In the last two editions, we discussed pricing and profit. In this edition, we present some additional issues on pricing. Will it be permissible for one to increase the price of a commodity in return for troubles endured? For instance, will it be okay for one to buy some products from a place that is far away and then sell them at a slightly higher price due to transporting them and pains that one underwent? Is this considered Riba? The simple reaction to this is that there is no harm in that. If one bought them for himself and he paid the price then he carried them to another land and sold them for some profit in return for your work. Transporting them and tying up your money in them and so forth; this is just as the rest of the people get profit from the products that they purchase.
However, if you bought the products for your friend who appointed you as an agent and paid you his money so that you could buy the products for him and you did that you may not take any extra from him. The only exception is regarding what you yourself paid of the price, and the cost of carrying and transporting the goods and so forth. What if one conspires secretly to prevent an increase in the price of an item? For instance in a public auction where the buyers attend, then the buyers devise a scheme to benefit some of them in profit. They work together in a way that the seller or the owner of the product does not know.
What will happen is that everyone who is interested in the item will stop bidding (at a low price) because they are actually partners. The goal behind this is to prevent an increase in the price of the product. Would this kind of sale be correct? Secret conspiring by the buyers in an auction or any other sale in order to stop the price of the product at a specific limit and their scheming to prevent any increase in the price is forbidden. This is due to what that contains of despised selfishness and harm to the owners of the products. Both selfishness and harm of a person against someone else is prohibited and they are despicable characteristics that are not befitting of the Muslims. Islamic Law is not pleased with such characteristics. This practice also is contained in the meaning of fixing prices unnecessarily and the issue of meeting the caravan (i.e. before it comes to the market to adjust the prices) and similar practices which contain harming of an individual or a group by others.
This also fosters grudges and ill feelings and it leads to devouring the wealth of the people in falsehood. Indeed the Prophet (salallahu alayhi wa sallam) prohibited meeting the trade caravan (before reaching the markets in order to fix prices) the city dweller selling for the desert dweller and fixing prices unnecessarily. He also forbade a man offering to buy while his brother has already made an offer his offering a sale while his brother is attempting to make the sale his proposing to a woman while his brother has already proposed to her and whatever is similar to this in meaning. This is due to what these things contain of injustice harm and causing grudges. Based upon this, the seller who has been tricked into not getting more profit from (the price of) his product is given the choice if it becomes evident that he was cheated out of his product. If he wishes, he may request to cancel the sale and if he wishes he may let it go.
This article was culled from the publications of Deen Communication Limited