Ruling on increasing the price of a commodity in exchange for a deferred payment
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Question:
A man borrowed ten thousand riyals from another man, on the condition that he would repay it after one year from the contract with an increase of two thousand riyals. The transaction is as follows:
The creditor bought a commodity for ten thousand riyals and sold it to the debtor for twelve thousand riyals, on the condition that he would pay the full amount after one year from the contract. The second person sold it to the shop owner for nine thousand eight hundred riyals. It is known that the creditor took possession of the goods first, then agreed with the debtor to pay the aforementioned amount. Is the creditor's method with the debtor valid? Is the debtor's method with the shop owner valid? Is this issue called tawarruq? Or is it one of the ruses of riba?
May Allah protect us and you from its evil. Please give us a ruling, may Allah reward you with the best reward.
Answer:
This issue is called by the scholars of knowledge (the issue of tawarruq). It is: that a man sells to another a commodity that he has owned and taken possession of, for a known price to a known term, then the buyer takes possession of it and disposes of it after taking possession.
The common case is that this is for his need for cash, and this sale in this manner is permissible in the Shari'ah—in the most correct of the scholars' opinions—falling under the saying of Allah the Exalted: [al-Baqarah: 275] and His saying, the Exalted: [al-Baqarah: 282], the verse.
The creditor is not allowed to sell to the one seeking to buy a commodity from the merchants that he has not bought and has not taken possession of; rather, that is invalid. This is due to the saying of the Prophet (peace and blessings be upon him):, and his saying (peace and blessings be upon him) to Hakim ibn Hizam: Sunan Ibn Majah 2187Hasan (Darussalam).
The sale in this issue—meaning (the issue of tawarruq)—is only permissible on the condition that the goods are present with the seller and in his possession. Then it is not permissible for the buyer to sell it while it is with the creditor, until he takes it into his ownership or to the market. He is not allowed to sell it to the creditor for less than what he bought it from him for, because that is taken as a ruse for riba.
Selling it to the creditor for less than what he bought it from him for is not valid. This sale is called (bay' al-'inah), and it is one of the sales of riba. And success is from Allah.
A man borrowed ten thousand riyals from another man, on the condition that he would repay it after one year from the contract with an increase of two thousand riyals. The transaction is as follows:
The creditor bought a commodity for ten thousand riyals and sold it to the debtor for twelve thousand riyals, on the condition that he would pay the full amount after one year from the contract. The second person sold it to the shop owner for nine thousand eight hundred riyals. It is known that the creditor took possession of the goods first, then agreed with the debtor to pay the aforementioned amount. Is the creditor's method with the debtor valid? Is the debtor's method with the shop owner valid? Is this issue called tawarruq? Or is it one of the ruses of riba?
May Allah protect us and you from its evil. Please give us a ruling, may Allah reward you with the best reward.
Answer:
This issue is called by the scholars of knowledge (the issue of tawarruq). It is: that a man sells to another a commodity that he has owned and taken possession of, for a known price to a known term, then the buyer takes possession of it and disposes of it after taking possession.
The common case is that this is for his need for cash, and this sale in this manner is permissible in the Shari'ah—in the most correct of the scholars' opinions—falling under the saying of Allah the Exalted:
But Allah has permitted trade and has forbidden interest
وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَاO you who have believed, when you contract a debt for a specified term, write it down.
يَا أَيُّهَا الَّذِينَ آمَنُواْ إِذَا تَدَايَنتُم بِدَيْنٍ إِلَى أَجَلٍ مُّسَمًّى فَاكْتُبُوهُThe creditor is not allowed to sell to the one seeking to buy a commodity from the merchants that he has not bought and has not taken possession of; rather, that is invalid. This is due to the saying of the Prophet (peace and blessings be upon him):
It is not lawful to combine a loan with a sale, nor to sell what you do not have
لا يحل سلف وبيع، ولا بيع ما ليس عندكDo not sell what is not with you.
لا تبع ما ليس عندكThe sale in this issue—meaning (the issue of tawarruq)—is only permissible on the condition that the goods are present with the seller and in his possession. Then it is not permissible for the buyer to sell it while it is with the creditor, until he takes it into his ownership or to the market. He is not allowed to sell it to the creditor for less than what he bought it from him for, because that is taken as a ruse for riba.
Selling it to the creditor for less than what he bought it from him for is not valid. This sale is called (bay' al-'inah), and it is one of the sales of riba. And success is from Allah.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.