Islam intends to form solid social order of society, where every individual is bound by brotherhood and affection as one universal family which is not limited by geographical boundary .
يأَيُّهَا النَّاسُ إِنَّا خَلَقْنكُمْ مِنْ ذَكَرٍ وَأُنْثَى وَجَعَلْنكُمْ شُعُوْبًا وَقَبَائِلَ لِتَعَارَفُوْا
"O mankind! We have created you from a male and a female, and made you into nations and tribes, that you may know one another".
To realize and preserve this social order of society, Islam prohibits all kinds of deceit and fraud in every activities of mu'amalah, because they can harm the social order of society what Islam yearn for . Islam explains, verily, all kinds of trades with deceit and fraud inside by doing prevarication will never get God's blessing. The holy Prophet -peace be upon him- said:
البَيِّعَانِ بِالْخِيَارِ مَالَمْ يَتَفَرَّقَا فَإِنْ صَدُقَ البَيِّعَانِ وَبَيَّنَا بُوْرِكَ لَهُمَا فِي بَيْعِهِمَا وَإِنْ كَذَبَا وَكَتَمَا فَعَسَى أَنْ يَرْبَحَا رِبْحًا مَا وَتُمْحَقُ بَرَكَةُ بَيْعَتِهِمَا
On such occasions, it is necessary to research those forbidden elements in order to form the insurance which conform to Islamic law.
1. Riba
The Arabic word riba literally means increase in or addition to (ziyadah), which is payment addition on financial principal of loan . Al-Jurjani formulated the usury definition as below:
الرِّبَا فِي الشَّرْعِ هُوَ فَضْلٌ خَالٍ عَنْ عِوَضٍ شُرِطَ لأَحَدِ العَاقِدَيْنِ
Terminologically, riba is excess free from payment devoid of recompense required to the hold one of parties.
Rahman, after studying various forms of business and credit transaction, containing the element of riba which were in vogue in Arabia during the time of the Holy Messenger -peace be upon him-, defined the riba as a predetermined excess or surplus over and above the loan capital received by the creditor conditionally in relation to a specified period. It contains the following three elements:
a) Excess or surplus over and above the loan capital.
b) Determination of this surplus in relation to time.
c) Bargain to be conditional on payment of a predetermined surplus to the creditor .
Clearly, Allah prohibited the usury in any types. This prohibition is based on qur'anic verses:
الَّذِيْنَ يَأْكُلُوْنَ الرِّبَوا لاَ يَقُوْمُوْنَ إِلاَّ كَمَا يَقُوْمُ الَّذِيْ يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ذلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا البَيْعُ مِثْلُ الرِّبَوا وَأَحَلَّ اللهُ البَيْعَ وَحَرَّمَ الرِّبَوا
“But those who devour interest cannot stand except like the one whom Satan was bewitched and maddened by his touch. They have been condemned to this condition because they say, Trade is just like interest, whereas Allah has permitted trade and forbidden interest”.
يَأَيُّهَا الَّذِيْنَ أمَنُوا اتَّقُوا اللهَ وَذَرُوْا مَا بَقِيَ مِنَ الرِّبَوا إِنْ كُنْتُمْ مُؤْمِنِيْنَ
“O Believers, fear Allah and give up what is still due to you from interest, if you are true believers”.
Muslim jurists never stop discussing the interest limitation. They agree in prohibiting the riba, but differ in determining the savings interest. Dr. Muhammad Hatta differentiates between riba and savings interest. In his opinion, riba merely occurs in the consumptive loan with the high return addition. And the savings interest occurs in the productive loan with the low return addition, which as the yield of capital .
Yet practically, it is difficult to differentiate between riba and savings interest, because actually they are equal in complicating the loaner .
Dr. Yusuf Al-Qardhawi argued strictly the permitting of productive riba. He maintained his argument with the historical fact proofed that the dominant riba in the pre-Islamic epoch was not consumptive riba. If there was so, the case was rare and could not be the measuring rod of this permitting. However, the riba which commonly used to be done in trade expedition in that era was productive riba .
If the sort of forbidden riba was merely consumptive, Prophet Muhammad -peace be upon him- would not curse the manager of riba as much as he cursed the eater. However he cursed those eater, manager, writer and witness of riba as mentioned in his saying:
عَنْ جَابِرٍ قَالَ لَعَنَ رَسُوْلُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ آكِلَ الرِّبَا وَمُؤْكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ
From Jabir, he said that Messenger of Allah -peace be upon him- cursed those eater, manager, writer and two witnesses of riba, and he -peace be upon him- said: “they are equal”
Also, Qardhawi opposed the legalization of riba because of its small percentage. . Thus, no differences in law status between riba and savings interest, both are unallowable.
2. Maisir
The Arabic word maisir literally means an ancient Arabian game of change (forbidden by the Koran) played with arrows without heads and feathering, for stakes of slaughtered and quartered camels . Rahman defined maisir as getting something too easily without hard labour, or receiving a profit without working for it; therefore it is called gambling .
The Arabic word “azlam” used in the Qur’an also refers to the practice of gambling. Maisir on other hand applies to all this forms by which wealth is acquired or divided by devices of chance, for example, lottery, betting, wagering or gambling.
Thus gambling in general (maisir) and raffling in particular way (azlam) and all forms of betting, raffling or lottery which, on principle, come under gambling forms are prohibited in Islam . Islam prohibited all forms of business in which monetary gain comes from mere chance speculation and conjecture and not from work. This prohibition is clearly mentioned in Holy Qur’an:
يَأَيُّهَا الَّذِيْنَ أمَنُوْا إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالأَنْصَابُ وَالأَزْلاَم ُرِجْسٌ مِنْ عَمَلِ الشَّيْطانِ فَاجْتَنِبُوْهُ لَعَلَّكُمْ تُفْلِحُوْنَ
“O yee believers! Wine and gambling and divining stones and arrows are an abomination of Satan’s handiwork. Leave it aside in order that you may prosper”.
وَأَنْ تَسْتَقْسِمُوا بِالأَزْلاَمِ ذلِكَ فِسْقٌ
“(Forbidden) also is the division (of meat) by raffling with arrows, that is impiety”.
Prophet Muhammad -peace be upon him- had prohibited many business practices including maisir. Those practices are:
a. Habal-al-Habla
It is narrated by Abdullah bin Omar the Holy Messenger -peace be upon him- forbade the sale called Habal-al-Habla which was a kind of sale practiced in the pre-Islamic days of ignorance period. In this sale one would pay the price of a she-camel which was not born yet but would be borne by the immediate offspring of an expectant she-camel.
عَنْ عَبْدِاللَّهِ بْنِ عُمَرَ رَضِي اللَّه عَنْهمَا أَنَّ رَسُولَ اللَّهِ صَلَّى اللَّه عَلَيْهِ وَسَلَّمَ نَهَى عَنْ بَيْعِ حَبَلِ الْحَبَلَةِ وَكَانَ بَيْعًا يَتَبَايَعُهُ أَهْلُ الْجَاهِلِيَّةِ كَانَ الرَّجُلُ يَبْتَاعُ الْجَزُورَ إِلَى أَنْ تُنْتَجَ النَّاقَةُ ثُمَّ تُنْتَجُ الَّتِي فِي بَطْنِهَا
“From Abdullah bin Omar -may Allah be pleased with both-, verily Holy Messenger -peace be upon him- forbade the sale called Habal-al-Habla which was a kind of sale practiced in the pre-Islamic days of ignorance period. In this sale one would pay the price of a she-camel which was not born yet but would be borne by the immediate offspring of an expectant she-camel”.
b. Muzabanah and Muhaqalah
Muzabanah was the exchange of fresh fruit for dry ones in a way that the quantity of dry fruit was actually measured and fixed, but the quantity of fresh fruit given in exchange was guessed while still on the trees. Likewise muhaqalah was the sale of wheat in exchange for wheat in ear which was estimated by conjecture while still in ears . It is reported by Ibnu Abbas that God’s Messenger -peace be upon him- forbade the transactions of muhaqalah and muzabanah:
عَنِ الشَّيْبَانِيِّ عَنْ عِكْرِمَةَ عَنِ ابْنِ عَبَّاسٍ رَضِي اللَّه عَنْهم قَالَ نَهَى النَّبِيُّ صَلَّى اللَّه عَلَيْهِ وَسَلَّمَ عَنِ الْمُحَاقَلَةِ وَالْمُزَابَنَةِ
“From Syaibany, from ‘Ikrimah and from Ibnu Abbas -may Allah be pleased with them- said that Holy Prophet -peace be upon him- forbade the transactions of muhaqalah and muzabanah”
c. Mukhabarah
Mukhabarah refers to the sale of fruit or grain or vegetables before ripening . It was forbidden by the Holy Prophet -peace be upon him- in order to protect the interest of buyer during the period of purchase before ripening when many kinds of diseases, storms, could destroy the fruit or corn crops and ruin the buyer.
عَنْ عَطَاءٍ سَمِعَ جَابِرَ بْنَ عَبْدِاللَّهِ رَضِي اللَّه عَنْهم نَهَى النَّبِيُّ صَلَّى اللَّه عَلَيْهِ وَسَلَّمَ عَنِ الْمُخَابَرَةِ وَالْمُحَاقَلَةِ وَعَنِ الْمُزَابَنَةِ وَعَنْ بَيْعِ الثَّمَرِ حَتَّى يَبْدُوَ صَلَاحُهَا…
“From ‘Athaa’, he listened Jabir bin Abdillah -may Allah be pleased with them- said that Prophet -peace be upon him- forbade mukhabarah, muhaqalah, muzabanah and sale of fruit before ripening”.
d. Mulamasah and Munabadzah
Mulamasah is a sale in which the deal is completed if the buyer touches a thing without seeing or checking it properly. And Munabadzah is a sale in which the deal is completed when the seller throws a thing towards the buyer giving him no opportunity to see, touch or check it. Abu Saeed said that the Holy Prophet -peace be upon him- forbade them in Hadith:
عَنِ ابْنِ شِهَابٍ قَالَ أَنَّ رَسُولَ اللَّهِ صَلَّى اللَّه عَلَيْهِ وَسَلَّمَ نَهَى عَنِ الْمُنَابَذَةِ وَهِيَ طَرْحُ الرَّجُلِ ثَوْبَهُ بِالْبَيْعِ إِلَى الرَّجُلِ قَبْلَ أَنْ يُقَلِّبَهُ أَوْ يَنْظُرَ إِلَيْهِ وَنَهَى عَنِ الْمُلَامَسَةِ وَالْمُلَامَسَةُ لَمْسُ الثَّوْبِ لَا يَنْظُرُ إِلَيْهِ
“From ibni Syihab, he said that God’s Messenger -peace be upon him- forbade munabadzah, it is a sale in which the deal is completed when the seller throws or puts a garment on the buyer giving him no opportunity to overturn and see it. And also forbade mulamasah, it is the sale of thing with touching without seeing it”.
Both these forms of sale are gambling. Two persons may agree to exchange one thing for another without seeing or checking either of them. The whole transaction in both forms of sale is based on sheer change or conjecture.
3. Gharar
The Arabic word gharar literally means risk, hazard, jeopardy, danger and peril . Etimologically, there are many definitions of gharar; Scholars of Maliky defined gharar as unknown event which may happen or not and may be gotten or missed. Scholars of the Shafiite persuasion defined gharar as unknown consequences of everything and more frightening peril . According to Imam Ibn Taymiya gharar is involved when one does not know what is in store for one at the end of business venture or bargain . More clearly, Ibn Qoyyim defined gharar as measureless supply in the existence or non-existence of the goods, such as selling the fled slave and wild camel.
Based on many foregoing definitions, Rahman divided the concept of gharar into two groups:
a) The element of peril or risk involving doubt, probability, and uncertainty is dominant.
b) The element of doubt due to the deceit or fraud on the part of one of the parties in paramount .
The Holy Qur'an has explicitly forbidden all business transactions including injustice in any form to any of the parties; it may be in the form of deceit or fraud, or undue advantage or peril leading to uncertainty in the business or any dealings. And in the business contract, Islam enjoined the clear and certain element with doing full measure and full balance in trading. Allah Almighty said:
وَأَوْفُوا الكَيْلَ وَالْمِيْزَانَ بِالقِسْطِ لاَ نُكَلِّفُ نَفْسًا إِلاَّ وُسْعَهَا
"He has enjoined that you should use full measure and a full balance. We charge you only with that much responsibility that you can bear".
Prophet Muhammad -peace be upon him- had prohibited many business practices including injustice and gharar in his Hadith, whether gharar owing to doubt and probability or gharar due to fraud and deceit. Those practices are :
e. The sale of fish in the water that is not yet caught.
f. The sale of bird in the air, because in the one case it is free and not property.
g. The sale of a fetus in the womb, because it may be born deathly.
h. The sale of catches that still in the trap, because the game-catcher may or may not catch any thing at all.
i. The sale of milk in the udder, because there is the possibility of fraud. The udder may be void of milk, and full of wind, or other might be implicated in the sale something not properly
4. Jahala
Jahala signifies an unspecified element in the quality, quantity or price of a thing. It seems something unknown or not known, leading to uncertainty in the outcome .
Any sale contract or business transaction that contains an element jahala is unlawful. For example, when one of the parties to a contract says to the other, “I sell you one of my sheep for Rp. 300.000,- “this is likely to lead the argument and dispute from the very beginning because the specification of the sheep is vague and not known. The buyer would naturally ask for the best sheep in the flock, whereas the seller would like to give the worst.
The sale is invalid if any quantity or quantity of a commodity can only be judged by conjecture. It is therefore unlawful to sell dates growing on tree in exchange for dates which have been picked, are computed from conjecture to be equal in amount to those that are no the tree as explained under the section of gambling .
In short, any type of transaction which leads to uncertainty with regard to the price to be paid, or the quantity or quality of the object of the sale or the time of payment and the completion of the sale contract, is invalid.
The Holy Messenger -peace be upon him- required to specify the terms and conditions and the time of payment in every transactions. The purpose of this instruction is to make them fair and eliminate the element of uncertainty from them as far as possible. It is narrated by Ibn Abbas that when the Holy Prophet -peace be upon him- came to Medina, the people were paying one, two or three years in advance for dates, so he said to the, “Whosoever pays in advance the price of a thing to be delivered later should pay for a specified measure and weight with a specified period” .
