(Series of Answers by the Scholar Ata Bin Khalil Abu Al-Rashtah, Ameer of Hizb ut Tahrir, to the Questions of the Visitors to his Facebook Page)
Answer to a Question: Regarding the Ruling on the Murabahah Contract
To Muhamad Abdallah
Question:
Assalamu Alaikum wa Rahmatullahi wa Barakatuh,
Our Sheikh and Ameer Ata Bin Khalil Abu Al-Rashtah, I have a question: What is the ruling on the Murabahah contract; is it permissible (ja'iz), irregular (fasid), or void (batil)? It happened that some brothers of ours agreed on a Murabahah contract, and after a period of time, they learned it was not valid. The first party, who provided the capital, took his capital back plus an additional half [of its value]. Now, he is demanding the rest of the profits after knowing the contract is not permissible.
The question is: What is the nature of the contract in terms of lawfulness and prohibition? Is the money he took halal or haram? Does he have the right to demand the rest of the profits after taking his capital and more, especially since the brothers know that the origin of actions is to adhere to the Shariah ruling?
Please advise us, and may Allah reward you with all good. Abu Suhayl – Berlin.
Answer:
Wa Alaikum Assalam wa Rahmatullahi wa Barakatuh,
What you have called a Murabahah contract, according to what was mentioned in your question—where the owner of the capital gives it to another party to trade or deal with it and gives him a guaranteed profit—is not permissible in Islam. What is permissible is for the owner of the capital to give his money to another to trade with it, and they agree on a percentage of the profit that both parties will receive if there is a profit. If there is no profit, then neither of them receives anything. If there is a loss, it is borne by the owner of the capital because the other party, who exerts effort and trades, would have lost his effort. That is, no guaranteed profit is fixed for the owner of the capital; rather, it is as we mentioned previously.
This is what is called in Islam Mudharaba.
Mudharaba is a type of company (sharika) because it is a partnership of labor and capital. A company is one of the transactions for which Shariah has stipulated permissibility. On the authority of Abu Hurayrah, he said: The Messenger of Allah (saw) said:
إِنَّ اللَّهَ يَقُولُ: أَنَا ثَالِثُ الشَّرِيكَيْنِ، مَا لَمْ يَخُنْ أَحَدُهُمَا صَاحِبَهُ، فَإِذَا خَانَهُ خَرَجْتُ مِنْ بَيْنِهِمَا
"Allah says: I am the third of two partners as long as one of them does not betray his companion. If he betrays him, I depart from them." (Narrated by Abu Dawood)
The Sahaba (ra) reached a consensus (ijma) on the permissibility of Mudharaba. Umar (ra) gave the money of an orphan for Mudharaba as reported in the Musannaf of Ibn Abi Shaybah. As for the profit in Mudharaba, it is according to what the two contracting parties stipulated. As for the loss, it falls upon the capital. Abdul Razzaq al-San’ani reported in his Musannaf from Ali regarding Mudharaba:
الْوَضِيعَةُ عَلَى الْمَالِ، وَالرِّبْحُ عَلَى مَا اصْطَلَحُوا عَلَيْهِ
"The loss (al-wadhi'ah) is upon the capital, and the profit is according to what they agreed upon."
Al-wadhi'ah means the loss.
For information, the term Murabahah in Shariah occurs in buying and selling, not in labor contracts. Those who use Murabahah in labor contracts between the owner of capital and the mudharib (worker) are using it in a way that is not its Shariah place. This is because Murabahah linguistically means achieving profit; it is said: "I sold the goods as a Murabahah" or "I bought them as a Murabahah."
In Shariah terminology: It is for the seller to offer his goods for sale at his cost price plus a known profit. It is one of the "trust sales" (buyu al-amanat) because it relies on the honesty of the seller in reporting the cost of the item to him.
It is Shariah-permissible because it is a purchase with a profit added to the price at which the seller bought it. So, if the seller says, "I sell you this item for such-and-such profit over the price I bought it for," and the buyer is informed of this price and accepts, then this is permissible because it is a known sale.
Your brother, Ata Bin Khalil Abu Al-Rashtah
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