benchmark in determining whether
possession has taken place would be
to assess whether there has been a
transfer of risk and liability. It should
be noted that the buyer may appoint
a third-party to take possession on
his/her behalf and that also would be
sufficient. Upon the third-party taking
possession on the buyer’s behalf, it
would be permissible for the buyer to
sell the item forward.
Proof: Hakim ibn Hizam g narrates,
“I told the Messenger of Allah s that
I buy and sell often and asked him
what is permissible when buying and
selling and what is impermissible. He
then told me not to sell any item until
I have possession of it” (Musnad Abu
Dawud).
‘Abdullah ibn ‘Amr narrates that the
Messenger of Allah s prohibited profiting
from an item one is not liable
for (Nisa’i).
Practical applications: The aforementioned
scenario is a primary example
of a dropshipping business model.
This principle is applicable to such
business models. Another place where
this principle may be applicable is in
selling stocks before settlement.
Note: Contemporary jurists have
discussed other Shari‘a-compliant
alternatives to dropshipping. The
details of such alternative schemes
are outside the scope of this article.
For more details, one may refer to reliable
scholars well-versed in Islamic
Finance.
Principle #3: It is not permissible for
there to be ambiguity/uncertainty in
the product or price.
Scenario: Ayesha starts a subscription
business in which subscribers
receive brand new toys for their kids
every month. The toys are not known
beforehand and are randomly chosen
according to the profile of the child.
Ruling: Impermissible
Explanation: Shari‘a does not allow
uncertainty in transactions. The price
and product should be clear and unambiguous
with no room for dispute.
Thus, whenever the price of a product
is not fixed (e.g. the exact price of a
product is variable or contingent on
a certain index) or the product is not
fixed (e.g. a lottery ticket or a machine
in which you pay for an undetermined
prize), such a transaction
would not be permissible.
Proof: Abu Hurayra g narrates that
the Messenger of Allah s prohibited
sales with uncertainty (Tirmizi).
Practical applications: An example of
a product having uncertainty is when
a person buys into a raffle draw in
hopes of winning a prize. Since there
is uncertainty regarding the prodcontinued
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