The Contract of Sale (Bay')

- Literally means ‫ مبادلة‬mubadalah or exchange

- Technically it refers to an exchange of one property for
another (item for money, item for item...)
- Legality:
• ِّ ‫او َح َّرَام‬
The Quran says: } ‫الرَاب‬ َّ ‫َح َّل‬
َ ‫ااَّللُاالْبَ ْي َع‬ َ ‫{ َوأ‬
“But Allah has permitted trade and forbidden usury” )2:275(.
The Hadith says: “ِ‫االر ُج ِّلاابِّيَ ِِّ ِّا‬
َّ ‫او َع َم ُل‬
َ ‫ور‬
ٌ ُ‫ام ْْب‬ ِّ ‫ض ِّلاالْ َك ْس‬
َ ‫بابَ ْي ٌع‬ َ ْ‫“أَف‬
“The best earning is where a person earns through his own
efforts and all sale transactions that are free from deception
and cheating” (Ahmad).
The effect of a sale contract is to transfer the ownership of the
property from one to another (seller and buyer).
 1) Conditions for the conclusion of Sale
- Conditions related to contracting parties:
1) Legal capacity
2) Should be more than one person except in case of guardian
or a judge selling his own property.
- Conditions related to the expression
1) Acceptance must correspond with the proposal
2) Unity of session
- Conditions related to the counter-values:
1) Must be valuable properties
2) Subject matter must be in existence
3) Deliverability
4) Specification (prescription or sight)
5) The price and type of currency should be known
 2) Conditions for the Execution of Sale

1) Complete ownership.
But a contract concluded by fudhuli (unauthorized agent):
- Hanafis and Malikis: depends on approval of the owner.
- Shafi’is and Hanbalis: not valid.

2) None other than a seller has right in the sold item

If a sold item found to be pledged at the time of contract:
- Majority of Schools: not valid.
- Hanafis: Mowquf (dependant) on permission of the pledgee
 3) Conditions for the Validity of Sale
1) No time limit for a sale (ex: for one year…)
2) Both subject matter and price should be specified
3) A sale should be free from coercion (ikrah), mistake, and
fraud.
4) A sale should be free from vitiating (spoiling) or
invalidating conditions.
5) In sales on credit, the terms of payment should be known,
otherwise it is invalid.
4) Condition to render a sale binding
• In the absence of options a contract of sale is made
obligatory. However, if parties decide to put some
conditions, what are they?
 • Conditions that may be put by the parties
- According to Hanafis, Malikis and Shafi’is conditions are
either valid or invalid:
- Categories of valid conditions:
a) Conditions which are harmonious with a contract (ex:
down payment; the item should be delivered by seller..)
b) Conditions the particular effects of which agree with the
purpose of the sale contract (ex: a seller may require
pledge or a guarantor if the price to be paid later)
c) Customarily accepted conditions (ex: stipulating a
guarantee period for the sold item).
- Hanafis allowed it on basis of Istihsan
- Shafi’is and Malikis find it as a matter of principle.
 The Subject-matter and the Price
• The subject-matter must be present. The price may not be.
• Hanafiis: if the type of currency is not specified, the sale is
voidable while the sale is void if the subject-matter is not
specified.
• Mutual cancellation of a contract (iqalah) is not possible
when the subject-matter which is already possessed by the
buyer is destroyed. While the destruction of price does not
make iqaalh impossible.
• Destruction of the subject-matter of contract before delivery
makes the contract void. Destruction of price does not.
 • Price Determination (al-Tasi’r)
The principle is that market should be free and price should be
determined by the force of supply and demand
When people complained that the prices of certain items were
high and requested the Prophet (p.b.u.h) to fix the prices, he
replied: “Allah is the one who fixes price, who withholds,
who gives lavishly, and who provides, and I hope that when
I meet Him, none of you would have a claim against me for
any injustice with regard to blood or property” (Ibn Majah,
Abu Daud, Tirmizi).
However, in case of artificial increase of price or hoarding a
state may interfere in order to control the price and compel
the dealers to sell their merchandise. It is because public
interest is given priority over individuals.