Understanding Islamic Finance - Doha Academy of Tertiary Studies

Trading in Islamic Commercial Law 145However, Ibn Taymiyah and Ibnul Qayyim allow certain types of suspended sale, not seeingany Gharar in the same. To them, such conditions are permitted to be attached to sales that donot involve Gharar and Riba. Ibn Taymiyah rejects only those stipulations which contradicta clear provision of the Qur’ān, the Sunnah or the scholarly consensus, or which contradictthe very object of a contract, nullifying it. Ibn Hazm, in al-Muhallah, has maintained seventypes of conditions that can be enforced, including Rihn in Bai‘, delay in payment in a creditsale (with stipulated time of payment), traits or features of the goods to be traded and otherconditions mutually agreed upon and not against the rules of Sharī´ah. 64The holy Prophet is reported to have said: “unlawful are a sale and a loan (Bai‘ wal Salaf),or two stipulations in a sale, or a sale of what you do not have.” 65 Imam Malik defined Bai‘wal Salaf, the contract of selling and lending, as being like one man saying to another: “Ishall purchase your goods for such and such if you lend me such and such”. If they agree toa transaction in this manner, it is not permitted. If the one who stipulates the loan, abandonshis stipulation, the sale is permitted. Shah Waliullah has explained it as co-mingling of aloan with a sale, which involves Jahl/hazard and is therefore not valid. 66 The Prophet (pbuh)is reported to have said: “Prevent them from making a selling and lending (contract)(concurrently) . 67 Imam Ahmad explained it as if a person gives a loan to someone andthen sells to him something at a higher than market price. 68Combining contracts which are conditional upon each other confuses the rights andliabilities of the parties and obstructs fair remedies in the event of default, thereby openinga door to Riba and Gharar. In this regard, Ibn Taymiyah is the most liberal, objecting onlyto the combination of onerous and gratuitous contracts, such as sale and loan (Qard), sinceby such arrangement parties can easily hide an illegal compensation for the loan. Modernscholars seem to follow this view, since the combination of contracts occurs quite frequently.One alternative in this regard is to combine contracts informally, without legally conditioningone on the other. Tawarruq, for example, is a transaction whereby a needy person buyssomething on credit and then immediately, in a separate transaction with another party, sellsit for cash. Most scholars have declared this permissible. Such a ruling reflects the fact thatbehaviour like this cannot be regulated by law but only by moral ruling. Sharī´ah principlesrequire that the exchange value should neither be bunched with gift nor made contingentupon any loan or Shirkah condition. For example, a person, says: “Sell me this; I will giveyou that much gift in addition to price”. 69 This involves Gharar and Jahl and the seller shouldrather decrease the price so as to determine exactly the counter value paid by the buyer.6.9 BAI‘ AL‘ARBŪN (DOWNPAYMENT SALE)‘Arbūn sale has been defined as a sale of downpayment, with the condition that if the buyertakes the commodity, the downpayment will become part of the selling price, and if he doesnot purchase the commodity, the advance money will be forfeited. 70 Two traditions of the64 Ibn Hazm, 1988, 7, pp. 319–331, No. 1447.65 Tirmidhi, 1988.66 Waliullah, 1353 H, 2, p. 28; Nisai with Sharah Al Sayyuti, 7, p. 295.67 Tirmidhi, 1988, No. 1257, p. 9.68 Ibn Qudama, 1367 AH, 4, p. 235.69 Al Baraka, 1997 (6: 24), p. 101.70 Al-Marghinani, iv, p. 232; Al-Baji, 1332 AH, III, p. 495.