Hadith on Riba #11

Table of content

Theme: Other Business Transactions That Are Considered Riba

The Prophet (ï·º) said:

“It is not permissible to have (contract in) sale with loan agreement, nor to have two conditions in one transaction, nor profit arising from something which is not in one’s charge, nor selling what is not in your possession.”

Narrated by ‘Amr bin Shu’aib, from his father ,from his grandfather رضي الله عنهما

(Source: Sunan Abi Dawood, No. 3504)

A sale with a loan agreement can be of two forms:

  1. Stipulating a sale condition while contracting in a loan agreement. For example, I will lend you $100 if you buy/lease these goods for $150.
  2. Stipulating a loan condition while contacting in a sale agreement. For example, I will buy/lease these goods for $X if you lend me $X.

For the first example, it is prohibited because the loan agreement brings monetary benefit (or in-kind benefit) to the creditor, which is a form of riba.

As for the second example, the majority of jurists agreed on its prohibitions, but the reason differs across the four mazahib. The Hanafis view a loan condition in a sale contract as a condition that brings exclusive benefit to one party, which is prohibited. The Malikis view the prohibition as blocking the means to riba. The Shafiites, on the other hand, view the prohibition due to price ambiguity, while the Hanbali view it as two transactions combined as one, which is prohibited.

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