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Islamic Law of Transaction - Legitimacy, Definitions, and General Rules of Sale in Islam
In Islamic law, a sale (bayʿ) means exchanging one item for another. The Arabic word bayʿ is used for both buying and selling, as mentioned in the Qur’an in verses [12:20] and [2:102].
The word bayʿ comes from the Arabic word bāʿ, meaning “arm,” because people stretch out their arms to give or receive items during a transaction. Another explanation is that people used to shake hands after completing a deal. Because of this, another Arabic word for a sale agreement is ṣafqa, which literally means “a handshake.”
Sales and trade are lawful and permitted in Islam. Their legitimacy is supported by the Qur’an, the Sunnah (teachings and traditions of Prophet Muhammad ﷺ), and the consensus (ijmāʿ) of Islamic jurists.
The Qur’an clearly allows trade and commercial transactions. Allah says: “But Allah has permitted trade” [2:275]. The Qur’an also encourages proper commercial dealings by stating: “Take witnesses whenever you make a commercial contract” [2:282]. Another verse says: “Let there be trade among you by mutual consent” [4:29]. Allah also says: “It is no crime for you to seek the bounty of your Lord” [2:198], meaning that earning through lawful trade and business is permissible.
The Sunnah of Prophet Muhammad ﷺ also supports lawful trade. The Prophet ﷺ was once asked which type of income is the best. He replied that the best income comes from a person’s own work and from every lawful and honest sale, meaning a transaction free from cheating and betrayal.
In another Ḥadīth, the Prophet ﷺ said: “A sale must be by mutual consent.” This shows that both the buyer and seller must willingly agree to the transaction without force or deception.
The Prophet ﷺ also accepted trade as a normal and lawful activity among people during his time. He praised honest business people by saying that a truthful and trustworthy trader will be among the prophets, the righteous, and the martyrs in the Hereafter. This Ḥadīth was narrated by Al-Tirmidhi and classified as ḥasan (good).
There is also agreement (ijmāʿ) among Muslims that sales are permissible. Islamic scholars agree that trade is necessary because it helps people fulfil their needs by cooperating and exchanging goods and services with one another. For this reason, the general rule in Islamic law is that all sales are permissible unless there is clear evidence that a specific type of sale is forbidden.
Al-Shafi‘i explained that the basic rule for all sales is permissibility as long as the transaction is carried out by capable people who willingly consent to it. However, any type of sale specifically prohibited by Prophet Muhammad ﷺ, or anything very similar to a prohibited transaction, is not allowed. Anything outside those prohibited matters remains lawful based on the Qur’anic verses that permit trade and commercial dealings.
According to the Hanafi School jurists, a sale is the exchange of a lawful and owned item (māl) for another item in a beneficial and specific manner. This definition excludes exchanges that bring no real benefit, such as swapping one identical coin for another identical coin. It also excludes worthless or prohibited items, such as dead animals or dust, because they are not considered valuable in Islamic law.
The Hanafi jurists also explained that a commodity or property (māl) must be something desirable and capable of being stored for future use. An object can be recognised as property if people generally see it as useful and valuable.
Mustafa Al-Zarqa criticised this definition and suggested a broader meaning. He defined property as any identifiable object that has material value to people.
Based on the Hanafi view, services and simple rights are not usually considered commodities because they are not physical objects that can be stored. However, the majority of Islamic jurists (fuqahāʾ) consider services and rights capable of ownership because the real benefit of physical property often comes from its use (usufruct).
Al-Nawawi defined a sale as the exchange of one owned item for another together with the transfer of ownership from one person to another.
Similarly, Ibn Qudamah defined a sale as an exchange that not only transfers ownership, but also allows the new owner to take possession of the item.
In all cases, a sale in Islamic law must be based on a contract that includes an offer (ījāb) and an acceptance (qabūl) between the parties involved.
Case Scenario: Permissible and Impermissible Sales in Islam
Ahmad sells his bicycle to Bilal for RM500. Ahmad legally owns the bicycle, while Bilal owns the money. Ahmad offers to sell the bicycle, and Bilal willingly accepts the offer. After payment, Bilal takes possession of the bicycle. Ahmad also honestly informs Bilal that the bicycle has a small scratch. This is a valid and permissible sale because there is lawful ownership, mutual consent, honesty, benefit, offer and acceptance, and transfer of ownership.
In another example, Sarah pays a tutor for online teaching services. Although Hanafi jurists may not classify services as physical commodities, the majority of Islamic scholars allow such transactions because the service provides recognised value and benefit to people.
However, if Ahmad forces Bilal to buy the bicycle, cheats him, or hides serious defects in the item, the transaction would go against the Islamic principles of mutual consent and honesty. Likewise, exchanging one identical RM10 note for another without any added benefit, or selling prohibited and worthless items such as dead animals or dust, would not be regarded as valid sales in Islamic law.
In Islamic law, a sale (bayʿ) means exchanging one item for another. The Arabic word bayʿ is used for both buying and selling, as mentioned in the Qur’an in verses [12:20] and [2:102].
The word bayʿ comes from the Arabic word bāʿ, meaning “arm,” because people stretch out their arms to give or receive items during a transaction. Another explanation is that people used to shake hands after completing a deal. Because of this, another Arabic word for a sale agreement is ṣafqa, which literally means “a handshake.”
Sales and trade are lawful and permitted in Islam. Their legitimacy is supported by the Qur’an, the Sunnah (teachings and traditions of Prophet Muhammad ﷺ), and the consensus (ijmāʿ) of Islamic jurists.
The Qur’an clearly allows trade and commercial transactions. Allah says: “But Allah has permitted trade” [2:275]. The Qur’an also encourages proper commercial dealings by stating: “Take witnesses whenever you make a commercial contract” [2:282]. Another verse says: “Let there be trade among you by mutual consent” [4:29]. Allah also says: “It is no crime for you to seek the bounty of your Lord” [2:198], meaning that earning through lawful trade and business is permissible.
The Sunnah of Prophet Muhammad ﷺ also supports lawful trade. The Prophet ﷺ was once asked which type of income is the best. He replied that the best income comes from a person’s own work and from every lawful and honest sale, meaning a transaction free from cheating and betrayal.
In another Ḥadīth, the Prophet ﷺ said: “A sale must be by mutual consent.” This shows that both the buyer and seller must willingly agree to the transaction without force or deception.
The Prophet ﷺ also accepted trade as a normal and lawful activity among people during his time. He praised honest business people by saying that a truthful and trustworthy trader will be among the prophets, the righteous, and the martyrs in the Hereafter. This Ḥadīth was narrated by Al-Tirmidhi and classified as ḥasan (good).
There is also agreement (ijmāʿ) among Muslims that sales are permissible. Islamic scholars agree that trade is necessary because it helps people fulfil their needs by cooperating and exchanging goods and services with one another. For this reason, the general rule in Islamic law is that all sales are permissible unless there is clear evidence that a specific type of sale is forbidden.
Al-Shafi‘i explained that the basic rule for all sales is permissibility as long as the transaction is carried out by capable people who willingly consent to it. However, any type of sale specifically prohibited by Prophet Muhammad ﷺ, or anything very similar to a prohibited transaction, is not allowed. Anything outside those prohibited matters remains lawful based on the Qur’anic verses that permit trade and commercial dealings.
According to the Hanafi School jurists, a sale is the exchange of a lawful and owned item (māl) for another item in a beneficial and specific manner. This definition excludes exchanges that bring no real benefit, such as swapping one identical coin for another identical coin. It also excludes worthless or prohibited items, such as dead animals or dust, because they are not considered valuable in Islamic law.
The Hanafi jurists also explained that a commodity or property (māl) must be something desirable and capable of being stored for future use. An object can be recognised as property if people generally see it as useful and valuable.
Mustafa Al-Zarqa criticised this definition and suggested a broader meaning. He defined property as any identifiable object that has material value to people.
Based on the Hanafi view, services and simple rights are not usually considered commodities because they are not physical objects that can be stored. However, the majority of Islamic jurists (fuqahāʾ) consider services and rights capable of ownership because the real benefit of physical property often comes from its use (usufruct).
Al-Nawawi defined a sale as the exchange of one owned item for another together with the transfer of ownership from one person to another.
Similarly, Ibn Qudamah defined a sale as an exchange that not only transfers ownership, but also allows the new owner to take possession of the item.
In all cases, a sale in Islamic law must be based on a contract that includes an offer (ījāb) and an acceptance (qabūl) between the parties involved.
Case Scenario: Permissible and Impermissible Sales in Islam
Ahmad sells his bicycle to Bilal for RM500. Ahmad legally owns the bicycle, while Bilal owns the money. Ahmad offers to sell the bicycle, and Bilal willingly accepts the offer. After payment, Bilal takes possession of the bicycle. Ahmad also honestly informs Bilal that the bicycle has a small scratch. This is a valid and permissible sale because there is lawful ownership, mutual consent, honesty, benefit, offer and acceptance, and transfer of ownership.
In another example, Sarah pays a tutor for online teaching services. Although Hanafi jurists may not classify services as physical commodities, the majority of Islamic scholars allow such transactions because the service provides recognised value and benefit to people.
However, if Ahmad forces Bilal to buy the bicycle, cheats him, or hides serious defects in the item, the transaction would go against the Islamic principles of mutual consent and honesty. Likewise, exchanging one identical RM10 note for another without any added benefit, or selling prohibited and worthless items such as dead animals or dust, would not be regarded as valid sales in Islamic law.
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