Entering into an Ongoing Commercial Transaction between Two People

Entering into an Ongoing Commercial Transaction between Two People

Question:

I have a question about a business transaction; can you please provide an Islamic ruling in the following scenario:

Person A sold his house to person B for £220,000. After the sale, person C claimed that person A had actually promised to sell the house to him for a lesser price of £208,000, and now has gone against his promise. Person B had no prior knowledge of the discussions that took place between persons A and C, so he asked person A about it. Person A explained that indeed some discussions had taken place between them, and person C also came to see the house and was interested in purchasing it for £208,000, but they did not agree a price and nothing was promised.

In this situation, is there any sin on person B for purchasing the house from person A, and would this constitute transacting on the transaction of your brother?

Answer:

In the name of Allah, Most Compassionate, Most Merciful,

In the mentioned scenario, there is no sin on person B for purchasing the house, and neither is person A sinful for selling his house to person B – if what is mentioned in the question is accurate. This does not constitute entering into someone else’s commercial transaction or ‘transacting upon the transaction of your brother’ prohibited by the Messenger of Allah (Allah bless him & give him peace).

1) Sayyiduna AbdAllah ibn Umar (Allah be pleased with him) relates that the Messenger of Allah (Allah bless him & give him peace) said, “No one should sell against the sale of another.” (Bukhari 2139 and Muslim 1412)

The meaning of this Hadith – as explained by classical scholars such as Ibn Hajar, Imam Nawawi and others – is that a person purchases an item with an option to cancel, and another person says to him, “Cancel your deal and return the item; I will sell you the same item at a cheaper rate.” This is impermissible and sinful, since the sale between the two parties is concluded, and one is ‘making a sale against the sale of another.’ The right of a man is that when he sells an item to another, no one should try and undermine his position by counter-proposing, as this inevitably leads to bitterness and animosity which Islam came to eradicate.

Included in this ruling is ‘purchasing on the purchase of another’, in that the option to cancel is with the seller, and another person says to him [the seller], “Cancel your deal and take back your item; I will purchase the same from you at a higher rate.” This is also impermissible, since the sale between the two parties is concluded. (See for details: Nawawi, Al-Minhaj sharh Sahih Muslim 1161; Ibn Hajr, Fath al-Bari 4/447; and Usmani, Takmila Fath al-Mulhim 4/211)

2) The second Hadith in this regard is that which is related by Sayyiduna Abu Hurayra (Allah be pleased with him) that the Messenger of Allah (Allah bless him & give him peace) said, “A believer must not transact on the transaction of his brother.” (Sahih Muslim 1515)

The meaning of this Hadith is that a sale is not yet concluded between the seller and purchaser but they both agree on a price, and another person comes and says to the seller, “Sell the item to me [instead].” This is impermissible, since both parties have agreed on a price and about to go ahead with the transaction. (Al-Minhaj sharh Sahih Muslim 1161 and Takmila Fath al-Mulhim 4/212)

Imam Ibn Abidin (Allah have mercy on him) states, “The meaning of ‘transacting on the transaction of another’ [which is prohibited] is that both parties agree on a price and there is inclination to go ahead with the transaction. In this case, it is not permitted for another person to come and say to the seller I will pay you more or similar.” (Radd al-Muhtar ala al-Durr al-Mukhtar)

As such, in summary, it is indeed wrong and sinful to enter into an ongoing commercial transaction between two people, but this is in two situations:

a) A sale has been concluded between the two parties,

b) Sale has not yet been concluded, but both parties have agreed a price and given their consent.

If none of the above two has taken place, it is permissible for another person to make a proposal. In the given scenario, since no sale was concluded between persons A and C and neither was a price agreed, it was completely permissible for person B to purchase the house from person A.

Note that even though it is permitted for another person to make a business proposal when a price has not been agreed, but if talks are ongoing between the two parties, it is better to avoid getting involved. Indeed; if negotiations stall, one may make a proposal.

And Allah knows best

[Mufti] Muhammad ibn Adam
Darul Iftaa
Leicester , UK

Question #: 7006
Published: 03/05/2013
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