in a cost-minus trade, then the buyer has the option to either keep the commodity or return it, and this was the implication of the position of the Hanafis [1674] According to them, a cost-minus sale is like a cost-plus sale. Al-Mabsut by Sarakhsi (22/68), Bidayat al-Mubtadi by Marghinani, p. 138, and Al-Bahr al-Ra’iq by Ibn Nujaym (6/124). See also Bada’i` al-Sana’i` by Kasani (5/225). and Shafi`is [1675] According to them, a cost-minus sale is like a cost-plus sale. Tuhfat al-Muhtaj by Ibn Hajar al-Haytami (4/423, 432) and Mughni al-Muhtaj by Shirbini (2/79). , and an opinion of the Hanbalis. [1676] According to them, a cost-minus sale is like a cost-plus sale, and Mardawi declared that their rulings are the same. Al-Mubdi` by Burhan al-Din Ibn Muflih (3/444) and Al-Insaf by Mardawi (4/316, 317). This is because a cost-minus trade is a contract based on trust, for the buyer relies on the seller and trusts him to inform about the initial price. Trust is required in this agreement and safeguarding it against dishonesty is a necessary condition. Therefore, its absence obligates the option for the buyer to keep or return the commodity, as would the presence of a defect in the commodity. [1677] See Bada’i` al-Sana’i` by Kasani (5/225).

Fifthly: The trade without negotiation with a person without knowledge (mustarsil)

1. Defining “the trade without negotiation with a person without knowledge”

Linguistically: The root meaning of “istirsal” is “composure” and “stability”. It is used to express reliance and confidence in a person and trust in what he communicates, and to “istirsala” to a person is to be “relaxed” and “at ease” with them. [1678] See Tahdhib al-Lughah by Azhari (12/273) and Lisan al-`Arab by Ibn Manzur (11/283).

Technically: It is when one person says to another, “Sell to me as the people sell” or “Buy my commodity from me as the people buy, for I do not know the value”, and then he buys or sells from him for whatever prices he offers him. [1679] See Al-Mughni by Ibn Qudamah (3/498) and Mawahib al-Jalil by Hattab (6/399, 400).

2. The ruling on the trade without negotiation with a person without knowledge

The trade without negotiation for a person without knowledge is concluded, and this was agreed upon by the four jurisprudential schools of thought: the Hanafis, [1680] It is valid if the price is known during the gathering; otherwise, it is void and can be acquired through taking possession. See Al-Durr al-Mukhtar li al-Haskafi wa Hashiyat Ibn `Abidin (5/112). See also Al-Muhit al-Burhani by Ibn Mazah (3/192) and Durar al-Hukkam by Mulla Khusru (2/177). Malikis, [1681] Mawahib al-Jalil by Hattab (6/399, 400) and Hashiyat al-`Adawi `ala Kifayat al-Talib al-Rabbani (2/137). See also Sharh Mukhtasar Khalil by Kharashi (5/153). Shafi`is, [1682] Rawdat al-Talibin by Nawawi (3/421) and Tuhfat al-Muhtaj by Ibn Hajar al-Haytami (4/184). and Hanbalis. [1683] Al-Mubdi` by Burhan al-Din Ibn Muflih (3/417) and Kashshaf al-Qina` by Bahuti (3/212). This is because the person without knowledge has their option of keeping or returning the commodity affirmed if it becomes evident that they were deceived. [1684] See Kashshaf al-Qina` by Bahuti (3/212) and Al-Fawakih al-Dawani by Nafrawi (2/72).

3. The ruling on the option to keep or return the commodity in a trade without negotiation for a person without knowledge

The option to keep or return the commodity is affirmed for the person without knowledge who is deceived, [1685] In this context, “deception”, or “unjust enrichment” (ghabn) refers to a situation where a person is duped into buying a commodity for a price significantly above its value, in which case the buyer is deceived, or selling for a price significantly below its value, in which case the seller is deceived. If this occurs, the deceived party has the option to revoke the transaction if they were unaware of the actual value of the commodity and are not skilled in negotiating prices. and this is a person who does not know the value of the commodity or is inexperienced in trade. [1686] The option is dropped when the person who has been deceived expresses their satisfaction with the transaction or disposes of the commodity. See Mawahib al-Jalil by Hattab (7/424), Kashshaf al-Qina` by Bahuti (3/213), and Durar al-Hukkam by `Ali Haydar (1/371). This is the position of the Malikis [1687] According to them, the option is affirmed for the buyer in two situations. Firstly, in an isti’man or istirsal trade (both types of trade without negotiation with a person without knowledge). And secondly, if the seller or buyer is deceived and either of them is an agent or custodian. Al-Taj wa al-Iklil by Mawwaq (4/468) and Mawahib al-Jalil by Hattab (6/404). and Hanbalis [1688] Al-Mubdi` by Burhan al-Din Ibn Muflih (3/417) and Kashshaf al-Qina` by Bahuti (3/212). , a view of the Hanafis, [1689] Some Hanafis gave a verdict affirming the option in the case of extreme deception. Al-Bahr al-Ra’iq by Ibn Nujaym (6/125, 126) and Hashiyat Ibn `Abidin (5/143). and the preferred opinion of Ibn Taymiyyah, [1690] Ibn Taymiyyah said: “If the buyer is not experienced in trade (mustarsil) and ignorant of the value of the commodity, the seller is not allowed to excessively deceive them in a manner that exceeds the norm. Instead, the seller should sell the commodity at its usual value or close to it. If he is subject to extreme deception, the buyer has the option to either revoke or affirm the trade.” Majmu` al-Fatawa (29/359). Ibn Baz, [1691] Ibn Baz said: “It is incumbent upon Muslims not to deceive or wrong their brothers and to trade with them in a customary manner. A person who is not experienced in trade should be treated like a person who is, and he should not be deceived. If he is deceived, then he has been wronged, and he has the option [to either revoke or affirm the trade].” The Official Website of Shaykh Ibn Baz. and Ibn `Uthaymin. [1692] Ibn `Uthaymin said: “The correct opinion is that anyone who is unaware of the value [of a commodity] has the option [to revoke the transaction].” Fath Dhi al-Jalal wa al-Ikram bi Sharh Bulugh al-Maram (3/582).

Evidences:

Firstly, from the Sunnah:

Ibn `Umar k narrated: “A man mentioned to the Messenger of Allah g that he had been deceived in trades. The Messenger of Allah g said: ‘When you engage in trade, say: “No cheating [1693] Meaning: “It is not permissible for you to cheat me.”. See Sharh Sahih Muslim by Nawawi (10/177) and Fath al-Bari by Ibn Hajar (4/337). .”’” [1694] Reported by Bukhari (2117) and Muslim (1533). The wording here is from Muslim.

Abu Hurayrah h narrated that the Prophet g said: “Do not meet the importer before they reach the town. Whoever meets them and buys from them, then when the owner of the goods reaches the market, they have the option of declaring the previous transaction null and void.” [1695] Reported by Muslim (1519).

The Prophet g affirmed the seller’s option of declaring the previous transaction null and void, and it is because they have been cheated. [1696] See Al-Ta`liqah al-Kabirah fi Masa’il al-Khilaf by Abu Ya`la (3/162).

And secondly, the mustarsil is misled due to their lack of knowledge about trade, so the option of keeping or returning the commodity is affirmed for them, as is the case with the deception that occurs in meeting trade caravans before they reach the town. [1697] See Al-Mughni by Ibn Qudamah (3/498) and Al-Mubdi` by Burhan al-Din Ibn Muflih (3/417).

The option to keep or return the commodity for the person who does not know the value of the commodity, even if they are skilled at bargaining [1698] “Mumakasah” refers to negotiating or haggling over the price, commonly known as “bargaining”. See Al-Sharh al-Mumti` by Ibn `Uthaymin (8/300).

The option to keep or return the commodity is affirmed for the person who does not know the value of the commodity if they are deceived, [1699] In this context, “deception”, or “unjust enrichment” (ghabn) refers to a situation where a person is duped into buying a commodity for a price significantly above its value, in which case the buyer is deceived, or selling for a price significantly below its value, in which case the seller is deceived. If this occurs, the deceived party has the option to revoke the transaction if they were unaware of the actual value of the commodity and are not skilled in negotiating prices. , even if they are skilled at bargaining, and this is a view of the Hanafis, [1700] Some Hanafis gave a verdict affirming the option in the case of extreme deception. Al-Bahr al-Ra’iq by Ibn Nujaym (6/125, 126) and Hashiyat Ibn `Abidin (5/143). Malikis, [1701] Mawahib al-Jalil by Hattab (4/470) and Minah al-Jalil by `Ulaysh (5/218). and Hanbalis, [1702] Al-Insaf by Mardawi (4/286), Sharh al-Zarkashi `ala Mukhtasar al-Khiraqi (3/644), Al-Muharrar fi al-Fiqh `ala Madhhab al-Imam Ahmad (1/329), and Al-Fatawa al-Sa`di by `Abd al-Rahman al-Sa`di, p. 284. and the preferred opinion of Ibn Taymiyyah, [1703] Ibn Taymiyyah said: “If the seller (the one offering the goods) is unaware of the price and is ignorant of the market value, the buyer becomes upset with him. Therefore, Malik and Ahmad both stressed this regarding every ignorant person (non-expert). The ignorant person, also known as "Mustarsil," is someone who neither negotiates nor is aware of the value of the item being sold. He is in a position similar to that of the ignorant seller in terms of pricing. It becomes evident that it is incumbent upon a person not to sell to such individuals except at the known price, which is the market value. This holds true whether these individuals are in need of purchasing from that seller or not. The reason is their ignorance of the value, regardless of whether they are Muslims committed to the seller or not actively participating in negotiations. In sales, satisfaction is considered, and satisfaction follows knowledge. If someone does not know that they are being deceived, they might either accept or reject. If they know they were deceived and still accept, there is no harm in that. However, if they do not agree to the market value, they do not pay attention to their dissatisfaction. Therefore, the Shariah established the option for those who were unaware of the defect or deception.” Majmu` al-Fatawa (28/104). He also said: “The consensus among scholars, including Malik and Ahmad, is that the option being established due to deception for the Mustarsil (the one who does not negotiate) – that is, the one who does not engage in bargaining – is valid. Therefore, those involved in markets cannot sell the Mumaakis (the one who negotiates) at a certain price and sell the Mustarsil – the one who does not negotiate or is ignorant of the price – at a higher price. This practice is disapproved for sellers. The hadith states, "Deceiving the one who does not negotiate is usury." This is similar to meeting trade caravans [before they reach the town], because the one who comes is ignorant of the price.” Majmu` al-Fatawa (28/75). And he was asked: “about someone who prices a commodity at a high rate and sells it for more than the usual value, especially when the buyer may be ignorant of the true value. Is this permissible or not? He answered: If the buyer is Mustarsil - meaning ignorant of the value of the sale - it is not permissible for the seller to deceive him with an excessive price beyond the customary practice. Instead, the seller should sell it to him at the usual value or close to it. If the seller deceives him with an excessive amount, the buyer has the option to annul the sale and revoke it.” Majmu` al-Fatawa (29/359). Ibn al-Qayyim, [1704] Ibn al-Qayyim said: “In the hadith "Cheating a Mustarsil is usury," there are two explanations. The first one is that a Mustarsil is someone who does not know the value of the commodity. The second, which is attributed to Ahmad, is that a Mustarsil is someone who does not negotiate but rather directly asks the seller, saying, "Give me this." It is not permissible for the people of the market to sell the Mustarsil at one price and the Mustarsil at another. This is something that should be rejected by the guardian of the Hsba (market regulation). This is similar to meeting trade caravans [before they reach the town], because the one coming is ignorant of the price.” Al-Turuq al-Hukmiyyah, p. 204. He also said: “If the J?lib (seller) does not know the price, he becomes ignorant of the value. The buyer becomes upset with him. Malik and Ahmad attributed this ruling to every Mustarsil (one who directly asks the seller without negotiating), as he is similar to a J?lib who is ignorant of the price. It becomes clear that it is obligatory for a person not to sell to such individuals except at the known price, which is the value of the commodity. This applies even if they do not need to purchase from him, but because they are ignorant of the value or are not negotiating, and the sale is considered based on satisfaction. Satisfaction follows knowledge. If someone knows that he has been cheated and is content, there is no issue.” Al-Turuq al-Hukmiyyah, p. 221. `Abd al-Rahman al-Sa`di, [1705] `Abd al-Rahman al-Sa`di was asked about their definition of the ‘mustarsil’ as someone who is ignorant of the value and does not engage in negotiation: “Does the presence of either one of these conditions suffice?” He responded: “Their statements are all explicit that both qualifications are necessary, and if someone is ignorant of the value but engages in direct asking (mum?k?sa) while not being Mustarsil, then it is not considered Mustarsil. They justified this by saying that if he is cheated, it is because of his haste and lack of patience. Similarly, if he does not negotiate well but is aware of the value, he is not considered Mustarsil.   This is their intended meaning, may Allah have mercy on them. It is understood from their expressions and justifications, although there is another opinion in the school that absolute cheating necessitates the option, even if the one cheated is not one of these three scenarios. The rationale is that both the buyer and the seller entered into the transaction expecting compensation based on the value of the equivalent or a slight increase or decrease that is not unjust. When cheating occurs in any form, the recourse goes beyond this matter, and it is known that the cheated buyer did not accept gross cheating. Just his impatience does not warrant the rejection of the cheating, and he may trust the seller and his honesty, leaving the negotiation for that reason, and he is satisfied with it. In this case, he does not have the option.   When they say that the Sharia only affirmed the option for Talaqqi and Mustarsil, and we have affirmed Naj?sh (a specific type of cheating) on it for clarification, it can be said that this is present in all forms of cheating. If the Sharia affirms the option, and we know that the reason for it is cheating, we know that this reason extends to everything that includes this meaning, because the Sharia may specify certain things for a general reason, and the ruling may go beyond the specific instances due to the generality of the reason.” Al-Fatawa al-Sa`di, p. 284. and Ibn `Uthaymin. [1706] Ibn `Uthaymin said: “The statement "and does not engage in negotiation" implies that if he negotiates well, then he has no option even if he is deceived. An example is a man who is ignorant of the value of things but is skilled in negotiation. He goes to a shopkeeper and asks about the price of a recorder. The shopkeeper says its value is two hundred riyals and writes a note with that value. The man, thinking that this is the market price, takes the recorder. Later, when he presents it to his friends, they tell him it is sold in the market for eighty riyals. He was deceived by a hundred and twenty. He returns to the seller and says, "This is worth eighty riyals." According to the author, he has no choice because he is skilled in negotiation and can estimate the value to reach eighty riyals. However, the correct view is that he has the option due to his ignorance of the value and the seller's deception. It is not appropriate to do anything other than treat the seller contrary to his intention when he deceived him, saying: He has the choice. If he says, "This man knows buying and selling, why didn't he negotiate with me?" We say: May Allah reward him well; he trusted you, and you are not worthy of trust. Now he has the choice.” Al-Sharh al-Mumti` (8/301). He also said: “The correct opinion is that anyone who is unaware of the value [of a commodity] has the option [to revoke the transaction].” Fath Dhi al-Jalal wa al-Ikram bi Sharh Bulugh al-Maram (3/582).

Evidences:

Firstly, from the Sunnah:

Abu Hurayrah h narrated that the Prophet g said: “Do not meet the importer before they reach the town. Whoever meets them and buys from them, then when the owner of the goods reaches the market, they have the option of declaring the previous transaction null and void.” [1707] Reported by Muslim (1519).

Before the seller reaches the market, they are ignorant of the value of the commodity. Therefore, the Prophet g prohibited the buyer from going out to him and purchasing from him because of the deception and misleading that entails. The Prophet g affirmed the option of keeping or returning the commodity for the buyer when he becomes aware of the reality of the situation, and this applies to anyone who does not know the true value of a commodity. [1708] See Majmu` al-Fatawa by Ibn Taymiyyah (29/359).

Secondly, the Legislator affirmed the option of keeping or returning the commodity in the case of meeting trade caravans before they reach the town, and the reason was deception, and this ruling extends to any type of trade in which deception is found. [1709] See Al-Fatawa al-Sa`di by `Abd al-Rahman al-Sa`di, p. 284.

And thirdly, because of the buyer’s ignorance of the value of the commodity and the seller’s deceiving of him. [1710] Al-Sharh al-Mumti` by Ibn `Uthaymin (8/301).