Chapter VII – Sale And Usury

Sale in the language of the Muslim Law signifies an exchange of property with the mutual consent of the parties. In its ordinary acceptance, sale is a transfer of property in consideration of a price in money. The word has a comprehensive meaning in the law, and is applied to every exchange of property for property with mutual consent. It, therefore, includes barter as well as sale and also loan, when the articles lent are intended to be consumed and replaced to the lender by a similar quantity of the same kind. This transaction which is truly an exchange of property for property is termed as qard in the law, i.e. loan.

According to the Muslim Laws of contracted trans action of sale and barter, etc., things are divided into: (a) Similars; and (b) Dissimilars:

Similar things are those which are sold by weighing and measuring; and dissimilar things which are different in quality but sold in exchange, such as wheat for its price in coin. In the case of similar things as wheat for rice, when sold after being measured or weighed delivery should take place at once. When these are sold unconditionally, the buyer has no right to choose the best part of it from the whole, unless the seller consents and desires to please him. Things sold or exchanged cannot remain undelivered or unadjusted on the mere responsibility of the parties. But if a thing is sold against its value in money, time is allowed in receiving money. Among similar things, there are similars of capacity weight and sale. The seller must express clearly the quantity and quality of the thing exactly as it is, so that any doubt or misunderstanding may not arise in regard to it later on. He must fix the price and say that he is willing to sell to so and so such a thing of so much value and on such terms and conditions (if there be any); the buyer must accept the offer in clear language. If the seller himself cannot do this, he must appoint an agent, with sufficient authority to dispose of his goods. If a contract takes place through a broker, it must be ratified by the actual buyer. Option is allowed to the buyer and seller for three days (in case a thing is not removed from the seller’s premises) to avoid the transaction. If a thing is purchased without inspection or examination and afterwards a difference is found in the quantity or the quality specified by the seller, or asked for by the purchaser the latter may refuse to take delivery of it. Of the various kinds of recognized kinds of sale, the following are the most important:

1. Sale of a specific thing for a price or by way of barter.
2. Sale of silver for silver or gold for gold or banking in which the exchange of coins, either silver or gold, must be exact in weight or quality, so that there may be no chance of resorting to usury.
3. Sale in advance when the price is deposited before taking delivery of goods.
4. Loan, etc.

The quality of the thing, when lent, is specified and the thing to be given back should be of the same quality.

One can mortgage his property, but here also usury is avoided. The theologians have permitted only such bargains in which a lender of money can be benefited without transgressing the law, e.g. by the use of a thing or property which has been mortgaged; or make a condition precedent that if, with a specified time, the money is not repaid, delivery of possession of the property mortgaged will be given to the lender, etc. Riba or usury is strictly prohibited under Islamic Law. It means taking advantage of an individual in distress by giving him momentary relief, with the intention of bringing more misery upon him. One is forced to ask for a loan on the condition that it would be repaid, as agreed, to the lender; often much more has to be paid to the lender than he has actually paid. In some cases it may be deemed harmless, but often it brings ruin to whole families, of which the lender is conscious. Such exaction is against the spirit of Islam. The lender may intentionally lend money to possess the property of one who may, owing to hard circumstances, be forced to seek his help. Islam inculcates moderate socialism and with it prescribes a rational and just mode of dealing as between members of the Muslim community. Each individual has the right to possess what is his own property and to enjoy what is his own wealth, but only to the extent that by that he does not injure others’ happiness or interests. He may amass wealth, but the surplus wealth, of which he is not in need of immediate use, must be used for helping those who are badly in need thereof. Usury as practised in the time of the Prophet was against such principles and was, therefore, prohibited. It is difficult to say whether the modern method of banking and charging of interest on amounts lent out is based upon the doctrine of mutuality, service and mutuality of benefit between lender and borrower. If the benefits are deemed to be one sided, it cannot be said to be permitted by the Islamic Law. If, on the other hand, there is mutuality of service, it would, in the judgment of Muslim theologians, be permissible as it would be held by them to be a kind of transaction.

Usury

sury, as an illegal transaction, is occasioned, by rate, united with species, and it includes all gain upon loans, whether from the loan of money, or goods or property of any kind.

The teaching of the Koran on the subject is given in Chapter 2, verse 275 of which the following is a translation:

“those who swallow down usury shall arise in the last day as he arises whom Satan has infected by his touch. This for that they say “Trading is nothing but the like of usury,’ and yet God hath allowed trading and forbidden usury; and whosoever receives this admonition from his Lord, and abstains from it, shall have pardon for the past and his lot shall be with God. But they who return to usury shall be given over to the Fire – therein to abide.”

The Prophet is related to have said:

“Cursed be the taker of usury, the giver of usury, the writer of usury, and the witness of usury, for they are all equal.”   , “Verily the wealth that is gained in usury, although it be great, is of small advantage” ([1]) .

Riba, i.e. usury, in the language of the law, signifies “an excess,” according to a legal standard of measurement or weight in one of two homogeneous articles (of weight or measurement of capacity) opposed to each in a contract of exchange, and in which such excess is stipulated as an obligatory condition on one of the parties, without any return, i.e. without anything being opposed to it. The sale, therefore, of two loads of barley, for instance, in exchange for one load of wheat does not constitute usury, since these articles are not homogeneous; and, on the other hand, the sale of ten yards of cloth in exchange for five yards of another cloth is not usury, since although these articles be homogeneous, they are not estimable by weight, or measurement of capacity.

Usury, then, as an illegal transaction is occasioned (according to most distinguished doctors) by rate united with species, where, however, it must be observed that rate, in the law of Islam, applies only to articles of weight and measurement of capacity, and not to articles of longitudinal measurement, such as cloth, etc., or of tale such as eggs, dates, walnuts, etc., when exchanged from hand to hand. Where the quality of being weighable or measurable by capacity, and correspondence of species (being the causes of usury) both exist, the stipulation of inequality or suspension of payment to a future period, are both usurious. Thus it is usurious to sell either one measure of wheat in exchange for two measures, or one measure of wheat for one measure deliverable at a future period. If, on the contrary, neither of these circumstances exists (as in the sale of wheat for money), it is lawful, either to stipulate a superiority of rate or the payment at a future period. If, on the other hand, one of these circumstances only exists (as in the sale of wheat for barley), then a superiority of the rate may legally be stipulated, but not a suspension in the payment. Thus one measure of wheat may lawfully be sold for two measures of barley; but it is not lawful to sell one measure of wheat for one measure of barley, payable at a future period.

Similars of weight and capacity are distinguished from all other description of property in a very remarkable way. When one article of weight or one of measure is sold or exchanged for another of measure, the delivery of both must be immediate from hand to hand, and any delay of delivery in one of them is unlawful and prohibited. Where again, the articles exchanged are also of the same kind, as when wheat is sold for wheat, or silver for silver, there must not only be reciprocal and immediate delivery of both before the separation of the parties, but also absolute equality of weight or measure, according as to whether the articles are weighable or measurable; any excess of either side is also unlawful and prohibited. These two prohibitions constitute in brief the doctrine of riba (usury), which is a marked characteristic of the Islamic Law of sale. The word riba (in Arabic) properly signifies “excess,” and there are no terms in the Islamic Law which correspond to the words “interest” and “usury” in the sense attached to them in the English language; but it was expressly prohibited by the Prophet to his followers to derive any advantage from loans, and that particular kind of advantage which is called by Westerners “interest” and which consists in the receiving back from the borrower a quantity larger than is actually lent to him, was effectually prevented by the two rules above mentioned.