A type of shari’a-incompatible sale (invalid sale or bay’ ghair sahih) that combines a normal sale with a condition (shart) of salaf (i.e., lending). In this sale, a buyer would say to a seller: “I purchase your goods for such and such if you lend me such and such”. For example, a buyer, willing to purchase $5,000 worth of wheat may require a seller to lend him $3000 in cash, for the transaction to conclude. Invalidity of bay’ and salaf is based on the explicit hadith: “it is impermissible to combine a sale contract with a lending contract” (narrated by Abu Dawood and al-Termizhi). One modern transaction that is based on the broader concept of bay’ and salaf is the case of an individual who wants to trade on a stock exchange, and is forced to deal through a broker (margin lender). The broker sets as condition that dealing should be carried out through his facilities. This transaction combines a commutative contract (the brokerage service) and a noncommutative contract (the lending). As a result, the trading is tantamount to a loan (qardh) that brings about an excess (benefit) to the lender, which is prohibited by shari’a.
Islamic Finance
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