The Ruling on Tawarruq Sales and the Difference Between It and 'Inah Sales

Question:
The first message in this episode was sent to the program from Qatar by our brother Muhammad Fahd al-Qahtani. Brother Muhammad asks two questions. In his first question, he says: What is the ruling on a person who buys some goods from someone for a specific amount for a specified period, and then sells these goods at the same time to another person for a price lower than the purchase price because he needs money at that time?

Answer:
In the name of Allah, the Most Gracious, the Most Merciful. Praise be to Allah, and may Allah send prayers and blessings upon the Messenger of Allah, and upon his family and his Companions, and upon those who follow his guidance.
As for what follows:
This transaction is called tawarruq by some jurists, and al-wa'dah by some laypeople. It is when a person buys a commodity on credit and then sells it for a lower cash price because he needs cash to get married, or to pay off a debt on him, or to renovate his residence, or for other purposes. This transaction is permissible according to the correct view.
Some scholars disliked it and prohibited it because, in meaning, it is a sale of cash for cash through the medium of a commodity. However, the correct view is that there is no harm in it, and people need this transaction to fulfill their needs. It falls under the saying of the Exalted: [al-Baqarah: 282]... the verse. It is a form of lending. So, if the seller has the commodity in his possession and in his custody, and then sells it for a known term, or in installments over known terms, there is no harm in that. But he is not allowed to sell what he does not have and then go buy it. No, he only sells what is with him, in his custody, and in his possession. This is because it is established from the Messenger of Allah (peace and blessings be upon him) that he said to Hakim ibn Hizam when he asked about this: . Indeed, Hakim asked him, saying: "O Messenger of Allah! A man comes to me wanting a commodity, but I do not have it, so I sell it to him, and then I go and buy it?" He said to him, may the prayers and peace of Allah be upon him: . And it is authentic from him (peace and blessings be upon him) that he said: .
So, he is not allowed to sell a car or anything else that he does not own but will go and buy. However, if the car, or the gold, or the rice, or something like that is with him, in his ownership, in his custody, in his house, or in his store, or in the market, and he has taken possession of it, there is no harm in selling it for a specified term or over terms. There is no harm in that. And there is no harm for the buyer to sell it, also, for less or more, or for the same amount, if he takes possession of it. The buyer, if he takes possession of it, holds it, and it becomes his property, and he transfers it from the seller's ownership, then he sells it afterwards to whom he wishes. He does not sell it to the one from whom he bought it. He does not sell it back to him, but he sells it to someone else. However, if he sells it back to him for less than the price, it becomes the issue of 'inah, and it is not permissible. But if he sells it to the one who sold it to him for the same amount he bought it for, meaning circumstances changed, or he sells it to him for more, there is no harm. But he does not sell it to the one from whom he bought it for less, for that is not permissible because it is the sale of 'inah. It is when a person buys a commodity for a price in debt or deferred, and then sells it back to the one from whom he bought it for less. This is the very essence of riba; because it is a stratagem to take a small amount of dirhams for a large amount of dirhams over a term, so it is not permissible.
But if he sells the commodity to someone other than the one from whom he bought it, sells it in the market, sells it to another person for a cash price to fulfill his need, there is no harm in that. Yes.

The presenter: May Allah reward you with good.