The Issue of Two Sales in One Sale

The Shaykh : There is a hadith in the Musnad of Imam Ahmad, narrated by Sammak ibn Harb (may Allah have mercy on him) from Abdullah ibn Mas'ud (may Allah be pleased with him), who said: And in another wording: Sammak ibn Harb, the narrator of the aforementioned hadith, was asked: What are "two sales in one sale"? He said: "When you say, 'I sell this to you for such-and-such amount in cash, and for such-and-such amount on credit.'" That is, selling on debt. I sell this device to you for one hundred dinars in cash, and for one hundred and twenty, for example, in installments, month by month, according to what you agree upon. This hadith is explicit in prohibiting two sales in one sale. How do we understand that installment sales are [prohibited]? Because the merchant presents a single item in the form of two sales. He says, "In cash, if you buy it and I sell it to you in cash, it is one hundred. And if you buy it and I sell it to you in installments, it is one hundred and twenty." The result is that the sale ends up being one of the two presented options. If he buys it in cash, there is no problem. But if he buys it in installments, that is the problem. Why? Because he took the increase in exchange for the debt. This increase is like if I said to a person—and this is what the Islamic bank does today. If I said to a rich person, "Please, I need to buy a device or a refrigerator or something similar from your neighbor, so lend me the price. Let's say the price is five hundred dinars, and I will give you six hundred dinars in place of the five hundred, or less, or more—it doesn't matter, the point is the example." The rich person says, "No, that is riba. But you go buy this refrigerator, and I will pay the price for you. And the amount you buy it for, you pay me." He buys it there in installments for six hundred, and the rich person pays five hundred. So he takes, in exchange for the five hundred, an increase of one hundred, which he refused to take face-to-face. "Give me five hundred and I will return it to you as six hundred." He said, "That is riba." But he went around and around, and as they say today, "doubled over," and said, "Go, you buy the refrigerator, and I will pay for it, and you pay me the price later... six months. He goes and buys it for six hundred and pays the merchant five hundred, and takes from the six hundred... what is the difference between this and that? There is absolutely no difference. And this has details that we may have to enter into, but I will try not to lengthen the session, because it appears there are other questions. But I say that another hadith has come, clarifying to people that this increase which the merchant takes in exchange for installments is riba. It is explicitly stated in the hadith that this increase which the merchant takes in exchange for installments is riba. That hadith is the hadith of Abu Dawud in his Sunan, through the route of Abu Hurayrah (may Allah be pleased with him), who said: The Messenger of Allah (peace and blessings be upon him and his family) said: You have understood the two sales in one sale from the explanation of Sammak ibn Harb in the first hadith from Ibn Mas'ud. He said, may the peace and blessings of Allah be upon him and his family: That is, the lesser of the two prices. That is his right. Or, if he took the increase, then this increase is riba. The sale on which the transaction settled is the installment sale. And we assumed earlier that this device, for example a refrigerator, is six hundred dinars in cash, and five hundred dinars in cash. He chooses either to buy it in cash for five hundred, or in installments for six hundred. So the poor man, who has no cash to pay and get rid of the increase, agreed to take the refrigerator and have it installed for him, for example, one hundred dinars each month, so he pays six hundred. The Messenger of Allah (peace and blessings be upon him and his family) said: This sixth hundred, if the merchant takes it, it is riba. But if he takes the five hundred, the cash price, that is halal. The increase is riba. These are two hadiths narrated in the books of the Sunnah, and many of our righteous predecessors acted upon them. I mention among the famous jurists and well-known hadith scholars Sufyan ibn Sa'id al-Thawri. And I mention among the Imams of hadith, Imam Abu 'Abd al-Rahman al-Nasa'i, the author of the Sunan al-Sughra, printed in the past, and the Sunan al-Kubra, printed recently. And I mention among the people of language, Ibn al-Athir, the author of al-Nihaya fi Gharib al-Hadith wa al-Athar. They explained "two sales in one sale" as follows: "I sell this to you in cash for such-and-such, and on credit for such-and-such and such-and-such." "Such-and-such" is the cash price, and "such-and-such" is the installment price. This transaction today, let us leave it now, and the bank. It is a transaction that the large and small merchant deals in, and it is a riba transaction, and it is one of the transactions to which the authentic hadith points, in such as his saying, peace be upon him: And there is another hadith, but my knowledge of hadith criticism obliges me to say that there is weakness in its chain, but its meaning ultimately meets with the first authentic hadith. That first hadith is in Sahih al-Bukhari. As for the other hadith, it is in some of the Sunans, and its wording is: So now, this transaction, this transaction is established, and some of the scholars or well-known sheikhs today issue fatwas on it.