Understanding Money in Islam #

Original question: I was wondering what are the rulings on auctions and how does it relate to biddings and situations nowadays , for example ebay etc where similar functions exist

Answer: In fiqh terminology, the act of purchasing and selling through an auction is known as “Bay’ al-Muzayadah.” According to the teachings of Shariah, it is viewed as a lawful practice based on the hadith below:

Sayyiduna Anas ibn Malik (may Allah be pleased with him) narrates that “the Messenger of Allah (ﷺ) once sold a saddle and bowl through auction. He asked: ‘Who will buy this saddle and bowl from me?’ A companion said: ‘I will buy it for one Dirham.’ The Messenger of Allah (peace be upon him) replied: ‘Who will increase on one Dirham?’ Another companion gave him two Dirhams, so the Messenger of Allah (ﷺ) sold the two items to him” (Sunan Tirmizi, no. 1218).

Additionally, the hadith in which the Messenger of Allah (ﷺ) said, “None amongst you should outbid another in a transaction” (Sahih Muslim, no. 1412) refers to a scenario where two parties have agreed on a price, and a third person comes to offer a better deal.

Imam Nawawi states in Syarh Sahih Muslim when explaining the hadith:
“As for transacting a sale over the sale transaction of your brother, the example is when a (third) person says to a buyer during the option to rescind period (khiyar) that: Rescind your purchase, and I will sell you a similar item at a cheaper price, or a better-quality item for the same price, and so on. This (practice) is unlawful.

Also, it is unlawful to transact a purchase over the purchase transaction of your brother, (for example) a third person says to a seller during the option to rescind period (khiyar) that: Rescind your sale, and I will buy from you at a higher price and so on.

As for bargaining over the transaction of your brother, (for example) is when both parties (seller and buyer) have agreed on the transaction, but it has not materialized, and a third person says to the seller: I will purchase it instead; this is unlawful after the price is agreed upon (both parties).”

Therefore, it is permissible to use platforms such as eBay for auctioning, as the seller does not agree to sell an item to any of the bidders; rather, they anticipate the highest bid and then sell it accordingly. However, it is crucial to remember two things when participating in virtual auctions:

Firstly, the specifications and details of the item being purchased must be clear and free from excessive ambiguity, as bay’ al-gharar (sale of an item with excessive ambiguity) is unlawful in Shariah.

Secondly, it is important to ensure that the auctioneer is legitimate by reviewing their past sales to avoid any scams.

May Allah guide us all to make transactions that are permissible and pleasing to Him. And Allah knows best.