Sunday, January 18, 2009

Part 3, The Islamic Rules of Trade - Brokerage (Samsara)

Due to the current global financial crisis there is increasing interest in the Islamic Economic System, the most comprehensive book on this topic is 'The Economic System of Islam' by Sheikh Taqiuddin an-Nabhani. However as people have many questions relating to the Islamic rules of trade we will be posting related extracts from the draft translation of the Fiqh masterpiece 'The Islamic Personality, Volume 2' by Sheikh Taqiuddin an-Nabhani.

Brokerage (Samsara)

It is narrated from Hakeem bin Hazam from his father who said: The Messenger of Allah (saw) said:

دعوا الناس يرزق الله بعضهم من بعض، فإذا استنصح الرجل أخاه فلينصح له
“Leave the people so that Allah gives sustenance to some of them through others. If the man seeks advice from his brother, let him advise him.”

In scrutinising trade and the situations of sale and purchase, we find therein that Allah provides sustenance for people through each other whether it is large trade or small trade. We often find the large traders undertaking the sale of small goods to traders on condition that they take a specific percentage of the profit upon what they sold to them for example one percent. This occurs in all goods. It occurs in what is measured and weighed and what is analogised and other than that. It occurs between large companies in manufacturing cloth-material, sweets, paper or machines and between wholesalers and they are called agents or selling agents. These people promise to sell what these companies produce and they take from them a specific profit which is a specific percentage of what they sell. There occurs between the large traders or manufacturers, and between the small traders, sales through the medium of persons working for the trader or manufacturer, and they are assigned exclusively to a specific trader of manufacturer. These people offer goods to people and sell them to them. Their sale is executed, and for them is a specific wage for the work of offering the goods from the large trader or manufacturer for whom they work whether they sold or did not sell and for them is a specific wage for each agreement of sale which they sold which is a specific percentage of the price for which they sold them. In this way the medium occurs between the seller and buyer in the factories, companies, and the traders and customers in everything. It occurs in vegetables in fruits just as it occurs in cloth-material, sweets and other things. In the vegetable market, the trader sells vegetables for the account of the peasants (liqa) of the specific hire لقاء عمولة (‘umula) which he takes from the peasant.

All these actions, whether they are large actions between companies and manufacturers, or between large and small traders, or between traders and customers, all of them are brokerage and those undertaking them are brokers. This is because brokerage is to undertake the affair and its preserver, then it is used for the one charged with the power of selling and buying. The fuqaha knew brokerage as the name for the one who works for someone else for a wage in selling and buying. And it is verified upon the auctioneer because he works for someone else for a wage in selling and buying. The brokerage and auctioneering is allowed in Shar’a, and it is considered of the practices of trader and it is a type of work by which wealth is owned in the Shar’a. Ahmad narrated from Qays bin Abi Ghurza Al-Kanani who said: We used to buy the camel loads in Madinah and we used to be called brokers. He said: So the Messenger of Allah (saw) came to us and called us by a name which was better that what we used to call ourselves so he said:

يا معشر التجار، إن البيع يحضره اللغو والحلف، فشوبوه بالصدقة
“O group of traders, verily there is present in this trade useless talk so mix it with charity (sadaqa).”

Its meaning is that he could exaggerate in describing his good until he talks which is useless talk i.e. more than what is obliged upon him of speech but it does not, however, which may reach the status of falsehood. He could also guess in swearing to market his good so he is recommended to give charity to efface that. The Messenger (saw)’s consent to the brokers upon their work, and his saying to them: “O group of traders” clarifies the permissibility of brokerage and that it is from trade. And it is the evidence that brokerage is allowed by Shar’a, and it is from the transactions permitted in the Shar’a.

However it is necessary that the action upon which he is hired to sell and buy be known either in the goods or by the time period, and that the profit or hire or wage be known. If a trader hires someone to sell for him or buy for him a specific house or specific utensils, the selling and buying is valid. Similarly if he hires him to sell or buy for him for a daily or monthly wage, it is valid. Similarly if he hires him to sell for him or buy for him for a daily or monthly wage to a specific level, and at the same time he hires him to sell for him or buy for him goods for a specific hire for each agreement. This is valid because the work upon which he was hired to sell or buy is known and the wage is known.

Accordingly brokerage, with its well-known meaning among traders and people from the time of the Messenger (saw) until today, is allowed. As for the brokerage for which the sahih hadith came prohibiting, it is specific to the deceitful brokerage which deceives people due to their ignorance of the price due to their lack of knowledge of the market or their lack of information regarding the good or what is similar to that. The Messenger (saw) consented to the the brokerage in a general form in considering it one of the trade practices. He prohibited the types of brokerage he clarified in their essence due to the reason (‘illah) therein which is deceit. Just like he permitted trade in a general form and prohibited specific types of trade for the reason therein. If the following of the ahadith coming therein and the scrutiny of their legislative meaning is performed, then this is clarified explicitly. In the ahadith which came with a prohibition of practices related to sale and purchase, brokerage is neither mentioned nor prohibited but some Sahabah and some narrators explained them as brokerage and translated the prohibition as being that he prohibited (someone) being a broker. If they are considered in their reality, it is clarified that they are types of brokerage. Al-Bukhari narrated from Abdullah bin Tawus from his father from ibn Abbas (ra) who said: The Messenger of Allah (saw) said:

لا تَلقوا الرُكبان ولا يَبِع حاضر لِبادٍ
“Do not meet riders, nor the sale of inhabitant for the Bedouin.”

He said: I said to ibn Abbas: What is his saying:

لا يَبِع حاضر لبادٍ
“Nor the sale of the inhabitant for the Bedouin.”

He said: Do not be a broker for him. And in the narration from Tawus that he said: I asked ibn Abbas (ra) what is the meaning of his statement: “The inhabitant should not be a trader for the Bedouin.” He said: He should not be a broker for him. And Al-Bukhari said: ‘The inhabitant should not sell for the Bedouin by brokerage” and he used the ‘no’ (la) of prohibition. Then he mentioned two hadiths in the chapter, the first of the two from Said bin Al-Musayyab that he heard Abu Hurairah (ra) saying: The Messenger of Allah (saw) said:

لا يَبتعِ المرء على بيع أخيه، ولا تناجشوا، ولا يَبِع حاضر لبادٍ
“The man should not buy upon the sale of his brother. Do not (najashu), nor the sale of the inhabitant for the Bedouin.”

And the second hadith from Anas bin Malik (ra) who said:

نُهينا أن نبيع حاضر لبادٍ
“He prohibited us from the sale of the inhabitant for the Bedouin.”

And Al-Bukhari said: in the ‘The Chapter of (najash): And the one who says that this sale is not permitted.’ And ibn Abi Awfa said: ‘The (najash) is the consumer of treacherous interest (riba) and it is the void deceit which is not permitted, and the Prophet (saw) said:

الخديعة في النار,ومن عمل عملاً ليس عليه أمرنا فهو رَدّ
“Deceit is in the Hellfire. And whoever performs any action not in accordance with our command, it is rejected.”’

And there came several ahadith mentioning several types of practices that the Messenger (saw) prohibited. It has been narrated from Abu Hurairah (ra) that the Messenger of Allah (saw) said:

لا تَلقوا الرُكبان ولا يَبِع بعضكم على بيع بعض ولا تناجشوا ولا يَبِع حاضر لبادٍ
“Do not meet riders nor should some of you buy upon the sale of others. Do not (tanajashu), nore should the inhabitant trader on behalf of the Bedouin” (narrated by Al-Bukhari).

And it was narrated that the Prophet (saw) said:

لا تَلقوا الجلب فمن تلقى منه شيئاً فاشتراه فصاحبه بالخيار إذا أتى السوق
“Do not convene up with the imported goods. And whoever receives anything from them, its owner has the option when he reaches the market” (narrated by Ahmad).

From these ahadith and others and their scrutiny, it becomes clear that he prohibited therein the inhabitant trading for the Bedouin and similar to them are the towns-people, and a person from buying upon the sale of his brother if he had completed the sale i.e. that the man comes to the good which has been bought by another so he increases the price for which it was bought and buys it to invalidate the first sale. And he prohibited the (najash) which is to increase upon the good while he is not a buyer for it i.e. that one who does not intend to buy increases the good to lead by it one who bargains for it, so that he will not increase on this amount except that he will bring the equivalent so he (فيَغتَر بyaghtarr) by that and increases in order to buy it. He prohibited the meeting of riders which is the inhabitant who goes out to the Bedouin who has imported goods and he informs him the price, and he says to him: ‘I will sell it for you.’ Or he deceives the Bedouin about the price of the land and he buys from them for less than the comparable price. Or he informs him of the little demand of what is with them or the little demand in the market. He (saw) prohibited meeting the imports which is like meeting the riders.
These are the actions which are prohibited, some of which are related to brokerage directly and of them are those which relate to trade. By scrutinising the ahadith which came in prohibition, it becomes clear that the prohibition therein is completely based upon an understood description i.e. a description which is understood as being that for whose sake the prohibition occurs. The understood description, where the command or prohibition overcomes it, then the command and prohibition are reasoned; so the meaning which is included by the understood description is the reason of the command or prohibition. So the obligation or forbiddance therein is linked to the reason suspended upon it. If the reason exists, the rule exists and if the reason is absent, the rule is absent; so it revolves with the reason in existence and absence. If the reason exists in other than it, the rule applies upon that other (thing) via the method of analogy. The inhabitant and the Bedouin, buying upon the sale of the brother, the (najash), meeting the riders and meeting imports, are all understood descriptions. They are, therefore, the thing for whose sake the prohibition exists i.e. its meaning is that it is that for whose sake the rule exists. The rule is suspended upon the Bedouin due to the reason of lack of knowledge of the price with the Bedouin, and suspended with buying upon the sale of his brother due to what has occurred therein with the price being determined and the reliance of one upon the other, and suspended upon the (najash) because he does not intend to buy it but only increases the price to harm the buyer, and suspended upon meeting the riders and meeting imports due to what there is therein of elevating the price upon the city-dwellers or cheapening it for the importer. If these meanings exist in these sales, the sale is forbidden therein and brokerage is forbidden therein; and if they do not exist, neither sale nor brokerage is forbidden therein. Umar bin Al-Khattab (ra) understood in prohibition of the sale of the inhabitant for the Bedouin that the reason is not knowing the price, so he said:

دلّوهم على السوق ودلّوهم على الطريق، أخبروهم بالسعر
“Direct them to the market, and direct them to the path. And inform them of the price.”

Accordingly, brokerage is allowed due to the manifestation of the evidence. If brokerage occurs in the types wherein a prohibition exists or there is a reason with in the brokerage for whose sake the prohibition exists, these types become haram but brokerage in its essence does not become haram. Rather brokerage remains allowed and the acquisition of brokerage remains an allowed acquisition.

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