[casinobonusese]

Assalaamu Alaikum,

A long time back i read (i think it was in a Q and A website, either askimam or islamqa) that you are not allowed to sell something that you dont own.

So if i open a e-business that sells, say Hard Disk Drives and the business model i apply is that only purchase a hard drive when i get an order for one. Which means i bear a small amount of risk.

In reality im selling something i dont have but rather something i can get hold of.

Is this type of business permissable?

I would like to here your thoughts on this.

Jazakallahu khairan

[xjNo4zvD]

Asalaamu Alaikum,

It is not permissible.

On Scholar search, found this -

And from the forbidden types of business transactions is: When a man sells something that he doesn’t own. For example, a man goes to a businessman looking for a specific product, but this businessman doesn’t have this specific product. Yet they both agree to a contract (for the sale of the product) and agree on the extent of the price (on the item) presently or in the future. And all the while, the product is not found in the possession of the businessman or the buyer. Then the businessman goes and buys this product and hands it over to the buyer after they already agreed to a price and they made a contract and determined the value as it relates to present terms or in the future.

So this kind of business transaction is haraam. Why? Because he sold something he didn’t own and he sold something before gaining possession of it, if the product was specified. As for if the product was not specified and its price was delayed, he actually sold a debt on credit. The Messenger of Allaah (sallAllaahu ‘alayhi wa sallam) forbade us from doing that, as was the case when Hakeem bin Hazaam (radyAllaahu ‘anhu) came to him, saying: “O Messenger of Allaah, what if a man comes to me wanting to buy something from me, but I don’t have it. Then I go to the marketplace and buy it for him?” The Prophet (sallAllaahu ‘alayhi wa sallam) said: “Do not sell what you don’t have.” This is a clear cut forbiddance, therefore it is not permissible for a person to sell some specified commodity unless he is in possession of it before making a contract on it, whether he will sell it right there or in the future.

http://abdurrahman.org/economics/forbiddenbusiness.html

[wepoiyub]

Assalamu Alaykum, since this appears to be an issue of fiqh, please submit your question to a reliable Mufti. If you need any help with this, I can point you in the right direction. More often than not, answers on this forum are given by the Average Joe, like me, who has little or no knowledge on fiqhi issues.

[casinobonusese]

Jazakallah brothers for your replies.

Is abdurahman.org reliable?

and

Are there any reliable muftis that answer on this forum or any other forum?

[wepoiyub]

Which country are you from? I can then suggest accordingly.

[casinobonusese]

Brother, Im from the Uk.

Is the below sahih?

The Messenger of Allaah (sallAllaahu ‘alayhi wa sallam) forbade us from doing that, as was the case when Hakeem bin Hazaam (radyAllaahu ‘anhu) came to him, saying: “O Messenger of Allaah, what if a man comes to me wanting to buy something from me, but I don’t have it. Then I go to the marketplace and buy it for him?” The Prophet (sallAllaahu ‘alayhi wa sallam) said: “Do not sell what you don’t have.”

[xjNo4zvD]

Jazakallah brothers for your replies.

Is abdurahman.org reliable?

and

Are there any reliable muftis that answer on this forum or any other forum?

Asalaamu Alaikum,

Yes abdurahman is reliable. Here's another one if you like...

Another well-established principle of Shariah violated in the futures transactions is that the commodity is sold without the seller actually owning the commodity or (at the least) having possession over it, both of which (ownership & possession) are indispensable for a valid sale according to Shariah.



In order for a sale to be valid, the seller must own the commodity and must also have acquired its possession. This possession can be either physical or constructive. Constructive possession means a situation where one has not taken physical delivery of the commodity, but it has fully come into ones control and all the rights and liabilities are passed on to him.



Hakim ibn Hizam (Allah be pleased with him) reports that he said to the Messenger of Allah (Allah bless him & give him peace): “O Messenger of Allah! At times an individual comes to me to purchase a specific item that I do not possess. Can I sell him the item and then purchase it from the market? The Messenger of Allah (Allah bless him & give him peace) said: “Do not sell what you don’t own.” (Sunan Tirmidhi, no. 1232 & others)

Regarding the prohibition of selling a commodity before acquiring its possession, Sayyiduna Abd Allah ibn Umar (Allah be pleased with him) narrates that the Messenger of Allah (Allah bless him & give him peace) said: “Whosoever sells foodstuff, then he must not sell it before taking its possession.” (Sahih al-Bukhari, no. 2019 and Sahih Muslim, no. 1525)



Sayyiduna Abd Allah ibn Abbas (Allah be pleased with him) narrates that the Messenger of Allah (Allah bless him & give him peace) forbade the selling of foodstuff before acquiring its possession. Ibn Abbas states: “I consider this ruling to be in all transactions.” (Sahih al-Bukhari & Sahih Muslim)

http://spa.qibla.com/issue_view.asp?...D=2684&CATE=44

[casinobonusese]

Jazakallah brother for taking the time to dig this info out for me. If it is indeed haram then all the muslim resellers out there (which there is many, and this method is a popular way of doing business these days) are violating islamic business law.

How are we supposed to compete with our non-muslim counter parts?

[Anypeny]

Jazakallah brothers for your replies.

Is abdurahman.org reliable?

Its a salafi website.

I hope your query was answered from the qibla.org link.

[Anypeny]

How are we supposed to compete with our non-muslim counter parts?

Brother have trust in Allah Ta'ala. If you have been to the markets of the subcontinent (india/pakistan) you will find 10-15 shops placed togather selling the same product, like mobile shops, electronic shops etc. But everybody gets their own share there might be some healthy competition, but the main factor is to trust in Allah Ta'ala.

Also have in mind the amount of money is not important, its the barakah thats important. Sometimes $1 helps us more than $100 at some times.

More on Barakah: http://www.youtube.com/watch?v=i-pG7aX_rSw

[casinobonusese]

jazakallahu khairan brothers.

Maybe a sharia compliant business just doesn't fit into the non-muslim eco-system.

[Symnunidanimb]

what if the payment for the goods is given to a third party and the money is only transferred to the sellers possesion once the goods have reached the buyer?

[malishka1025]

Jazakallah brother for taking the time to dig this info out for me. If it is indeed haram then all the muslim resellers out there (which there is many, and this method is a popular way of doing business these days) are violating islamic business law.

How are we supposed to compete with our non-muslim counter parts?

One way is to collect the service charge for getting the product and give the product at same price to customer.

Our business model is established this way

[casinobonusese]

what if the payment for the goods is given to a third party and the money is only transferred to the sellers possesion once the goods have reached the buyer?

Actually that is what sort of happens. when an item gets dispatched that is when the customer is charged.

But having read the links provided, I think as a business you have to buy (exchange funds, and take stock either in your warehouse or the suppliers warehouse) thus the business takes x amount of risk which justifies charging a profit. All this before you actually sell it to a customer.

One way is to collect the service charge for getting the product and give the product at same price to customer.

Our business model is established this way

Interesting idea brother.

Does the customer know this as one price i.e. cost of product + service charge. Or do you tell them the cost price is x and our service charge is y?

[Sellorect]

so all you people using dropshippers out there....

[Symnunidanimb]

Actually that is what sort of happens. when an item gets dispatched that is when the customer is charged.

But having read the links provided, I think as a business you have to buy (exchange funds, and take stock either in your warehouse or the suppliers warehouse) thus the business takes x amount of risk which justifies charging a profit. All this before you actually sell it to a customer.

are you dropshipping?

[casinobonusese]

No I'm not a drop shipper. But Drop shipping would be a prime example of selling stock that you don't initially have.

[prowsnobswend]

Drop shipping is not permissible, right?

[Symnunidanimb]

there are 3 scenarios here right?


1. i show an image and description of a product to a prospective buyer without implying that i possess the product and also set a price with him for that product. i then purchase the product myself and then sell the product to the buyer who pays first for that product that i now possess and to whom i send the product after receiving payment.

2. i show an image and description of a product to a prospective buyer without implying that i possess the product and also set a price with him for that product. i then proceed to sell the product to the buyer without being in possession of the product and only purchase the product once i receive payment from the buyer and then send the product once i have recieved payment.

3. i show an image and description of a product to a prospective buyer without implying that i possess the product and also set a price with him for that product. i then ask the buyer to deposit payment with a third party, e.g paypal or escrow scheme. once the payment is with the third party i then proceed to purchase the product and once i have the product in my possession or once the buyer recieves the product i then retrieve the money from the third party.

i think a fatwa is required for all the above 3 scenarios as i believe they all differ.

NB: i think that eventhough paypal imitates a conventional bank account, i dont think it actually is a bank account. it is more like an escrow account as they are free to freeze or confiscate your funds whenever they feel like it. you only truly own the money in the paypal account once you withdraw it into your possession. i could be wrong in this. a mufti who has understanding of such thing should look into this in detail and pass judgement.

[Nesskissabe]

Assalamu alaikum,

Dropshipping is completely permissible according to fatwa on AskImam.

This business model is permissible. However the transaction a person would be doing is not a normal sale but rather a bay-salam - i.e. a forward sale.

People have misunderstood "selling something one does not own". Whenever this is mentioned in fiqh books it is referring to (i) either a specific item like a specific car (with unique VIN number) which cannot be sold if one does not own it, or (ii) where there is gharar involved (i.e. the common example given in books - one sells the fish in the ocean - whatever one will catch).

This case is different if it is done according to bay as-salam. In bay as-salam one will have to describe the general item up for sale. This refers to the the type of item in general and not a specific item. For example Honda Civic, with model number and the specific features in the model. In this case the brother will post the detailed description of the various models of hard drives he will sell.

When an order comes he must collect the money in full in order for this to be a valid bay as-salam. Thereafter he will buy the hard drive and deliver it to the person who placed the order or bought it (however you look at it).

All the conditions for bay as-salam need to be followed. One will have to also mention that this is a bay as-salam or forward sale.

If you want to go the order route then you will have to mention that the money they will be paying is only a deposit (which has to be refundable if they don't go through with the contract). Then once you acquire you will have to undertake the actual transaction to "seal the deal" which will transfer the deposited money to your ownership and the item to the ownership of the buyer. While the money is in deposit it is still the property of the person who intends to buy.

Note: the above is not a fatwa or an answer from a qualified scholar.