Chapter One
Cash Sale (Al-Bay’ An-Naqdi)
(A) Form and conditions
Since – as we mentioned above – the cash sale means that the two assets, the goods and the price, are present, it will then be normal to have this included in its form (sighah), even if through including no limitations it is understood from it that it is binding on each of the two parties to hand over what he has to the other. And as in all other contracts, it is sufficient in the form that is done verbally or in writing, using any wording that indicates the will to sell and buy and establishes this will and shows it to the other. It is also sufficient in this handing-over type contract (mo‘ātāt) to have the seller handing over the goods and the buyer handing over the payment with the intention of selling and buying shown through this handing over.
The conditions that must be present in the cash sale and other purchase and sale contracts are:
First: Conditions for the contract
997. The conditions for the contract are:
First: Hastening to accept the sale before the seller retracts from the sale, but if he retracts, the sale is not valid unless a new contract is made.
Second: Fulfilment, so the sale cannot be made pending something that is not present at the time of the contract, whether it is known to happen in the future, such as the birth of the new moon, or unknown, such as the rain falling.
Third: Exact similarity between the content of the proposal and the content of the acceptance, in the price, the goods and all other subsidiaries; so if Muhammad sells his book to Ahmed for a thousand, it becomes binding on Ahmed to buy the book for a thousand, not a (certain) dress for two thousand, for example, since there is no exact similarity either in the price nor in the goods.
Second: Conditions for the contracting parties
998. The conditions for the contracting parties are:
First: Reaching the Islamic legal age, so a child’s contract involving his assets is not valid without the guardian’s permission; in contracts involving the assets of others, however, it is sufficient if he has permission from the asset’s owner, is aware of sexual matters and of reasonable conduct, even if the guardian did not give permission.
Second: Sanity, so it is not valid when any of the contracting parties is insane.
Third: Free will, so it is not valid if undertaken by someone who is forced to do so.
Fourth: Each of the contracting parties owns what is at his disposal under valid ownership, or as if he is regarded as the owner, such as someone who has permission of the owner or his representative/proxy; it is not valid for the non-owner of another person’s asset to sell it without his permission, and also not valid if the person selling has been indicted for bankruptcy.
999. If a person sells another’s asset without his permission, his sale is an intrusion (fodūl) and the seller is an intruder (fodūli), hence the sale is invalid unless if the owner accepts and allows it. It is sufficient in such permission to offer words or acts that show satisfaction; the owner cannot retract from this permission after giving it and the sale remains valid and binding.
Third: Conditions for the two exchanged things
1000. The conditions for the exchanged things are:
First: The thing sold must be an asset, i.e. whatever is not a benefit, which will then be suitable for renting; it is not conditional that the price (i.e. the payment) is the form of an asset. A right (being sold) may, in general, be an asset or a price (payment) (as will be explained).
Second: Each of the two things must be owned by the person giving it away, or like an owned thing, such as selling something not present to be handed over later, like if one sells a flat that is non existent yet, but is represented by a promise to build it in the future, and both seller and buyer rely on the specifications in the drawings for knowledge of it.
Third: It must be pure ownership, not made waqf except in the cases that were mentioned under waqf.
Fourth: Both parties should know the nature and descriptions of the two things exchanged if they are of different value, such as colour, taste, quality (good and bad) and the like, unlike when the value is not different; it is sufficient to know the thing by any means that remove ignorance about it.
Fifth: Each of the two things must be possible to hand over, so it is not valid to sell something that one cannot hand over, such as lost money or escaped bird, unless it is possible to find it, in which case it is valid. Also, contracting is valid on something not possible to hand over if in addition to another thing that meets the conditions, such as if one person sells to another his stolen car in addition to a book. Also, it is valid to sell a misappropriated asset to the misappropriator, even though the seller is not able to take it from him when establishing the contract.
1001. A right is a situation stemming from different things that identify the authority of the rightful owner of a thing or person; there are two kinds:
1- What is exclusive to its owner for shar’i or legal reasons, such as the right of sexual intercourse, or guardianship of a minor.
2- What is not exclusive to its owner and there is nothing that prevents transferring it to others, such as jurisdiction, exclusion (of land etc) or custody rights.
It is not allowed to make the first type one of the two exchanged things, while it is allowed to make the removal of control from this right, the freezing of it or the complete removal of itt – in rights that are suitable for complete removal – one of the two exchanged things. The second, however, as long as it has a financial status and value for which sane people might compete, then it is allowed to make it both an asset and a price (payment), not to mention allowing the removal of control from it as one of the two exchanged things.
Fourth: Handing over and getting paid
1002. When the sale is complete with all the previously mentioned conditions, it becomes binding and neither of the two parties has the right to revoke the contract except by mutual agreement, or by conferment of choice (khiyār) that will be explained just below. Also, each one of the parties has to live up to the promise to the other and hand over his obligation – it is sufficient for handing over if the seller presents the sold thing and gives it to the buyer, and if the buyer presents the payment to the seller.
(B) Commitment and revocation
If the two parties mutually agreed to revoke the sale, it can be revoked, otherwise each one of them cannot unilaterally revoke the contract unless one of the following choices (khiyār) has been conferred on him:
1- Choice during the contracting meeting
1003. It is the right of the two meeting parties when making the contract to invalidate the contract as long as they are still meeting, since a sales contract does not become binding until after they separate, which is what is called ‘khiyār al-Majlis’ (derived from the verb ‘jalasa’ which is ‘he sat’). This is exclusive to sales contracts, and not applicable in other exchange contracts.
1004. It is not conditional that the parties meeting for contracting are the original parties, for it is sufficient that the representative/proxy meets for the agreement, unless the representative is a proxy for carrying out the form (seeghah, i.e. the formulation of the contract)ly, in which case his presence does not negate the need for the original person to be present at the contracting meeting (al-Majlis) so as to be able to activate this choice for his authoriser.
1005. The choice that is available during the contracting meeting is cancelled if its non-existence is made conditional in the contract or in another contract, and can be cancelled after making the contract and before leaving, with anything that shows cancellation.
2- Choice relating to animals
1006. The animal choice is conferred when one of the exchanged things is a live animal, in which case the choice for revocation for the seller and the buyer is available for three days (and even stretches to the fourth day when, for instance, the selling takes place in the afternoon of the 10th day of the month; in this case the choice does not end on the 12th day of the month but stretches to the afternoon of the 13th day of the month.) It can be cancelled in the same way as the choice during the contracting meeting.
3- The choice of delay
1007. The situation for a choice of delay is if the seller agrees that the buyer delays paying the price without specifying the waiting duration, neither explicitly nor implicitly, and the seller does not hand over the thing sold until the buyer brings the payment. Here he must allow him three days; if he brings the money then, the buyer has the right of sale, otherwise the seller has the right to invalidate the contract. This is exclusive to sales, the seller in particular; also, it is specific to when the seller is ready to hand over but does not hand over the sold item because the buyer is not able to hand over the price now. However, if the seller refuses to hand over the sold item to a person other than the buyer, in this case the buyer has no choice of delay and he is forced to hand over, as was explained in ‘(A) Fourth: Handing over and getting paid’ above. It seems that getting paid some of the price or handing over some of the sold item is like not handing it over or getting paid, so the basis for the choice of delay continues to exist.
4- Choice relating to a failure of description
1008. The choice relating to a failure of description is conferred when the buyer saw the item with certain characteristic, or the owner described to him likewise, then when it comes into his possession he finds it different to what he saw or what was described; in this case he may choose to withdraw from the deal or to go ahead; this is particular to specific assets, or the unspecific (amount) of a specific type of asset, such as one kilo from a sack of wheat. However, if the thing sold was unspecific and not present and the item handed over is different to the description, here if there is an alternative, the buyer may simply ask for another item with the descriptions/features; otherwise he has the choice of withdrawing or going ahead.
1009. What is meant by the description that, when it fails to match (on the handed over thing), confirms the choice, is the sought-after descriptions that are additional to the thing, such as the fat in a sheep, the shoe leather being original, or illiteracy or old age in a servant. But if the description is something essential to the thing sold, or if the price is specified according to it, such as the buyer asks someone to sell him a sheep then he sells him a cow, this is not a situation for this choice; rather, such matters invalidate the sale, even if the buyer is presented the requested thing afterwards.
1010. The choice relating to a failure in description is conferred on both the seller and the buyer if the description failed in the price (payment) or in the item sold, for the right of each of them depends on both.
1011. One must hasten – as is commonly acceptable – to use the choice, otherwise one's right is cancelled.
1012. Included under this heading the choice relating to cheating (khiyār at-Tedlīs), which takes place when the owner of the viewed thing makes it look better than it is, and decorates it to show it looking different to its actual state, or he mentions only some good features or descriptions to the buyer, who cannot view it to check if they are different to its actual state, so as to trick him and encourage him; if the matter is uncovered to the (second) cheated party, he has the choice of accepting the sale or revoking the contract, but he has no right to request compensation for the difference between the requested asset and the handed over or presented asset, except in the case of marriage, which is if he marries a woman thinking that she is a virgin then finds out that she is not, as will be explained in the section on marriage.
5- Choice relating to failure in the conditions
As a terminology, a condition is the request by one or both contracting parties – within the contract – of an asset, benefit, work or right from the other; if the other party accepts it, meeting the obligations of the condition becomes binding on him in general. The details are as follows:
1013. There is no distinction, regarding the obligation of meeting the condition, between the condition being part of the binding contract or part of a potential contract; however the obligation with the potential contract is conditional to the continuation of the contract, so if the contract fails to materialise, there is no point in meeting the obligation.
1014. Declarations (iqā’āt) such as divorce, relief from responsibility/commitment and the like, do not by definition include conditions, such as making their consequences dependent on the commitment to the condition or otherwise of the party declaring divorce, for example; thus if the declaration was initiated pending something, such as if he says: ‘You are divorced if you give up your dowry’, it is invalid.
1015. It is allowed to include as a condition any work, assets, words or rights which the person putting the condition wants, even if not common and this applies to all areas of private and public life, but according to the following conditions:
a- It must not violate a binding ruling, such as including a request to do a forbidden thing, abstain from doing an obligatory thing, requesting doing something which the Shari’ah commands not to do it in a given act, or requesting the abstention from something which the Shari’ah commands to do; in non-binding matters, however, there is no harm in making its violation conditional, such as making abstention from the newāfil prayers conditional.
b- The condition must not be contradictory to the contract, such as if a person sells to someone something on the condition that it has no price.
c- The condition must be – at the time of the making the contract – possible, so it is not valid if the contracting parties know when making the contract that it cannot be met; also, it is not valid if they thought they could meet it but then the failure to do so is discovered at the beginning, or it was possible then that failure to meet it would take place.
d- The condition must be something clear and specified to an appreciable degree, sufficiently so to be specified in reality in a way that prevents any failure to know one of the two exchanged things; so it is valid to sell a car on the condition that the buyer offers as qada’ what his deceased father failed to pray for a duration of between one to two years (i.e. not exactly specific).
e- The condition must be clearly stated in the contract, so that the contract is based on it and restricted by it, by mentioning it before the contract and so as to establish the commonly practised agreement that is the intention of the contracting parties, which is called ash-Shart ad-dimni (implicit condition).
1016. The effect of the choice of failure in a condition is that the person who included the condition has the choice of accepting the contract without the condition and without requesting payment of the value of what he had lost due to failure to meet the condition, or revocation of the contract and returning the asset to its owner. However, if he included a condition of payment of a money fine as a penalty for violating the contract conditions in addition to his right of revocation, in this case he is allowed to claim it and it is binding to the other party.
1017. The choice relating to failure in the conditions is cancelled if the person who included the condition cancels the choice without cancelling the condition itself, or if he cancels the condition and retracts from it, because cancelling the condition cancels its consequences, one of which is the choice.
6- Condition choice
1018. A condition choice is: one or both contracting parties gives himself or the other the right to invalidate the contract under certain circumstances up to a certain time, even if something like ‘… as long as I am/you are living’, or based on what is known in reality but unknown to the contracting parties or one of them, such as the arrival of Muhammad from his travels. It is, then, a choice that results from putting a condition, which is why it is called condition choice (khiyār ash-Shart). The consequence of it is that the person who includes the condition will have the choice of revoking the contract and returning the asset or accepting the contract as it is.
1019. It is not valid to include a condition choice in declarations such as divorce and relief from responsibility/commitment, nor in a potential contract since it is meaningless when it is (only) possible. But it is allowed to include the condition choice in binding contracts, including compensation ones, except marriage, alms (sadaqah) or binding gifts (hibah).
7- Choice relating to unfairness (ghobn)
1020. Unfairness in selling takes place when an asset is sold at a price that is less than that of similar items in the market, or when buying the asset at a price that is more than that of similar items in the market. The parameter measuring ‘less’ or ‘more’ is the non-tolerance of people towards the excess or deficit, something which differs according to the type of commercial transaction and its amount.
But the ‘less’ or ‘more’ must also be weighed alongside the conditions that one or more of the contracting parties may have imposed on the other, which may be related to the excess or deficit of the price in the market.
1021. The effect of the choice relating to unfairness that the disadvantaged party is given the choice – in the beginning – of accepting the transaction at the price that was agreed without claiming the difference or invalidating the contract and cancelling the agreement, unless the norm in the country in which the transaction took place works on the basis that the disadvantaged party has the right to claim the difference in price first, and if the party that has acted unfairly accepts to pay, the other party has no right to invalidate the contract, limiting the right of revocation, therefore, to the case in which the party that has acted unfairly refuses to pay the difference.
1022. If the choice between invalidation and accepting the contract is conferred on the disadvantaged party, it is not obligatory on him to accept the difference if the party that has acted unfairly presents it, but he has the right to invalidate it regardless. Also, he can agree with him to accept the contract in exchange of an amount which the party that has acted unfairly pays to cancel the right of invalidation of the disadvantaged party, in which case the choice is cancelled and the party that has acted unfairly must pay the compensation specified in the agreement.
1023. The choice is conferred on the disadvantaged party as described above only if he was unaware of the unfairness and insists on dealing at the market price, otherwise if he is aware of the unfairness, or will buy the goods regardless of the price, in this case he has no choice.
1024. When knowledge of the unfairness and conferment of the choice takes place, the disadvantaged party – if he decides to renounce the contract – must hasten to use his right of invalidation in a way that is not regarded as a delay that is longer than what is common, something that differs according to the type of the sale; if he is ignorant, unaware or forgetful of one or both of them (the unfairness and the choice) for a period of time, this does not affect the validity of the conferment (of the choice), provided that he then hastens – in the normal way – to use his right after learning about and realising the choice that is available to him.
1025. The choice relating to unfairness is cancelled if its cancellation is made conditional in the contract, or by cancelling it after the contract, or when the disadvantaged party disposes of the asset after his knowledge of the unfairness in a way that shows his commitment to the contract and his choosing to go ahead in it. That said, if the disposal does not show his acceptance of the contract, as in cases of ignorance of the unfairness, the choice does not become cancelled.
8- Choice relating to defects (‘ayb)
1026. The choice relating to defects is confirmed/conferred on the buyer when discovering a defect in the sold item, and to the seller when discovering a defect in the form of payment received. A defect is: whatever is an addition or reduction in the thing so that it is different in its nature and original creation, or something that is - according to the norm - regarded as a defect even if it is naturally formed and the item is still complete, something that differs according to the assets and societies.
1027. If the defect in the asset is confirmed, the choice is conferred on the asset’s owner (after the transaction), then if the buyer chooses he can go ahead wit the transactions and accept the asset as it is without claiming a compensation for the difference between the value of the good and defective asset, or he may choose to invalidate the transaction and return the asset to its original owner. However, if he cannot return it, he is bound to go ahead with the transaction and claim compensation. The cases where returning the asset is not possible include:
- damage to the asset, for whatever reason.
- transfer of ownership either by a binding transfer, such as selling, or by a potential transfer such as a non-compensated/exchanged gift (hibah).
- disposal of the asset when with the new owner, whether through his own actions or those of others; this could be either an external disposal that leads to a change in the asset, such as dyeing clothes or tailoring them, or disposal that involves a change in the status of the asset, such as its benefit leaving its owner’s control by renting or mortgaging.
- a defect occurred in the asset after it was received from its past owner, whether that defect was a result of actions of one of them, a third person or natural accident.
1028. Just as choice relating to defects may be conferred when the defect takes place before the contract, it may also be conferred when the defect takes place after the contract if used by its original owner (before handing it over).
1029. (The right of) returning the item and claiming compensation can be cancelled by making cancellation of both conditional and the acceptance of the other party of this condition, or their mutual understanding of this. Also, this is cancelled upon the buyer's cancellation of his right of choice, or his knowledge of the defect before the contract, or his acceptance of the contract and abiding by it after gaining knowledge of the defect, if he shows whatever clearly implies his surrender of the compensation, otherwise acceptance alone is not sufficient to cancel the compensation.
1030. Just as it is possible to make the cancellation of the rights of returning the asset and compensation conditional, it is possible to make the cancellation of one of these conditional. It is also valid to make the cancellation of the right of the choice (itself) conditional.
9- The choice of a split deal
1031. A split deal choice is conferred in any situation where the sale cannot be completed in part of the sold item or part of the price (payment). This may be because the item sold was believed to be one thing then it is discovered that part of it is not included in it due to lack of conditions for sale, such as if it was a waqf (trust/entailment) or was owned by others; or because they are two or more things that were sold in one deal on the condition of staying together, then the sale is discovered to be void in one or more of the sold items. When the deal gets split in this way, the right of revocation is conferred on whomsoever saw the asset in his possession split for this reason; the buyer can accept the sold item to the degree that was delivered and give to the seller the amount of payment that is equal to the amount of the sold item received; or the buyer can return to the seller that part of the sold item equal to the reduction in his payment.
Addition in iqālah (agreed invalidation)
Iqālah is invalidation of the contract by one of the two contracting parties upon his request to the other; it is established with any wording or acts that show it. It may be practiced in all binding contracts except marriage, compensation and alms; it is valid for all the parts of the contract and in part of it as well. The details of this are as follows:
1032. Iqālah is exclusive to the two contract parties, so it is not applicable to, nor valid for, the heirs after the death of one of them.
1033. Damage to one or both of the exchanged items does not stop the validity of the Iqālah, so if they establish Iqālah, each of them returns the exchanged good to its original owner; if it was present, he takes it, but if it has subsequently been damaged, he returns a similar item (or its value on the day when the damage occurred).
If the asset is transferred out of the ownership of its new owner, this is like (in its consequence) damage, so its ruling applies to it.
1034. If one of the two exchanged items becomes defective when in the hands of who dispose of it, the Iqālah is valid, so the defective asset is to be returned to its original owner with compensation.
1035. The Iqālah of a repenting person is recommended and many narrations encourage it, one of which is: ‘If any (of God’s) servants agree with a Muslim to invalidate a sale with him, Allah will pardon/forgive his (sinful) lapse on the Day of Judgement.’