Some Permissible and Forbidden Forms of Brokerage

So I said, for example, that perhaps some types of it have no relation to brokerage at all. We all know that one cannot say that brokerage is absolutely permissible, nor absolutely forbidden. If we assume there is a hadith cursing the broker, there is no doubt that this hadith is directed at a specific trait present in that broker. So, if the matter is as we say—that we cannot say brokerage is absolutely permissible or absolutely forbidden—then let us now hear about types of brokerage that might be permissible or forbidden. I have been asked repeatedly, "What is your opinion on brokerage?" So I asked, "What do you mean?" This exists in our reality today. I would say to you, "I open an office for selling land, and I know that in such-and-such area there are lands at such-and-such prices, high or low, or buildings, old or new, and so on." My answer, in brief, is: If you are not playing both sides, but rather advising both the seller and the buyer, then this is a prescribed mediation that is not denied, and you take a fee for it without treachery, without deception, and without anything else. This is a type of brokerage that is well known today. As for the hadith you are referring to, I think you will say, "No."

The questioner : No...

The Shaykh : Good, then give us a second example so we can see what jurisprudence requires us to rule on it.

The questioner : ...

The Shaykh : Alright, the matter is finished.

The questioner : ... meaning that at the beginning of the matter... I try to convince you... the percentage... or increase... is not clear between the two parties.....

The Shaykh : This is not permissible. It is clear that there is no advice to the Muslims in it; rather, there is deception and misguidance, and as we said, playing both sides.

The questioner : ...

The Shaykh : That is why, good, but I was surprised that there is a hadith cursing brokers.

The questioner : ...

The Shaykh : In any case, the issue is clear. If brokerage is done with mindfulness of Allah, there is absolutely no objection to it, because it brings the seller and the buyer closer together, as no one goes around the world [looking for a deal].

The questioner : ...

The Shaykh : And upon you be peace. Your voice came out; we need it to come out more than this on the second trip. Yes.

The questioner : ... so here the sale is completed.....

The Shaykh : Of course, both examples share the fact that the goods being sold and bought do not exist. But in the second example, there is a profit of fifteen percent, for example, or less or more; this profit is not important. We need to see if it comes out of the merchant's pocket as a commission for you as the intermediary in this brokerage. If it is from the merchant's pocket, there is nothing wrong with it, because you and he are on clear terms. But if this commission is added to the price of the goods and the buyer pays it, this is not permissible, because it is treachery. He buys based on the price the merchant sells at, so when you add a fifteen percent commission that you want to take from the merchant from whom you will retrieve the goods you requested, that is different, unless you are frank with this customer. You tell him, "The price at the merchant is, for example, such-and-such, but you know in advance or later that I want to take such-and-such percent." If there is such frankness, there is no objection. This is the permissible brokerage. But if you make him think that you are selling to him at the price known today in the country or in the market, while in reality you are taking your brokerage from him by adding this percentage to the price of the goods, this is not permissible.

The questioner : ...

The Shaykh : Well, is the customer obligated to buy when he comes to you?

The questioner : No

The Shaykh : So you did not get it except for his sake.

The questioner : No, sir, when I got it...

The Shaykh : That is why I am asking you if he is obligated to buy. You say no, but how can he not be obligated when you agreed with him?

The questioner : ... I spoke with him; he gave me the specifications he wants...

The Shaykh : No problem, if he comes to you, is he obligated?

The questioner : If he comes, he is obligated...

The Shaykh : To buy this item that you and he agreed on, at the price that you set or will set.

The questioner : Meaning, if he refuses to buy it, do I have to file a lawsuit against him?

The Shaykh : No, it is not necessary to file a lawsuit against him. Allow me to explain: "Obligated by Sharia" means that believers are bound by their conditions. If I buy an item that exists with you, and I pay you the price, and I tell you I cannot take it with me, and I return the price, the contract is valid and he owns it, and you do not have ownership of this goods, correct? So you are obligated to deliver it to him, and he is obligated to take it from you because he gave you the price. Good. Now, I am that man. I came and said, "I want a Zarfayl of such-and-such type, with such-and-such handle, and so on, with good specifications, and it is not with you, and you promised me for tomorrow." I came tomorrow, saw it, and liked it. "How much is the price?" You said, "For example, two pounds." I did not like this price. Am I obligated to buy?

The questioner : No.

The Shaykh : So there is no problem with this example. If it is in this form, there is no problem.

The questioner : ... there are two patterns: one is that you know that... and another pattern is that you contract with him, for example, setting the price... the goods are in my possession, and I do not sell anything that does not exist...

The Shaykh : This is easy if it is described with a precise description. It is not included in the general meaning of his (peace be upon him) saying: because this cannot be sold and bought except in this way, based on the description. However, it is required that the description be very precise, so that it does not become a cause of dispute when the described item arrives and is contrary to some of the specifications mentioned previously. This is permissible.
Abu Layla : I understood one of the examples the professor asked about, which is not permissible. The example I understood is that I, for example, buy goods from merchants, and a buyer comes and does not find the goods with me. I tell him, "I will bring it to you tomorrow or the day after tomorrow," and I buy it with an invoice in my own name personally. If he asks me for an invoice, I give him an invoice from me, not from the merchant himself. What is the ruling on this example?

The Shaykh : This returns to what we said: Does he buy from you at the price it is sold at in the market, so your profit is from the merchant and not from the person? If your profit is from the merchant, there is no problem in our discussion regarding its permissibility. But if your profit is from him, meaning you went to the merchant or he went to buy the item, you or he, at one price, while in the second example you go to buy it as if he went and bought it for one dinar, for example, and you are going to sell it to him for one and a quarter dinars. This quarter you took from him as an addition; you did not take it from the merchant who sold you the goods.
Yes... the goods you take from there, I want a commission of five or ten percent. If it is in this form and you agreed on it, it is permissible, because in this form you become his agent and his representative.
Abu Layla : Professor, he is able to buy it, but he came...

The Shaykh : What do we need now? We have nothing here. We are here now, you, you have one of the two images we mentioned. What is your observation regarding one of the two images you are speaking about? I know that if you told me, you would not have revealed anything unknown to me. You mean because this is your craft and profession. For example, if I want to buy an abaya now, what tells me about the quality of the fabric? I don't know, but you are not exploiting me. I am a Muslim, I entrust my self to you because you are a trustworthy man to me, and so on. And then you go and manipulate this. It is not permissible. There were simple incidents that happened to us in Damascus. One of our brothers who used to attend our lessons, may Allah have mercy on him, he was from Tartus and passed away to the mercy of Allah. He used to sell oil tins. He sold the tin... he sold it to me. Later, I discovered that he sold it to me at a higher price than he sold it to others. Higher, and I am his Shaykh and his teacher, and so on. No, let him treat me the same as others. When I discovered this after a while, we said to him, come here, Abu So-and-so, it was reported to me that you sold at such a price. He said, yes. I said to him, how do you sell at that price, and you sell to me at a higher price? His answer was, why is the profit limited? The profit is limited. Of course, my answer was no, the profit is not limited, but because I trust you, you take an extra amount from me. On the contrary, the issue is what people do. So if it is unavoidable, it must be at the price you sell to others. This is gharar (excessive uncertainty in a contract) and exploitation. It is not honorable and it is not permissible. So my point is that when this person comes to you and asks you to buy something, you need to understand the reality. It is not that in his mind you are going to buy from the market from the merchant. He profits you so that you sell the item at his price. This issue is completely known.
I, for example, was a watchmaker. I would go down to the merchant and take some watches, for example, thirty pounds for one, and I would sell it for thirty-five. I sell it for thirty-five, but he gives me a discount. I do not calculate the difference; I do not take my profit from the customer. No, but at the same price he sells, I sell. But because I buy from him in bulk, he gives me a discount. So my profit came from the merchant, not from the customer. So on this basis, the two images are clear. Do you have anything else?
Abu Layla : Yes, my teacher, now here is a clarification. Sometimes, as our brother mentioned, I buy a job of cartons from one person. We have... so as for me... building materials. I found that the price was lower. So I went back to the other one and said to him, I found a price lower than what you have. He said: You do not distinguish between wholesale and retail... If you buy a dozen or ten from me, it will be... So I profit now...
Abu Yahya : ...

The Shaykh : No, my brother Abu Yahya, the issue is different. The issue is different between me going to buy the watch, for example, from the merchant for thirty, and he sells it for thirty-five. I come, in my turn, as we said earlier, and sell it for thirty-five. So I profited from the merchant. I profited these five from the merchant. This is the image we spoke about regarding that watch. There is a second image you want to talk about. I bought it for thirty, he sells it for thirty-five, I sold it for thirty-seven. I am free, that is fine. This is what you are talking about. But I am talking about an image where you come to me and want a specific type of watches on the basis that I sell you at the same price that I sell to customers. So here there is a difference regarding the case of our deceased brother, may Allah have mercy on him...

The questioner : ...

The Shaykh : ... Here, as we said earlier, does this commission come out of the merchant's pocket or the customer's pocket? Please proceed.
Abu Yahya : So now I faced a problem, I am facing options...

The questioner : ... I hope for an answerThe Shaykh : that clarifies the question as is customary?

The Shaykh : In any case, I see the discussion has become long due to giving examples and discussing some of its images. Now, to obtain the scientific jurisprudential benefit, I ask you to present the question briefly in one or more transactions from what came in the context of your speech, so that we can look at whether it is permissible or not. Is it possible to be brief?

The questioner : ... Is it permissible...

The Shaykh : It is permissible on the condition that this amount comes out of the merchant's pocket and not the buyer's pocket. Good, anything else?

The questioner : ...

The Shaykh : Listen to me, I am going to give you the answer even if we shorten your speech. This image you are describing is different from the first image where the answer is completely clear. The employer knows in which image this other image falls. In other words, you sell an item for five, five, you are allowed to sell it for six, right? But why did you specify the customer that So-and-so the engineer sent you for six, and did not specify a customer that the engineer did not send you for six? Instead, you took from him the lower price, which is five. Here you need to look at the driving factor for you to take this increase, which is originally permissible in Sharia, because profit is not limited, as we all know. But we want to see what made you, as an example you impose, to take an extra amount from the specific buyer, who was sent by the specific engineer. Why did you specify him with this increase? So that this increase does not come out of your pocket.

The questioner : We do not take an extra amount, we have a public price... Because if I want to sell to my brother Abd al-Rahman... I sell him for four and a half, I do not sell him for five and a half...

The Shaykh : But perhaps you sell in the bottom of your heart for four and a half. Allow me, be patient. I, as I say, in the bottom of your heart, you have four and a half, but you announced it as five so that this half is a reserve for you to satisfy that engineer. I mean, an example comes to my mind now that I once told you about on the occasion of installment sales.
A merchant, one of the big merchants in Kuwait, was informed through my channel, through someone else, that he took an increase for installment payments, and this is riba (usury or interest). So what did he do? He is a big car merchant. The price he was selling for on installments, he made it installment and cash. He made it installment and cash at the high price. He unified the price. But before, he was oppressing half the customers who bought from him on installments. Now he is oppressing all the customers who buy in cash and those who buy on installments. This is one price, we did not take an increase. No, rather he took two increases. He took an increase for installments, and he took an increase for cash which he did not take before. So does this mean he followed the intent of the Sharia in its saying: Or is this like what is said: "He was under the rain, now he is under the gutter."
So now, the person you mean, this merchant, has set a price of five for everyone, but he has no objection to selling for less, right. But the question returns to: who do you sell the lower price to? You sell the lower price to the customer who came to you from the engineer's side, so that the increase above the lower price returns to whom? To the engineer. So here the discussion returns: If it is like this, it does not benefit us that we announced the price for the general public as five.

The questioner : No, sir, no problem.

The Shaykh : Is there another image like this?
Abu Yahya : ...

The Shaykh : No problem, Abu Yahya, this is fine. But when someone comes to you from the engineer's side, do you sell to him for five? You do not sell to him for five.
Abu Yahya : I sell to him for five.

The Shaykh : No, the engineer, where will the engineer take from?

The questioner : Here...

The Shaykh : We need to see where the engineer takes from in the commission that you have agreed upon with him.
Abu Yahya : The doubt is not that he takes it for four and a half. The doubt is that I insist on selling to him for five, because later...

The Shaykh : Where is the doubt if you sold to him for five?

The questioner : ...

The Shaykh : My dear, you are the engineer and I am the customer, and I went to Abu Yahya, I saw the dozen that was announced for five, I sell it to me for four and a half.

The questioner : No.

The Shaykh : I say, he is now no, be patient, why? Because he sells at a discount to non-engineers. He sells at a discount, that is fine. When I came to you from the engineer's side and you sold to me for five, where did the engineer take the commission that you agreed upon with him?

The questioner : From the five.

The Shaykh : From where the five? You sold to me for five.

The questioner : The five is from you, and I sold it to the engineer for four and a half...

The Shaykh : I am the one who wants to buy. I am saying I went to him sent from your side, you are the engineer.

The questioner : I sold it for five.

The Shaykh : Be patient, be patient, but you have an agreement with him. Every time you send him a customer, he wants a commission.

The questioner : Yes, I am the employer.

The Shaykh : What is the matter that you are not speaking? My brother, I am Nasser al-Albani. I am the one you sent to buy something from him at the advertised price of five, not the reduced price. Where is he going to take the agreed commission between you and him from now?

The questioner : From ...

The Shaykh : This is what we discussed, the profit you made just now, so where did it come from? Did it come from your pocket?

The questioner : From my pocket ...

The Shaykh : Okay, consider that when you set the price at five, as we said, just as that Kuwaiti did.

The questioner : No, I am not considering that, but it is for the sake of the engineer.

The Shaykh : ... but we hold onto it, so take it out. Take it out.

The questioner : Consider generally that someone might come and embarrass me, someone like the engineer might come... so consider that I am satisfied if someone...

The Shaykh : The important thing is that you never put the engineer in your mind. If you put it in your mind that you are profiting from the customer a certain amount of money for the sake of the engineer, this will ruin your profit...

The questioner : ... May Allah have mercy on you, O Shaykh. Your speech is not harsh, and your understanding of the issue is very broad.

The questioner : ...

The Shaykh : Is this present?

The questioner:...

The Shaykh : But you described them as honorable, you said no need for honor with respect... No, Abu Yahya, if the matter involves custom as Abu Muhammad mentioned, the matter is clear, meaning.

The questioner : It is not permissible for the consultant to work in a way that brings him a profit by contradicting his advice. It is not permissible for him to engage in trade...

The Shaykh : Good, but Abu Muhammad, there is a second issue. This restriction is not like here, our friend sees it, but you must observe the issues we are talking about, yes.

The questioner : ...

The Shaykh : This is exposed and clear.

The questioner : ...

The Shaykh : This is not the picture we were talking about.

The questioner : ...

The Shaykh : Yes, but this is the sensitive point in the matter: from your pocket or from the customer's pocket? But like this, please observe what we mean. Your writing, or that of any other merchant, that the price is five, this does not justify you selling that item for less in order to give the excess on the minimum to whom? To the intermediary. This does not justify you. You must, if you reduce, reduce from the aspect that you want to dispose of your goods from your profit, and he needs to dispose of his goods, meaning you are not keeping in your mind that this person wants a commission from me. Where is he going to look for this commission? From my pocket or from the customer's pocket? If you took an excess from the customer, what do you call it? The margin. This is not enough, because the margin was not placed by Allah, you placed it. So when you placed it, you aimed for something. If among the things you aimed for was that you take five in order to save half or a qirsh from it, for whom? For the broker, for the intermediary. This means you have wronged this customer by this difference. The important thing is what is your intention: .

The questioner : ...

The Shaykh : No, you have ruined it for us. We intended to profit, yes, but by what means? By the means that I do not take from you according to the list, whereas when I take according to the list, it is so that it comes out for the intermediary.

The questioner : ...

The Shaykh : This is not the issue, may Allah reward you. My brother, put whatever you want, but when you want to take the regulated price from one person and a lower price from another, you need to see what the motive is. To take less from Zayd and the regulated price from Bakr from among the people. If what motivated you to take the regulated price is to secure the intermediary, then here is the problem. But the matter is not ambiguous. The intention: .

The questioner : If this customer knows that I am going to take...

The Shaykh : We discussed this with the man, and we told the man: if you tell the customer, "I am going to go to the market and buy the goods for you, so I want a commission of five or ten percent from you," this is clear. And your picture is close to this, meaning he knows. But does he know that it is at your expense or at his expense? And this is the issue. Yes.

The questioner : ...

The Shaykh : ... My brother, without blame, the same answer, the same answer, and we listen and know. Please, go ahead.