Lesson 5

Summary

This video delves into the principles of Islamic trade and financial transactions, emphasizing key concepts such as ownership, liability, and the prohibition of ambiguous trades. It explores the conditions required for a valid transaction, like knowing the product and price, and acquiring the goods before reselling them for profit. The speaker highlights the importance of following Islamic jurisprudence to ensure fair and transparent transactions. Real-world examples, such as Drop Shipping and selling stolen goods, are used to illustrate these rules. The video ultimately stresses that profit can only be made from goods one truly owns and bears responsibility for.

Takeaways

• 😀 You must own what you sell. In Islamic jurisprudence, it is forbidden to sell something that is not in your possession or ownership, as the Prophet ﷺ said, 'Do not sell that which is not with you.'
• 😀 Acquisition and liability are key to the validity of a transaction. You cannot sell something for profit until you physically acquire it or assume responsibility for it, ensuring the buyer can take possession.
• 😀 Ambiguous trade is prohibited. You cannot sell goods without clear knowledge or description of what you are selling, such as selling a fish in the ocean that may or may not be caught. This leads to uncertainty, which is a form of gambling.
• 😀 The importance of transparency in trade: Both the buyer and seller must know what is being bought and sold. An accurate description of the goods must be provided by the seller, and any factors that affect the price must be included.
• 😀 The transfer of liability determines ownership in Islamic law. For example, if you buy a car but haven't physically taken possession of it, you cannot sell it until you have responsibility for it.
• 😀 In Islamic law, a sale that occurs without the owner's consent is contingent on the original owner's acceptance. If the seller sells someone else's property, the deal is valid only if the owner agrees to the sale.
• 😀 There are two methods for acquiring goods: physical receipt and transfer of liability. For a transaction to be complete, you must either take possession or assume responsibility for the asset.
• 😀 Transactions should not resemble gambling. The Sharia forbids practices that mimic gambling, such as insurance and lottery, as these are based on contingencies, where the outcome is uncertain.
• 😀 Knowledge of the price is essential in trade. Both the buyer and seller must know the exact price being exchanged to avoid ambiguity in the transaction. This ensures the price is clear and agreed upon by both parties.
• 😀 The Sharia allows trade in good faith but limits the scope for exploitation. Profits should only be made when you carry the burden and risk of the asset, such as caring for it or dealing with any loss related to it.
• 😀 Interest (riba) is prohibited because the lender does not bear any liability in the transaction but still makes a profit. Similarly, the Sharia prevents making profits in trade without assuming responsibility or risk for the goods being sold.

Q & A

Why is it essential to own the goods before selling them in Islamic trade?

In Islamic trade, ownership is fundamental because you cannot sell what you do not possess. This ensures that transactions are clear, fair, and transparent, preventing disputes and maintaining the integrity of trade. The Prophet Muhammad (PBUH) emphasized that you should not sell what is not in your possession or under your control.

What is the ruling on selling stolen goods in Islam?

Selling stolen goods is forbidden in Islam because it involves selling something that does not belong to you and depriving the rightful owner of their property. This is considered an unfair transaction and is prohibited to maintain justice and equity in trade.

What does the concept of liability mean in Islamic trade?

Liability in Islamic trade refers to the responsibility for the goods after a transaction is made. You cannot sell a product at a profit until you have physically acquired it or assumed liability for any loss or damage to it. This ensures that the seller has the full responsibility for the goods before making a profit.

Why are speculative trades or trades based on contingencies prohibited in Islam?

Speculative trades, such as those dependent on uncertain future events (e.g., lotteries, insurance, or selling goods that may not exist), are prohibited because they resemble gambling. Islam seeks to prevent financial exploitation by ensuring that trade is based on clear, equitable, and transparent transactions.

Can a transaction be valid if the buyer and seller don’t know the exact details of the goods being exchanged?

No, a transaction is not valid unless both parties know the exact details of the goods being exchanged. This is to avoid ambiguity, which could lead to disputes. Accurate descriptions of the product, including its condition, price, and features, are essential for the transaction to be considered valid in Islamic law.

What does the Prophet's saying, 'Do not sell what you do not possess' imply in modern terms?

In modern terms, this saying implies that you cannot sell something you don't own or haven't acquired. This principle applies to contemporary transactions, such as online sales, dropshipping, or speculative markets, where a seller should only offer goods they have full control over or have legally assumed responsibility for.

How does Islamic law view the concept of making a profit from goods you haven’t assumed responsibility for?

Islamic law does not allow making a profit from goods you haven’t assumed responsibility for. Profit is only allowed if the seller has taken on the burden of risk associated with the goods. This prevents unfair financial gain without the seller bearing any risk or responsibility.

Is it permissible to buy goods and sell them at a profit before physically taking possession of them?

No, it is not permissible to sell goods at a profit before physically taking possession of them or assuming liability. The Islamic principle is that a transaction is only valid once the buyer has either physically acquired the goods or taken responsibility for them, ensuring fairness and accountability.

Why does Islamic law forbid interest-based transactions (usury) in trade?

Islamic law forbids interest-based transactions because they involve earning profit without bearing any risk. In such transactions, the lender makes a profit without taking on any responsibility, which is seen as exploitative. Islamic finance aims to ensure that profit is earned through risk-sharing and genuine ownership.

Can a seller sell a product they already agreed to sell to someone else before the buyer has taken possession?

No, the seller cannot sell the same product to someone else before the buyer has taken possession or assumed responsibility for it. If the seller sells the product to another party before the deal is fully completed, it is considered invalid and may lead to disputes, as the original agreement takes precedence.