Business Transactions
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Business Transactions

Allah Subhanahu wa Ta'ala has created human beings in a state of dependence upon one another. Each individual does not own all the things he needs one person has something which he can spare while at the same t me he may need something which others have and which they can spare. Allah has directed people toward exchanging goods and utilities through buying and selling because such transactions make social and economic life function smoothly and encourage people to be productive.

Various types of transactions and exchanges of property were current among the Arabs at the dawn of the Prophet's mission. He approved and confirmed such types of transactions which did not conflict with the principles of the Shari'ah and disapproved and prohibited those business practices which were against the purposes and aims of the Shari'ah. The prohibitions were due to specific reasons, as, for example, trading in haram goods, transactions involving fraud or exorbitant profits, or injustice to one of the contracting parties.


The Prohibition of Selling Haram Goods

Trading in goods which are normally used for committing sin is haram. Examples of such things are swine, intoxicants, and other prohibited foods in general, as well as idols, crosses, statues, and the like. Permitting the sale or trade of such articles implies promoting and propagating them among people, and consequently encouraging them to do what is haram, while prohibiting their sale implies suppressing and ignoring them, thereby preventing people from coming into contact with them. The Prophet (peace be on him) said, "Surely, Allah and His Messenger have prohibited the sale of wine, the flesh of dead animals, swine and idols," (Reported by al-Bukhari and Muslim.)
and also, "When Allah prohibits a thing, He prohibits (giving and receiving) the price of it as well." (Reported by Ahmad and Abu Daoud.)


The Prohibition of a Sale Involving Uncertainty

The Prophet (peace be on him) forbade any kind of transaction which could lead to a quarrel or litigation due to some uncertainty (See the chapter on "The Prohibition of al-Gharar (Transactions Involving Uncertainty)" in Muslim and others.) or which involved an unspecific quantity to be exchanged or delivered. This includes the sort of transaction in which there is no guarantee that the seller can deliver the goods for which he receives payment. Accordingly, the Prophet (peace be on him) forbade accepting money for a stallion's or male camel's covering, for fish in the water or birds in the air which one has not caught, or for the offspring of a camel still in the female's womb, since there is an element of uncertainty as to the outcome in all such transactions.

The Prophet (peace be on him) observed that people sold unripened fruits which were still in the fields or orchards; if the crop were destroyed by blight or some natural calamity, the buyer and seller would quarrel over who was to bear the loss. Hence, the Prophet (peace be on him) prohibited the sale of fruit until they were clearly in good condition (Reported by al-Bukhari and Muslim.), unless they were to be picked on the spot Similarly, he forbade selling ears of corn until they were white and safe from bright, (Reported by Muslim) saying, "Tell me why, if Allah withholds the fruit, any of you should take his brother's property." (Reported by al-Bukhari and others.)

However, not every sale involving what is unknown or uncertain is prohibited; for example, a person may buy a house without knowing the condition of its foundation or what is inside the walls. What is prohibited is selling something about which there is an obvious element of uncertainty which may lead to dispute and conflict, or may result in the unjust appropriation of other people's money. Again, if the risk of uncertainty is small—and this is determined by experience and custom—the sale is not prohibited. For example, one may sell root vegetables such as carrots, onions, and radishes while they are still in the ground, or fields of cucumbers, watermelons and the like. In the opinion of Imam Malik, all such sales of needed items in which the margin of risk is bearable are permissible. (In Al-qawa'id al-nuraniyyah, p. 118, Ibn Taimiyyah says: "The principles laid down by (Imam) Malik concerning sales are superior to those of others, because he took them from Sa'id ibn al-Musayyib, who is the best authority on the fiqh (jurisprudence) of sales." Imam Ahmad bin Hanbal's opinion is close to that of Malik.)


Price Manipulation

In Islam the market is to be free and permitted to respond to the natural laws of supply and demand. Thus, when the prices became high in the Prophet's time and people asked him to fix prices for them, he replied, Allah is the One Who fixes prices, Who withholds, Who gives lavishly, and Who provides, and I hope that when I meet Him none of you will have a claim against me for any injustice with regard to blood or property. (Reported by Ahmad, Abu Daoud, al-Tirmidhi, Ibn Majah, al-Dari and Abu Y'ala.)

With these words the Prophet of Islam (peace be on him) declared that unnecessary interference in the freedom of individuals is injustice and that one should meet Allah free of blame for such a thing. If, however, any artificial forces, such as hoarding and manipulation of prices by certain merchants, interfere in the free market, public interest takes precedence over the freedom of such individuals. In such a situation price control becomes permissible in order to meet the needs of the society and to protect it from greedy opportunists by thwarting their schemes, for the above hadith does not mean that price control is prohibited regardless of the circumstances, even if it removes harm and prevents obvious injustice. Researchers among scholars have concluded that, depending on the nature of the circumstances, price control may at times be unjust and prohibited, and at other times may be just and permissible.

If price control compels people to sell their goods at a price which is not acceptable to them or denies them the reasonable profit permitted by Allah, it is haram. If, on the other hand, price control establishes equity among people, for example, by forcing sellers to accept a price equal to that commanded by other comparable commodities and restraining them from taking more than this, it is allowed—indeed necessary.

The hadith cited above relates to the first type of situation. Accordingly, if merchants are selling a commodity in the customary fashion without any wrong-doing on their part and the price subsequently rises due to the scarcity of the commodity or due to an increase in population (indicating the operation of the law of supply and demand), this circumstance is from Allah, in which case to force them to sell the commodity at a fixed price would be unjust compulsion.

In relation to the second type of situation, should the dealers in a commodity refuse to sell it, despite the fact that people are in need of it, unless they secure a price higher than its known value, they must be compelled to sell it at a price equal to the price of an equivalent commodity. Price control here means nothing more than establishing comparable prices for equivalent commodities and it is therefore in conformity with the standard of justice demanded by Allah Ta'ala. (Refer to Risalat al-hisbah by Ibn Taimiyyah, as well as to Al-turuq al-hikmiyyah by Ibn al-Qayyim, p. 214 ff.)


The Condemnation of Hoarding

Freedom for individual and natural competition in the marketplace is guaranteed by Islam. Nevertheless, Islam severely condemns those who, driven by ambition and greed, accumulate wealth at the expense of others and become rich by manipulating the prices of food and other necessities. This is why the Prophet (peace be on him) denounced hoarders in very strong words, saying, "If anyone withholds grain for forty days out of the desire for a high price, Allah will renounce him." (Reported by Ahmad, al-Hakim, Ibn Abu Shaybah, and al-Bazzar.)
He also said, "If anyone withholds goods until the price rises, he is a sinner." (Reported by Muslim.)
And the term "sinner" here is not to be tlightly. It is thesame epithet which Allah Ta'ala has applied to some of the great tyrants in history, for example: ...Assuredly Pharaoh and Haman and their hosts were sinners. (28:8)
The Prophet (peace be on him) also said, "The man who hoards goods is evil. If prices fall he is grieved and if they rise he is happy" (Razi has mentioned this hadith in his Jami'ah.), thereby exposing the selfish and greedy mentality of hoarders. Again, he said, "He who brings goods to the market is blessed with bounty, but he who withholds them is cursed." (Reported by Ibn Majah and al-Hakim.)

There are two ways of making a profit in a business. One is to withhold the commodity from the market until it becomes scarce and those who need it are unable to find it; then, compelled by their need, they come to the hoarder and pay him the price he demands, although it may be unreasonably high. The other way is to put the commodity on the market, sell it for a reasonable profit, buy more goods and sell them in like manner, and so on. Since this latter practice serves the public interest, a merchant who practices it is both blessed by Allah and well-provided for, as the foregoing hadith states.

A very important hadith concerning hoarding and manipulating prices has been narrated by M'aqal bin Yassar, a companion of the Prophet (peace be on him). The Umayyed governor, 'Ubaidullah bin Ziyad, came to visit M'aqal when he was bedridden due to a grave illness. After inquiring about his condition, 'Ubaidullah asked him, "Do you know of any instance of my having wrongfully shed someone's blood?" M'aqal replied that he did not. "Do you know of any instance," 'Ubaidullah continued, "in which I interfered with the prices of the Muslims' goods?" M'aqal again replied that he did not know. Then M'aqal asked the people to help him to sit up, which they did. He then said, "Listen, O 'Ubaidullah, and I will tell you something which I heard from the Messenger of Allah (peace be on him). I heard the Messenger of Allah (peace be on him) say, 'Whoever interferes with the prices of the Muslims' goods in order to raise them deserves that Allah should make him sit in the Fire on the Day of Resurrection.' "Did you hear this from Allah's Messenger (peace be on him)?" asked 'Ubaidullah, and M'aqal replied, "More than once or twice." (Reported by Ahmad and al-Tabarani.)

On the basis of the text and content of these foregoing ahadith, scholars have deduced that hoarding is prohibited under two conditions: one, that hoarding at a given time is injurious to the people of that country, and two, that the hoarder's aim is to force the price up in order to make more profit.


Interference in the Free Market

Another practice related to hoarding which was prohibited by the Prophet (peace be on him) was a townsman's selling on behalf of a man from the desert. Scholars have explained the situation in the following manner: a stranger would bring some goods to be sold in town at the current market price. A townsman would approach him, saying, "Leave them with me for a while. I will sell them for you when the price is better." Had the non-resident himself sold his goods, he would have done so for a lower price, thereby benefiting the people, while he himself would have made a reasonable profit.

This sort of practice was very common in Arab society when Islam came. Anas says, "Sale by a resident on behalf of a desert-dweller was prohibited to us, even though he might be a blood brother." (Reported by al-Bukhari and Muslim.) From this we learn that for the Muslim the public interest takes precedence over personal relationships. Said the Prophet (peace be on him), A resident (of the town) must not sell for a man from the desert. If people are left alone, Allah will give them provision from one another. (Reported by Muslim.)

This significant expression of the Prophet's, "If people are left alone, Allah will give them provision from one another," establishes a basic principle in the field of commerce: that the market, its prices, and sales, should be left free to respond to internal economic forces and natural competition without manipulation. When Ibn 'Abbas was asked about the meaning of "A resident must not sell for a man from the desert," he replied, "The resident should not be a broker for him."(Reported by al-Bukhari.) From this we understand that if someone were to inform the man from the desert about prices, proffering him good advice and telling him about prevailing market prices without charging him a commission, there would be no harm in it, for giving good advice is part of the religion; in fact, a sound hadith states, "Religion is the giving of good advice," (Reported by Muslim.)
and, "If someone asks your advice, advise him." (Reported by Ahmad.)
However, with regard to the broker, it is quite probable that, in a situation such as that described above, he might neglect the public interest for the sake of his own profit.


The Permissibility of Brokerage

With the exception of such cases, brokerage is permissible, since it is a sort of mediation and connection between the buyer and the seller, which in many cases facilitates a profitable transaction for at least one of them or for both.

In modern times, middlemen have become more necessary than at any time in the past because of the complexities of trade and commerce, which involve all types of exports and imports, and wholesale and retail sales and purchases; brokers play a very important role in keeping things moving. There is nothing wrong, therefore, with the broker's charging a commission for his services. The commission may be a fixed amount or proportional to the volume of sales, or whatever is agreed upon among the parties involved. Al-Bukhari states in his Sahih. Ibn Sirin, 'Ata, Ibrahim, and Hassan saw nothing wrong with commissions charged by brokers. Ibn 'Abbas said, 'There is no harm if one person says to another, "Sell this robe, and if you sell it for more than such and such a price, you may keep the extra amount."' Ibn Sirin said, 'There is nothing wrong if one person says to another, "Sell it for this price and keep the profit, or the profit will be shared between you and me."' The Prophet (peace be on him) said, 'The Muslims must abide by their terms.' (This hadith is reported by al-Bukhari with the chain of transmitters which does not reach back to the Prophet (peace be on him); however, Ahmad, Abu Daoud, al-Hakim, and others have a complete chain of transmitters)


Exploitation and Fraud

In order to prevent the manipulation of the market, the Prophet (peace be on him) also prohibited what is termed najash. (Reported by al-Bukhari and Muslim.) Ibn 'Umar explained that najash signifies someone's bidding for an item in excess of its price without having any intention of actually buying it, but merely in order to induce others to bid still higher. Many times this is pre-arranged for the purpose of deceiving others.

Among the variety of measures which the Prophet (peace be on him) took to keep business transactions as far removed as possible from all kinds of exploitation and fraud was that of prohibiting people from going out of town to buy merchandise which was on its way to the market, telling them to wait until it was brought to the marketplace. (Reported by Muslim, Ahmad, and Ibn Majah.) The reason for this prohibition is that the market place, where the forces of demand and supply determine prices, is the best place for trading transactions. If someone goes out of town to buy from a trader who is bringing merchandise, there is a possibility that the seller, not knowing the current price of his merchandise, may be defrauded. If anyone does buy some of his merchandise in this manner, the seller has the option of canceling the transaction after arriving at the marketplace. (Reported by Muslim.)


"He Who Deceives Us Is Not of Us"

Islam prohibits every type of fraud and deception, whether it be in buying and selling or in any other matter between people. In all situations the Muslim must be honest and truthful, holding his faith dearer than any worldly gain. The Prophet (peace be on him) said, Both parties to a butransaction have a right to cancel it as as they have not separated. If they tell the truth and make everything clear, they will be blessed in their transaction, but if they lie and conceal anything, the blessing will be blotted out. (Reported by al-Bukhari.)
He also said, It is not permissible to sell an article without making everything (about it) clear, nor is it permissible for anyone who knows (about its defects) to refrain from mentioning them. (Reported by al-Hakim and al-Bayhaqi.)

Once, when passing by a grain merchant, the Prophet's curiosity was aroused. He thrust his hand into the heap of grain and found it wet. "What is this, O merchant?" he asked. "It is because of rain," the man replied. The Prophet (peace be on him) then said to him, "Why did you not put it on top so that the people could see it? He who deceives us is not of us." (Reported by Muslim.)

In another report it is said that he passed by a heap of grain which was made to look good by the merchant. The Prophet (peace be on him) put his hand into it and found it to be bad. He told the merchant, "Sell the good and the bad separately. He who deceives us is not of us." (Reported by Ahmad.)

The Muslims of earlier times strictly observed the practices of exposing the defects of what they sold, of telling the truth, and of giving good advice. When Ibn Sirin sold a sheep, he told the buyer, "I would like to tell you about a defect it has: it kicks the fodder." And when al-Hassan bin Salih sold a slave girl he told the buyer, "Once she spat up blood." Although she had done this only once al-Hassan's Muslim conscience required that he mention the fact, even if it resulted in his receiving a lower price.


Frequent Swearing

The sin of deceiving is the greater when the seller supports it by swearing (This means swearing that something is true in the name of Allah. (Trans.)) falsely. The Prophet (peace be on him) told the merchants to avoid swearing in general and, in particular, in support of a lie, saying, "Swearing produces a ready sale but blots out the blessing." (Reported by al-Bukhari.)
He disapproved of frequent swearing in business transactions because first, it is probably done to deceive people, and second, because it reduces respect for the name of Allah.


Withholding Full Measure

One way of defrauding the customer is to measure or weigh incorrectly. The Qur'an emphasized this aspect of business transactions and included it among the ten obligations described in the last part of Surah al-An'am: ...And give full measure and (full) weight, in justice; We do not burden any soul beyond what it can bear.... (6:152)
And elsewhere in the Qur'an Allah Ta'ala says, And give full measure when you measure and weigh with the straight balance; that is most fitting and best in the final determination. (17:35)
He also says, Woe to the defrauders—those who, when they take the measure from people take it in full, but when they measure for them or weigh for them give them short. Do they not realize that they will be raised up again on a mighty Day, a Day when mankind will stand before the Lord of the worlds? (83:1-6)
The Muslim should try to do justice in measuring and weighing as far as it is humanly possible, although absolute accuracy in this regard is unattainable. This is why, following the command to give full measure, the Qur'an adds, "We do not burden any soul beyond what it can bear."

A story is narrated in the Qur'an concerning a people who were dishonest in their business dealings, deviating from justice in weighing and measuring, and being miserly with each other. Allah Subhanahu wa Ta'ala sent a messenger to bring them back to justice and honesty, as well as to the belief in His Unity. These were the people of the prophet Shu'aib (peace be on him), who as a warner and preacher, called on them to Give full measure, and do not be of those who give less (than what is due). And weigh with the straight balance, and do not diminish people's goods nor do evil on the earth, making mischief. (26:181-183)

What is correct in relation to weighing and measuring is correct in relation to all other human affairs and relationships. The Muslim is not permitted to have two standards, one for himself and one for other people, this for the near and dear and that for the public, demanding in full his rights and the rights of those who support him, but when it concerns others, diminishing or depriving them of their rights.


The Prohibition of Buying Stolen Property

In order to combat crime and to confine the criminal within a very narrow sphere of activity, Islam has prohibited the Muslim to buy any article which he knows to have been usurped, stolen, or taken unjustly from its owner; anyone who does so abets the usurper, the thief, or the one committing injustice in his respective crime. Said the Prophet (peace be on him), He who buys the stolen property, with the knowledge that it was stolen, shares in the sin and shame of stealing. (Reported by al-Bayhaqi.)

The passage of time does not render a piece of stolen or misappropriated property lawful, for in Islam the mere passage of time does not transform the haram into the halal nor does it deprive the original owner of his right to it.


The Prohibition of Interest

Islam permits increase in capital through trade. Allah Subhanahu wa Ta'ala says, O you who believe, do not consume your property among yourselves wrongfully, but let there be trade by mutual consent.... (4:29)

At the same time, Islam blocks the way for anyone who tries to increase his capital through lending on usury or interest (riba), whether it is at a low or a high rate, reprimanding the Jews for taking usury, even though they had been prohibited to do so. Among the last revelations are the following verses of Surah al-Baqarah: O you who believe, fear Allah and give up what remains due to you of interest if you are indeed Believers. And if you do not, then be warned of war (against you) by Allah and His Messenger, while if you repent you shall have your capital. Do not do wrong and you shall not be wronged. (2:278-279)

The Prophet (peace be on him) declared war on usury and those who deal in it; he pointed out its dangers to society, saying, When usury and fornication appear in a community, the people of that community render themselves deserving of the punishment of Allah. (Reported by al-Hakim; Abu Y'ala has reported something similar on good authority.)

Among the revealed religions (According to the Qur'an there has been only one true, authentic faith, Al-Islam. Islam means the attainment of peace through conscientious and loving submission to the Will and Guidance of Allah. This was the mission of all Prophets and Messengers in human history. It is the same fundamental faith which was revealed to Moses, Jesus, and Muhammad (peace be upon them). The original revelations given to Moses and Jesus are no longer available in their complete, original and unadulterated form. The Qur'an is the only divine revelation which was meticulously preserved in it's complete, original, and unadulterated form. As such, it is to be used as the criterion to judge the authenticity of the present forms of previous revelations.), Judaism, prior to Islam, had also prohibited interest. In the Old Testament we read, If you lend money to any of My people with you who is poor, you shall not be to him as a creditor, neither shall you require interest from him. (Ex. 22:25)
As for Christianity, the Gospel according to Luke reads, Give away to every one who begs of you, and of him who takes away from your goods, do not demand them back again. (Luke 6:30)
It is, therefore, sad to see that the Old Testament has been subjected to such distortions that the meaning of "My people," which originally had a broader application, later became restricted to the Jews alone, as we read in Deuteronomy, You may lend on interest to a foreigner, but to your brother you shall not lend on inters". (Deut. 23:20)


The Wisdom of Prohibiting Interest

The strict prohibition of interest in Islam is a result of its deep concern for the moral, social, and economic welfare of mankind. Islamic scholars have sound arguments explaining the wisdom of this prohibition, and recenstudies have confirmed their opinions, with some additions and extensions of their arguments.

We confine ourselves to what Imam al-Razi says in his Tafsir of the Qur'an:

First: The taking of interest implies appropriating another person's property without giving him anything in exchange, because one who lends one dirham for two dirhams gets the extra dirham for nothing. Now, a man's property is for (the purpose of) fulfilling his needs and it has great sanctity, according to the hadith, 'A man's property is as sacred as his blood' (Transmitted by Abu Na'eem in Al-hilbah.) This means that taking it from him without giving him something in exchange is haram.

Second: Dependence on interest prevents people from working to earn money, since the person with dirhams can earn an extra dirham through interest, either in advance or at a later date, without working for it. The value of work will consequently be reduced in his estimation, and he will not bother to take the trouble of running a business or risking his money in trade or industry. This will lead to depriving people of benefits, and the business of the world cannot go on without industries, trade and commerce, building and construction, all of which need capital at risk. (This, from an economic point of view, is unquestionably a weighty argument.)

Third: Permitting the taking of interest discourages people from doing good to one another, as is required by Islam. If interest is prohibited in a society, people will lend to each other with good will, expecting back no more than what they have loaned, while if interest is made permissible the needy person will be required to pay back more on loans (than he has borrowed), weakening his feelings of good will and friendliness toward the lender. (This is the moral aspect of the prohibition of interest.)

Fourth: The lender is very likely to be wealthy and the borrower poor. If interest is allowed, the rich will exploit the poor, and this is against the spirit of mercy and charity. (This is the social aspect of the prohibition of interest.) (Tafsir by al-Fakhr al-Deen al-Razi, vol. 7, p. 4.)

Thus, in a society in which interest is lawful, the strong benefit from the suffering of the weak. As a result, the rich become richer and the poor poorer, creating socio-economic classes in the society separated by wide gulfs. Naturally this generates envy and hatred among the poor toward the rich, and contempt and callousness among the rich toward the poor. Conflicts arise, the socio-economic fabric is rent, revolutions are born, and social order is threatened. Recent history amply illustrates the dangers to the peace and stability of nations inherent in interest-based economies.


The Borrower on Interest and the Writer of the Deed

Unquestionably the money-lender who takes interest, getting more from the borrower than his capital, is accursed in the sight of Allah and the people. But Islam, with its characteristic method of dealing with the haram, does not confine the sin to the lender on interest alone; it considers the borrower who pays him interest, the writer of the promissory note, and the witness to it to be among his accomplices. A hadith says: Allah has cursed the one who takes interest, the one who pays it, the one who writes the contract, and the one who witnesses the contract. (Reported by Ahmad, Abu Daoud, al-Nisai, Ibn Majah, and al-Tirmidhi, who calls it sound.)

However, if a person is driven to borrowing money on interest due to some pressing need, the sin will be on the lender alone. Now, to establish such a pressing need certain conditions must be met:

  1. The need must be real, not merely an extension of the scope of one's needs and the desire for luxury. It must be so basic that life is not possible without it, for example, food, clothing, and medical treatment.

  2. This concession is limited to the exact amount needed. Thus, for example, if nine dollars is sufficient, borrowing ten dollars is not lawful.

  3. The borrower must continue to search for ways to escape from his predicament, and his brother Muslims should help him in this. If no other means are found, he can resort to borrowing on interest with no intention of liking it or transgressing the limits, and hope for forgiveness from Allah, as indeed He is Forgiving and Merciful.

  4. He must continue to hate it and regret doing it until Allah opens a way out for him.


Concerning the Prophet's Seeking Refuge with Allah from

The Muslim must be aware that his religion commands him to be moderate in his living habits and thrifty in his financial affairs ...And do not be extravagant; indeed, He does not like those who are extravagant. (6:141) ...And do not squander your wealth wantonly; truly, those who squander are the brothers of the evil ones. (17:26-27)

When the Qur'an asked Muslims to spend in the way of Allah, it did not ask them to spend all but merely a part of their wealth. If a person spends only a part of what he earns, it is not likely that he will become destitute; thus, with moderation in his living habits and control of his spending, the Muslim will not be compelled to borrow The Prophet (peace be on him) disliked the Muslim's being in debt because debt is a worry by night and a humiliation by day. He always asked Allah's protection from indebtedness, saying, "O Allah, I seek refuge in Thee from the burden of debt and from the anger of men." (Reported by Abu Daoud.)
He also said, 'I seek refuge in Thee from unbelief and debt.' A man asked him, 'Do you equate debt with unbelief?' He replied, 'Yes.' (Reported by al-Nisai and al-Hakim.)
In his prayers he would frequently say, 'O Allah, I seek refuge in Thee from sin and debt.' He was asked, 'Why do you so often seek the protection of Allah from debt?' He replied, 'One who is in debt tells lies and breaks promises.' (Reported by al-Bukhari.)
From these statements it becomes clear that borrowing can endanger one's morals.

The Prophet (peace be on him) would not pray the funeral prayer for a person who had died in a state of indebtedness, not leaving behind enough property to repay his loans; he did this in order to discourage others from such an end. In later years, when Allah had enriched him from the spoils of war, he paid the debts of such persons and led their funeral prayers. (This is from what is narrated by Jabir and Abu Hurairah.)

He said, "Everything will be forgiven to the shaheed (martyr in the cause of Allah) except debt." (Reported by Muslim.)

The Muslim who is informed of these ahadith will never resort to borrowing except in the case of dire need, and if he does borrow will always remain mindful of the obligation of repayment. A hadith states, If a man borrows from people with the intention of repaying them, Allah will help him to repay, while if he borrows without intending to repay them, Allah will bring him to ruin. (Reported by al-Bukhari.)
Accordingly, if a Muslim is not to resort to the kind of borrowing which is halal (that is, without interest) without a compelling need, what can we say concerning his borrowing money on interest?


Sale for Deferred Payment (Credit)

While it is best to buy an article by paying cash, it is also permissible to buy on credit by mutual consent. The Prophet (peace be on him) bought some grain from a Jew, to be paid for at specific time, pledging his coat of mail as security. (Reported by al-Bukhari.)

A group of jurists are of the opinion that, should the seller increase his price if the buyer asks for deferred payments, as is common in installment buying, the price differential due to the time delay resembles interest, which is likewise a price for time; accordingly, they declare such sales to be haram. However, the majority of scholars permit it because the basic principle is the permissibility of things, and no clear text exists prohibiting such a transaction. Furthermore, there is, on the whole, no resemblance to interest in such a transaction, since the seller is free to increase the price as he deems proper, as long as it is not to the extent of blatant exploitation or clear injustic, in which case it is haram. Al-Shawkani says, "On the basic of legal reasons, the followers of Shafi'i and Hanafi schools, Zaid bin 'Ali, al-Muayyid Billah, and the majority of scholars consider it lawful." (Nayl al-awtar, vol. 5, p. 153. Al-Shawkani said, "We have compiled a treatise on this subject and have called it 'Shifa al'ilal fi hukum ziyadat al-thamam li mujarrad al-ajal' (The Reason for Increasing the Price Due to Lapse of Time), and have researched it thoroughly.")


Payment in Advance

The Muslim is allowed to make an advance payment of a specified price for a specified quantity of merchandise to be delivered at a fixed time in the future. This type of transaction was prevalent in Madinah when the Prophet (peace be on him) arrived, and he introduced certain changes and conditions in this type of transaction in order to bring it into conformity with the Islamic Shari' ah. Ibn Abbas narrated, "When Allah's Messenger (peace be on him) came to Madinah, they were paying one and two years in advance for fruits, but he then said, Those who pay for anything in advance must do so for a specified measure and weight, with the fixing of a specified time. (Reported by al-Bukhari, Muslim and others.)

This limitation of specifying the measure or weight and time removes uncertainty and misunderstanding. Similar to this was the practi4 of paying in advance for the fruit of a certain number of palm trees, which the Prophet (peace be on him) prohibited because of the possibility of unforeseen losses due to blight. The proper form of advance trade is therefore to specify the measure of weight, rather than selling the fruits of a certain number of trees or the crop of a certain acreage of sown field. However, such a transaction is haram if the owner of the trees or the farm land is clearly being exploited because he needs money.


Partnership Between Capital and Labor

It may be said that Allah Subhanahu wa Ta'ala has distributed talents and wealth among human beings according to a wise plan of apportionment. We find many a talented and experienced individual who does not possess much wealth or none at all, while others have a great deal of money but little or no talent. Why, therefore, should not the wealthy person turn over to the one possessing talents some of his wealth to invest in a profitable business, so that the two may benefit from one another and share the profits according to some agreed-upon formula? In particular, business ventures on a large scale require the cooperation of many investors. Among the populace we find a large number of people who have savings and excess capital but who lack time or the capability of investing it. Why should not this money be pooled and placed under the management of capable people who will invest it in significant, large-scale projects?

We maintain that the Islamic Shari'ah did not prohibit cooperation between capital and management, or between capital and labor as these terms are understood in their Islamic legal sense. In fact, the Shari'ah established a firm and equitable basis for such cooperation: if the owner of capital wishes to become a partner with the working man, he must agree to share all the consequences of this partnership. The Shari'ah lays down the condition that in such a partnership, which is called al-mudaribah or al-qirad, the two parties should agree that they will share the profit if there is profit and loss if there is loss in a proportion agreed upon in advance. This proportion can be one-half, one-third, one-fourth, or any other proportion for one party and the remainder for the other party. Thus the partnership between capital and labor is that of two parties with joint responsibility, each having his share, whether of profit or loss, and whether much or little. If, in the balance, the losses exceed the profits, the difference is to be charged against the capital. This arrangement is not surprising, for while the owner of the capital has suffered a loss in his wealth, the working partner has lost his time and effort.

This is the law of Islam concerning partnership contracts. Conversely, were the owner of the capital to be guaranteed a fixed profit on his capital regardless of the magnitude of the profit or loss, it would be a clear violation of justice and a bias in favor of capital against investment experience and labor; it would also be contrary to the realities of investment, which always contain elements of risk. To guarantee to the person who did not toil or take any risk is the very essence of abominable usury.

The Prophet (peace be on him) forbade the type of partnership on cultivable land which was known as al-muzara'ah (share-cropping) (Reported by Muslim.), in which the contract would give one partner the produce of a specified area of a farm or a fixed amount of grain such as one or two tons. He prohibited this because such a transaction is similar to usury or gambling; for if the farm produced less than the specific amount or nothing at all, one partner would still get his share, while the other would suffer a total loss, which is contrary to justice.

The explicit hadith invalidating share-cropping because of this condition is, in my opinion, the basis of consensus among jurists that no partnership is valid which specifies a fixed profit for one partner in every case, regardless of whether or not the investment was profitable. They say, "Suppose one of the partners makes a condition that he is to receive a specified amount of money. In case the profit does not exceed that amount, he would receive the entire profit, and even if there is no profit, he would receive that much; on the other hand, if the profit is large he will be hurt by the condition of getting only the specified amount. " (In his treatise, Al-Islam wa mushkilatina al-mu'asirah (Islam and Contemporary Problems), Dr. Muhammad Yusuf Musa quotes Sheikh Muhammad 'Abduh and Sheikh Abdul Wahhab as disagreeing with the jurists concerning partnership contracts. They argue that this has no basis in the Qur'an and the Sunnah. With due respect to their opinions, I maintain that the analogy to share-cropping is sufficient to apply it to other partnerships. But Allah knows best.) This reasoning is in accordance with the spirit of Islam, which bases all human affairs on clearly defined principles of justice and fairness.


Partnership Among Owners of Capital

Just as it is lawful for the Muslim to use his own wealth for any permissible purpose or to give it to a capable, experienced person to invest in a joint venture, it is also lawful for him to pool his capital with the capital of others for investment, trade, or any lawful business ventures.

There are all kinds of activities and projects, some requiring intensive labor, others intensive mental expenditure, and still others large capital. By themselves individuals may not be able to accomplish much, but when joined with others, they can achieve many things. Allah Ta'ala says, ...and help each other in righteousness and God-consciousness. (5:3 (2))
Any deed which produces good results for the individual or society, or which removes some evil, is righteousness, and a righteous deed becomes piety if a good intention is added to it. Islam is not content with merely allowing such joint endeavors but encourages and blesses them, promising Allah's help in this world and His reward in the Hereafter as long as these endeavors are within the sphere of what Allah has made halal, far removed from usury (interest) and from ambiguity, injustice, fraud, and cheating in any form. In this connection the Messenger of Allah (peace be on him) said, Allah's hand is over two partners as long as one of them does not cheat the other, but when he cheats his partner, He withdraws it from both. (Reported by al-Darqutni.)
"Allah's hand" refers to His help, inspiration, and blessing. The Prophet (peace be on him) also stated in a hadith quasi that Allah, the Great and Glorious says, I make a third with two partners as long as one of them does not cheat the other, but when he cheats him I depart from them. (Reported by Abu Daoud and by al-Hakim, who calls it sound.)
Razin's versadds, "and Satan comes." (Reported by Razi in his Jami'ah.)


Insurance Companies

We now turn to the important relating to present-day companies which issue life insurance and insurance against hazards and accidents. What is the Islamic position and ruling concerning such companies?

Before answering this question we must first inquire into the nature of such companies and the nature of the relationship between the insured and the insurance firm; in other words, is the insured individual a partner of the firm's owners? If this is the case, every individual insured by the firm should have a share in its profits or losses since this is the meaning of a partnership in Islam.

With regard to insurance against hazards, the insured pays a specified premium during the year. If no accident of the type specified in the insurance policy occurs to the property (shop, factory, ship, etc.) during the year, the company keeps the premiums received and nothing is returned to the insured. If, on the other hand, some calamity occurs, the insured individual is paid the agreed-upon sum. This kind of transaction is far removed from either trade or partnership.

In relation to life insurance, supposing a person takes out insurance for twenty thousand dollars and dies soon after paying the first premium, his beneficiaries are then entitled to the entire sum of twenty thousand dollars. Had this been a business partnership, they would have been entitled only to the amount of the premium which was paid, plus the profit on it. Again, if the insured person fails to pay his premiums after having paid a few of them, according to the terms of insurance contracts he will lose all or a great part of what he has already paid. The least one can say about this is that it is, in the context of the Islamic legal system, an invalid condition.

The argument that the two parties, the insured and the insurance firm, enter into this contract willingly in accordance with their respective self-interest carries no weight; so do the lender and the borrower on interest and two gamblers. The mutual agreement of the two parties has no validity in a transaction which is not based on justice and equity, and which is not devoid of any trace of ambiguity or exploitation. Moreover, since justice, with no harm either to oneself or others, is the ultimate criterion here, a transaction is invalid if it stipulates that in certain situations one party is to take all, with no benefits guaranteed to the other.


Do Insurance Companies Constitute Cooperatives?

It is clear to us that the relationship between the insured and the insurer does not constitute a partnership. The question then is, What is the nature of this relationship? Is it a relationship of cooperation? Are insurance firms to be regarded as cooperatives which are organized by their members to help one another, each member paying a certain amount as his share?

In order to establish a cooperative system on a sound footing in any group which desires to help its members in the event of unforeseen calamity, the following conditions must be met in regard to the money collected:

  1. Every member who pays his allotted share of money pays it as a donation, in the spirit of brotherhood. From this pool of donations help is given to those who are in need.

  2. If any part of this money is to be invested, it should be invested in halal businesses only.

  3. It is not permitted to the member to donate his share on the condition that he will receive a pre-determined amount in the event of an unforeseen calamity. Rather, he will be paid an amount which will compensate his loss or a part of it, depending on the resources of the group, from the pooled monies.

  4. What has been donated is gift from the donor, and taking it back is haram.(Taken from the book, Al-Islam wal-manahij al-ishtirakiyyah (Islam and Socialism), by Muhammad al-Ghazzali, p. 131.)

Apart from some of the Muslim cooperatives and associations in which the individual pays a certain sum monthly as a donation without any right to take it back and with no condition that he will receive a pre-determined amount in case of an unforeseen calamity, these conditions are not met. As far as insurance companies— especially life insurance—are concerned, they do not satisfy these conditions in any respect because:

  1. The insured individuals do not pay the premium as donations; such a thought never occurs to them.

  2. Insurance firms invest their monies in businesses which operate or lend their money on interest. All this is haram and the Muslim is prohibited to participate in such activities; the strictest and most permissive jurists alike all agree on this point.

  3. In the event that the insured survives the term of the contract, he gets back all the premiums he paid plus some additional sum, which is nothing but interest.

Furthermore, insurance is contrary to the whole concept of cooperation among people. While the principle of cooperation requires that the poor and needy be paid more than the rich, the rich, who can afford higher premiums, get back much more in the event of death or an accident than the poor. (In the 6th (1972) edition of the present volume, Dr. al-Qaradawi has cited three additional references about insurance published in the '40's and '50's. (Trans.))


A Modification

In my view insurance against hazards can be modified in a manner which would bring it closer to the Islamic principle by means of a contract of "donation with a condition of compensation." The insured would donate his payments to the company with the stipulation that the company would compensate him, in the event that he is struck by calamity, with an amount which would assist him and reduce the burden of his loss. Such a type of transaction is allowed in some Islamic schools of jurisprudence. If such a modification is effected, and if the company is free of usurious business, one may declare insurance against hazards to be a lawful contract. However, as far as life insurance is concerned, I see it as being very remote from Islamic business transactions.


The Islamic System of Insurance

Our observation that the modern form of insurance companies and their current practices are objectionable Islamically does not mean that Islam is against the concept of insurance itself; not in the least—it only opposes the means and methods. If other insurance practices are employed which do not conflict with Islamic forms of business transactions, Islam will welcome them.

In any case, the Islamic system has already insured the Muslims and others living under its governance in its characteristic fashion, the characteristic which permeates all its teachings and legislation. This provision is accomplished either through mutual help among individuals or through the government and its treasury, for the treasury, known as the bait al-mar, is the universal insurance company for all who reside within the Islamic domain.

In the Islamic Shari'ah we find insurance for individuals against hazards and provision for assisting them to overcome disasters which may befall them. Earlier we mentioned that a person who' is rendered destitute due to a calamity is permitted to ask for financial help, particularly from the administrative authorities, until he is fully compensated or is able to stand on his own feet again. (See the hadith from Qubaisah on pp. 127 of this book in the section on "Work; and Earning a Livelihood.")

We also find the concept of insurance for the heirs of a deceased person in the Prophet's saying, I am nearer to each Muslim than his very self. If he leaves behind some property it is for his heirs, and if he leaves behind a debt or a family with young children, he leaves them to me and they are my responsibility (Reported by al-Bukhari and Muslim.), meaning that they are the responsibility of the Islamic government.

The greatest form of insurance which Islam has legislated for its followers among those deserving to receive zakat funds relates' to the category of gharimeen (those in debt). Some of the early interpreters of the word gharim say, "It denotes one whose house has burned down or whose property otrade has been destroyed by flood or other disasters." Some jurists hold that such a person may be given, from the zakat fund, an amount whicwould restore his previous financial position, even though the amount may reach thousands of dollars.


The Use of Cultivable Land

If the Muslim owns a piece of cultivable land, he must make use of it by planting crops or trees. It is not consonant with Islam that such lands not be used for cultivation, as this is tantamount to rejecting the bounty of Allah and wasting wealth, which the Prophet (peace be on him) prohibited.

In this regard a number of options are available to the land owner:


1. Cultivating the Land Himself

The first option available to the landowner is that he himself cultivate the land. This is commendable, and the owner will be rewarded by Allah for whatever men, beasts, and birds eat of the produce of his farm or garden. As we mentioned earlier, the Ansar among the Companions of the Prophet (may Allah be pleased with them) were farmers.


2. Lending the Land to Others for Cultivation

If the land owner is unable to cultivate the land himself, he may lend it to another person who is able to cultivate it by employing the latter's own equipment, helpers, seeds, and animals. In such a case the land owner is very desirable in Islam. Abu Hurairah narrated that the Prophet (peace be on him) said, "If anyone has land, he should cultivate it or lend it to his brother.'' (Reported by al-Bukhari and Muslim)

Said Jabir, "In the time of the Prophet (peace be on him) we used to do planting on a piece of land and in return would get what remained in the ears after they were threshed. In this way, as the Prophet (peace be on him) said, If anyone has land, he should cultivate it or lend it to his brother for cultivation, or otherwise release it from his ownership. (Reported by Ahmad and Muslim. "Lending it to his brother for cultivation" means without receiving anything in return for it.)
Some early scholars, going by the apparent meaning of this hadith, held the opinion that cultivable land can be used in one of two ways: either the owner cultivates it himself or he lends it to someone else for cultivation, with no return for himself In the latter case, the piece of land remains the property of the owner but the produce belongs to the one who cultivates it.

In the opinion of Ibn 'Abbas, the Prophet's order to lend the cultivable land to others if one does not farm it himself was not intended as command which must be obeyed but only as the recommendation of a laudable act. Al-Bukhari reported that 'Amr bin Dinar said, "I said to Taous (one of the closest companions of Ibn 'Abbas), 'I wish you would leave off share-cropping since people claim that the Prophet (peace be on him) prohibited it.' Taous replied, 'The most knowledgeable among them (that is, Ibn 'Abbas) informed me that the Prophet (peace be on him) did not prohibit it but said, "Lending it free to Your brother is better than asking a fixed sum from him.'' (Reported by al-Bukhari.)


3. Taking a Proportion of the Crop

The third alternative for the landowner is to let out his land to a person who will cultivate it, using the cultivator's own equipment, seeds, and animals on the condition that he is to get a specified percentage, such as half, a third, or whatever is agreed upon, of the total produce of the land; the owner may also make available to the cultivator his own seeds, equipment, animals, or other help. Such an arrangement is termed share-cropping.
Al-Bukhari and Muslim report on the authority of Ibn 'Umar, Ibn 'Abbas and Jabir bin 'Abdullah that the Prophet (peace be on him) gave the people of Khayber the land to work and cultivate, in return for which they were to get half of what it produced.
In support of their position, scholars who consider share-cropping permissible say, It is established and well-known that the Prophet (peace be on him) practiced it until his death and that after him the rightly guided Caliphs practiced it until their deaths, as likewise those who came after them. The wives of the prophet (may Allah be pleased with them) continued this practice after the death of the Prophet himself (peace be on him) until the last one of them had died, and so on. This practice cannot be considered to be abrogated because an abrogation is valid only if it was implemented by the Prophet himself (peace be on him)during his own lifetime. Now, if he practiced a thing until his death, and thereafter his successors and all the Companions (may Allah be pleased with them) acted on it and none of them opposed it, how then is anyone else entitled to invalidate it? And if it was (actually) abrogated during the lifetime of the Prophet (peace be on him), why then did he continue to practice it after abrogating it? And how was it possible that his closest Companions and successors should remain ignorant of its abrogation while the story of Khayber was circulating widely and they were (themselves) acting according to it? And where was the narrator of (the report on this abrogation, that none of them knew him or had heard about him? (AI-mughni by Ibn Qudadmah, vol. 5, p. 384.)

The Prohibited Form of Share-Cropping

The Prophet (peace be on him) prohibited his Companions to practice another form of share-cropping which was quite common at that time. The land owner would give out his land conditional to his getting the produce of one part of it and the cultivator the produce of the remaining part or perhaps half, or to the owner's getting a specified weight or measure of the grain produced and the cultivator the rest. But sometimes one part of the land produced a crop while the other did not, so that one of the two would receive nothing or very little, while the other took everything. Similarly, if the total produce did not exceed the specified weight or measure, the owner would get everything while the cultivator would get nothing.

Such a transaction clearly involves great uncertainty and risk, and is contrary to the spirit of justice. The Prophet (peace be on him) saw that justice demands that both should share the total produce, whether this total is much or little, according to the agreed-upon ratio. Proportions of the total produce must be specified so that if the crop is bountiful, it is bountiful for both; if it is meager it is meager for both, and if nothing is produced, neither of them receives anything. This is the fair distribution for both parties.

Al-Bukhari reported that Rafi' bin Khadij said, "We had the most agricultural land in Madinah, and one of us would rent out his land, designating a part of it for himself. Sometimes a calamity would hit that part while the rest of the land was safe, and sometimes the other way around. Consequently, the Prophet (peace be on him) prohibited us from doing so."

Muslim reported Rafi' bin Khadij as saying, "People used to let out land in the time of the Prophet (peace be on him) in exchange for what they grew by the streamlets or at the borders of the fields, or for a fixed quantity of produce. Sometimes it would happen that the part so set aside was destroyed while the other was safe and sometimes the opposite, and the people had no investments other than this. Hence the Prophet (peace be on him) forbade this practice.

Again, Al-Bukhari reported from Rafi' bin Khadij that the Prophet (peace be on him) asked, "What do you do with your agricultural lands?" The people replied, "We let them out for (the produce on the quarter of their area or for a measure of barley or dates." He said "Do not do that." What is meant here is that the land owner would take this fixed quantity as "overhead" and would also share in some proportion of the remainder, for example, the entire produce of the specified one-fourth of the area, plus one-half of the produce of the remaining three-fourths of the area.

We observe from this that the Prophet (peace be on him) was eager to establish perfect justice in his society and to remove every source of conflict and discord from the community of Believers. Zaid bin Thabit narrated that two people came to the Prophet (peace be on him) disputing about some la, and he said, "If this is what happens among you, then do not let out your farms." (Reported by Abu Daoud.)

The landowner and the cultivator must therefore be mand generous to one another; the landowner should not demand too high a share of the yield and the worker should take proper care of the land. Ibn 'Abbas said that the Prophet (peace be on him) did not prohibit share-cropping but advised the owner and the cultivator to be considerate of each other. (Reported by al-Tirmidhi, who calls it sound.) And when someone said to Taous, "O Abu 'Abdur Rahman, why do you not give up share-cropping, since they claim that the Prophet (peace be on him) forbade it?" he replied, "I help them (the cultivators) and provide for them." (Reported by Ibn Majah.) His concern was not simply that he should earn something from his land regardless of whether those who were employed on it got something or suffered hunger; rather, he helped them and took care of them. That was the true Muslim society.

There may be a landowner who prefers to keep his land idle, not planting any crops or fruit trees on it, rather than renting it to a farmer for a small proportion of the yield, since he may consider the return too little. With this in mind, the caliph 'Umar bin 'Abdul-Aziz issued a decree to all concerned saying, "Let out your land for one-third, one-fourth, one-fifth and up to one-tenth of the yield, but do not leave the land uncultivated."


4. Renting the Land for Money

The fourth option available to the Muslim landowner is to lease the land to the cultivator for a fixed amount of money, gold, or silver. Some well-known jurists have declared this to be permissible, while others consider it haram on the basis of sound ahadith of the Prophet (peace be on him) which prohibit renting out land for money. Among the narrators of these ahadith are two Companions who participated in the Battle of Badr, as well as Raf'i bin Khadij, Jabir, Abu Sa'id, Abu Hurairah, and Ibn 'Umar; all of them report that the Prophet (peace be on him) absolutely prohibited the renting of agricultural land for money. (See Al-muhallah, vol. 8, p. 212.)

Exempted from this prohibition is share-cropping for a specified proportion of the total yield, as is demonstrated by the Prophet's transaction with the people of Khayber. He turned land over to them to cultivate for one-half the total yield and continued to do this until his death; after his death, the rightly guided Caliphs continued to practice share-cropping on a proportionate basis.

The student of the legislative development of this problem comes across a clear exposition by Ibn Hazm, who stated: When the Prophet (peace be on him) arrived (in Madinah), the people used to lease their farms, as is reported by Raf'i and others. This practice had undoubtedly been common among them before the time of the Prophet (peace be on him), and it continued after he became the Messenger; it is not permissible for any sane person to doubt this fact. Then, as is authentically transmitted by Jabir, Abu Hurairah, Abu Sa'id, Zahir al-Badri, and Ibn 'Umar, the Prophet (peace be on him) totally prohibited the leasing of land, thus nullifying this practice; this is certainly correct and there is no doubt concerning the matter. He who asserts that what was nullified (i.e., the leasing of land) has been restored and that the certainty of nullification is not established is a liar and denies the veracity of others saying what he does not know. According to the Qur'an, making such an assertion is haram unless one brings proof for it. And he can never find a proof for it except in the instance in which the land is let for a given proportion (such as one third or one-fourth) of the total yield, as it is authentically reported that the Prophet (peace be on him) did this with the people of Khayber after prohibiting it for several years, and he continued to give them land on a share-cropping basis until his death. (AI-muhallah, vol. 8, p. 224.)

A group of early jurists hold the same opinion. Taous, the jurist of Yemen and one of the greatest of the second generation Muslim scholars, disliked renting land for silver or gold but saw no harm in renting it for one-third or one-fourth of the yield. When someone disputed with him, saying that the Prophet (peace be on him) had prohibited this, he replied, "Mu'ad bin Jabal, the governor of Yemen appointed by the Prophet (peace be on him), arrived here and gave out the land for one-third or one-fourth (of its yield), and we continue this practice to this day." Thus, in his opinion, renting land for gold or silver was disapproved but share-cropping was permissible.

Reasoning by Analogy Implies No Leasing for Money

Correct reasoning by analogy (qiyas) based on Islamic principles and sound and clear texts leads to the conclusion that the leasing of cultivable land for money is haram:

  1. The Prophet (peace be on him) prohibited the leasing of land for a fixed amount of the yield such as one or two tons, and permitted share-cropping only on the basis of a proportion such as one-half, one-third, or one-fourth—that is to say, on a percentage basis. Such a basis is just and equitable, as both partners share in the profit if the land is productive and in the loss if blight strikes the crop. However, if one party is guaranteed a profit while the other has to take the risk of ending up with nothing for his effort and toil, the whole transaction resembles gambling or a usurious contract. If we reflect on the matter of leasing land for money in this light, what difference do we find between the last-mentioned practice and the type of share-cropping which is prohibited? In both the owner of the land is guaranteed his share in the form of money regardless of what happens to the land, while the lessee must gamble his effort and labor, not knowing whether he will gain or lose.

  2. When the owner of an article lends it to another person and charges rent for the use of it, he is rightfully entitled to this rent in consideration of the fact that he prepared the article in question for the renter's use; as the article becomes worn out by usage and depreciates over time, the owner deserves compensation. But as far as land is concerned, in what way has the owner made it ready for the lessee's use, since indeed, it is Allah and not the owner who makes the land ready for cultivation. Again, how does land become worn out or depreciate by cultivation, since land is not like buildings or machinery which depreciate over a period of time or get worn out by being used?

  3. The person who rents a house lives in it, thus receiving an immediate benefit, while the man who rents a piece of machinery uses it and thus derives an immediate benefit. But the man who rents a piece of land does not benefit from it at once, nor are his benefits assured. When he rents it he receives no direct benefit from it, as in the case of renting a house, but works hard, plowing and planting, in the hope of benefiting from it at a later date. His hope may be fulfilled or it may not; consequently, any analogy between renting land and renting a house and the like is a false one.

  4. In the two Sahihs of al-Bukhari and Muslim it is reported that the Messenger of Allah (peace be on him) forbade the sale of fruits until they were obviously in good condition and of ears of grain until they were ripe and safe from blight. He gave the reason for this prohibition by saying, "Tell me why, if Allah withholds the fruit, any of you should take his brother's property."

If this is the position relative to selling fruits which have appeared, but the safety of which is not assured, so that if they are ruined by some calamity their sale would be nullified, how is it possible for a person to take money for the use of a piece of cultivable land which has not yet been plowed or planted? Is it not more appropriate that he be told, "Tell me why, if Allah withholds the fruit, you should take your brother's property?"

I myself have witnessed how certain cotton fields were struck by an infestation of caterpillars known as doodah until nothing was left of them except dry stalks. Ne, the owners of the land demanded the rent, and the lessees had no choice except to pay it, obliged by the conditions of the contracts which they had signed under grave necessity. Wthen is the equality and justice so eagerly sought by Islam?

Consequently, there is no denying the fact that justice cannot be achieved except through share-cropping on a proportionate basis,_ according to which the gain or loss accrues to both parties alike. (Concerning this subject, refer to what has been said by Ibn Hazm in Al-muhallah vol. 8, Ibn Taymiyyah in Al-qawaid al-nuraniyyah; Abul 'Ala Maududi in Milkiyyat al-ard fil-lslam; and Professor Mahmoud Abu Sa'ud in his article, "Istighlal al-ard fil-Islam," published in Al-Muslimoon.)

Although Shaikh al-Islam Ibn Taymiyyah considers the leasing of land to be halal, he nevertheless remarks that share-cropping is more akin to the justice of the Shari'ah and its principles, saying "Share-cropping is preferable to renting and closer to justice and to the principles of the Shari'ah, since in this case both parties share in the profit or loss, in contrast to leasing for rent, under which the land owner takes his rent, while the lessee may or may not receive the harvest. (From Ibn Taymiyyah's treatise, Al-hasbah fi al-Islam, p. 21.)

Another great thinker, Ibn al-Qayyim, commenting on the oppression perpetrated by the rulers and military personnel on farmers during his time, says: Had the soldiers and the rulers relied on what Allah and His Messenger (peace be on him) have legislated and followed the practice of the Messenger (peace be on him) and of the rightly-guided Caliphs in their dealings with the farmers, Allah would have showered His blessings on them from the sky and the earth; they would have been given to eat from above their heads and from beneath their feet, and from that one-fourth of share-cropping would have received many times more than they receive by oppression and tyranny. But their ignorance and greed prevented them from doing anything but committing oppression and injustice, and thus Allah withheld His blessings and His provision from them. In addition to being deprived of Allah's blessing in this world, they will receive His punishment in the Hereafter. If it is asked, What is the legislation of Allah and His Messenger (peace be on him) and the practice of the Companions in this regard so that one may follow it' the reply is this: The equitable form of share-cropping is that in which both the landowner and the cultivator are on equal footing, neither of them enjoying any of those privileges for which Allah has sent down no authority. These customs which they (the soldiers and rulers) have introduced are ruining the country, corrupting the people, and have kept away Allah's help and blessings. Many of the rulers and soldiers are consuming what is haram, and if the body is nourished by what is haram, the Fire is its fitting abode. Such equitable share-cropping was the practice of the Muslims during the time of the Prophet (peace be on him) and during the time of the rightly-guided Caliphs. Such was the practice of the families and descendants of Abu Bakr, 'Umar, 'Uthman, 'All and of the families of other emigrants (muhajireen). Great Companions of the Prophet (peace be on him) such as Ibn Mas'ood, Ubay bin K'ab, Zaid bin Thabit, and others expressed their opinions favorably concerning it, and this was also the opinion of the jurists who rely on the hadith, such as Ahmad bin Hanbal, Ishaq bin Rahawait, Muhammad ibn Isma'il al-Bukhari, Daoud bin 'All, Muhammad bin Ishaq bin Khazimah, and Abu Bakr bin Nasr al-Maruzi. Other great Muslim scholars, such as al-Laith bin Sa'd, Ibn Abu Laila, Abu Yusuf, Muhammad bin al-Hasan and others, have all expressed the same opinion. The Prophet (peace be on him) made an agreement with the people of Khayber that they would work the land for half of the produce of fruit and crops, spending their own money for the preparation of the land and the seed. This agreement remained in effect during his lifetime and thereafter until 'Umar exiled them from Khayber. Accordingly, the scholars who say that the seed may be provided either by the worker alone or by both the partners are entirely correct. Al-Bukhari in his Sahih mentions that 'Umar ibn al-Khattab employed people with the stipulation that if he ('Umar) provided the seed, his share would be half and if they brought the seed their share would be more than half. (AI-turuq al-hikmiyyah fil-lslam by Ibn Qayyim, pp. 248-250.)

In all the reports-which have reached us from the time of the Prophet (peace be on him) and his Companions, we find that the cultivator's share was never less than one-half, and in some cases it was more. This division, according to which the cultivator's share would not be less than half, as was allotted by the Prophet (peace be on him) to the Jews of Khayber (Refer to what is said by Ibn Hazm in Al-muhallah, vol. 8; Abul 'Ala Maududi in Milkiyyat al-arc fil-Islam, and Mahmoud Abu Sa'ud in his article, "Istighlal al-ard fil-Islam," published in Al-Muslimoon.), appeals to the mind, for it is not appropriate that the share of the land, which is an inanimate thing, should be greater than the share of the human, the cultivator.


Partnership in Raising Animals

Partnership in raising animals is quite common in Muslim countries, especially in villages. One of the partners puts up all or a part of the price of the livestock and cattle, while the other partner raises them; the two then share the yield and the profits of this joint venture.

In order to form an opinion concerning this partnership, we should first look at its various forms:

  1. In the first form of such a business, the partnership is entered into for purely commercial purposes, for example, raising calves for beef or cows and water buffalo for milk production.
    It is supposed here that one partner contributes the price of the animals and the other contributes the effort, that is to say, the management and supervision; the expenses of feeding, watering, and the like are borne by the joint partnership and not by one partner alone. After a sale is made, the feeding expenses are deducted from the proceeds before dividing up the profits in the agreed-upon proportions. It is not just that one partner alone be required to bear all the feeding expenses without receiving any commensurate return, while the profits are divided between the two; this point is quite clear.

  2. The second form of such a business is the same as the first except that the partner who manages the business also bears the feeding expenses and in return benefits from the milk or makes use of the animals in the field for plowing, irrigating, or planting; this is the situation when large animals are involved. We see no harm in such a contract. Although one may not be able to balance exactly the cost of feed with the benefits derived from milking or working the animal, so that there is an element of uncertainty about it, we still prefer to consider this arrangement halal. The element of risk is negligible, and there are other examples of such contracts which are permitted by the Shari'ah. In the sound ahadith concerning mortgages, the Prophet (peace be on him) stated the permissibility of using an animal which is mortgaged for riding or milking, saying, "A mortgaged animal may be used for riding or milking by the person who bears the expenses of feeding it.'' (Reported by al-Bukhari on the authority of Abu Hurairah.)

In this hadith the Prophet (peace be on him) equated spending on feeding the animal with using it for riding or milking. Accordingly, if this type of mortgage is allowed for people's mutual benefit, with the possibility that the expenses of feeding may be more or less than the benefit derived from the animal by using it for riding or milking, we see no harm in allowing a similar arrangement in the case of partnerships in raising animals, as the needs of people are better served in this manner. This is my own deduction from this hadith, and I hope it is correct.

However, if the partnership is in raising young calves which cannot be used for work ofor milk with the stipulation that the price is to be paid by one partner and the feeding expenses by the other, the rules of Islam do not permit such an arrangement. The partner who bears the cost of feis the only loser, receiving no return in the form of work or milk, while the other partner has the clear advantage. Such an arrangement is contrary to the justice which Islam seeks to establish in every transaction. However, if the two partners share the cost of feeding and raising the animal until it reaches the age of usefulness, such an arrangement is, in our view, halal.



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