(See: Majmu’ Fatwa Al Lajnah Ad Daimah 14/176-177, fatwa no: 20244). You cannot trade the same currency for different values (e.g. Required fields are marked *. الَّذِينَ يَأْكُلُونَ الرِّبَا لاَ يَقُومُونَ إِلاَّ كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا, “As for those who devour interest, they behave as the one whom Satan has confounded with his touch. (And they can’t hide anything from Allah) [Chapter:The Women:42]. The Prophet -peace and prayer of Allah be upon him said: لاَ يَأْخُذَنَّ أَحَدُكُمْ مَتَاعَ أَخِيهِ لاَعِبًا وَلاَ جَادًّا، وَمَنْ أَخَذَ عَصَا أَخِيهِ فَلْيَرُدَّهَا. Fair Trade has empowered farmers to earn significantly higher incomes, and to build health, education and women’s programs that benefit an estimated of five million people worldwide. Allah the Exalted decreed, In essence, the principle of the Islamic economic system is oriented towards humanity. Everyone has a reflection to share, expertise on a specific topic, or a new idea. dollar for dollar), the exchange needs to be of equal amounts (e.g. Save my name, email, and website in this browser for the next time I comment. Uddin, S. (2003). Real examples of this type of contract are: debt contracts, deposits, loans, charities, gifts, marriage, etc. Muslims are encouraged to participate in markets with a consciousness of God in mind; they are required to be just and help their brothers and sisters provide for themselves. Islamic finance operates in accordance with the principles of Islamic law (or Shariah). http://www.equalexchange.coop/islamicrelief, Readers should also be aware of these three Fair Trade efforts: Brother, as already mentioned above, that in the business world, there is a couple that always come together: that is profit and loss. As a virtual mosque, we strive to provide a safe space for learning and discussion. Al Baqarah/The Cow: 275). Readers will like to know that Islam Relief USA has expressly endorsed Fair Trade and last year entered into a partnership with our co-operative, Equal Exchange, to promote Fair Trade to the American Muslim community and to make it easier for people to access Fair Trade products. Muamalat (also muʿāmalāt, Arabic: معاملات ‎, literally "transactions" or "dealings") is a part of Islamic jurisprudence, or fiqh.Sources agree that muamalat includes Islamic "rulings governing commercial transactions" and Majallah al-Ahkam al-Adliyyah).. Modern finance theory informs today’s conventional finance while ethical imperatives drive Islamic finance. This stresses that authority and responsibility must both be present to result in a fair deal for everybody, buyers and sellers alike. Based on this, Islamic sharia divided transactions in terms of it’s goals into three major parts, as explained in the first point. Along with the surge of influences come from the mindset of the disbelievers who have no faith in Allah and the Last Day, most of muslim experts in economy also become narrow minded in viewing the meaning of profits. Thus, it is mentioned in a famous principle in jurisprudence that: “Every debt that yields profits, is a usury.” (See: Al Muhazzab by As Syairazy 1/304, Al Mughny by Ibn Qudamah 4/211&213, As Syarhul Mumti’ 9/108-109, etc). However, it is advised to all muslim businessman to make ease and lighten the affairs of his brothers, also in trading, without making any exception. Islamic principles determine the objectives and the operations of Islamic finance. Do not submit commercial, off-topic or other copyrighted material. It essentially constitutes what elsewhere would be considered criminal, personal and commercial law.”3, The range covered in these sources extends from the highly spiritual to material matters, including business. 1). Seized in this state they say: “Buying and selling is but a kind of interest,” even though Allah has made buying and selling lawful, and interest unlawful. Al-Baqarah/The Cow: 276). For example, A sold a car to B with a price of IDR 50.000.000,- and the settlement was due after a year, with a house as the guarantee. Islam is the religion of truth. Islamic sharia is a set of laws that truly respect the ownership of it’s followers. رواه أحمد والدارقطني والبيهقي، وصححه الحافظ والألباني, “Properties of a muslim is unlawful but by his willingness.” (Narrated by Ahmad, Ad Daraquthny, Al Baihaqy ; classed sahih by Al Hafizh Ibnu Hajar and Al Albani), What excluded from the general scope of this law is, if the profit is required at the time of trading or renting or similar contracts to it [2], by owed payments. Islam's Sharia law is cast from the words of Muhammad, called "hadith," his actions, called "sunnah," and the Quran, which he dictated. As a legal system, the Sharia law is exceptionally broad. Among the examples of these contracts is: Mortgaging contract. So I purchased two sheeps for him, and I sold one of them for a Dinar. Thus, it is not allowed for anyone to take or to use the property of his brothers unless he is willing to let it happened, either in trading or other forms. The Five pillars are as followed Shahada or witnessing that Allah is one and Muhammad is his messenger, Salah which means Prayer, Zakah which is obligatory charity, Sawm which is fasting, and Hajj which is the pilgrimage. Every fund that we manage by our own or that is used by our brother, should yield material profits to us. The meaning of “bind” here is that if a contract has been finished by fulfilling all of it’s requirements, the consequence of such contract should be obeyed and no one might cancelled it without the willingness of the second party, unless there is a defect in goods that became the object of contract. Islam raises and orients social funds to the needy and the poor, slaves, people who cannot afford to pay debts, converts, people on the journey, and also Fisabilillah. coerced or forced one is a cornered one, thus he is unable to reject the transaction, and he is forced to sell his properties. For example, when you are dealing with the same kind of currency (e.g. As for the kinds of deposit that commonly found in our society, such as motorcycle deposit, car deposit, etc, that require some amount of deposit fee, are not considered as the true contract of deposit, but selling and buying of service, that is termed as the contract of ‘ijarah’ (Working contract) in Islamic jurisprudence. IFAT (International Fair Trade Association) prescribes the standards that Fair Trade organizations must follow in their day-to-day work.8 The first principle requires transparency and accountability; as highlighted above, “And give full measure when you measure, and weigh with a balance that is straight” (Qur’an, 17:35). [i] Join the iFX EXPO Asia and discover your gateway to the Asi… Business Ethics, 12(1), 23-32. doi: 10.1111/1467  8608.00302. قال: يا رب آتيتني مالك، فكنت أبايع الناس، وكان من خلقي الجواز، فكنت أتيسر على الموسر وأنظر المعسر، فقال الله: أنا أحق بذا منك، تجاوزوا عن عبدي. That there is only one profit, that is the material profits or or advantages that lead to it. Second: The contract that is aimed to give credits, aids, services, or assistance to other people. We find that, on average, levels of bilateral trade are lowest among Islamic law states, holding all else constant; levels of bilateral trade are highest among common law states. We hope, by opening up submissions from guest authors, that we can highlight the work of new, talented writers in our virtual community. It is the embodiment of the code of life which God, the Creator and the Lord of the universe, has revealed for the guidance of mankind. This fact is strengthen by the following verses: يَا أَيُّهَا الَّذِينَ آمَنُواْ اتَّقُواْ اللّهَ وَذَرُواْ مَا بَقِيَ مِنَ الرِّبَا إِن كُنتُم مُّؤْمِنِينَ . Obligatory and Recommended Business Transactions. Real example of this type of contract is selling and buying (trading), renting, trading partnership, tillage of land (contract of musaaqah), etc. http://www.goodweave.org/home.php, Ten Thousand Villages – this non-profit is one of the pioneers of Fair Trade and import goods from dozens of nations including many in the Middle East, South Asia and Indonesia. Share the knowledge! Is it Allowed to Bequeath Unlawful Wealth? The law of qiṣāṣ was an exception to the principle of individual responsibility for crimes emphasized by Islamic law, because it made the perpetrator 's clan (ʿāqilah) responsible with him for payment of the diyah; correspondingly, the clan of the victim divided up the diyah payable for his death in keeping with the legal maxim that liability is proportional to the benefit. If you repent even now, you have the right of the return of your capital; neither will you do wrong nor will you be wronged. For example, if there is a person who force other to sell his property, otherwise he’ll kill him, and the other one, fear of being killed, sell his property, the status of such contract is invalid, since it is not based on consensual principle. Al-Baqarah/The Cow: 278-280). Thank you, […] Islam and Fair TradeDec 31, 2010 … Tweet Tweet By Suzan El-Ajou What are the congruencies between Islamic business ethics and the Fair Trade principles? The doctrinal basis of Islamic law is the point of departure for this study. These are things that I can explain in this occasion, and I hope it’ll be useful for us all. فَإِن لَّمْ تَفْعَلُواْ فَأْذَنُواْ بِحَرْبٍ مِّنَ اللّهِ وَرَسُولِهِ وَإِن تُبْتُمْ فَلَكُمْ رُؤُوسُ أَمْوَالِكُمْ لاَ تَظْلِمُونَ وَلاَ تُظْلَمُونَ . For example Islam has prohibited adultery, it has also prohibited anything which leads to it or makes it attractive such as seductive clothing, private meetings and casual meetings between men and women, the depiction of … Author: Ustadz Dr. Muhammad Arifin Badri, M.A. Download The Entire Album in a SINGLE ZIP FILE. transactions) is different from western litigation on civil law as Islamic Jurisprudence is governed by the idea of lawful and prohibited acts. Between 2000 and 2016, Islamic banks' capital grew from $200 billion to close to $3 trillion in 2016. Basis of International Trade A country specializes in a specific commodity due to mobility, productivity and other endowments of economic resources. قال: يا رب آتيتني مالك، فكنت أبايع الناس، وكان من خلقي الجواز، فكنت أتيسر على الموسر وأنظر المعسر، فقال الله: أنا أحق بذا منك، تجاوزوا عن عبدي. And whoever has already taken – for example – the stick of his brother, should return it immediately.” (Narrated by Ahmad, Abu Dawud, At Tirmidhi; classed hasan by Al Albani), لاَ يَحِلُّ مَالُ امْرِئٍ مُسْلِمٍ إِلاَّ بِطِيبِ نَفْسٍ مِنْهُ. A Critical Analysis of the Islamic Principles of Trade and Commerce i)) *+ Abstract Islam presents an exceptional outlook to Muslims as compared to other religions. Contracts and agreement occurred between men, in terms of the basic attribute of the contract, could be classified into two big groups. At VirtualMosque.com, we encourage and value the comments of our readers. Comments will be moderated for relevance, obscenity, libel or hateful and defamatory language. Islamic Principles Governing International Trade 27:137 (2006) incorporated into English law by means of an Act of Parliament, the Contracts (Applicable Law) Act 1990 ('the Act").5 The Convention was intended to harmonize the rules relating to the proper law of the contract This attitude could be seen inside two big doctrines: These two doctrines are the mirror image of how far are the businessmen today from beliefs in Allah and the Last Day. In fact, Islam encourages individual initiative, drive, efficiency, and enterprising attitudes along with a right to make profits and own private properties; it condemns greed, unscrupulousness and an attitude of disregard for the rights and needs of others. Khan, AA, & Thaut, L. (2008). Islamic sharia have taught it’s followers to have an open minded and broad perspective regarding the meaning of profit in business. Second are the principles requiring the promotion of fair trade and payment of a fair price; in the Qur’an we find, “And we task not any person except according to his capacity, and with us is a record which speaks the truth, and they will not be wronged” (Qur’an, 23:62). Another proof is that there is also no distinction made in Islam between men and women with regards to the rights of life, liberty, ownership, dignity, and of education.9 Another principle encourages bettering environmental practices and the application of responsible methods of production; similarly, Islam has detestation for conspicuous consumption. “O people of trade!” They turn their heads to him, paying attention to the calling of the messenger of Allah -peace and prayer of Allah be upon him- . No of lectures: 11. Fair Trade Certification empowers farmers and farm workers to lift themselves out of poverty by investing in their farms and communities, protecting the environment, and developing the business skills necessary to compete in the global marketplace.7 This model serves as an alternative to the system of capitalistic trade where barriers are created to maintain the status quo. Your email address will not be published. Another Islamic principal is that if something is prohibited, anything which leads to it is likewise prohibited. The goal was to provide relief to refugees and other poverty stricken communities by selling their handicrafts to Northern markets. رواه الترمذي وابن حبان والحاكم وصححه الألباني. Is There Any Zakat Taken From One’s Monthly Salary in Islam? But if there is a person who was coerced of forced to sell his goods due to a right reason, and he sold it, the selling contract is valid. 1 dollar for 1 dollar). Explanation of Hadith from Jabir regarding the Prophet’s Offering, Gift for Physician is considered as bribery, How Evil Doing Always Disconcerts The Heart, How to Manage the Household Finance in Islam, Ruling on Online Business of E-Book Affiliation in Islam, Rulings for A Gas Station that Serves a Car Loaded with Intoxicants, Rulings for Gifts given Out of the Working Hours, Rulings for Keeping and Trading Birds in Islam, selling computers to the Insurance Company, The Right of Allah and The True Happiness. If it suffers from loss, he’ll be ready to bear it, and if it yields profits, he’ll also be glad to receive it. Islamic finance is a financial system that operates according to Islamic law (which is called sharia) and is, therefore, sharia-compliant. One or several of the benefits of knowing the division of contracts in terms of it’s goals will be seen when a feud happened due to defects in objects of a contract. While the principles of Fair Trade include transparent management and relations that aim to promote fairness and respect between trading partners, Islam holds these as well and within the context of the Fair Trade model Muslims can help to expand this into even more markets than the ones currently available.11  Fair Trade allows farmers in developing nations to enter into markets and raise their standard of living through fair opportunities which are fully compatible with Islam, thus affirming the congruency of both. يَا أَيُّهَا الَّذِينَ آمَنُوا لا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ إِلَّا أَنْ تَكُونَ تِجَارَةً عَنْ تَرَاضٍ مِنْكُمْ, “Believers! Thanks so much. This is important to know and always be considered, since based on my own experience, by mastering these contracts and each of it’s consequence, we’ll be easier to understand various sharia law regarding these contracts. And at the third type of contract, both parties deserve to cancel the contract, without permission from the other party. Most of them obediently follow the theories and doctrines of their enemy. رواه ابن ماجة وابن حبان وصححه الألباني, “Verily, a (true) trading is a trading that is based on the sense of consensual.” (Narrated by Ibn Maja, Ibn Hibban, and classed sahih by Al Albani). Islam has introduced it’s followers to a concept that states that the profit of business could be established in two things: Brother, think about the two hadith below: عن حكيم بن حزام رضي الله عنه عن النبي صلى الله عليه و سلم قال: البيعان بالخيار ما لم يتفرقا، فإن صدقا وبينا بورك لهما في بيعهما، وإن كذبا وكتما محقت بركة بيعهما. In Islamic trade finance, trade transactions can be financed either on credit or on a participatory basis. متفق عليه, “Hudzaifa -may Allah be pleased with him-said: The messenger of Allah -peace and prayer of Allah be upon him- said: Allah bring in one of His slave whom He bestowed upon wealth, and Allah said to him: What did you do on earth? They have over 100 stores across North America. As for those who revert to it, they are the people of the Fire, and in it shall they abide.” (Qs. The principles and prohibitions of Islamic finance are expounded in the Shari’aor Islamic law. It will give a misleading impression that business world is identical to profits, while it actually recognizes loss too. Among the principle that shall be recognized by every businessman or businessman-to-be, is to recognize various types of contracts, and it’s law consequence. the basic law for all transactions is legal Interactional relationship between men, whether it is in accordance with sharia or not, is unlimited. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South. It is obligatory upon the scholars ('Ulamaa’) to teach these rules to the people. All countries are endowed by nature with the same productive Allah loves none who is ungrateful and persists in sin.” (Qs. Islamic Relief, 13. But if the debtor is in straitened circumstance, let him have respite until the time of ease; and whatever you remit by way of charity is better for you, if only you know.” (Qs. Therefore, religious consideration takes effect as an internal control of human acts. This can be seen from either the Asnaf or the recipient of zakat. The civil division in Islamic jurisprudence (i.e. With one-fifth of the world’s total population identifying themselves as Muslim1, and with the consideration that they are active participants in world markets, it is imperative to include the Muslim community in business affairs and look for ways to reach out to them. Benefits of knowing the division if contracts in terms of it’s consequence. World Assembly of Muslim Youth. “ (Narrated by At Tirmidhi, Ibn Hibban, Al Hakim, and classed sahih by Al Albani). In the United States, Alternative Trade Organizations (ATOs) have followed this model with Fair Trade handicrafts, and an Equal Exchange was formed in 1986 to import Fair Trade coffee to the US market.2, Islam lays the groundwork for all aspects of a Muslim’s life. Indeed, Islam discourages all sorts of prejudices, oppression and discrimination. اللَّهُمَّ اكْفِنِا بِحَلاَلِكَ عَنْ حَرَامِكَ وَأَغْنِنِا بِفَضْلِكَ عَمَّنْ سِوَاكَ. This course will offer participants a firm grounding in the principles, concepts, and terminology of Islamic law as well as an introduction to its history and its role in the contemporary era. Hence, any currency trade transaction that involves ANY type of usury, is not allowed in Islam. Due to it’s basic aim, The sharia doesn’t allow for anyone to gain profits from it. In this verse, Allah the Exalted threaten the usurer and after that mention the rewards of the charity giver. Participatory finance involves the participation of the financier in the profits and losses brought in to resell the financed goods or put them into an income-generating production process. An Nisa’/The Women: 29). There are still many kind of divisions of contract in various terms, but I think that the most important to know are the previously discussed divisions. The authors are not responsible or liable for the intentional, reckless, or negligent actions of any individual. متفق عليه, “It was narrated from Hakîm bin Hizâm that the Prophet said: “The two parties to a transaction have the option (of canceling it) until they part. From the Mediterranean and Africa, these traders brought gold, glass, and ivory. It is important to notice that the meaning of ‘coercion’ in this context is a type of coercion without any legal basis. Because, by this practice, basically, A has sold his car for IDR 50.000.000,- plus the renting fee of the house for a year. According to the Islamic finance principles, Muslims are not allowed to participate in the ambiguous and uncertain transactions. (And they can’t hide anything from Allah) [Chapter: The Women:42]. Hence, it is not allowed for both parties who run a transaction to be parted one another before they achieve an agreement. By giving farmers and farm workers direct access to international markets, and the tools and resources they need to succeed and thrive, Fair Trade makes sustainable local development possible. By understanding this type of division, we’ll be able to understand the reason and wisdom beneath the prohibition of usury, as well as to understand the wisdom beneath distinction between usury and selling and buying contract. While individuals face problems having to do with ethical issues in the realm of business, Islam requires that Muslims act in a way that will ensure socio-economic justice at all times. For the purposes of this article, the definition used for fair trade will be: “Fair Trade is a trading partnership, based on dialogue, transparency and respect that seeks greater equity in international trade. By looking into the similarities between Islam and Fair Trade, there are many ways the two can cooperate with one another to ensure success in business ventures for all parties involved. Islam has given detailed regulations for our economic life, which is balanced and fair. Islamic law with common and civil law. You can read more about our partnership at: http://www.islamicreliefusa.org/Page.aspx?pid=398 The next principle promotes gender equity; the Prophet of Islam ﷺ married a rich businesswoman, lending proof that in Islam it is both accepted and encouraged for women to take part in the pursuit of business. To read our full privacy policy, please, To repost articles, please use the title and author's name and link back to VirtualMosque.com. Issue 722: It is obligatory upon every Muslim to learn the rules of business transactions to the extent of his need. For this purpose, one of the basic principles of Islamic finance is ‘no risk, no gain'. For Muslims, although business ventures are highly regarded, pursuing them in a haste manner is not. Do not devour one another’s possessions wrongfully; rather, let there be trading by mutual consent; and do not kill yourselves. Have fear of Allah and give up all outstanding interest if you do truly believe. An islamic perspective on fair trade. عن عروة البارقي رضي الله عنه قال أعطاني رسول الله صلى الله عليه و سلم دينارا أشتري به أضحية أو شاة فاشتريت شاتين فبعت إحداهما بدينار فأتيته بشاة ودينار. So I returned with the sheep and the Dinar to the Prophet -peace and prayer of Allah be upon him- and I mentioned what had happened and he said: ‘May Allah bless you in your business dealings.’ Thus, if he were to buy the dust, he would get profits in it.” (Narrated by Abu Dawud, At Tirmidhi, Ibn Maja). Comments are the opinions of the individuals leaving them and do not necessarily reflect the views of VirtualMosque.com or its content providers. لا يحل مال امرئ مسلم إلا بطيب نفس منه. رواه أحمد وأبو داود والترمذي والبيهقي وصححه الألباني, “For two man who are transacting selling and buying to not be parted from each other but based on the sense of consensual.” (Narrated by Ahmad, Abu Dawud, At Tirmidhi, Al Baihaqi; classed sahih by Al Albani). As well as the complete information should be shared with both parties so that the profit and loss will be equally shared. Basic Principles of Islam. This contract usually contains a bargaining process, thus each partner involved in it wont be surprised or feel sorry if one day he finds out that his partner is able to get profits from their contract. Just like conventional financial systems, Islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies. Throughout the Qur’an there are verses echoing this sentiment: “And give full measure when you measure, and weigh with a balance that is straight” (Qur’an, 17:35); “Do not withhold from the people the things that are their due and do not commit mischief in the land, causing corruption” (Qur’an, 11:85). Allah decree: I am more rightful than you to do such, make the affairs of this slave of Mine easy.” (Muttafaqun ‘alaih). متفق عليه, “Hudzaifa -may Allah be pleased with him-said: The messenger of Allah -peace and prayer of Allah be upon him- said: Allah bring in one of His slave whom He bestowed upon wealth, and Allah said to him: What did you do on earth? If they are honest and disclose any defects, their transaction will be blessed, but if they lie and conceal defects the blessing will be erased.” (Muttafaqun ‘alaih), عن حذيفة رضي الله عنه قال: قال رسول الله صلى الله عليه و سلم أتى الله بعبد من عباده آتاه الله مالا، فقال له: ماذا عملت في الدنيا؟ قال: ولا يكتمون الله حديثا.