The Ethics of Doing Business in Islam

Date: 30th January 2015;  9th Rabī’ al-Thānī 1436

A true Mumin needs to be very watchful regarding his amls. He needs to observe his Ibadah as carefully as possible because Allah is always keeping a watch on him at all times. Just as Salah, Fasting and Zakah has been decreed upon us we need to be honest and sincere when dealing with other parts of our life. Islam allows us to run a profitable business given on the fact that we observe some constraints regarding the fairness when conducting the transaction.

Anything which involves exchange we term it as a transaction. The transaction involves the transfer of ownership from one person to another. The buying and selling process needs to be done according to the Sunnah of the Prophet Muhammad (Sallallahu Alayhi Wasallam). When doing business both honesty and sincerity needs to be present. If someone does not present honesty when dealing with a transaction and goes into deception for him Allah has indeed reserved a painful punishment and this has been mentioned in the Quran and Hadiths several times. In one Surah Allah mentions:

Woe to those who give less [than due],

Who, when they take a measure from people, take in full.

But if they give by measure or by weight to them, they cause loss.

Do they not think that they will be resurrected

For a tremendous Day –

The Day when mankind will stand before the Lord of the worlds?

Surat Al-Muţaffifīn, Ayahs 1-6 (83:1-6) Translation: Sahih International

Imam Nasa’i (Rahmatullah Allaih) transmits a narrative from Ibn ‘Abbas (Radi Allahu Anhu) that when the Holy Prophet (Sallallahu Alayhi Wasallam) arrived in Madinah, the people of Madinah whose most transactions were based on measurements used to cheat and short measure. For this reason, Allah revealed the Surah. It is reported from Ibn ‘Abbas (Radi Allahu Anhu) that this is the first Siirah that was revealed as soon as the Holy Prophet arrived at Madinah. The reason is that it was a common practice in Madinah that the people used to be very strict in measuring when they had to receive something from others, but when they sold something, they used to cheat the buyers. After the revelation of this Surah, all of them abandoned this bad custom totally, and mended themselves in a way that they are now well-known in their honesty in weighing and measuring.

Reference:  Ma’ariful Quran by  Mufti Muhammad Shafi. Tafseer of Surah At-Tatfif Ayahs 1-6 (83:1-6). Volume 8. pp. 726-727.

Allah says further in the Quran:

And give full measure when you measure, and weigh with an even balance. That is the best [way] and best in result.

Surah Bani Israel, Ayah 35 (17:35) Translation: Sahih International

Regarding the verse: ”And give full measure when you measure”, Abu Hayyan (Rahmatullah Allaih) says in Tafsir al-Bahr al-Muhit that the responsibility of giving full weight and measure in this verse has been placed on the seller which tells us that it is the seller who is responsible for weighing, measuring and seeing that it is full as due.

At the end of verse 35, it was said about the fulfillment of weight and measure: “That is good, and better in the end”. As for making the weight and measure correct and even, two things have been said here: (1) Firstly, the rule is good. It means that it is intrinsically good. No normal and decent person is going to take weighing less and measuring short as something nice, neither religiously, nor rationally, nor naturally. (2) Secondly, it is better in  the end. The end includes the consequent success of the Hereafter, reward of deeds and the blessing of Paradise as well as the happy outcome of the very life in this world. This is suggestive of the fact that no business can prosper until its goodwill stands recognized in the market – and that cannot happen without this commercial honesty.

Reference:  Ma’ariful Quran by  Mufti Muhammad Shafi. Tafseer of Surah Bani Israel Ayah 35 (17:35). Volume 5. pp. 500.

When seller is selling faulty items, he should disclose it to the buyer before the transaction. This is an absolute duty for the seller. If the seller keeps the faults of the items a secret then Allah’s wrath is placed on that person.

Prophet Muhammad (Sallallahu Alayhi Wasallam) said: “Whoever sells a defective product without disclosing its defect to the purchaser, shall earn the permanent anger of Almighty Allah and the angels continuously curse such a person.”

Reference: Sunan Ibn Majah

These ethics do not only apply during buying and selling, these also apply when we pay our expenses or when we pay our workers. Those also need to be done ethically. Hadith says:

Abdullah ibn ‘Umar (Radi Allahu Anhu) said: The Messenger of Allaah (Sallallahu Alayhi Wasallam) said: “Give the worker his wages before his sweat dries.”

Reference: Sunan Ibn Majah, Hadith 2443. Classed as Sahih by Shaykh al-Albani (Rahmatullah Allaih) in Saheeh Ibn Majah.

Islam is indeed perfect and it teaches us discipline in every aspect of our lives. Let us take our Imam Abu Hanifa (Rahmatullah Allaih) as an example.

Being a businessman, Abu Hanifah (Rahmatullah Allaih) was a person who would make sure all is selling and buying process follow correctly and with the income he received, he used it for charity purposes. One incident: ”The Imam’s business was on a large scale. He traded in goods worth millions, had his agents in a number of cities and had dealings with many big merchants. With such a vast establishment under him he personally took care to see that no illicitly gained money came into his coffers, even though this subjected him to occasional losses. Once he sent some lengths of silk to Hafs ibn ‘Abd al-Rahman for sale with instructions to point out to prospective customers certain defects in some of the lengths. Hafs forgot the instruction and sold off the defective lengths without telling the customers anything about their defects. When the Imam learned of this, he was very sorry and gave away in charity the entire price of the lengths, which amounted to thirty thousand dirhams.

Reference: Imam Abu Hanifah – His Life and Work An excerpt from the english translation of Allamah Shibli Nu’mani’s “SIRAT-I-NU’MAN” by M. Hadi Hussain

We need to be careful when dealing with our daily business. If someone does not maintain his honesty while doing business, he will be devastated on the Day of Judgement. We may think that a person through deception may succeed in the short run but in the long run surely his business will fail. If a person is truthful, Allah will increase his reward and that person will prosper in this life as well as the Hereafter. If the buyers observe that a certain man is being honest with them surely through positive word of mouth, this person’s business will grow.

Islam also teaches mankind to buy goods with its fair price. One Hadith says:

Narrated by Hakim bin Hizam (Radi Allahu Anhu): Allah’s Apostle (Sallallahu Alayhi Wasallam) said, “The seller and the buyer have the right to keep or return goods as long as they have not parted or till they part; and if both the parties spoke the truth and described the defects and qualities (of the goods), then they would be blessed in their transaction, and if they told lies or hid something, then the blessings of their transaction would be lost.”

Reference: Sahih al-Bukhari, Book 3, Volume 34, Hadith 293.

This Hadith in fact teaches us that if buying and selling is done truthfully then it turns into an Ibadah, a form of worship. If deception is present in the transaction, it won’t receive any reward from Allah.

If a person keeps on deceiving people and horde his wealth, Allah curses that person and sometimes Allah even takes away his wealth by fire or other means so as to remind that person of his Lord.

The people of Madyan were Arabs who lived in the country of Ma’an, part of which today is greater Syria. They were a greedy people who did not believe that Allah existed and who led wicked lives. They gave short measure, praised their goods beyond their worth, and hid their defects. They lied to their customers, thereby cheating them.

Allah sent His Prophet Shu’aib (Alayhi As-Salām) armed with many miracles. Shu’aib (Alayhi As-Salām) preached to them, begging them to be mindful of Allah’s favors and warning them of the consequences of their evil ways, but they only mocked him. Shu’aib (Alayhi As-Salām) remained calm as he reminded them of his kinship to them and that what he was doing was not for his personal gain.

They seized the belongings of Shu’aib (Alayhi As-Salām) and his followers, then drove them out of the city. The Messenger (Alayhi As-Salām) turned to his Lord for help, and his plea was answered. Allah sent down on them scorching heat and they suffered terribly. On seeing a cloud gathering in the sky, they thought it would bring cool, refreshing rain, and rushed outside in the hope of enjoying the rainfall. Instead the cloud burst, hurling thunderbolts and fire. They heard a thunderous sound from above which caused the earth under their feet to tremble. The evil doers perished in this state of horror.

Allah the Exalted stated:

The companions of the thicket denied the messengers

When Shu’ayb said to them, “Will you not fear Allah?

Indeed, I am to you a trustworthy messenger.

So fear Allah and obey me.

And I do not ask you for it any payment. My payment is only from the Lord of the worlds.

Give full measure and do not be of those who cause loss.

And weigh with an even balance.

And do not deprive people of their due and do not commit abuse on earth, spreading corruption.

And fear He who created you and the former creation.”

They said, “You are only of those affected by magic.

You are but a man like ourselves, and indeed, we think you are among the liars.

So cause to fall upon us fragments of the sky, if you should be of the truthful.”

He said, “My Lord is most knowing of what you do.”

And they denied him, so the punishment of the day of the black cloud seized them. Indeed, it was the punishment of a terrible day.

Indeed in that is a sign, but most of them were not to be believers.

Surah Ash-Shu’ara, Ayahs 176-190 (26: 176-190) Translation: Sahih International

Reference: Story of Prophet Shuaib (Alayhi As-Salām). A chapter from “Stories of the Prophets” by Imam Ibn Kathir (Rahmatullah Allaih).

People may think that nowadays we have numerous deceitful business in our society, so why don’t Allah punish us for that? It is because of the dua of the Prophet Muhammad (Sallallahu Alayhi Wasallam), it is for his dua we are being saved from the Ahzab of Allah in this world. The Quran mentions one of his best duas:

If You should punish them – indeed they are Your servants; but if You forgive them – indeed it is You who is the Exalted in Might, the Wise.

Surah Al-Maidah, Ayah 118 (5:118) Translation: Sahih International

When a buyer wants to return an item for some reason, perhaps it may be because it is faulty or some other valid reason, he has the right to annul his transaction and return the item and the seller must accept it given the fact that there is a valid reason for annulling the transaction.

Abdullah ibn ‘Umar (Radi Allahu Anhu) reported Allah’s Messenger (Sallallahu Alayhi Wasallam) as saying: “When two persons enter into a transaction, each one of them has the right to annul it so long as they are not separated, or their transaction gives one another (as a condition) the right of annulling, and if their transaction, has the right of annulling it the transaction becomes binding.” Ibn Abi Umar made this addition that whenever he (Ibn Umar) entered into a transaction with a person with the intention of not breaking it, he walked a while and then returned to him.

Reference: Sahih Muslim

Nowadays we see that shops have this rule of “No Return Policy”, we should understand that Islam does not permit this. The annulation of transaction does not harm our business, rather it allows us to create a bond between the buyers and the sellers.

A sale needs to be done based on a mutual consent between the buyer and seller which means both the party needs to be satisfied with their transaction. Hadith says:

The Prophet (sws) is reported to have said: A sale is a sale only if it is made through mutual consent.

Reference: Sunan Ibn Majah, Hadith 2176

A Hadith mentions of the blessing of being courteous when engaging in a transaction:

Prophet Muhammad (Sallallahu Alayhi Wasallam) has said that “Almighty Allah’s mercy descends on one who is gentle at the time of buying, selling, and requesting payment.”

Reference: Jami at-Tirmidhi

When we take loan from someone, we all need to pay it as soon as possible. Hadith says:

Narrated Abu Huraira (Radi Allahu Anhu) Allah’s Apostle (Sallallahu Alayhi Wasallam) said, “Procrastination (delay) in repaying debts by a wealthy person is injustice.”

Reference: Sahih Bukhari, Volume 3, Book 41, Hadith 585.

When we engage in transaction all of us need to give a fair pay to our seller. The classical Islamic scholars have recommended us to follow this principle:

“Live like brothers (and sisters) but conduct transactions with each other live like strangers”

Reference: Al-Mustatraf fi Kulli Fannin Mustadhraf by Imam Muhammad Ibn Ahmed al-Ibsihi (Rahmatullah Allaih) Volume 1, page 70.

Mufti Muhammad Taqi Uthmani Saheb described this statement as: “The lesson conveyed in this statement is that as far as our social lives are concerned we should treat one another like brothers. As much as possible we should assist one another and overlook one another’s shortcomings. However, when it comes to money matters or aspects pertaining to property or partnerships, or the distribution of shares, etc., one should determine and clarify these matters like two total strangers. ust as two strangers would clarify the minutest detail, we should likewise conduct our transactions to the same degree of clarity and leave no ambiguity whatsoever. No aspect should be left totally in the dark, nor should anything be even minutely unclear.”

Reference: This is an excerpt taken from an article titled: “LIVE LIKE BROTHERS – DEAL LIKE STRANGERS” which is a translation of an article by Hazrat Mufti Muhammad Taqi Uthmani Saheb. The original article, titled, “Mua’malaat Ki Safai Aur Tanazu ‘aat“, was published in the July-94 issue of the monthly Urdu magazine Al-Balaagh.

All of our transaction thus should be as transparent as possible, all necessary details need to be outlined for us to keep peace. Only then can we hope to see a healthy economy in our society.


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