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Qtn: Discuss the Islamic teaching on business transactions
Qtn: Examine the ways in which business can be carried out
Business transaction involves the sale and purchase transaction and the ethics involved in carrying out these transactions. In other words as the buying and selling of goods and the ethics involved e.g. the Dos and Don’ts or the regulations in carrying out these transactions.
It should however be noted that, in the process of carrying out these transactions there are parties involved i.e. two people, the buyer and the seller. And such dealings are simple transactions which even involve payment of cash.
However, if the transactions involve purchase on credit, it may involve a third party to act as a witness, since business transactions involve human beings whose behaviour is un predictable i.e. keep on changing.
On this, Islam has land down some principles governing the transactions and they include;
1. The principle of fair dealings. The prophet always practiced and encouraged his companion to be fair while in business. Therefore things like Fraud, interest, gambling, un certainty doubt, exploration, profiteering and black marketing are completely condensed or prohibited in Islam.
2. Best earnings. This principle is founded or based on the concept of earning as a result of personal effort. Thus, the prophets said;
“No one has ever eaten better food than what he eats as a result of the labour of his hands”
Prophet Dauda also used to eat from what he had worked for.
Prophet’s wife Aisha reported that the prophet said that
“The pleasantest things you enjoy come from what you earn and your children come from what you earn”
3. The prophet also cautioned Muslims upon transacting in things they have doubt.
“Leave what causes you doubt and turn to what doesn’t cause you doubt………” (Tirmidh)
“Truth is peace and falsehood is doubt.
4. Forbidden business. While transacting, a Muslim forbidden from involving in things which are forbidden and un lawful / Haram e.g. transacting business in pork, intoxicants, prostitution e.t.c.
Allah says
“Oh you who believe, eat of the good things that we have provided for you and be grateful to Allah. He has only forbidden you dead meat and blood and the fresh of swine” Ch 85:3
The prophet said that when something is prohibited, even its price is prohibited for example, he said
“The price paid for a dog is impure, the hire paid to a prostitute is impure” (Muslim)
5. Good conduct in business dealings. Any one carrying out business has to be gentle, kind in business transactions. The prophet said;
“Allah is merciful to a man who is merciful when he sells, when he buys and when he makes a claim” (Bukhar)
He also said;
“Avoid much swearing while transacting business………….” (Muslim and Bukhar)
“The truthful and trustworthy merchant is associated with the prophets.
The upright and the
Martyrs……………..” (Muslim)
6. Right of parties in transactions. In business there must be mutual consent between the two parties i.e. exchanging of goods. Allah forbids people from taking other peoples things without their consent and permission Ch. 4:29. This was intended to maintain peace and order in society and also keeping good relationship between various members of the society.
SOME ASPECTS OF BUSINESS TRANSACTIONS.
From the general principles governing business transactions, Islam has gone ahead to legislate more on business transactions and for that matter, it has laid down more guidelines for the smooth running of business they include;
1. Ownership of natural resources.
All resources provided by nature are supposed to be enjoyed by all people at zero cost or free of charge.
No body should monopolies them. No one has rights over them. They may include rivers, lakes, springs; wood in forests, fruits of the wild plants, animals of the jungle e.t.c should all be used freely.
1. Business contracts (Agreements) on many occasions, when people work together in any business, they are likely to have / develop some disputes and differences or some conflicts of option over financial / money matters. On this note therefore, Islam advises to write down any matter involving money.
Ch. 2:282 Allah says;
“oh you who believe! When you contract a debt for a fixed time, write it down and call two witnesses from among your men to witness… ”
2. Business on commissions.
Islam allows business on commission. According to Abdullah bin Abaas
“There is no harm in asking a commission agent to sell your cloth or other goods at any price and keep the excess profit. Which is over and above. The normal product and ask it for himself as a commission”
3. Hoarding. This is the practice of keeping goods from the market and resources from production. This is completely against the Islamic economic principle. This practice is very common especially here in Uganda. This practice slows down the rate of economic development.
For that matter, Islam condemns it and that’s why people who practice it have been described as sinners.
Allah says; Ch. 9:344 that;
“They who hoard up gold and silver and spend it not in the way of God, to them give tidings.
(“Oh Muhammad”) of a painful punishment… ”
The prophet condemned this when he said
“The man who hoards goods is evil. If prices fall, he is grieved and if they rise, he is happy. He who brings goods on market is blessed, but whoever withholds them, is cursed” (Ibn majah)
4. Cheating by weights.
The Islamic economic system greatly discouraged cheating by means of weights, Allah says;
Ch. 83:1 – 6
“Woe to the defrauders. Those who when they take the measure from people demand it full, but if they measure to them or weigh for them, they cause them loss.
Also Ch. 17:35 says;
“ full the measure when you measure and weigh with a right balance; that is honest
and better in the end”
5. Transacting business in haram things. Islam prohibits any transaction that involves haram things e.g. alcoholic beverages, intoxicants, drugs, swine, idols, statues or anything of that kind. Any earnings from such business are sinful earnings and the fire is likely to be the abode for the fresh which has been nourished on such earnings.
6. It is even haram to trade in things mode out of gold and silk for men, unless are for women. The prophet said,
“When Allah forbids a thing, he prophets the price of it as well”
7. Lying about the merchandise being sold. i.e. lying customers, hoping to make more sells. This is one of the major weaknesses of merchants and it has been forbidden by Allah prophet said;
“Merchants be aware of lying” this is one of the major weakness of merchants and it has been forbidden by Allah prophet said;
“Merchants beware of lying” this is because lying leads to wrong doing and ion turn leads to fire.
8. Sale involving uncertainty. This is where a person involves himself in a kind of business where he has no guarantee. This is prohibited and the prophet forbade any kind of transactions where one has no guarantee, concerning the quality of the goods, because this can lead to a quarrel e.g. selling fish not caught from water is also bad, selling un ripe fruits still in the field, because they can be destroyed by natural calamities.
Thus bringing a quarrel between the buyer and the seller. However, if the un certainty is small, the sale is not prohibited.
9. Buying of stolen property. Islam prohibits the buying of things known to have been stolen or taken un justly from the owner, one who does so is encouraging the committing of crimes or injustice in the society, prophet said;
“He who buys a stolen property, with the knowledge that it was stolen, shares on the sin and the shame of stealing”
10. Middle man ship; Islam does not allow the practice of middleman because this interferes in the free market where demand and supply is supposed to determine the price but if there is middle man ship, this is not possible. So if one has something to sell, he should be left to sell it at a price which is on the market, but not less. If one asks the condition in the market. He should be told the right price in order not to cheat him.
The prophet said;
“A resident of town must not sell to a man from the desert. If people are left alone, Allah will give them provision from one another” (Muslim)
He also said that;
“Religion is giving of good advice and if one asks for advice, give him” (Muslim)
11. Transactions involving interest. In Islam, interests in all its forms was totally prohibited by Allah. Therefore, all transactions involving interests are prohibited and any earning from interest is hararra
Jabil said;
“ Allah’s messenger cursed the one who accepts interest, the one who pays it, the one who records it, and the two witness to it, saying they were all alike” (Muslim).
12. Prohibition of harmful economic practices. Some harmful economic practices like gambling of all forms, cheating, hoarding, ribah e.t.c. has been prohibited in Islam.
13. Purchase on credit. In Islam purchase on credit is allowed and one can buy something by mortgaging his property for as long as it is accepted by the seller. But the prophet cautioned to always pay their debts. It’s also allowed for one to pay back more than he borrowed as a sign of appreciation.
14. Bribery and corruption.
This means to influence un fairly in order to get fatuous or gifts. Bride taking is unlawful and therefore will be punished on the behave after, because it promotes injustice in society.
The prophet said;
“God cursed the bribe taker and the bribe giver”. (Abu Daudah a Ibin majah)
And Allah does not accept prayer of a person who takes the bribe, since his fresh has grown on unlawful things.
15. Begging. Islam prohibited dependence on anybody else for livelihood. This is a social stigma and disgraceful humility.
A Muslim should always be radiant and stay away from being a liability to anyone. This is why Islam accepts and respects all kinds of work for earning a living. So as long as it is not haram .i.e. lawful.
The prophet said;
“Its far better for one to take a rope, cut wood and sell it in order to eat and give charity other than to beg others… !
He further said that;
“The upper hand is better than the lower hand”.
This means that its better to give than to beg.
16. Gambling is not allowed i.e. playing games of chance for money.
17. Bargaining is allowed. Islam allows people to negotiate the price of a commodity, such that both parties are satisfied about the price.
18. Sell of defective products. Its not allowed because they may have advance effects on the health of the people. Therefore, selling them with the knowledge that they are defective is completely against Islamic teaching for example, Rotten tomatoes, outdated drugs. This is normally done by the use of consumer ignorance.
19. Zakah should be paid to cleanse / purify one’s business. Ch. 9:71.
20. Swearing Allah’s name in trade or business is un acceptable in Islam.
21. Capitalism tendencies of excessive industries dualism is haram. This is because, in capitalism, people are after maximizing profits for their own benefit at the expense of the others.
22. In business or trade, workers should be well paid and in time.