Principles of Islamic Economy

Principles of Islamic Economy

Islam did not introduce independent economic principles which were divorced from other aspects of life, in the manner of positive concepts. Islam has a realistic view towards life. In its opinion, all aspects of life are inter-dependent and its materialist side has to rely on its spiritual side. For this reason, Islam's economic principles are mixed with others which may be material, social or educational.

Nor does Islam, treat economics superficially, it makes a deep study of it, and in all other matters, it tries to find out the secrets of each problem. In The Holy Book and The Sunna these sound principles, based on a natural and realistic footing, are to be found everywhere. They are mentioned in these two sources in a way which follows the latest principles of education. This makes them directives for good behavior which can be easily assimilated and not just set principles which cannot reach the heart and which are difficult to apply except through violence and authority.

Islam allows ownership and gives this right to everybody, provided no harm is to be done to individuals or groups of individuals. It left to society the regularizing of its affairs within these limits according to environment and circumstances related to time and space. If the application of these principles is carried out properly and precisely, Islam is confident of their good results.

It is easy for everyone studying The Holy Book and The Sunna to realize how Islam deals with economy. Islam's way of approaching this can be summarized under the following points:
1 - Developing man's mind :

The Relation between man's mind and the economy is a powerful one, since the human mind is a sound measurement which man has to exploit not leave idle Allah says what means :

" In the creation of the heavens and the earth, and the alternation of night and day, and the ships that run in the sea with that which profits men, and the water that Allah sends down from the sky, then gives therewith to the earth after its death and spreads in it all (kinds of) animals and the changing of the winds and the clouds made subservient between heaven and earth, there are surely signs for a people who understanding. (The Holy Quran)

The Quran repeats this meaning many times and in many chapters. It teaches man how to contemplate, and then how to order his relation with his world, in order that he may start on his own from the beginning, without any disturbance or distortion.

2- Faith in Allah is essential for man :

If man thinks deeply he will soon have faith in Allah. if such a man continues contemplation and thought, endeavoring to know about time and space and whatever numberless and changing worlds they include, he will feel that he is an atom in these worlds, which are ordered by sound and steady laws and which aim at certain objectives known to none except Allah. Submissively and quietly, he recognized only Allah and fears neither poverty nor harm. Allah says what means :

Those who believe and whose hearts find rest in the remembrance of Allah. Now surely in Allah's remembrance do hearts find rest. Those who believe and do good a good final state is theirs and goodly return And might belongs to Allah and His Messenger and the believers, but the hypocrites know not. (The Holy Quran)

3- Recognition of Private Ownership:

(i) Man must recognize and admit this principle. Allah says what means:

" Who make the earth a resting place for you and the heavens a structure, and sends down rain from the clouds then brings forth with it fruits for your sustenance; so do not set up rivals to Allah while you know. And make not over your property, which Allah has made a (mean of) support for you, to the weak of understanding, and maintain them out of it, and clothe them and give them a good education. (The Holy Quran)

The verses of The Holy Quran which deal with this point are numerous and there is insufficient space to deal with them here.

(ii) Combating of divergent opportunities regarding ownership : There should not be discrimination regarding, ownership due to birth, race, color or wealth. persons, are equal and only by the merit and worth of work can a man be superior. Allah says what means:

"And that man can have nothing but what he strives for. O people, keep your duty to Allah, Who created you from a single being and created its mate of the same (kind), and spread from these two many men and women. And keep your duty to Allah, by Whom you demand one of another (your rights), and (to) the ties of relationship. Surely Allah is ever a Watcher over you. O mankind, surely We have created you from a male and a female, and made you tribes and families that you may know each other. Surely the noblest of you with Allah is the most dutiful of you. Surely Allah is Knowing, Aware. (The Holy Quran)

(iii) Delineation of the means for acquiring possessions : To have money is not a goal in itself, but a means by which life becomes stable and prosperous. In this respect, the fundamental principle of ownership that man can own anything without resorting to violence, should be taken into account. Man is forbidden from using force in obtaining ownership. Beyond this man is free to own anything. Allah says what means :

Say : The bad and the good are not equal, though the abundance of the bad may please thee. So keep your duty to Allah, O men of understanding, that you may succeed. Say Allah forbids only indecencies, such of them as are apparent and such as are concealed, and sin and unjust rebellion, and that you associate with Allah that for which He has sent down no authority, and that you say of Allah what you know not. (The Holy Quran)

To achieve that goal, Islam ordains the following:

(i) Individuals are forbidden to acquire money through gambling because to gamble is to usurp another's money without reward and because it constitutes an infringement of the rights of society, as opposed to the individual. It makes a member of particular society unable to perform his duties towards the community he lives in. Society requires from every member the offering of productive work. Allah says what means :

"O you who believe, intoxicants and games of chance and (sacrificing to) stones set up and (dividing by) arrows are only an uncleanness, the devil's work; so shun it that you may succeed. The devil desires only to create enmity and hatred among you by means of intoxicants and games of chance, and to keep you back from the remembrance of Allah and from prayer. will you then keep back? (The Holy Quran)

(ii) People are forbidden from colleting money through usury. Usury increases the value of capital and encourages people with money not to work. In addition to that, it harbors hatred in the souls of the needy. In such a ease, the community cannot be stabilized and individuals feel no safety. Allah says what means:

" Those except as he arises who swallow usury cannot arises whom the devil prostrates by (his) touch. That is because they say, Trading is only like usury. And Allah has allowed trading and forbidden usury. To whomsoever then the admonition has come from Allah, and he desists, he shall have what has already passed. And his affair is in the hands of Allah. And whoever returns (to it) - these are the companions of the Fire : therein they will allude - Allah will blot out usury, and lie causes charity to prosper. And Allah loves not any ungrateful sinner. And whatever you lay out at usury, so that it may increase in the property of man it increases not with Allah; and whatever you give in charity, desiring Allah's pleasure, these will get manifold. (The Holy Quran)

(iii) Islam prevents the accumulation of wealth by plundering and exploiting the weakness of others. Allah says what means:

" And swallow not up your property surely Allah is ever Aware of what you do among yourselves by false means, nor seek to gain access thereby to the judges, so that you may swallow up a part of the property of men wrongfully while you luiow. O you who believe, devour not your property among yourselves by illegal methods except that it be trading by your mutual consent. And kill not your people. Surely Allah is ever Merciful to you. Those who swallow the property of the orphans unjustly they swallow only fire into their bellies. And they will burn in blazing fire. Surely Allah commands you to make over trusts to those worthy of them, and that when you judge between people you judge with justice. Surely Allah admonishes you with what is excellent. Surely Allah is ever Hearing. Seeing. O you who believe, be maintainers of justice, bearers of witness for Allah, even though it be against your own selves or (your) parents or near relatives - whether he be rich or poor, Allah has a better right over them both. So follow not (your) low desires, lest you deviate. And if you distort or turn away from (truth), surely Allah is ever Aware of what you do. (The Holy Quran)

(iv) The organization of relations between employees and employers. Islam ordains that such relations must be founded on a basis of the mutual exchange of services and equality between all. Allah says what means :

" Do they apportion the mercy of Allah? We portion out among them their live hood in the life of this world, and We exalt some of them above others in rank that some of them may take others in service. And the mercy of thy Lord is better than that which they amass". (The Holy Quran)

The Prophet Muhammad, peace be upon him, says on this point (The Muslim is the brother of the Muslim he should not do injustice to his brother nor leave him to the mercy of others). By adopting this principle, the morale of the worker rises and the employer's attitude towards him becomes free from any sense of exploitation or monopoly. Everybody has to offer something in order to obtain for himself whatever he is able or needs to obtain. Relations between both parties are to be based on collaboration, following the Prophet's words "There should be no harm for anyone".

(v) Islam combats man's excessive desire for ownership which may oblige one to resort to objectionable means or spend beyond his capacity in order to acquire something he does not need. Ownership is not an aim but a means for achieving cooperation between peoples in an attempt to secure happiness and welfare. The Holy Quran has a number of verses which explain that wealth and riches, like anything else, are determined by Allah and no power other than Allah's can increase or decrease what He decides for each human being. Allah says what means:

" Or who is it that will give you sustenance if he should withhold His sustenance? Nay, they persist in disdain and aversion. Is he who goes prone upon his face better guided or he who walks upright on a straight path? (The Holy Quran)

The Prophet also warns people against going to extremes.

As a practical religion, Islam guarantees for people their necessities. In case man should become unable to meet his requirements through his personal effort, the society in which he lives has to look after him. In such a case, Islam allows such a man to obtain money from the state treasury (Beit al Mal). Allah says what means:" Alms are only for the poor and the needy, and those employed to administer it, for those whose hearts are to be propitiated, for the captives for those in debt and in the way of Allah and for the wayfarer - an ordinance from Allah. And Allah is Knowing, Wise. (The Holy Quran).

(vi) Islam defines the ways in which a man may enjoy whatever he possesses. In doing so, it never restricts man's liberty, but it sets up a barrier between man and excess in enjoying himself lest he should forget the others who live with him in the same community, or tends to usurp their rights. In this context Islam introduced some prohibitions and imposed restriction. Allah says what means:

" O ,men, eat the lawful and good things from what is in the earth, and follow not the footsteps of the devil, Surely he is an open enemy to you. O you who believe, forbid not the good things which Allah has made lawful for you and exceed not the limits Surely Allah loves not those who exceed the limits. And eat of the lawful and good (things) that Allah has given you, and keep your duty to Allah, in Whom you believe. (The Holy Quran)

The Quran not only asks people to be reasonable in enjoying themselves, but warns those who deviate from the right path and tells them that they will go astray. Allah says what means :

"They are losers indeed who kill their children foolishly without knowledge, and forbid that which Allah has provided for them, forging a he against Allah. They indeed go astray, and are not guided. And He it is who produces gardens, trellised and untrellised, and palms and seed - produce of which the fruits are of various sorts, and olive and pomegranates, like and unlike. Eat of its fruit when it bears fruit, and pay the due of it on the day of its reaping, and be not prodigal. Surely He loves not the prodigals. And of the cattle (He has created) some for burden and some for slaughter. Eat of that which Allah has given you and follow not the footsteps of the devil. Surely he is your open enemy. Eight in pairs of the sheep two and of the goats two. Say Has He forbidden the two males or the two females or that which the wombs of the two females contain? Inform me with knowledge, if you are truthful; and of the camels two and of the cows two. Say : Has He forbidden the males or the two females or that which the wombs of the two females contain? Or were you witnesses when Allah enjoined you this? Who is then more unjust and he who forges a lie against Allah to lead men astray without knowledge? Surely Allah guides not the iniquitous people. (The Holy Quran)

(vii) Islam develops in man the spirit of Cooperation with others. It ordains that every man should give the needy a specified proportion of his wealth. By doing this, hatred against the wealthy people cannot be harbored by the poor. This is in accordance with Islam's aim which enjoins the achievement of security and order. Allah says what means:

"And keep up prayer and pay the poor-rate and bow down with those who bow down. Only Allah is your Friend and His Messenger and those who believe, those who keep up prayer and pay the poor rate, and they bow down. Take alms out of their property thou wouldst cleanse them and purify them thereby - and pray for them. Surely thy prayer is a relief to them. And Allah is Hearing, Knowing. (The Holy Quran)

(viii) Islam safe and protects man's property. This is done in the following ways

(a) It protects peoples' properties from being stolen or pillaged by deterrent punishments. Allah says what means :

"The only punishment of those who wage war against Allah and His Messenger and strive to make mischief in the land is that they should be murdered, or crucified, or their hands and their feet should be cut off on opposite sides, or they should be imprisoned. This shall be a disgrace for them in this world, and in the Hereafter they shall have a grievous chastisement. And (as for) the man and the woman addicted to theft, cut off their hands as a punishment for what they have earned, an exemplary punishment from Allah. And Allah is Mighty, Wise. (The Holy Quran)

(b) Islam also protects people against fraud by forbidding anybody from using the property of another without any legal claim. Allah says what means

"And swallow not up your property among yourselves by false means, nor seek to gain access thereby to the judges, so that you may swallow up a part of The property of men wrongfully while you know. (The Holy Quran)

(c) Islam prohibits man from wastefully spending money, even for charity. Allah says what means:

" O men, eat the lawful and good things from what is in the earth, and follow not the footsteps of the devil. Surely he is an open enemy to you. And give to the near of kin his due and (to) the needy and squander not wastefully. Surely the squanderers are the devil's brethren. And the devil is ever ungrateful to his Allah. And if thou turn away from them to seek mercy from Allah which thou hopest for, speak to them a gentle word. And make not thy hand to be shakied to thy neck, nor stretch it forth to the utmost (limit) of his stretching forth, lest thou sit down blamed, stripped off. And they who, when they spend are neither extravagant nor parsimonious, and the just means is ever between these. (The Holy Quran)

(ix) Islam creates the incentives to ownership since the absence of these incentives may lead to disinterestedness and frustration with the rigors of life. An individual is to leave his property to his relatives and this property serves also as a further incentive which requires from man not to give up an active life because he has reached the stage of self-sufficiency. To achieve this goals, Islam provided the inheritance laws. Allah says what means :

"For men is a share of what the parents and the near relatives leave, and for women a share of what the parents and the near relatives leave, whether it be little or much - an appointed share. And when relatives and the orphans and the needy are present at the division give them out of it and speak to them kind words. (The Holy Quran)


4 - Respect for the community:

Islam enjoins strengthening of family relations between its members since it believes that the family is the basis on which the society is founded. It also requires all members of every family to respect the rights and obligations towards the family and to consider the duties of rearing, protecting and looking after children. Allah says what means :

"And serve Allah, and associate naught with Him, and be good to the parents and to the near of kin and the orphans and the needy and the neighbor of (your) kin and the alien neighbor, and the companion in a journey and the wayfarer and those whom your right hands possess. Surely Allah loves not such as are proud, boastful, who are niggardly and bid people to be niggardly and hide that which Allah has given them out of His grace. And We have prepared for the disbelievers an abasing chastisement. And mothers shall suckle their children for two whole years, for him who desires to complete the time of suckling. And their maintenance and their clothing must be borne by the father according to usage. No soul shall be burdened beyond its capacity. Neither shall a mother be made to suffer harm on account of her child, nor a father on account of his child, and the similar duty devolved on the (father's) heir. And Allah has decreed that you serve none but Him, and do good to parents If either or both of them reach old age with thee, say not (Fie)to them, nor chide them, and speak to them a generous word And lower to them the wing of humility out of mercy, and say Allah, have mercy on them, as they brought me up (when I was) little. (The Holy Quran)

By these decrees the Holy Quran not only aims at the protection of the family, which is the basis of the society but it also protects the society against the following

(i) The accumulation of wealth. By the law of inheritance The Holy Quran decrees that big holdings be divided in a way which protects society against economic inflation and the accumulation of wealth by one single family, since it will harm society both in relation to its individual members in its general character and structure.

(ii) Selfishness dominating the members of society. Selfishness removes the element of harmony and cohesion in a society. Allah says what means :

"If your fathers and your brethren and your wives and your kinsfolk and the wealth you have acquired, and trade whose dullness you fear, and dwellings you love, are dearer to you than Allah and His Messenger and striving in His way, then wait till Allah brings His command to pass. And Allah guides not the transgressing people. Go forth, light and heavy, and strive hard in Allah's way without your wealth and your lives. This is better for you, if you know. (The Holy Quran)

The restiveness of either the individual or the family and their deviation from the proper way is due to the dominance of the love of money, which they conceive of as a goal and not a means. Islam, in more than one of the verses of The Holy Quran, explains that wealth is not the means for securing stability and order-this is a fact which experience endorses. Allah says what means :

"Let not then their wealth nor their children excite thine admiration. Allah only wishes to chastise them there with in this world's life and (that) their souls may de part while they are disbelievers. Quran was surely of the people of Moses, but he oppressed them, and we gave him treasures, so much so that his hoards of wealth would weigh down a body of strong men. When his people said to him Exult not; surely Allah loves not the exultant. And seek the abode of the Hereafter by means of what Allah has given thee, and neglect not thy portion of the world, and do good (to others) as Allah has done good to thee, and seek not to make mischief in the land. Surely Allah loves not the mischief mackers. He said I have been given this only on account of the knowledge I have. Did he not know that Allah had destroyed before him generations who were mightier in strength than he and greater in assemblage? And the guilty are not questioned about their sins. And it is not your wealth, nor your children, that brings you near to Us in rank, but whoever believes and does good, for such is a double reward for what they do, and they are secure in the highest places. (The Holy Quran)

(iii) The domination of materialism and disappearance of idealism destroy the most powerful communities. Islam demands that should be given to people of limited incomes; this raises the normale of such people and safeguards others against loss in case they become incapacitated due to illness. Allah says what means:

" It is not righteousness that you turn your faces towards the East and the West, but righteous is the one who believes in Allah, and the last Day, and the angels, and the Book and the Prophets, and gives away wealth out of love for Him to the near of kin and the orphans and the needy and the wayfarer and to those who ask and to set slaves free and keep up prayer and pay the poor-rate; and the performers of their pronuse when they make a promise, and the patient in distress and affliction and in the time of conflict. These are they who are truthful; and those are they who keep their duty. Alms is only for the poor and the needy, and those employed to administer it, and those whose hearts are made to incline (to truth), and (to free) the captives, and those in debt, and in the way of Allah and for the wayfarer - on ordinance from Allah And Allah is Knowing, Wise. (The Holy Quran)

Islam, by attractive promises, also persuades men to help others by granting them loans, without interest, seeking only the graciousness of Allah. Allah says what means :

Who is it that will offer to Allah a goodly gift, so He multiplies it to him manifold? And Allah receives and amplifies, and to Him you shall be returned. (The Holy Quran).

In respecting the collective identity of the community Islam not only protects them from aggression by individuals, but it gives preference, in case of conflict, to the community interest. Should it be necessary, the interest of the individual must be set aside in favor of the inter ests of the community.

Islam stipulates:

a) That individuals and their properties are to be placed in the service of the community. Sometimes, Islam persuades individuals to make sacrifices in this respect. Allah says what means :

"Surely Allan has bought from the believers their persons and their property - theirs (in return) is the Garden. They fight in Allah's way, so they slay and are slain. It is a promise which is binding on Him in The Torah and The Gospel and The Quran. And who is more truthful to his promise than Allah? Rejoice therefore m your bargain which you have made. And that is the mighty achievement. (The Holy Quran).

In case persuasion does not work, Islam gives it the shape of an order. The Holy Quran says what means:

" And spend in the way of Allah and cast not yourselves to perdition with your own hands and do good (to others). Surely Allah loves the doers of good. (The Holy Quran)

(b) Function which are of general utility are to be exercised by the community. They have to be controlled by the community through its rulers, as a means of giving everyone an equitable share in them. Allah says what means :

He it is Who sends down water from the clouds for you; it gives drink, and by it (grow) the trees on which you feed. And He it is Who made the sea subservient that you may eat fresh fish from it and bring forth from it ornaments which you wear. And thou seest the ships cleaving through it, so that you seek of His bounty and that you may give thanks He it is Who made the earth subservient to you, so go about in the spacious sides thereof, and eat of His sustenance. And to Him is the rising (after death). Allah is He Who made subservient to you the sea that the ships may glide therein by His command, and that you may seek of His grace, and that you may give thanks. And He has made subservient to you whatsoever is in the heavens and whatsoever is in the earth, all from Himself. Surely there are signs in this for a people who reflect. (The Holy Quran)

DEFECTS IN AN ITEM

Principles Of Busines in Islam

Defects in an item

1. When selling an item, it is wajib on the person to show all the defects that may be found in it. It is harâm to conceal the defects and to convince the person into buying such an item.

2. After purchasing an item, a person noticed a defect in it, e.g. a woman notices that a cloth has been eaten up, a shawl has some moths in it or she notices any other defect. She now has the choice of keeping the item as it is, or returning it to the seller. However, if she decides to keep it, she will have to pay the full price of the item. It is not permissible for her to reduce an amount from the total price as a compensation for the defect. But if the seller agrees to reduce the price because of the defect, it will be permissible for her to pay less.

3. A person had purchased some fabric and kept it aside. A child ripped off a corner of that fabric or cut it with a pair of scissors. Thereafter, he noticed that it is damaged from the inside as well and that a rat has eaten it at several places. The person cannot return this item because one additional defect took place at his house (i.e. when the child had cut it). However, he can have the price reduced as a compensation for the defect that took place at the shopkeeper's place (i.e. the several places that had been eaten by a rat). People who know the value of the item should be asked to estimate its present value and the price reduced accordingly.

4. Similarly, if a defect is noticed after a fabric has been purchased and already cut, it cannot be returned but the price will be reduced. However, if the seller says : "Return the cut fabric and take a full refund, I am not going to reduce the price", he has the right to ask for it and the buyer cannot refuse to return it.

If the fabric has been cut and also sewn and thereafter a defect is noticed, the price will be reduced as a compensation for the defect. In such a case, the seller cannot take his fabric back.

If the buyer sells that fabric or cuts it with the intention of sewing something for her immature child and at the same time making a firm resolution of giving it to the child, and thereafter a defect is noticed, then the price cannot be reduced. But if she cut it with the intention of sewing something for her mature child, the price can be reduced.

5. A person purchased eggs and paid a certain price per egg. When the eggs were broken, all of them turned out to be rotten. The buyer can take all his money back and it will be regarded as if he did not purchase the eggs at all. If a few turn out to be rotten, he can claim the money for those that are rotten.

If a person purchases several eggs which have all been priced together (i.e. he does not pay a certain price per egg), then we will have to see how many rotten eggs come out from the entire lot. If five or six eggs are rotten out of a total of 100 eggs, it will not be considered. But if more than this turns out to be rotten, he can claim the money for those that are rotten.

6. A person purchased cucumbers, sweet-melons, water-melons, pumpkins, almonds, walnuts, etc. When they were cut open or broken open, he noticed that they are rotten. In such a case, check whether they could be used, or they are so bad that they are absolutely useless and have to be thrown away. If they are absolutely useless, this transaction will not be valid and the person must claim all his money back. But if they can be used in some way, he must pay the market value of such items. The full price will not be paid.

7. If, out of 100 almonds, four or five are rotten it will not be considered. But if more than these turn out to be rotten, the person has the choice to reduce the price accordingly.

8. A person purchased 150 grams of wheat for R1 or 100 grams of ghee for R1. A portion of both these items was good, while the balance turned out to be bad. It is not permissible to keep the good and return the bad. If he decides to keep them, he will have to keep all. And if he decides to return them, he will have to return all. However, if the seller agrees to take back all the bad and give you the good, it will be permissible to do so. The buyer cannot do this without the consent of the seller.

9. When there is any defect in an item, the person will only have the right to return it when it is established that there is no indication that the person is happy about taking the defective item. However, once a person agrees to purchase an item after seeing the defect, he does not have the right to return that item. But if the seller takes it back happily, it will be permissible. For example, a person purchased a goat or cow. When he went home with it, he realized that it is sick or there is a wound on its body. Once he notices this defect and expresses his consent and says to himself : "Well, it's okay. I've bought a defective animal", he will no longer have the right to return it. If he does not say anything verbally, but carries out certain actions which show that he is satisfied with the animal, then too will he no longer have the right to return it. For example, if he starts treating its wound and gives it some medication, he will no longer have the right to return it.

10. A person purchased goat's meat. When he went home, he realized that it is the meat of a sheep. He has the right to return it.

11. A woman purchased a pearl necklace or some other jewellery and also wore it at some time or the other. Alternatively, she purchased a pair of shoes and began walking around with it. Now she cannot return these items if she finds any defect in them. However, if she wears the shoes in order to check whether they fit her properly and that she does not experience any discomfort by wearing them, there will be no harm in wearing them for a little while in order to test them and she still has the right to return them if she wishes to do so.

Similarly, if a person purchases a flat-couch (refers to a flat wooden type of bed) or bed and lays them down out of necessity or begins to offer salâh on that couch or uses the bed in some way or the other, he will no longer have the right to return the bed or couch. Other items could be understood in the same manner. That is, once they are used for any purpose, they cannot be returned.

12. At the time of selling an item, a person said : "You better check it properly before you buy it. Later if you find any defect in it, I will not be responsible." Despite the seller saying this, the person purchased the item. Later, he cannot return it irrespective of how many defects it may have. It is permissible for the seller to sell an item in this manner and it is no longer wajib on him to show the defect that may be in the item.

Written By
Maulana Ashraf Ali Thanvi Rahmatullah Alaihi
Taken From: http://www.nazmay.com

PURCHASING AN ITEM WITHOUT SEEING IT

Principles Of Busines in Islam

Purchasing an item without seeing it

1. A person purchases an item without having seen it. This transaction is valid. However, once he sees the item, he has the right to return it or keep it. This is irrespective of whether there is any defect in the item or not. Even if the item is exactly as he had envisaged it to be, he still has the right to return it or keep it.

2. A person sold an item without even looking at it. This person who sells the item does not have the right to take it back after he sees it. Only the buyer has the right of returning an item after seeing it.

3. A hawker came selling peas. The top of the heap had all good quality peas. Upon seeing this, the buyer bought the entire basket of peas. However, the peas that were in the bottom of the heap were of an inferior quality. He still has the right to return them. However, if all the produce is of the same quality, it will be sufficient to see a few. Once he does this, he forfeits the right to return them irrespective of whether he sees all the produce or not.

4. A person bought guavas, pomegranates, coconuts or anything else which is generally not all the same. As long as the person does not see all the fruit, he will have the right to return them. By his seeing a few of the fruit, he does not forfeit the right to return.

5. If a person purchases something that is to be consumed (either by eating it or drinking it), he does not forfeit his right to return by merely seeing it. He should also taste it. If he does not like it, he has the right to return it.

6. A person had seen an item long ago. He purchased it today but did not look at it at the time of purchasing it (thinking that there is no need to do so since he had seen it previously). When he took it home, it was exactly as he had seen it a long time ago. After seeing it, he does not have the right to return it. However, if, after seeing it after so long, he notices some difference in it, he has the choice of keeping it or returning it.

Written By
Maulana Ashraf Ali Thanvi Rahmatullah Alaihi
Taken From: http://www.nazmay.com

Khiyârush Shart - THE RIGHT TO RETURN GOODS

Principles Of Busines in Islam

Khiyârush Shart - The Right To Return Goods

1. At the time of purchasing an item, a person says : "I have the right to take or return this item within one day, two days or three days. If I wish, I will keep it, if not, I will return it to you." This is permissible. He has the choice of returning the item within the period that he specifies or of keeping it.

2. A person says : "I have the right to take or return this item within three days." Three days expired and this person did not say anything nor did he return it. He will now have to take that item. He does not have the right to return it. However, if the seller permits him to do so, it will be permissible. He cannot return it without obtaining the consent of the seller.

3. It is not permissible to make such a condition for more than three days. If a person makes a condition for four or five days, we will have to see whether he makes a decision within three days or not. If he returns the item within three days, it will be considered to be returned. If he decides to keep it, the transaction will be valid. If three days pass without knowing whether he is going to keep the item or return it, the transaction will become invalid.

4. Similarly, the person selling the item also has the right to say : "I have the choice of taking my item back within three days." This is also permissible.

5. At the time of purchasing an item, a person says : "I have the right of returning this item within three days." The next day he comes and says : "I have decided to keep this item and I am not returning it." Once he says this, his right will be forfeited and he cannot return that item. In fact, even if he goes to his own house and says that he has decided to keep that item, his right will be forfeited. When a person wishes to cancel his transaction or return the item, he will have to do it in front of the seller, he cannot do it behind his back or in his absence.

6. A woman says : "My mother has the right - if she says that I should keep it, I will do so, if not, I will return it." This is permissible. This woman or her mother can return the item within three days. If this woman or her mother come and inform the seller that she has decided to keep the item, this right will now be forfeited and the item cannot be returned.

7. A person takes two or three pieces of cloth and says : "I have the right for three days. Whichever one I like, I will pay R10 per piece and keep it." This is permissible and he can select one piece of cloth within three days. But if the person takes four or five pieces of cloth (i.e. more than three) and says that he will select one from them, this transaction will be invalid.

8. A person had stipulated the right to return the item within three days. Thereafter, he began using it at home, e.g. if it is something that is used to cover himself, he began covering himself with it. If it is something that is worn he began wearing it. If it is something to lay out, he began laying it out. In all these cases, the right to return the item will now be forfeited.

9. However, if a person uses an item merely to see whether it is suitable or not, e.g. a woman purchases a dress, sheet or carpet. Thereafter, she puts on the dress to check whether it fits her well or not and removes it immediately thereafter, wraps the sheet around her to check whether its length and width is suitable or not, or spreads the carpet to see whether its length and breadth is suitable or not. In all these cases, she still has the right to return these items if she wishes to do so.

Written By
Maulana Ashraf Ali Thanvi Rahmatullah Alaihi
Taken From: http://www.nazmay.com

PURCHASING ON CREDIT

Principles Of Busines in Islam

Purchasing on credit

1. It is permissible to purchase an item on credit. However, it is necessary to specify a period of time, i.e. you will pay the amount after 15 days, after one month or after four months - whatever the case may be. If a person does not specify any period but merely says : "I don't have the money now, I will pay you later", this has two aspects to it : (i) He says : "I will purchase this on condition that I will pay you later." In such a case the transaction will be invalid (faasid). (ii) If the person does not include this condition in the actual transaction, but after purchasing it he says : "I will pay you later", this will be permissible.

If he did not mention anything within the transaction nor anything after the transaction, the sale will be valid and in both these instances he will have to pay cash for the item. If the seller gives on credit on his own accord, it will be permissible. But if he asks for the money immediately, the person will have to give it.

2. At the time of purchasing an item a person says :

(a) "Give me that item, once I get my money I will pay it to you."

(b) "When my brother comes, I will pay you."

(c) "Once the orchard bears its fruit, I will pay you."

(d) Alternatively, the seller says : "Take the item now, and you can pay me whenever you wish."

In all these cases, the transaction will be invalid. One has to specify a period of time and then purchase the item. If the person purchases the item and then says any of the above, the transaction will be valid and the seller has the right to ask for the money immediately. The exception is that the seller cannot demand for the money before the orchard can bear its fruit.

3. When paying in cash, the price of 200 grams of wheat is R1. But if the person buys on credit, he receives only 150 grams. This transaction is valid on the condition that the buyer is informed of this at that very time.

4. The above rule applies when the seller asked the buyer whether he is going to pay cash or take it on credit. When he replied that he is going to pay cash, the seller gave him 200 grams. And when he said credit, the seller gave him 150 grams. But if the seller says : "If you pay cash, this will be the price, and if you take it on credit, this will be the price", then such a transaction will not be valid (since the buyer has not specified his intention of paying cash of taking on credit).

5. A person purchased an item after promising to pay for it after one month. On the expiry of one month he went to the seller and told him that he must give him a respite for another 15 days, after which he will pay him his money. If the seller agrees, it will be permissible. However, he also has the right to demand the money immediately.

6. Once the person has the money, it is not permissible to delay in paying. He cannot say : "I won't give you today, I'll give it to you tomorrow", "Don't come to collect it now, come at such-and-such time", "I don't have change now, once I get some change I will pay you". All this is harâm. Once the person asks for the money, you should make the change and give him his money immediately.

However, if the person purchases something on credit and promises to pay after a certain period of time, then once the time expires, it will be wâjib on him to pay the money. It is not permissible to delay or make the person "run" for his money once the specified time expires. But if the person does not have the money nor was he able to obtain it from someone else, then he has no alternative but to pay it the moment he receives the money. Once he receives the money, he cannot delay in fulfilling his debt.

HAVING KNOWLEDGE OF THE ITEM THAT IS TO BE PURCHASED

Principles Of Busines in Islam

Having knowledge of the item that is to be purchased

1. When purchasing dry groceries, seeds, etc. a person has the choice of purchasing it after having it properly weighed or he could say : "I am buying a certain amount of wheat for R1." Alternatively, he could purchase it as it is (i.e. without having it weighed nor specifying any amount) and say : "I am buying this heap of wheat for R1." No matter how much of wheat may be in that heap, all will belong to him (once he purchases it).

2. When purchasing, mangoes, guavas, oranges, etc. one has the choice of purchasing them by merely counting them or purchasing them in heaps. If a person purchases all the mangoes that are in a basket for R2 without knowing how many there are in it, the transaction will be valid. All the mangoes will be his irrespective of how many come out from that basket.

3. A woman came around selling fruit. The person said to her : "Give me some fruit equal to this brick in weight for R1." The woman agreed to sell the fruit by using the brick as a weight. However, none of them know the weight of the brick itself. Despite this, the transaction will be valid.

4. A person purchased an entire basket of mangoes, guavas, oranges or any other fruit for R100 on the condition that there are 400 mangoes (or whatever other fruit there may be) in that basket. When the mangoes were counted, there were only 300. The person purchasing the mangoes has the choice of taking them as they are or not buying them. If he buys the entire basket, he does not have to give R100. Instead, he will have to pay for only 75% of the total amount. If there are 350 mangoes, he will have to pay for 88% of the total amount. In short, the fewer the mangoes, the lesser he will have to pay.

If, after counting, more than 400 mangoes come out, the balance will belong to the seller. The buyer does not have the right to take more than 400. But if the buyer purchases the entire basket without specifying how many there are, then whatever number comes out will be his; whether they are more or less.

5. A person purchased a head-covering which is made of such a fabric that if a part of it is torn, the entire garment will become spoilt and useless. At the time of purchasing it, the person made this condition that it is 3 metres in length. When it was measured, it turned out to be less than 3 metres. In such a case, the price of this fabric will not be reduced. Instead, the buyer will have to pay the full price that had been agreed upon. However, in such a case, the only concession that they will have is that despite their agreeing on a price, the buyer has the right to take the item or leave it. If more than 3 metres are found in that length of fabric, it will belong to the buyer. He does not have to pay any additional amount of money for it.

6. A woman purchased two silk belts at night. The following morning she noticed that one of the belts is made of cotton. The transaction with regard to both these belts is not permissible; neither the one made of silk nor the one made of cotton. Similarly, if a person purchased two rings on the condition that they are made of turquoise, and later he learns that one of them is not made of turquoise but of something else, the transaction with regard to both is not permissible. If the person still wishes to purchase one of the two or both of them, then the method of doing this is that they should commence the transaction all over again and thereafter the buyer can purchase whichever one he wants.

FINDING OUT THE PRICE OF AN ITEM

Principles Of Busines in Islam

Finding out the price of an item

1. A person closed the palm of his hand and says : "Give me that particular item for whatever money is in my hand." And it is not known what is in his hand; whether he has dollars, rands, cents, a gold coin; whether he has one, two or many. Such a transaction is not permissible.

2. In a certain city, two different currencies are in vogue. The person will have to inform the seller that he intends buying a particular item with a particular currency. If the person does not inform him and says that he is selling a particular item for a particular price and the buyer says he will take it, then we will have to see which currency is more in use in that place. The currency that is more in use will have to be given as payment. If both the currencies are used equally, the transaction will not be valid and will be fâsid, i.e. imperfect.

3. A person has some money in his hand, he opens his hand, shows it to the seller and asks him to sell him a particular item for all that money. The seller saw the money in his hand and handed over the item but did not know the exact amount of money that was in the buyer's hand. This transaction is valid.

Similarly, if the buyer places a heap of money before the seller on a mat, etc. and the latter agrees to sell him the item for that heap of money, the sale is valid even if he does not know the exact amount kept before him..

In short, once the seller sees the money, it is not necessary to tell him how much money there is. But if he does not see the money with his own eyes, it is necessary to specify the exact amount. A person says : "I will take this item for 10 coins." If in such a case, he does not specify the total amount of money and the matter is not settled, this transaction will not be valid.

4. A person says :

(a) "Take this item, what is the need to agree on a price? Whatever the price will be, I will collect it from you. How can I take extra from you?"

(b) "You can take this item away. I will find out the price from home and let you know later."

(c) "Someone else had taken a similar item. You can pay me whatever that person had paid."

(d) "Pay me whatever you wish, I will not refuse it. I will accept whatever you give me."

(e) "Find out the price in the bazaar and then pay me whatever the market price is."

(g) "Go and show this item to a certain person and you can pay me whatever he quotes you."

The transaction will be invalid in all the above instances. However, if the price of the item is made known at that very place and the cause which had made the transaction invalid is no more found, the transaction will become valid. If the price was made known after there was a change in their places, then the first transaction will be invalid. However, once the price is made known, they can recommence the transaction.

5. There is a particular shopkeeper from whom one orders whatever one needs and the goods are delivered to the person's home. Today he might order some betel nut, tomorrow he might order some catechu (a vegetable extract eaten with betel leaves), some other day he might order a few coconuts, etc. and when purchasing these items he did not bother to ask about the price and thought to himself that whenever the account comes he will pay whatever he has to pay. Such a transaction is permissible.

Similarly, a person sent a prescription to a chemist requesting for some medicine but did not ask for the price thinking to himself that once he recovers from his sickness he will go and pay whatever he is owing. This is also permissible.

6. A person has got R1 in his hand and says : "I am buying this item for this R1." He has the choice of giving that same R1 or he could take out another R1 and hand it over to the seller. The only condition is that it must not be counterfeit.

7. A person purchased an item for R1. He has the choice of giving a R1 coin, two 50c coins, five 20c coins, etc. As long as they total R1, the seller cannot refuse to accept that money. However, if the person does not give such coins but gives 1c and 2c coins, the seller has the right to accept or refuse. If he does not wish to accept any coins, the buyer will have to pay in notes.

8. A person sold a writing case or a suitcase. The key for both these items will also be considered to be sold. He cannot charge separately for the key of the writing or suit case nor can he withhold the key.

Source: Maktaba al-Ashrafia

Principles Of Busines in Islam
Written By
Maulana Ashraf Ali Thanvi Rahmatullah Alaihi
Taken From: http://www.nazmay.com

BUYING AND SELLING

Principles Of Busines in Islam

BUYING AND SELLING

1. When a person says : "I have sold this item for so much" and another person says : "I have bought it", that item will be sold and the person who purchased it will be its owner. If the seller decides not to sell or the purchaser decides not to buy it, they will not be able to do so. The former will have to hand it over and the latter will have to accept it. This act of selling an item is known as a sale.

2. A person says : "I have sold this item to you for R2." The other person replies : "I accept", "I am happy with that price" or "Okay, I've taken it." By replying in any of these ways, the item will be sold. Now, neither does the seller have the choice of not handing over the item nor does the buyer have the choice of not purchasing it. However, this rule will only apply when this conversation takes place between both parties in one place or in one sitting. If one of them says : "I have sold this item to you for R4" and the other person remains silent on hearing this price, stands up from his place, goes away to buy the item from someone else or goes away for some other reason, and in carrying out all these actions he changed his place and then he replies : "Okay, I'll buy it for R4", in such a case that item will not be considered to be sold. However, if thereafter, the seller, grocer, etc. says : "Okay, I give it to you" or "Okay, take it", in such a case it will be sold.

Similarly, if the seller, grocer, etc. stands up or goes away for some other work, and the buyer says : "Okay, I've taken it", even then it will not be regarded as sold. In short, if both the parties reach an agreement in one place, only then will the item be considered to be sold.

3. A person says : "Give me this item for R1." The other person replies : "I’ve given it." In saying this, the sale will not take place. However, if thereafter, the buyer again says : "I’ve taken it", it will be sold.

4. A person says : "I am taking this item for R1" and the other person replies : "Take it"; the sale will take place.

5. After checking the price of an item, a person handed the money to the seller and took the item away. The seller accepted the money happily. The seller did not say anything verbally as to how much he is selling the item nor did the buyer say that he is buying it. In such a case, by merely taking an item and handing over the money for it, the item is considered to be sold and the sale is valid.

6. A hawker came selling guavas. Without asking him anything, the person took out four big guavas from his basket and placed R1 in the hawker's hand. The hawker accepted this money happily. This sale is valid irrespective of whether they uttered any words or not.

7. A person said : "I am selling this string of pearls for R10." The buyer replied : "I’ve taken five from the string of pearls" or "I’ve taken half the string of pearls." As long as the seller does not agree, the sale will not take place. This is because, he offered the entire string of pearls for sale and as long as he does not agree, the buyer does not have the right to buy a part of it and leave out the other part. If she wishes to purchase it, she will have to buy the entire string. However, if the seller says : "I am selling each pearl for R1", and the person says that he has taken five pearls, then five pearls will be considered to be sold.

8. A person is selling four different items and says that he is selling the lot for R4. Without obtaining his agreement, the buyer cannot purchase one or two items and leave out the others because he wishes to sell all the items together. But if the seller gives the price of each item individually, it will be permissible for the buyer to purchase one or two items and leave out the rest.

9. When buying and selling an item, it is also necessary to show the item properly and spell out the terms clearly. The seller should abstain from speaking in vague terms which could result in problems and arguments. Similarly, the price has to be clearly laid down and agreed upon. Even if one of these factors is not made clear and agreed upon, the sale will not be valid.

10. A person purchases an item with money. The seller says : "Hand the money over to me first and then I will give you the item." The buyer replies : "Hand the item over to me first and then I will give you the money." In such a case, the money will have to be given first and then only will the item be given to the buyer. The seller has the right to refuse to hand over the item until he receives the money for it.

However, if he purchases an item in return for another item, changes money in return for money or a person purchases clothing in return for clothing, and in all these cases this sort of argument takes place, then each one will be asked to place his hand on the others hand and then the exchange will take place.

The Role of Zakaah in the Muslim Economy

The hand that gives is better than the hand that receives. This is an age-old adage, and by nature people are bashful to go round asking for help, especially in money matters. But the wheel of life at times doles out distraught circumstances to the unsuspecting, unprepared human being rendering him totally helpless. A road accident can in an instant transform an entire family of happy infants into miserable penniless orphans; a pre-dawn fire can wipe out an entire household but leaving one old woman out in the cold; an epidemic of a deadly plague can render entire villages feeble and unaided. And do not forget the disastrous effects of earthquakes and tsunamis, and worse still man-made wars and organized famines.

The act of charity (sadaqah) cuts across all human religions. It is held in high esteem by all and sundry. In Islam, it is so firmly and deeply emphasised that is surpasses voluntary giving (sadaqah jariyah) to become the mandatory zakaah as specified in the Third Pillar of Islam, after the testament of the Islamic creed and the performance of the five obligatory daily prayers.. This annual tithe is the foundation of the Muslim economy. It is obligatory upon all Muslims in possession of wealth, may it be in the form of gold, silver, cash money, crops such as wheat, corn, barley and rice, fruits such as grapes and dates, livestock such as camels, buffaloes, cows and goats. For each category, the calculation is based upon two determining factors, i.e. the nisab (the minimum amount on which zakaah must be paid) and the hawl (a period of one lunar year that one is in possession of the said ‘taxable’ items).

In a nutshell, zakaah is paid on surplus of wealth that is left over after the passage of one lunar year. It is thus a payment on the accumulated wealth. Leaving aside animals and agricultural yield, zakaah is paid at almost a uniform rate of 2.5%. This rate covers the value of gold, silver, and other modern assets such as bank accounts, stocks, real estate investments and other moneymaking instruments and portfolios for the stipulated period. Of course, the whole exercise of collection and disbursement depends on the sincerity of Muslim individuals and the extent of enforcement imposed by the authorities of the day.

In the Qur’an, ALLAH SWT says: “You will not attain piety until you spend of what you cherish; and whatever you spend Allah knows it well.” [Ale Imran: 92]

The recipients of the zakaah are also spelt out in the Qur’an: "The alms are only for the poor and the needy, and for those employed in connection therewith, and for those whose hearts are to be reconciled, and for the freeing of slaves, and for those in bondage and in debt, and for the cause of Allah, and for the wayfarer. Thus, it is ordained by Allah. And Allah is All-Knowing, Wise."
[At-Taubah: 60]

Prophet Muhammad SAW set a shining example in charitable spending that cannot be matched. He was a generous man, and used to become even more generous in the fasting month of Ramadhan. He encouraged his Companions (r.a.) to give selflessly and advised them not to fear poverty. On one occasion, speaking to the Abyssinian freedman Bilal, he said: “Spend O Bilal and fear no decrease in your wealth from the Lord of the Throne.”

In another hadith, the Prophet SAW said: “Miserliness and faith can never co-exist in the heart of the believer.” [Nasa’i]

One meaning of the word zakaah implies purification. Hence, spending one’s wealth for the sake of ALLAH purifies the heart from the love of material wealth. The man who spends truly offers that as a humble gift before his Lord and thus affirms the truth that nothing is dearer to him in life than the love of ALLAH and that he is fully prepared to sacrifice everything for His sake. There is no burden of obligation on the recipient, but a sense of thankfulness and gratitude on the part of the giver, since he has been afforded the opportunity to discharge his obligation towards ALLAH SWT and mankind.

In the early days of Islam, money collected from sadaqah used to fill the House of Finance (Baitul Mal), and it used to be the main source of funding for the Muslim nation and its needy citizens, whether they be Muslims or otherwise. Unfortunately, the spirit of sadaqah has dwindled so much today that many affluent Muslims have stopped even paying the compulsory zakaah for fear of becoming destitute.

It is incumbent upon fellow Muslims to remind them of the following verses in the Qur’an: “Your wealth and your children are only a trial, whereas Allah with Him is a great reward (Paradise). So keep your duty to Allah and fear Him as much as you can; listen and obey; and spend in charity for that is better for yourselves. And whosoever is saved from his own covetousness, they are the successful ones. If you lend to Allah a goodly loan (i.e. spend in Allah’s Cause), He will double it for you, and will forgive you. And Allah is Most Ready to appreciate and to reward, Most Forbearing.” (At-Taghabun: 15-17]