Question:
If a man buys a commodity for ten thousand, pays a portion of it immediately, and the remainder is paid in installments over a year, for example—if the seller comes to him after the third month and says: "If you give me the remaining five thousand now, I will discount one thousand for you, and I will only take four thousand from you," is this considered selling a debt for less than its value for the sake of accelerating payment, or is it a sanctioned conditional forgiveness and not a sale of debt?
If this is permissible, how does it differ from setting two prices for a commodity in a single contract?
Answer:
Accelerating the payment of a deferred debt in exchange for discounting a part of it is not "selling debt for debt." Rather, in Fiqh, it falls under the chapter of "Dha’ wa Ta’ajjal" (Reduce and Accelerate), meaning: reduce some of the deferred debt in exchange for its immediate settlement.
As for "debt for debt" (Dayn bi al-Dayn), it is like you having a thousand dinars owed to you by a man, and you use that debt to buy from him one hundred kilograms of lentils to be delivered to you after a month. Here, you have sold the debt (1,000 dinars) for deferred lentils (also a debt). This is haram (forbidden) because it is a sale of debt for debt. Moreover, it is a Salam (forward sale) using a debt as capital, which is haram because the capital of a Salam contract must be received at the beginning.
Another form of debt for debt is if you are owed a debt of 1,000 dinars by Amr, and I am owed a debt of 100 garments by Zaid, and I say to you: "I sell you the 100 garments owed by Zaid for the 1,000 dinars owed to you by Amr." This is a sale of debt for debt.
There are other forms, but they all constitute selling debt for debt. This is also called Bai' al-Kali' bi al-Kali' (sale of the delayed for the delayed) or Bai' al-Nasi'ah bi al-Nasi'ah.
This type of sale to a party other than the debtor is strictly haram according to a single consensus, based on the hadith of Al-Hakim in his Mustadrak 'ala al-Sahihayn from Ibn Umar (ra), that the Prophet (saw):
نَهَى عَنْ بَيْعِ الْكَالِئِ بِالْكَالِئِ
"He prohibited the sale of the delayed for the delayed."
In another narration, it was added: "It is the delayed for the delayed (Al-Nasi'ah bi al-Nasi'ah)."
As for selling the debt to the debtor himself, there is a difference of opinion among scholars; some permit it and others forbid it.
Regarding your question, as we mentioned, it falls under the chapter of "Dha’ wa Ta’ajjal" (Reduce and Accelerate), which means reducing part of the deferred debt in exchange for paying the debt or part of it immediately. This issue is a matter of scholarly disagreement:
- Some do not permit it, relying on evidence including:
- What was reported by Al-Bayhaqi in Al-Sunan al-Kubra from Al-Miqdad bin Al-Aswad who said: "I lent a man a hundred dinars, then my name came up in an expedition sent by the Messenger of Allah (saw). I said to him: 'Pay me ninety dinars immediately and I will drop ten dinars.' He said: 'Yes.' This was mentioned to the Messenger of Allah (saw), and he said:
«أَكَلْتَ رِبًا يَا مِقْدَادُ، وَأَطْعَمْتَهُ»
'You have consumed Riba, O Miqdad, and fed it.'"
(For information, Imam Ibn al-Qayyim stated in Ighāthat al-Lahfān: "There is weakness in the chain of Al-Bayhaqi's hadith").
- They argued that it is well known that the Riba of the Jahiliyyah was a deferred loan with a stipulated increase; the increase was in exchange for extending the term. Thus, Allah (swt) invalidated it and forbade it, saying:
وَإِنْ تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ
"And if you repent, you may have your principal." (Surah Al-Baqarah [2]: 279)
They added that discounting part of the debt in exchange for bringing the deadline closer is also haram because of the compensation tied to the time period, whether it is an increase or a decrease.
This practice of "Dha’ wa Ta’ajjal" was forbidden by the majority of jurists from the Hanafi, Maliki, Shafi'i, and Hanbali schools. It was also disliked by Zaid bin Thabit, Ibn Umar, and a number of the Tabi'un.
- Others permit it, relying on evidence including:
- From Ibn Abbas (ra), who said: "When the Messenger of Allah (saw) wanted to expel Banu al-Nadir, they said: 'O Messenger of Allah, you have ordered our expulsion while people owe us debts that have not yet matured.' He said:
«ضَعُوا وَتَعَجَّلُوا»
'Reduce and accelerate.'" (Narrated by Al-Hakim in his Mustadrak, who said this hadith has a Sahih chain though they [Bukhari/Muslim] did not record it).
(For information, Al-Dhahabi said in his Talkhis: "Zanji is weak and Abdul Aziz is not trustworthy." Ibn al-Qayyim said in Ahkam Ahl al-Dhimmah: "Its chain is Hasan [good]; it contains only Muslim bin Khalid al-Zanji, and his hadith does not fall below the rank of Hasan.")
- The statement of Abdullah bin Abbas (ra): "Riba is only: 'Delay for me and I will increase for you,' and it is not: 'Hasten for me and I will reduce for you.'"
The permissibility of this has been narrated from Ibn Abbas, Al-Nakha'i, Al-Hasan, and Ibn Sirin. It is a narration from Imam Ahmad and a view held by the Shafi'is. It was the choice of Shaykh al-Islam Ibn Taymiyyah and his student Ibn al-Qayyim. Ibn Abidin, among the Hanafi jurists, also permitted it as mentioned in his footnote on Al-Durr al-Mukhtar.
We do not prefer to adopt (tabanni) a specific opinion on this matter; let the person concerned follow (yuqallid) whichever jurist they feel comfortable with.
As you can see, this issue differs from the issue of selling in cash versus installments. If the seller says: "The price of this item is one thousand in cash or one thousand three hundred in installments," and leaves it floating like that, it is not permissible because the price is unknown. However, if the price is specified—such as the buyer saying: "I buy it for this much in cash," or: "I buy it for this much in installments"—it is permissible as the price has been determined and the commodity has a single price.