Understanding Islamic Finance - Doha Academy of Tertiary Studies

Trading in Islamic Commercial Law 137cannot be sold or only those that involve Gharar. Ibn Taymiyah is of the view that thereis no evidence to prove that the sale of every nonexistent item is impermissible thereis another cause for the prohibition of the sale of nonexistent objects and that is Gharar.A nonexistent item cannot be sold, not because it is nonexistent but because it involvesGharar. For example, the “sale for years” (also called Mua‘awamah), in which fruits of atree or an orchard are sold for more than one year to come, and the sale of Habl al Hablahis prohibited. 24 Therefore, with regard to the Prophet’s saying: “do not sell what you do notpossess”, scholars contend that what is meant by possession here is the inability to deliverthe goods. So, from the seller’s part, he must be sure that he can deliver the goods.Nawavi, in his annotation to Sahih Muslim, has reported that people used to buy from thecaravans without weighing, measuring or even estimating precisely. 25 Selling goods onwardcould be unjust to the buyers, so they were asked to take possession before selling. Thisis also evident from the words of Imam Bukhari: “Ibn Umar (Gbpwh) narrated ‘I saw thepeople buy food stuff randomly (i.e. blindly without measuring it) in the life time of the holyProphet (pbuh) and they were punished if they tried to sell it before carrying it into theirown houses. Similarly, a heap of grain was purchased, considering it a specific amount, thepurchaser was asked first to take delivery of the declared amount and then to sell onward’.” 26The rationale behind this seems to be that the seller should take the risk and reward ofhis trade activity. 27 So long as the sold commodity remains with the seller – the buyer hasneither made payment nor taken its possession, its risk and reward are that of the seller.Goods subject to Salam and Istisna‘a and the conditions required for their permission arethe best examples of the permissibility of nonexistent but defined goods. It is commonlyunderstood that Salam goods can also not be sold before taking their possession, and thefollowing Hadith is reported for this: The holy Prophet said: “A person who purchasessomething on Salam, he should not transfer it to others before its transmutation (takingits possession)”. 28 But the sale of Salam goods needs more detail (given in Chapter 10),particularly in view of the fact that the above Hadith is “weak”. 29 Salam is an exceptionand goods purchased through Salam can be sold onward on the basis of (Parallel) Salam. Ifwe were to strictly observe the spirit of this Hadith, Parallel Salam would not be possible.Further, the Salam purchaser undertakes the business risk after the Salam contract is executed;prices may fall or rise, he has to take possession of the goods.Ibn Hazm explains that whatever a person owns should be taken as if it is in his possessionalthough the commodity might be in Hind. 30 Many other jurists, including the Hanafis,have contended that for a lawful sale transaction, it is sufficient that the item of sale mustbe present and fully known, leaving no room for ignorance and dispute, and that physicalpossession is not a necessary condition of a valid sale. 31 It is also ascertained in Majallahthat delivery of the sale item on the part of the vendor is completed when he sets it asidefor the vendee and there is nothing to prevent the buyer from taking physical possession24 Tirmidhi, 1988, No. 1335, p. 32, cf. Al-Dhareer, 1997, pp. 31, 32, see also Muslim (x/95, 200), Nisai, n.d., 7, pp. 293, 294.25 Muslim, 1981, with annotation by Nawavi, 10, pp. 168–169.26 Bukhari, Bab al Kail ’alal Baai’i.27 Tirmidhi, 1988, No. 1308–1033, p. 25.28 Abu Daud 1952, Kitab al Buyoo, Al Salaf la Yohawal.29 Ibn Hajar, 1998, 3, No. 1203, p. 69.30 Ibn Hazm, 7, 1988, p. 475.31 Al-Atasi, 1403 AH, Majallah, Articles 197–200, 262.