Divine Guidance on Corporate Mu’amalat

By:
Prof. Dr. Mohd. Ma’sum Billah
masum@applied-islamicfinance.com
masum2001@yahoo.com
+6019-3699542

Governing Principles On The

Fulfillment Of Contractual Obligations:

"O you who believe! Fulfill all obligations (Uqud).” (Surah al-Maidah (5): 1)

"And fulfill every engagement (‘Ahd) for every engagement will be enquired into (on the day of reckoning).” (Surah Bani Israil (17):34)

(But it is righteousness) - to fulfill the contracts which they had made.” (Surah al-Baqarah (2):177)

"For the worst of beasts in the sight of Allah are those who reject Him. They will not believe. They are those with whom you did make a covenant but they breach their covenant every time and they have not the fear of All a h (swt).” (Surah al-Anfal (8):55-56)

"But for those who breach the covenant of Allah, after having plighted their word thereto and cut asunder those things which Allah has commanded to be joined and work mischief in the land - on them is the curse! For them is the terrible abide!” (Surah Ar-Rad (13):25)

"Our Lord! You are He who will gather mankind together against a day about which there is no doubt; for Allah(swt) never fails in his promise.” (Surah al-I-Imran (3):9)

" Allah has purchased of the Believers their persons and their goods. For their (return) is the Garden of (Paradise): They fight in His cause, and slay and are slain. A promise binding on Him in truth, through the law, the Gospel and the Qur’an. And who is most faithful to his covenant that Allah? Then rejoice in the bargain, which you have concluded. That is the supreme achievement.” (Surah at-Tauba (9):111)

Every Transaction Should Be Concluded By Mutual Consent

"O you who believe! Eat not up your property among yourselves in vanities; but let there be amongst you traffic and trade by mutual good will. (Surah An-Nisa (4):29)

In Any Transaction Trustworthiness Should Be Observed

"O you who believe! Betray not the trust of Allah (swt) and the Messenger, nor misappropriate knowingly things entrusted to you.” (Surah al-Anfal (8):27)

" Allah(swt) commands you to render back your trusts to those to whom they are due.” (Surah An-Nisa (4):58)

Against Misappropriation

"To orphans restore their property (when they reach their age), nor substitute (your) worthless things for (their) good ones; and devour not their substances (by mixing it up) with your own. For this is indeed a great sin.” (Surah An-Nisa (4):2)

Any Transaction Involves Riba Is Void

"O you who believe, fear Allah (swt) and give up what remains of your demand for usury if you are indeed believers. And if you do not then be warned of war from Allah (swt) and His messenger, but if you turn back, you shall have your capital sums, Deal not unjustly and you shall not be dealt with unjustly” (Surah al-Baqarah: 278-79)

Those who devour riba (usury) will not stand except as stands one whom the Evil One by his touch has driven to madness. That is because they say "Trade is like riba”. But Allah (swt) has permitted trade and forbidden riba. Those who after receiving direction from their Lord desists, shall be pardoned for the past, their case is for Allah (swt) to judge. But those who repeat (the offence) are companions of the Fire, they will abide therein for ever.” (Surah al-Baqarah (2):275)

"When usury and fornication appear in community the people of that community render themselves deserving the sanction of Allah (swt).” (Al-Hakim )

Unlawful Subject Matter

"He has only forbidden you dead meat and blood and flesh of swine and that on which any other name has been invoked besides that of Allah (swt).” (Surah al-Baqarah (2): 173)

"Forbidden to you are dead meat, blood, the flesh of swine and that on which has been invoked the name of other than Allah (swt); that which has been killed by strangling or by a violent blow or by a headlong fall or by being gored to death; that which has been partly eaten by wild animal unless you are able to slaughter it (in due form); that which is sacrificed on stone (altars); (forbidden) also is the division (of meat) by raffling with arrows; that is impurity.” (Surah al-Maidah (5):4)

"O you who believe!. Intoxicants and gambling, (dedication of) stones and (divination by) arrows are an abomination - of Satan’s handiwork.. Eschew such (abomination) that you may prosper. Satan’s plan is (but) to excite enmity and hatred between you with intoxicants and gambling and hinder you from the remembrance of Allah (swt) and from prayer. Will you not then abstain?” (Surah al-Maidah (5): 93-94)

"Eat not of (meats) on which Allah’s(swt) name has not been pronounced. That would be impiety. But the evil ones ever inspire their friends to contend with you. If were to obey them, you would indeed be Pagans” (Surah al-An’ am (6):121)

Those things, which are unlawful, cannot as a matter of principle and guidance be made lawful except to the manner and extent provided by the Holy Qur’an.

"But say not - for any false thing that your tongues may put forth. "This is lawful and this is forbidden” so as to ascribe false things to Allah (swt). For those who ascribe false things to Allah (swt), will never prosper.” (Surah An-Nahl (16): 116)

Unlawful Subject Matter Is Lawful On The Genuine Necessity Situations Only

"He has only forbidden you dead meat, and blood and flesh of swine and that on which any other name has been invoked besides that of Allah (swt).. But if one is forced by necessity, without neither willful disobedience nor transgressing due limits, then he is guiltless. For Allah (swt) is Oft-Forgiving, Most Merciful.” (Surah al-Baqarah (2):173)

"Say: I find not in the message received by me by inspiration any (meat) forbidden to be eaten by one who wishes to eat it unless it be dead meat or blood poured forth or the flesh of swine - for it is an abomination - or what is impious, (meat) on which a name has been invoked other than Allah’s (swt). But (even so), if a person is forced by necessity without lawful disobedience, nor transgressing due limits - Your Lord is Oft-Forgiving, Most Merciful.” (Surah al-An’ am (6): 145)

"Woe to those that deal in fraud. Those who, when they have to receive by measure from men, exact full measure. But when they have to give by measure or weight to men, give less than due. (Surah al-Mutaffifin (83): 1-3)

Against The Transactions Involving Bribery Or Misappropriation

"And do not eat up your property among yourselves for vanities, nor use it as bait for judges, with intent that you may eat up wrongfully and knowingly a little of other people’s property.” (Surah al-Baqarah (2):188)

Transactions With Measurement Or Weight Should Be Just

"To the Madyan people (We sent) Shu’aib, one of their brethren. He said "O my people! Worship Allah (swt)! You have no other God but Him. And give not short measure or weight. I see you in prosperity, but I fear for you the Penalty of a Day that will compass (you) all around.. "And O my people! Give just measure and due weight nor withhold from people the things that are their dues, commit not evil in the land with intent to do mischief.” Surah Hud (11):84-85)

Against Fraud Or Misrepresentation In Transaction With Measurement Or Weight

"Give full measure and do not be of those who give less (that what is due). And weigh with the straight balance, and do not diminish people’s goods nor do evil on the earth, making mischief.” (Al-Shuara (181-83)

"And give full measure when you measure and weigh with the straight balance, that is the most fitting and best in the life after.” (Al-Isra: (17):35)

Unlawful Subject Matter

"The Holy Prophet (saw) said: Surely Allah (swt) and His messenger have prohibited the sale of wine, the flesh of dead animals’ swine and idols.” (agreed)

"The Holy Prophet (saw) said: When Allah (swt) prohibits a thing, He prohibits (giving and receiving) the price of it as well.” (Ahmad and Abu Daud)

Against Price Manipulation

"The Holy Prophet (saw) said: Allah (swt) is the one who fixes prices, who withholds who gives lavishly, and who provides. I hope that when I meet Him, none of you has a claim against me for any injustice with regard to blood or property.” (Ahmad)

Against Hoarding

"If anyone withholds goods until the price rises, he is a sinner.” (Muslim)

"The man who hoards goods is evil. If prices fall he is grieved and if they rise he is happy.”

"He who brings goods to the market is blessed with bounty, but he who withholds them is cursed.” (Ibn Majah)

Against Deceiving In Transaction

"Both parties to a transaction have a right to cancel it as long as they have not separated. If they tell the truth and make everything clear, they will be blessed in their transaction, but if they lie and cancel anything, the blessing will be blotted out.”

"Why did you not put it on top so that the people could see it? He who deceive us is not one of us.” (Muslim)

Against Caveat Emptor

"It is not permissible to sell an article without making everything (about it) clear, nor is it permissible for anyone who knows (about its defects) to refrain from mentioning them.” (Hakim)

Different Qualities Of Subject Matter Should Be Sold Separately

"Sell the good and the bad separately. He who deceives us is not of us.” (Ahmad)

Transaction Involving Stolen Subject Matter Is Void

"He who buys the stolen property, with the knowledge that it was stolen, shares in the sin and the shame of stealing.” (Baihaqi)

Deferred Payment In Credit Transaction

"If a man borrows from people with the intention of repaying them, Allah (swt) will help him to repay, while if he borrows without intending to repay them, Allah (swt) will bring him to ruin.” (Bukhari)  

Past Consideration, Financial Futures Exchange And Earnest Money

Ibn Abbas (r.a) narrated, "when the Holy Prophet (saw) came to Medina, he said that the people were paying one and two years in advance for fruits, then he (saw) said:

"Those who pay for anything in advance must do so for a specified measure and weight with the fixing of a specified time.” (Bukhari, Muslim, etc.)

Partnership Transaction

"And help you one another in righteousness and piety. But help you not one another in sin and rancor.” (al-Maidah: (5):2)

" Allah’s(swt) hand's over two partners as long as one of them does not cheat the other, but when he cheats his partner, He withdraws it from both.” (Dar Qutni)

"I (Allah swt) make a third with two partners as long as one of them does not cheat the other, but when he cheats him I depart from them.” (Abu Daud)