What is the ruling on tawarruq and acting upon it?

Question:
May Allah reward you. The honorable scholar says: What is your view, Honorable Shaykh, on the issue of tawarruq, applying the ruling with evidence, and the ruling on acting upon it?

Answer:
Tawarruq is when a person in need of money goes to a merchant and buys a commodity from him for a deferred price, then sells it to someone other than the merchant. He sells it in the market for a spot price, which he receives and uses to meet his need. When the deferred payment comes due, he pays the price of the commodity. The majority of scholars hold that this transaction is permissible, and the needs of the people call for it. It also serves as a protection against resorting to riba (usury or interest). The needs of the people call for it today, and the majority of scholars have permitted it. There is no riba in it, because it is a sale and purchase, so there is no riba in it, if Allah wills.