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org )) Saalikeen -Manhaj As (The Book of transactions) a condensed fiqh treatise authored by the noble, respected sheikh: Rahmaan ibn Naasir asSa'diy, -Abdur 1376AH -1307AH (May Allah have mercy upon him). Knowledge International University of Finance www.kiu.org Producers Note: This translation has been produced by Knowledge International University and has been tailored complement the curriculum and pattern of the six day online summer course offered in 2012. For an easier understanding of the Arabic text please note the following: 1. Text that is placed between [] denotes a paraphrased translation of the Arabic text. 2. Text that is placed between () denotes additional text without any corresponding Arabic text representing it. Knowledge International University of Finance www.kiu.org The Book of Transactions (Sales) [] The Conditions for Transactions (Sales) 133 : : }} {{ ] 572. ] 311- The general ruling for transactions is that of permissibility. [Evidence] Allah says: "Allah has permitted trade and forbidden usury." (2: 275). 135 . 312- Thus all tangibles, such as, property, animals, furniture etc. are permissible to place under (contractual obligation) if the conditions for trade are met. 131 : 313- From the most important of conditions are: []: First Condition: Knowledge International University

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Finance Fiqh of Finance www.kiu.org 52: ] . : :}} {{ ] Mutual Consent: because Allah said: "O you who believe! Eat not up your property among yourselves unjustly except if it be a trade amongst you by mutual consent." (4: 29). []: Second Condition: 133 . . 315- That there is neither [gharar] nor jahala (uncertainty); because our Prophet forbade the sale of gharar. (Muslim) 132 : 315- [Based upon this- the following transactions (sales) are forbidden] 3 . 1. The selling of an escaped slave and a runaway camel 5 . 2. [A sale in which one says]: 'I will sell to you one of the following two items'. 1 . 3. Or (a sale that entails) selling an area of land determined by a stones throw, etc. 3 . 4. Or (for a master) to sell the [unborn child] of his female slave, or to sell the fruit of a tree before [its condition is known]. Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 2 . 5. Or to sell the [unborn offspring] of an animal. . [This condition of there being neither ambiguity and deception nor uncertainty in the sale applies to both the price of the commodity as well as the commodity itself.] 133 ]:] Third Condition: . ) ( For the [seller] to actually own the [object being sold], or have permission to sell it, whilst having attained maturity as well as competency. 137 ]:] Fourth Condition: . : From the conditions (that apply) as well is [for the transaction (sale) to be free from any elements of riba.] : : . . On the authority of 'Ubaadah the Prophet said: "Gold for gold,

silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, (must be of) same quantity for same quality, (with the exchange being) hand to hand. However if these classes differ; sell as you please, as long as (the exchange is) hand to hand. [Muslim]. Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 133 . 318- (Based on this) it is not permissible to sell a measurement of a substance of one of these categories (with another measurement of the same substance) unless these two conditions are fulfilled. This also applies to goods that are customarily weighed. 132 : . 319- And if a measured item is sold for another measured item of different type, or a weighed item is sold for another weighed item of different type; then it is a [permissible transaction] as long as the payment is made on the spot (hand-hand) before the buyer and seller depart from one another. 153 . 320- And if a measured item is sold for a weighed item or the opposite; then this [is considered a permissible transaction] even if the possession took place after the separation of the buyer and seller. 153 . 321- And Ignorance of Tamaathul (equality between two measured or weighed commodities of the same substance) is equivalent to knowledge of Tafaadul (excess in quantity of quality of one item over the other). 155 : . . Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 322- The Prophet likewise prohibited al Muzaabanah transactions; which is the "buying of dates with dates that are still attached to the tree." (Agreed upon). 151 . . 323- The Prophet gave permission regarding the sale al 'Araaya 1 on the basis of an estimation (of what the dates would be when dry), on the condition that they be less than five Awsuq 2 , to the person in need of fresh dates and does not have enough money to buy them, according to its estimation." (Muslim). []: Fifth Condition: 153 : :

324- From the [Shariah] conditions of sale is that the [sale does not apply to a forbidden object by the Shariah]. 3 . . 5 : . . 1 ) ( : . 3 : . 1 This refers to the sale of fruits still on trees based on an estimation when they are ripe (further clarity on this will be shared during the course). 2 This is the Plural of of wasq, with one wasq being equivalent to approximately 60 saa's or 130.56 kgs. Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 2 : . : . 3 . : . 1. Either due to the essence of the item itself, (for example) how the Prophet forbade the selling of intoxicants, carrion and idols. (Agreed upon) 2. Or due to the sale resulting in the severing of ties between Muslims. Thus, the Prophet forbade "buying and selling in opposition to one's brother and likewise annajash. 3 (Agreed upon) 3. Likewise the Prophet forbade the separating of slaves that are members of one family. 4. Likewise a transaction where it is known that the buyer will perform a sin with the item purchased like (the purchase of) walnuts and eggs for gambling, or weapons to create fitnah (strife) or for travel robbers. 5. The Prophet also forbade going to meet [those bringing merchandise into the market for sale before reaching the market]. Thus, he said: Do not intercept incoming merchants; if a person intercepts (an incoming merchant) and buys from him, the merchant has the choice of taking it back when he reaches the market.[Muslim]. 6. The Prophet also said: "Whoever cheats us, is not from us". [Muslim]. 152 : 325- Another example of clear usury is: . 3 This is where a person makes a bid merely to raise the price of an item not intending to buy it. Knowledge International University Islamic Finance Fiqh of Finance

www.kiu.org . : . . : a) To [illegally strategize using the 'eenah concept], which is to sell a commodity on credit, then buy the same commodity back from the buyer in cash for less, or the opposite. b) Or to [illegally strategize] through the form of loan reversals. 4 c) Or to [illegally strategize] via a loan by lending a person money stipulating some sort of benefit from his wealth, or for him to give a replacement of some sort that has some benefit in it. Thus, every loan than results in a type of benefit is usury. d) [From that which is considered illegal strategy] is to sell silver jewelry with something else for silver, or a handful of 'ajwah dates and a dirham for two dirhams. 153 : . : . 326- And the Prophet was asked about selling dry dates for moist dates? (In reply) He said: "Do they decrease when they dry?" They said yes. The Prophet thus prohibited such a transaction. [Reported by the five]. 157 . . 4 This will be further elaborated on during the course. Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 327- The Prophet also forbade the selling of package of dates with an unknown quantity for dates which had a known quantity. [Muslim]. 153 : 328- And as for selling that which is owed; : . . . a) then it is permissible to sell that which one is owed only to a person who owes it, on the condition that the one who is owed takes possession of the replacement item before they part company, and that there is nothing left between them. This is based on the statement of the Prophet " : There is nothing wrong if you take [the equivalent] as long as it is done according to the rate of the day, and you part with nothing left between you." b) and if it is sold to someone else; the transaction is invalid due to the presence of ambiguity.

 The Chapter (related to the sales) of sales of trees and fruits 152 : . . 329- The Prophet said: "Whoever buys a palm tree after it has been pollinated, the fruits will belong to the seller who sold them unless the buyer requests them as a condition." (Agreed upon). 113 . Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 330- And this also applies to all trees if their fruits are apparent and visible. 113 . 331- And Similar to this (in application of the above rule) would be crops that appear which are harvested only once. 115 . 332- If however, they are usually harvested repeatedly; the plants will belong to the buyer, and the fruits or crops at the time of the sale will belong to the seller. 111 : ) . 333- The Prophet forbade the selling of fruits until its condition is clearly known. He forbade that for the buyer and seller. (Agreed upon). 113 : : . 334- The Prophet was asked about [when its condition could be known] to which he replied: "till they are safe from blight." And in another narration: "Until they become reddish or yellowish." 112 . . 335- He also forbade the selling of grain until they became hard. (Reported in the sunan.) 113 : . . 336- He also said: "If you sold fruit to your brother and it was affected by blight, it would not be permissible for you to

take anything from him. [On what basis] should you take your brother's property unjustly?" (Reported by Muslim) Chapter (related to) options etc. during Transactions 117 : Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 337- If a transaction is completed it becomes binding upon both parties, unless if one has a [reason validated by the Shareeah]. From amongst these validated reasons are: 113 : : . . 338- Khiyaar al Majlis: (Option during the sale-session). The Prophet said: "When two parties [engage in a transaction]; [both parties have a right to annul the transaction] as long as they are together and not separated, or one of them exercises his right over the other and does so, and they make the transaction- it becomes binding, or when they separate after having made the transaction and none of them annuls it- the transaction becomes binding." (Agreed upon). 112 . : : 339- And [from the exceptions is] Khiyaar ash-Shart: (Option of stipulation). [This is where the right to exercise the power of choice is stipulated by both parties or for one of them for a certain fixed period]. : . . The Prophet said: "Muslims [are bound to] the conditions they make unless the condition makes the impermissible permissible or the permissible impermissible." (Reported in the Sunan) 133 :

 .Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 340- [And from the exceptions is:] if one was gravely deceived either by najash 5 , or talaqqi al jalab 6 etc. 133 : : : . . : 341- [And from the exceptions is:] Khiyaar at-Tadlees (Option dua to [deception]). This is where the seller cheats the buyer in order to raise the price of the commodity. Such as [allowing milk to accumulate in the udders of animals]. The Prophet said: "Do not keep camels and sheep [without milking them for a long time]. Whoever, buys such an animal has the option to milk it and then decide whether to keep it or return it to the owner with one saa' of dates." Agreed upon. In another narration, it mentions that the person has a choice for up to three days. 135 . 342- And If a person purchased a product with a defect not knowing about it at the time of purchase; he has a choice between returning the product or keeping it. If however, he was unable to return the product (due to a specific reason), [he has a right to compensation.] 131 . 343- And if both parties disagree over the price of the product then they are to take an oath, and (as a result), they will both have the right to annul the contract. 133 : . . 344- The Prophet said: "Whoever accepts the demand of a Muslim to rescind a transaction, Allah will rescind his faults." (Reported by Abu Dawud and Ibn Maajah). 5

This is where a person makes a bid merely to raise the price of an item not intending to buy it. 6 This is going to meet what is being brought to the market for sale [before reaching the market] Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org The Chapter of Salam (Forward Purchases) 132 : 345-forward Purchases are permissible in everything that [can be defined with fixed qualities.] 3 . 5. 1. (This means:) 1. [that all qualities which in effect could affect the overall price are clearly defined.] 2. [that a specified time for receiving (the purchased item) is defined.] 3. [that the amount of the purchased item be paid fully in advance before both both parties depart.] : : . Ibn 'Abbas reports that the Prophet came to Medinah and found (its people) paying in advance for fruits which were to be given after one, two or even three years after. Thus he said: "Whoever pays in advance should pay for a specified measurement and a specified weight for a specific period." (Reported by Bukhari and Muslim) 133 : . . 346- The Prophet also said: Whoever took the wealth of people intending to repay it, Allah will pay it on his behalf, and whoever takes it in order to spoil it, then Allah will spoil him. (Reported by Bukhari) Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org The Chapter of Security for a debt [mortgage/pledge], Guarantee and Surety 137 . 347- These are guarantees for established rights (i.e. debts etc.)

133 . : As for ar-rahn (security for a debt/pledge): it is permissible for every 'ayn (goods/commodity) that is sellable. 132 . 349- (The security offered) remains with the murtahin (mortgagee/creditor/pledgee) but does not guarantee it unless he (mortgagee/creditor/pledgee) was negligent in its handling as is the case with all other deposits. 123 . 350- If [the debt is paid], the security is [considered disengaged (and should be returned to its owner)] 123 . 351- If [however the debt is not paid and the creditor seeks to sell the deposit, it is obligatory to sell it and use the money to cover the amount owed. And whatever remains from selling it belongs to the owner. And if anything remains to be paid from the debt it will remain a debt without a security. 125 . 352- And whoever destroys the security has to offer compensation for (the destroyed security) (and the compensation) will be a security 121 . 353- [Any increment/growth] of the security is considered to be [part of the security], and [maintenance of the security is upon its owner] Knowledge International University Fiqh of Finance www.kiu.org 123 : . . 354- It is not allowed for the raahin (debtor/pledgor) to benefit from the security unless with the permission of the other party or the Lawgiver. The Prophet said: "The mortgaged animal can be used for riding as long as it is fed and the milk of an animal can be drunk according to what one spends on it. The one who rides the animal or drinks its milk should provide its expenditures." Reported by Bukhari. 122 . :

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355- Dhamaan (guarantee) is to guarantee the paying back of a debt of another person. 123 . : 356- Kafaalah (surety) is (for the assurer) to commit to present the debtor in person to the creditor. 127 . : 357- The Prophet said: "The guarantor is liable." (Reported by Abu Dawud). 123 : 358- Thus both are legally liable except: 3 . 5. 1. . 1. If he paid back what was legally due. 2. Or the creditor acquitted him. 3. Or if the creditor acquits the original debtor. And Allah knows best. Knowledge International University of Finance www.kiu.org The chapter of Interdiction due to bankruptcy etc. 122 . 359- A [creditor] should give respite to the one in financial difficulties (insolvency; mu'sir). 133 . 360- And he should be flexible with for the one who is not facing difficulties (musir). 133 . 361- And whoever has a financial obligation must fulfill it completely in quantity & quality. 135 : . . 362- The Prophet said: "Procrastination in paying debts by a wealthy man is oppression. And, if the creditor is referred to another able person to pay his debt, he should accept" (Agreed upon). 131 : . 363- The malee' is the one who is capable of paying back that owed

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and does not [intentionally delay] payment and is possible to summon him to a court of law. 133 : . 364- If the debts of a person amount to more than his wealth, and the creditors, or some of them, requested from a judge an interdiction; [then an interdiction would be enforced]. He would also be prevented from administrating his entire wealth, [which would be liquidated and Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org distributed amongst the creditors in accordance to the amounts of their debts. 132 : 365- None of them should be given any preference except: 3 . 5 : . . 1. The one who has put up collateral (saahib ar-rahn). 2. The Prophet said: "Whoever finds his wealth with an insolvent person, he will have more right to it than anybody else." (Agreed upon). 133 : . 366- It is obligatory upon the guardian of the minor, reckless and insane to prevent them from administrating their wealth [in a manner that] will harm them. : }} 2: ] . {{] Allah (swt) says: "and give not unto the reckless your property which Allh has made a means of support for you" (4:5) 137 : : . 367- It is not allowed for him to approach their wealth except [in a manner beneficial to them], (in that ) he protects it and spends of it [on that] which they are in need of. 133 : : .

368- Their guardian is their competent father. If they do not have a father; the judge appoints someone from their relatives who is most compassionate to them and e most aware [of their circumstances] and most trustworthy. Knowledge International University Finance Fiqh of Finance www.kiu.org 132 ) : ). 369- And If he (guardian) is rich; he should abstain [from utilizing the finances for himself], and if he is poor; he [is permitted] to use for himself that which [the norm considers acceptable]. This is defined as the minimum of either the wage of a similar person who carries out the same job or what suffices his basic needs. And Allah knows best. The Chapter of [Negotiated Settlements] 173 : . . : 370-The Prophet said: "as-Sulh is permissible between Muslims, except a sulh which makes the lawful unlawful and the unlawful lawful." Reported by Abu Dawud and at-Tirmidhi who said it is hasan saheeh. It was also authenticated by al Haakim. 173 . : 371- [It is permissible for one to settle a negotiation over a corporeal item ('ayn) with a corporeal item ('ayn) or with a debt.] 175 . : 372- And it is permissible for the one in debt to settle the debt by giving a corporeal item ('ayn) or committing to a financial arrangement as long as the commitment is concluded before parting. 171 . : 373- Or [working] a settlement by allowing him to benefit from his property or something else that is known. 173 : ..

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The Chapter of Agencies, Partnership, and Crop Sharing Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org []: [Agencies] 172 . 375- Prophet used to appoint agents to deal with his private matters and likewise public matters [that were his responsibility]. 173 . 376- It is a non-binding (jaaiz) contract for both parties. 177 : 377- [This contract is applicable in all cases that permit representation: (such as) . : . : 1. (That considered to be) from the rights of Allah: [for example:] the distribution of Zakah, expiations etc. 2. (That considered to be) from the rights of one another: [for example:] contracts and annulments (of contracts) etc. 173 . : 378- [Representation is not permitted in] matters that are specifically connected to a particular individual like prayer, purification, oaths, dividing time amongst wives etc. 172 . 379- The agent is not allowed to [administer any process] not specified verbally (by the appointer of the agent) or by [the norm of a custom.] 133 . 380- It is permissible to appoint an agent by ju'l (A contract in which the entitlement to wages depends upon the completion of the task.) or by other means. 133 . Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 381- The agent is like all bearers of trusts- he is not legally liable to [guarantee a loss] except in the case of transgression or negligence. 135 . 382-His [negation of an accusation] is accepted with an oath. 131: . : . :

383- If a representative claimed to have returned what he was entrusted with: 1. If he was appointed [upon the ju'l concept]- his statement will not be accepted unless he had clear proof (bayyinah). 2. And if he was a volunteer- his statement will be accepted with an oath. []: [Partnership] 133 : : . . 384- The Prophet said: "Allah says: 'I am the third [partner] of two partners as long as one of them does not cheat his companion, and if he cheats him; I depart from both of them." Reported by Abu Dawud. 132 . 385- [All forms of partnership are non-binding.] 133 . 386- Ownership and profit in partnerships are in accordance to that agree upon as long as the partnership is based upon a specified, known percentage. 137 : 3 . : 5 . : Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 1 . : 3 : . 2 . : 387- [The types of partnership are:] 1. Sharikah al 'Inaan: (Cooperative partnership). This is where both partners invest with capital and labor. 2. Sharikah al Mudaarabah: (Speculative/limited partnership). This is where one of the partners invests with capital and the other partner bears the labor. 3. Sharikah al Wujuh: (Reputable partnership). [This is where both partners purchase trade goods for a deferred payment based upon their repute.] 4. Sharikah al Abdaan: (Manual partnership). [This is where both partners share what they earn by their own work from permissible trade like cutting grass etc.] 5. Sharikah al Mufaawadah: (Comprehensive partnership). This is a comprehensive partnership that covers all types of partnerships mentioned.

133 . 388- All forms of (these aforementioned) partnerships are permissible. 132 . 389- [Partnerships] become null and void [due to any form of injustice or ambiguity]. For example; if one was to take profit for a specific time period and the other partner was to take the profit for another time period. Or if one was to take the profit for one commodity and the other take the profit from another commodity, or one was to take the profit from one journey and the other take the profit from another journey etc. 123 . 390- Just as Crop sharing becomes null and void because of any injustice or ambiguity. Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org : ) .( : . . Raafi' bin Khadeej said: "People used to let out land in the time of the Prophet for what grew by the streamlets, and the edges of brooks or for something of the crop; but sometimes this portion of the crop would be destroyed whilst the other portions would be saved or vice versa. Thus no wages were available to the people except for the portion which produced a crop. Therefore, he rebuked the practice of it. But as for when something is known and guaranteed there would be no problem with that." (Reported by Muslim.) . . And the Prophet [ concluded a contract with] the people of Khaibar upon [the condition that] half the fruits or harvest would be their share. (Agreed upon.) 123 : . 391- al Musaaqaah (watering) of trees is when one gives a laborer a tree that he then takes care of in return for a specified share of the fruits of the tree. 125 . : 392- al Muzaara'ah (crop sharing) is when one gives a person a piece of land to cultivate it and is then given a specific share of its produce. 121 : .

393- Both types (of crop sharing) should be in accordance to what is customarily considered to be correct on condition that there is no uncertainty involved. 123 . : 394- [And it is permissible for one to give another person his animal to use (during the crop sharing process) with an agreement to share the profits.] Knowledge International University of Finance www.kiu.org The Chapter of Cultivation of Barren Lands 122 . 395- This is uncultivated land which has no known owner. 123: : . . 396- Whoever brings life back to it (i.e. cultivates it) by erecting a wall (around it) or by digging a well or by supplying water to it or by preventing that which makes the land infertile; qualifies to own the land and that in it, with exception to minerals. This is based upon the narration on Ibn 'Umar " : Whoever cultivates land that does not belong to anyone is more deserving of it." Reported by Bukhari. 127 : . : 397- If one was to surround a barren land with stones or was to dig a well and didnt reach its [any water level to fill the well], or was given land (from an official authority): is more deserving of it. However he cannot posses it until he cultivates it using the aforementioned means. The Chapter of Jaaalah and Ijaarah 123 : . 398- Both (terms) refer to the: giving of a known amount of

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wealth to a person who does a known amount of work, or an unknown amount of work in the case of Ju'aalah or known in the case of ijaarah or for a deferred benefit. 122 . : 399- Whoever [completes that asked of him]; deserves to be paid. But if he doesnt, then he does not deserve it. 333 . Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 400- The exception to this is, if the person was unable to complete the work in the case of ijaarah. In such a case, he is paid [based on work completed.] 333 : : : . . 401- Abu Hurayrah narrates in a hadith considered as marfoo': "Allah says: I will an opponent to three people on the Day of Resurrection: One who makes a covenant in my name, but he proves treacherous. One who sells a free person (as a slave) and eats the price (i.e: spends the amount). And one who employs a labourer and [receives in completion his service] but does not pay him his wages." Reported by Bukhari. 335 . 402- Ju'aalah is [wider in scope] than Ijaarah. This is because it is permissible in matters of worship, and because the type of work involved can be known or unknown, and because it is considered a non-binding agreement; unlike Ijaarah. 331 . 403- It is permissible (for the one renting) to rent/lease out [that which he is renting] to someone [with similar circumstances to him] but not to someone who would cause more harm if done so. 333 . 404- There is no damaan (compensation) in any of the two [contratcts], unless due to negligence or transgression. 332 . : . 405- The Prophet said: "Give the [one hired] his earnings before his sweat dries." Reported by Ibn Majah. Knowledge International University Finance Fiqh of Finance www.kiu.org Islamic

(NOTE: This portion is not part of the course- please )continue onto the next chapter : 333 . : : . . : : : . : . : : : . . . : 733 . 333 The Chapter of Competitions and Contests : 233 . : : : : : . . :)409- There are three types (of competition 1. That which is permissible with a prize or any reward. Examples of :these types of competition are .Horse & Camel racing as well as archery 2. That which is permissible without a prize and prohibited with a prize. These are all competitions other than the three aforementioned ones. Knowledge International University Islamic Finance Fiqh of Finance www.kiu.org 3. [Competitions which include the usage of a] Dice and the game: chess etc. (The ruling for these are that of prohibition based on the hadith: "No (reward should be given for) competitions except those done by (camel) hoofs, or those with) cloven hoofs or .arrowheads." Reported by Ahmed . : 333 410- Anything other than the aforementioned falls under .gambling