is very important & has an effect on all other Ibadaat & the
general spiritual status. BEFORE doing Business the person
is required to know the Islamic Laws applicable. This will
enable him to earn Halal rizq for himself & his family. EVEN
in Halal business there may be Transactions/ Situations
where there is a possibility of overstepping HIS laws.
examples are :-
Import & Export - Dealing with customs in terms of 'Law
Of Land'. If a person does not understand this concept
either he will stop doing business or he will end up
doing the business through committing haram.
Currency, stocks, options, speculation, banking, etc. -
One should know in & out about interest, Islamic way of
banking, exchanges, etc.
Shop-keeping - One should know the Islamic rules of
Purchase /sale ..marketing, displaying, goods return,
The examples are numerous. The line between haram and
halal is thin in businesses. In most cases, a momin
should (ie it is wajib) have proper religious training on
'how to do business - the Islamic way'. .This was
demonstrated by Imam Ali (as) when he ordered flogging
of a Fish Merchant who was selling fish w/o scales &
Question: Kindly, explain to me what I am required to
know by way of Shariah before I start a business of my own
and if there is any formula of purchase and sale to be
It is recommended for a business man to learn the rules of
daily transactions. In fact, if due to ignorance there are
chances that he may contradict the laws of Shariah, then it
is obligatory upon him to learn.
Imam Ja’far Sadiq (a.s) is reported to have said:
A person who wishes to engage in business should
learn its rules and laws, and if he makes any
transaction without learning them, he may suffer
because of entering into a void or doubtful
Business Related Laws from Al-Islam.Org
are given below:-
R u l e s
r e g a r d i n g p u r c h a s e a
n d s a l e
It is recommended for a business man to learn the rules of
daily transactions. In fact, if due to ignorance, he may
necessarily contradict the laws of Shariah, then it is
obligatory upon him to learn. Imam Ja'far Sadiq (A.S.) is
reported to have said: "A person who wishes to engage in
business, should learn its rules and laws, and if he makes
any transaction without learning them, he may suffer because
of entering into a void or doubtful transactions".
If a person is not aware, because of ignorance about the
relevant laws, whether the transaction made by him is valid
or void, he cannot have any discretion over the property
which he has acquired, unless he knows that the other party
has no objection to it. In any case, the transaction remains
If a person does not possess any wealth, and it is
obligatory on him to maintain his dependents, like, his wife
and children, he should start earning. Moreover, to earn is
recommended for Mustahab acts like providing better means of
livelihood to one's family, and helping the poor persons.
H a r a a m
t r a n s a c t i o n s
There are many Haraam deals and businesses, some are
To sale and purchase intoxicating beverages, non-hunting
dogs, pigs, an unslaughtered carcass (as a precaution).
Besides, if a permissible use of Najisul Ayn is
possible, like, excrement and faeces being converted to
manure or fertilisers, its transaction is permitted, but
as a precaution, such sale and purchase should be
2 - Sale and purchase of usurped property.
3 - As a precaution, it is haraam to sell and
purchase those things which are not usually considered
to be merchandise, like, the sale and purchase of wild
beasts, if it does not involve any substantial gain.
4 - Any transaction which involves interest.
5 - Sale and purchase of those things which are
usually utilised for haraam acts only, like, gambling
6 - A transaction which involves fraud or
adulteration, like, when one commodity is mixed with
another, and it is not possible to detect the
adulteration, nor does the seller inform the buyer about
it, like, to sell ghee mixed with fat. This act is
called cheating (ghish) or adulteration.
The holy Prophet of Islam (s.a.w.a) said: "If a
person makes a deceitful transaction with the Muslims,
or puts them to a loss, or cheats them, he is not one of
my followers. And when a person cheats his fellow Muslim
(i.e. sells him an adulterated commodity), Allah
deprives him of Blessings in his livelihood, closes the
means of his earnings, and leaves him to himself."
There is no harm in selling a Pak thing which has become
najis, but can be made Pak by washing it. And if it cannot
be made Pak with water, and its use does not require it to
be Pak, like some oils, its sale is permissible. In fact,
even if its use requires it to be Pak, if it has substantial
halal benefit, its sale is permitted.
If a person wants to sell a najis thing, he should inform
the buyer about it, because by not telling him, he might do
something contrary to the rule of Shariah. For example, if
he sells him najis water which the buyer may require for
Wudhu or Ghusl, and to offer his obligatory prayers, or he
sells him something which he uses as food or drink - in all
such cases, the seller should inform the buyer. Of course,
if the seller knows that it is no use informing the buyer
who is careless, and does not care about Taharat or Najasat,
then it is not necessary to inform.
Although the purchase and sale of najis medicines for
internal or external use is permissible, the buyer should be
informed about it in situations explained in the foregoing
rule no. 2065.
There is no objection to selling or buying the oils which
are imported from non-Islamic countries, if it is not known
to be najis. And as for the fat which is obtained from a
dead animal, if there is a probability that it belongs to an
animal which has been slaughtered according to Islamic law,
it will be deemed Pak, and its sale and purchase will be
permissible, even if it is acquired from a non-Muslim or is
a imported from non-Islamic countries. But it is haraam to
eat it, and it is necessary for the seller to inform the
buyer about the situation, so that he does not commit
anything contrary to his religious responsibility.
If a fox, or any other such animal, is not slaughtered
according to religious law, or dies a natural death, it is
haraam to purchase or sell its hide, as a precaution.
The purchase and sale of hide and skin which is imported
from a non-Islamic country, or is bought from a non-Muslim,
is permissible provided that one feels strongly that the
animal was most probably slaughtered according to Islamic
law. And, namaaz with it will be in order.
The fat obtained from a dead animal, and the hide obtained
from a Muslim, when one knows that the Muslim has obtained
it from a non-Muslim, without investigating whether or not
the animal has been slaughtered according to Islamic law, is
Pak, and its sale and purchase permissible. But it is not
permissible to eat it.
Transaction of intoxicating drinks is haraam and void.
Sale of usurped property is void, and the seller should
return to the buyer the money taken from him.
If a buyer is serious about a transaction, but his intention
is not to pay the price of the commodity being purchased by
him, this intention will not affect the validity of the
transaction, though it is absolutely necessary that he
should pay the money to the seller.
If a person has purchased a commodity on credit, and wishes
to pay its price later from his haraam earning or wealth,
the transaction will be valid, but, he will have to pay the
amount which he owes from halal property, in order to be
absolved of his responsibility.
Purchase and sale of instruments of entertainment like,
guitar, lute and harmonium etc., is haraam, and as a
precaution, the same rule applies to the small musical
instruments made as toys for the children. However, there is
no harm in selling and purchasing instruments of common use,
like, radio and tape-recorder, provided that it is not
intended to use it for haraam purposes.
If a thing which can be used for halal purposes is sold with
the intention of putting it to haraam use - for example, if
grapes are sold so that wine may be prepared with them, the
transaction is haraam, and as a precaution the deal is void.
However, if the seller does not sell it with that Niyyat,
but only knows that the buyer will prepare wine with the
grapes, the transaction will be in order.
Making a human sculpture or that of an animal, is haraam,
but there is no harm in purchasing and selling it, though as
a precaution, it should be avoided. However, painting human
portraits or animals is permissible.
It is haraam to purchase a thing which has been acquired by
means of gambling, theft, or a void transaction, and if a
person buys such a thing from a seller, he should return it
to its original owner.
If a person sells ghee mixed with fat and specifies it, for
example, he says: "I am selling 3 kilos of ghee" - the
transaction will be void if the quantity of fat is more, to
the extent that it cannot be called ghee.
But if the quantity of fat is small, so that it can just be
classified as ghee mixed with fat, the transaction will be
valid. But the buyer has a right of refusal, based on the
deficiency in the quality, and can therefore cancel the deal
and ask for refund.
And if ghee and fat are distinct from each other, the deal
covering the fat will be void, and the seller will have to
refund the price of that fat, and keep the fat for himself.
But in this case also, the buyer has a right of canceling
the transaction of pure ghee which is in it. Where the
seller does not say that he is selling a particular thing,
and just sells, say, 3 kilos of ghee he possesses, and if it
turns out to be ghee mixed with fat, the buyer can return
it, and ask for pure ghee.
If a seller sells a commodity which is sold by weight or
measurement, at a higher rate against the same commodity,
like, if he sells 3 kilos of wheat for 5 kilos of wheat, it
is usury and, therefore, haraam. In fact, if one of the two
kinds of same commodity is faultless, and the other is
defective, or one is superior and the other is inferior, or
if their prices differ, and the seller asks for more than
the quantity he gives, even then it is usury and haraam.
Hence, if a person gives unbroken copper or brass and takes
more of broken copper and brass, or gives a good quality of
rice, and asks for more of inferior kind of rice instead, or
gives manufactured gold and takes a larger quantity of raw
gold, it is usury and haraam.
If the thing, which he asks for in addition, is different
from the commodity which he sells, like, if he sells 3 kilos
of wheat against 3 kilos of wheat and one dirham cash, even
then it is usury and haraam. In fact, if he does not take
anything in excess, but imposes the condition that the buyer
would render some service to him, it is also usury and
If the person who is giving less quantity of a commodity,
supplements it with some other thing, for example, if he
sells 3 kilos of wheat and one handkerchief for 5 kilos of
wheat, there is no harm in it, provided that the intention
is that the handkerchief is for the excess he is receiving,
and also that the transaction is not on credit.
And if both the parties supplement the commodity with
something, like 3 kilos of wheat with a handkerchief is sold
for 3 1/2 kilos and a handkerchief, there is no objection to
it, provided that the intention is that half kilo of wheat
with the handkerchief on one side, was given for a
handkerchief on the other.
If a person sells something by measuring in meter or yard,
like, cloth, or something which is sold by counting like,
eggs and walnuts, and asks for more instead, there is no
objection, except when the commodity exchanged are of the
same kind and the transaction is on credit, then it is not
permissible. For example, if he gives ten eggs on a
condition that he should receive eleven eggs after a month,
it is a void and haraam transaction.
In matters of the currency notes, a person can sell one type
of it for another, like toman against dinar or dollar, on
credit, and on condition to receive more. But if he sells
toman for toman, expecting more, then that transaction
should not be on credit; otherwise it will be void and
haraam. For example, if a person gives 100 toman cash, on a
condition that after six months he should be given 110 toman,
that is void and haraam.
If a commodity is sold in most of the cities by weight or
measurement, and in some cities by counting, there is no
objection if that commodity is sold against the same
commodity at a higher rate, in the city where it is sold by
counting. Similarly, if the cities are different, and if it
cannot be said that the majority of the cities sell the
commodity by weight or measurement or by counting, every
city will be governed by the custom prevailing in it.
In commodities which are sold by weight or measurement, if a
person sells a commodity in exchange of something which does
not belong to the same category, and if the deal is not on
credit, he can take more. But if it is on credit, it is not
permissible. Hence, if he sells one kilo of rice for two
kilos of wheat on a month's credit, that transaction is
If a ripe fruit is exchanged for the raw fruit of the same
type, one cannot take more. And Fuqaha have commonly held
that if a commodity taken in exchange is from the same
origin, one should not take more. For example, if someone
sells one kilo of ghee made from cow milk for one and half
kilos of cheese made from cow milk, it will be usury and
therefore haraam. But this generalisation is a matter of
From the point of usury, wheat and barley are commodities of
one and the same category. Hence, if a person gives 3 kilos
of wheat and takes in exchange thereof, 31/2 kilos of
barley, it is usury and haraam. And if, a person purchases
30 kilos of barley, on the condition that he would give in
exchange 30 kilos of wheat at the time of its harvest, it is
haraam, because he has taken barley on the spot and will
give wheat some time later, and this amounts to taking
something in excess, and therefore haraam.
Father and son, husband and wife can take interest from each
other. Similarly, a Muslim can take interest from a
non-Muslim who is not under protection of Islam. But a
transaction involving interest with a non-Muslim who is
under protection of Islam, is haraam. But after the
transaction is completed, and the deal is closed, if payment
of interest is permissible in the religion of that
non-Muslim, a Muslim can receive interest from him
C o n d i t i o n s
o f a s e l l e r a n d
a b u y e r
There are six conditions for the sellers and buyers:
They should be baligh.
2 - They should be sane.
3 - They should not be impudent, that is, they
should not be squandering their wealth.
4 - They should have a serious and genuine
intention to sell and purchase a commodity. Hence, if a
person says jokingly, that he has sold his property,
that transaction is void.
5 - They have not been forced to sell and buy.
6 - They should be the rightful owners of the
commodity which they wish to sell, or give in exchange.
Rules relating to these will be explained in the
To conduct business with a child who is not baligh, and who
makes a deal independently, is void, except in things of
small value, in which transactions are normally conducted
with the children who can discern. But if a discerning child
is accompanied by his guardian, and he pronounces the
confirmation of the deal, then the transaction is valid in
In fact, if the commodity or money is the property of
another person, and that child sells that commodity or
purchases something with that money, as an agent of the
owner, the transaction is in order, even if the discerning
child may be possessing that property or money on his own.
And similarly, if the child is a medium of payment to the
seller, and carrying the commodity to the buyer, or giving
the commodity to the buyer and carrying the money to the
seller, the transaction is valid, even if the child may not
be discerning (i.e. one who can distinguish between good and
bad) because in reality, two adult persons have entered into
If a person buys something from a child who is not baligh,
or sells something to him, in a situation when the
transaction is not valid, he should give the commodity or
money back to his guardian, if it was the child's own
property, or to its owner, if it was the property of someone
else, or should obtain the owner's agreement.
But if he does not know its owner, and has also no means to
identify him, he should give the thing taken from the child
to a poor on behalf of its owner as Radde Mazalim, and in so
doing, he should, as an obligatory precaution, seek the
If a person concludes a transaction with a discerning child
(i.e. one who can distinguish between good and evil), in a
situation when it is not valid to conclude a transaction
with him, and the commodity or money which he gives to the
child is lost, he can claim it from the child after he
attains the age of Bulugh, or from his guardian. But if the
child is not discerning, he will have no right to claim
anything from him.
If a buyer or a seller is forced to conclude a transaction,
and he concedes after the transaction is concluded (e.g. if
he says: I agree), the transaction is valid. However, the
recommended precaution is that the formula of the
transaction should be repeated.
If a person sells the property of another person without his
consent, and if the owner of the property is not agreeable
to the sale, and does not grant permission, the transaction
The father or paternal grandfather of a child and the
executor of the father and the executor of the paternal
grandfather of a child, can sell the property of the child,
and if the circumstances demand, an Adil Mujtahid can also
sell the property of an insane person, or an orphan, or one
who has disappeared.
If a person usurps some property, and sells it and after the
sale, the owner of the property allows the transaction, the
transaction is valid, and the thing which the usurper sold
to the buyer and the profits accrued to it, from the time of
transaction, belongs to the buyer. Similarly, the thing
given by the buyer, and the profits accrued to it from the
time of the transaction, belong to the person whose property
If a person usurps some property, and sells it with the
intention that the sale proceeds should belong to him, and
if the owner of the property allows the transaction, the
transaction is valid, but the sale proceeds will belong to
the owner, and not to the usurper.
L a w s
o f P a r t n e r s h i p
If two persons make an agreement that they would trade with
the goods jointly owned by them, and would divide the profit
between themselves, and if they pronounce a formula
declaring partnership, in Arabic or in any other language,
or express their intention of becoming each other's partner
by conduct, the partnership will be valid.
If some persons enter into a partnership to share the wages
from their labor, like, if a few barbers or laborers agree
mutually that they would divide between themselves whatever
wages they earn, that partnership is not in order.
But if they enter into a mutual compromise that, say, half
of what one earns will be given to the other, for a fixed
period, in exchange of half of what the other earns, this
transaction will be valid, and thus each will be a partner
in the wages of the other.
If two persons enter into a partnership, on the terms that
each of them would purchase the commodity on his own
responsibility, and each would be responsible for the
payment of its price, but would share the profit which they
earn from that commodity, that partnership is not valid.
However, if each of them makes the other his agent,
authorizing that whatever one purchases on credit, the other
will be a partner in it, which means that he and his partner
are responsible for the debt, then they will be considered
partners in that commodity.
The persons who become partners under the rules of
partnership, must be adult and sane, and should have
intention and free volition for becoming partners. They
should also be able to exercise discretion over their
properties. Hence, if a feeble-minded person who spends his
wealth impudently, enters into partnership, it is not in
order, because such a person has no right of disposal over
If a condition is laid down in an agreement of partnership,
that the partner who manages, or does more work than the
other partner, or does more important work than the other,
will get larger share of the profit, it is necessary that he
should be given his share as agreed upon. Similarly, if it
is agreed that the person who does not manage, or does not
do more work, or does not do more important work, will get
larger share of the profit, that condition is also valid and
it must be fulfilled.
If it is agreed that the entire profit will be appropriated
by one person, or the entire loss will be borne by one of
them, that sort of partnership is a matter of Ishkal.
If it is not agreed that one of the partners will receive
more profit, and if the investment of each of them is equal,
they must share profit and loss equally. And if their
investment is not equal, they should divide the profit and
loss in proportion to their capital.
For example, if two persons become partners, and the capital
of one of them is double the capital of the other, his share
in the profit and loss will also be double of the other,
irrespective of whether both of them do equal work, or one
of them does less work, or does not work at all.
If it is laid down in the agreement of partnership, that
both the partners will buy and sell together, or each of
them will conclude transactions individually, or only one of
them will conclude transactions, or a third party will be
hired to conclude the transaction, they should act as agreed
If it is not specified as to which of the partners will buy
and sell with the capital, neither of them can conclude any
transactions with that capital without the permission of the
The partner who has been given the right of discretion over
the capital, should act according to the agreement of
partnership. For example, if it is agreed that he will
purchase on credit, or will sell against cash payment, or
will purchase the property from a particular place, he
should act according to the agreement.
However, if no such agreement is made with him, he should
conclude transactions in the usual manner, and carry on in
such a way that no loss is suffered in the partnership. He
should not carry any property belonging to the partnership,
with him while he is traveling, if that is unusual.
If a partner who transacts business with the capital of the
partnership, sells and purchases things contrary to the
agreement made with him, or concludes transactions in a
manner which is not normal, because of the absence of any
agreement, the transaction made by him in both the cases
will be correct and valid; but if such a transaction results
in a loss, or a part of wealth is squandered, then the
partner who has acted against the agreement, or the usual
norm, will be responsible for the loss.
If a partner who trades with the capital of the partnership,
does not go beyond the bounds of his authority, nor is he
negligent in looking after the capital, yet unexpectedly the
entire capital or a part of it perishes, he is not
If a partner who trades with the capital of the partnership,
declares that the capital has perished, and if other
partners trust him, they should accept his word. But if they
do not trust him, they can complain against him before the
Mujtahid, who will decide the case according to Islamic
If all the partners withdraw the permission, given by them
to one another, for the right of discretion over their
respective shares held in partnership, none of them will be
allowed the right of discretion over them. And if one of
them withdraws the permission accorded by him, the other
partners do not have the right of discretion; but one who
has withdrawn his permission can exercise his right of
discretion over the property of the partnership.
If one of the partners demands that the capital invested in
the partnership should be divided, others should accept his
demand even if the period fixed for the partnership may not
have expired yet, except when the division of the capital
entails considerable loss to the partners.
If one of the partners dies, or becomes insane, or
unconscious, other partners cannot continue to exercise
right of discretion over investment held in the partnership.
And the same rule applies when one of them becomes
feeble-minded that is, spends his property without any
If a partner purchases a thing on credit for himself, its
profit and loss belongs to him. However, if he purchases it
for partnership, and if the agreement allows credit
dealings, its profit and loss belongs to both of them.
If the partners conclude a transaction with a joint capital
investment, and it transpires later that the partnership was
invalid, if the validity of the transaction was not
dependent on mutual consent, meaning that, if they had known
that the partnership was not valid, they would have still
been agreeable to having the right of discretion over the
property or stock of each other, the transaction will be
considered valid, and whatever is gained or lost from the
transaction will be shared by them.
But if the partners would not have been disposed to agree to
exercise discretion over each others' stock or property had
they known that the partnership was not valid, yet they
approve the particular transaction, it will be valid - and
if they do not, it will be invalid.
And in either case, if any partner has worked for the
partnership without the previous intention to work gratis,
he can collect the wages for his services at the usual rate,
considering the percentage of other partners. But if the
usual wage is more than his share of dividend, after having
agreed to the validity of the transaction, he should take
the dividend only.
a k a t o n b u s i n e s s
g o o d s
Goods earned by commutative
contracts, and set aside for investment in business or
profit earning, is, as a precaution, liable for Zakat if
certain conditions are fulfilled. The rate of Zakat is 1/40.
The owner of the goods should be baligh and sane.
(ii) The goods should have reached the
taxable limit, which is equal to that of gold and
(iii) The goods should have remained for one year
ever since the owner intended to invest it for profit.
(iv) The intention of investing it for profit
should have remained unchanged throughout the year. If
the intention changes, like, when he decides to spend it
for maintenance, then he will not pay its Zakat.
(v) The owner should be actually capable of
its disposal throughout the year.
(vi) Throughout the year, the owner should have a
buyer of the goods equal to the capital or more. If,
during the year, he gets a buyer for the goods for less
then capital outlay, it will not be obligatory upon him
to pay its Zakat.
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