Islamic Rules Concerning
There are many examples of financial dealings
among Muslims leading to disagreements, strain in relationships and even
fights, instead of leading, as they normally should, to strengthening the
bond of Muslim brotherhood and to mutual benefit. Almost everyone in our
community must know cases, in which two or more Muslims become partners
in a business or one gives a loan to another brother and the result is
mutual pain instead of mutual benefit.
On the basis of such examples many Muslims have decided that it is better
not to deal with other Muslims in any way, but this negative solution is
not very Islamic, since it is not quite consistent with the spirit of Muslim
A more positive solution would be to revive the teachings of Islam regarding
financial transactions; teachings which, if revived, could make such transactions
far more pleasant and profitable and greatly increase the financial power
of the community.
All dealings between human beings, financial and otherwise, are based on
some expressed or implicit agreements. Honouring these agreements is the
key to happy and smooth relationships among members of a community or society.
The Holy Qur'an therefore stresses this principle again and again. In several
places the Holy Qur'an lists fulfilment of one's commitments among the
most important characteristics of a believer.
In other verses honouring agreements is given as a commandment:
"(Believers are those) who
are faithful to their trusts and to their commitments." [Qur'an 23:8]and
"Those who fulfil their commitments when they make them."
The failure to honour agreements is one of the primary causes of difficulties
in dealings among human beings. This is true especially of financial dealings.
If we analyse broken business partnerships or other difficulties in dealings
of a financial nature, we will in every case find that these difficulties
resulted from a failure on the part of one or more parties to fulfil some
agreement implicit in those dealings.
"O Believers: Honour your contracts"
"And fulfil every commitment. Surely every
commitment will be asked about (on the day of judgement)." [Qur'an
There are four possible reasons why any party may fail to fulfil an
agreement: due to failure of memory, due to differing understandings of
the terms of the agreement, due to bad faith or due to circumstances beyond
the control of the party or parties concerned. The Qur'an and Hadith give
guidance aimed at countering each of these causes of a breech of agreement.
Writing and Witnessing
To avoid failure of memory and to reduce the chances of misunderstanding
and bad faith, the Qur'an commands the writing of financial deals and/or
having the deal confirmed by witnesses. The Qur'anic commandment is contained
in the following two verses, the first of which is the longest verse in
In these verses the Qur'an distinguishes between two types of financial
transactions: those that involve credit for a definite period and those
that are carried out on the spot. Examples of the first type include loans
for a definite period, purchase or sale of goods with either the payment
or delivery of goods promised for some fixed time in the future, while
the examples of the second type include buying something in a shop on a
"O You who have attained to faith!
Whenever you give or take credit for a stated term, set it down in writing.
And let a scribe write it down equitably between you; and no scribe shall
refuse to write as God has taught him: thus shall he write. And let him
who contracts the debt dictate; and let him be conscious of God, his Sustainer,
and not weaken anything of his undertaking. And if he who contracts the
debt is weak of mind or body, or is not able to dictate himself, then let
him who watches over his interests dictate equitably. And call upon two
of your men to act as witnesses; and if two men are not available, then
a man and two women from among such as are acceptable to you as witnesses,
so that if one of them should make a mistake, the other could remind her.
And the witnesses must not refuse (to give evidence) whenever they are
And be not loath to write down every contractual
provision, be it small or great, together with the time at which it falls
due; this is more equitable in the sight of God, more reliable as evidence,
and more likely to prevent you from having doubts (later). If, however
(the transaction) concerns ready merchandise which you transfer directly
unto one another, you will incur no sin if you do not write it down.
And have witnesses whenever you trade with
one another, but neither scribe or witness must suffer harm, for if you
do (them harm), behold, it will be sinful conduct on your part. And remain
conscious of God, since it is God who teaches you (herewith) - and God
has full knowledge of everything."[Qur'an 2:282]
"And if you are on a journey and cannot find
a scribe, pledges (may be taken) in hand: but if you trust one another,
then let him who is trusted fulfil his trust, and let him be conscious
of God, his Sustainer. And do not conceal what you have witnessed, for,
verily, he who conceals it is sinful at heart; and God has full knowledge
of all that you do." [Qur'an 2:283]
For financial transactions involving credit, the Qur'an commands the
writing of the terms of the transaction and having the deal confirmed by
two male witnesses or one male and two female witnesses. For on-the-spot
transactions, the writing of the deal is made optional while witnesses
are apparently recommended. These instructions, it should be noted, are
delivered on the assumption that people cannot not read or write. This
assumption is still relevant and is likely to remain forever relevant.
A majority of mankind still cannot read and/or write and it is likely that
there will always be a large minority of such people. But there is another
reason why the Qur'anic instructions will always remain relevant. As the
level of literacy and education increases in the world so does the complexity
of financial dealings, so that an average person is likely to remain incapable
of writing and concluding every financial deal on his own. Just as in the
time of Qur'anic revelation an average person needed a scribe because he
was unlettered, in the modern times an average person needs a lawyer or
a financial agent because despite being literate he does not know all that
is involved in most modern deals. Similarly the role of witnesses is now
often taken by signatures, thumb impressions, notaries/lawyers or court
officials, although ordinary witnesses are frequently used.
It might be surprising for some readers that the Qur'an recommends that
even on-the-spot transactions such as sale of goods on cash-and-carry basis
should have some proof in writing or through witnesses and perhaps because
at first sight it looks unnecessary this Qur'anic recommendation has been
almost completely ignored in practice in the Muslim world. However, as
the business became more organized, the wisdom of the Qur'anic recommendation
has been independently discovered in modern times. These days, each time
we buy any small or large item in a shop, we are issued a receipt by the
seller. This is because as a proof of sale the receipt serves the following
purposes, among others:
a) defective items may be returned with
little or no arguments;
We have briefly considered above the usefulness and relevance of the Qur'anic
instructions about writing and/or witnessing financial deals. Let us now
consider the important question: how obligatory are these instructions?
b) if the shopkeeper overcharged or cheated the
buyer in some other way, he may be brought to justice;
c) shoplifters can be caught and brought to justice;
d) both the buyer and the seller can keep accounts
The writing of deals involving credit is obligatory, since
referring to on-the-spot transactions the Qur'an says :
which implies that for transactions involving credit there is blame
if we do not write the details. This conclusion is further supported by
a Hadith in which the Prophet (pbuh) is reported to have said that three
types of people cry out to Allah for help but are not helped. One of these
three types consists of people who lend money to others and do not get
it back because in disobedience to God's commandment they did not write
the details of the loan nor had it witnessed.
is no blame on you if you don't write (the deal)."
The purpose served by witnesses is that they provide evidence that the
terms of the deal were faithfully written and agreed to by all the parties
concerned. Witnesses make it difficult for any party to later accuse the
scribe of not faithfully writing the terms of the deal or denying agreeing
to those terms. In case both parties can read and write these purposes
will be served by signatures. For small deals therefore signatures may
be considered sufficient. For bigger deals signatures in the presence of
witnesses or a notary would be desirable.
It is clear that a written deal is meaningless without a proof that
it was faithfully written and acceptable to the parties. Consequently,
when writing of a deal is obligatory, so is providing such a proof in the
form of witnesses, signatures, etc.
For on-the-spot transactions, the Qur'an does not make writing an obligatory
act but says the witnesses should be present. However, in relaxing the
requirement of writing the Qur'an assumes that it is harder to find a scribe
than to find witnesses, which was the case in Arabia at the time of the
Qur'anic revelation. In our age, it is harder, at each transaction, to
arrange witnesses than to arrange a written proof of sale in the form of
a bona fide receipt, which in any case provides a better proof than do
witnesses. Hence a bona fide receipt fulfils the objectives behind the
Qur'anic recommendation concerning on-the-spot transactions.
The Qur'an says that one of the two male witnesses may be replaced by
two women witnesses. The reason given is that "if one (of them) forgets,
the other can remind her." Thus the basis of the rule is that women, being
generally less involved in business matters, may be more prone to forget
the details of a deal. Clearly, if we know that certain women or women
in a certain society or age have the same knowledge and experience in business
matters as the average man, then the rule will not be applicable. It should
be noted here that in another matter in which a woman is expected to have
as much knowledge as a man the Qur'an accepts a woman's witness at par
with that of a man [see Qur'an 24:6-9].
Even Small Details To Be
The Qur'an says:
Here "small or great" probably refers to the amount of loan, but in the
case of complex modern deals we can use analogy (qiyas) to understand
it to mean "small or great detail". The written deal should be sufficiently
detailed so that chances of doubts or misunderstandings arising later any
do not loath to write it down, be it small or great..."
Writing a clear, detailed agreement, duly signed and/or witnessed, can
avoid two causes of problems in financial dealings: failure of memory and
misunderstanding about the terms of the agreement. It can also reduce the
chances of any of the parties involved falling victims to the temptation
of taking advantage of the other parties by lying, cheating or other crooked
ways resulting from bad faith. But to avoid bad faith more than just writing
the deal is needed. There is first of all need for taqwa on which
the whole teachings of Islam lay such emphasis. Taqwa is that respect
for moral values which comes through fear and consciousness of God and
belief in the hereafter.
But there will always be some people who do not give too much importance
to taqwa. They will not hesitate to break an agreement whenever
it suits them. For such people there is also need for a legal apparatus
to enforce the deals they willingly sign.
In Muslim lands there have always been courts in which disputes among
Muslims could be settled. However, in non-Muslim countries we would have
to depend on local non-Muslim courts until such time as we establish, like,
e.g. the Jews, some community religious courts with some recognized authority
to enforce laws.
During the period of our existence in Western countries when we have
to depend on local courts, we should take a Muslim brother to court only
as a last resort, when there remains no other way to deal with his devious
and crooked ways.
First published in Al-Ummah, Montreal, Canada
in 1988. Copyright © Dr. Ahmad
Shafaat. The article may be reproduced for Da'wah purposes with proper