Fatwa ID: 08202
Answered by: Maulana Abdurrahman Mohammad
Question:
1.) If I’m an agent for a business and they require me to be on video calls and sometimes, the buyer and seller don’t put their faces on video but sometimes they do and most of the time I won’t need to but maybe I will have to do it sometimes for identification purposes and I won’t know which call I have to show my face or not. Is my income halal?
2.) If you’re working with a supplier and they require a standby Letter of Credit or Letter of Credit from the buyer (you’re an agent for the supplier) but you know that the buyer will definitely pay for this letter and many scholars say paying for this letter is Riba. Is the income permissible for me? As I have to tell the buyer to acquire an SBLC or LC and they will have to pay for it. Everyone globally uses standby letters of credit for business and without it, many businesses don’t deal with buyers. Is the income permissible for me?
3.a) If you make an agreement with a buyer to supply the buyer every month for a year and the buyer pays before shipment for the whole thing. Is the income permissible?
3.b) If the previous answer is that it’s not halal, what if the buyer makes upfront payment after the product is delivered?
3.c) What if the buyer makes payment at the delivery port before/after the product is sent or after it’s sent? Is the income halal?
3.d) What if the buyer makes payment after the first product shipment in the first month has arrived?
3.e) What if the buyer makes payment before or after every shipment has arrived monthly for the 12 months?
3.f) Or can the seller choose whatever option he wants from above as he possesses the product?
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
Showing Face on Video
Unless it is specifically mentioned in the terms and conditions that you have to show your face on video, it is up to you if you want to show your face on camera. Income is based on the agreed-upon work and responsibilities, so as long as you fulfill your end of the deal and the nature of the work is permissible, your income should be permissible.
Letter of Credit
It is difficult to pass a verdict on these letters without knowing the exact terms, but here are some guidelines. According to investopedia.com:
A letter of credit, or a credit letter, is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. If the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. It may be offered as a facility (financial assistance that is essentially a loan). [1]
This appears to be a Kafālah setup with the possibility of leading to an interest-based loan. Any fees involved in this setup should not be charged for the guarantee itself or involve interest. There are many types of Letter of Credit, but generally:
Banks usually charge a fee for a letter of credit, which can be a percentage of the total credit they are backing. The cost of a letter of credit will vary by bank and the size of the letter of credit. For example, the bank may charge 0.75% of the amount that it’s guaranteeing. [2]
Such a setup would not be permissible as the bank is charging for the act of Kafālah (guarantee). The price of the letter is based on the amount of the backed-up credit and the banks are charging for the credit, not for the costs involved in the process of acting as a guarantor (which would be an administrative or processing fee). Also, if the buyer defaults on payment, a loan would be taken out in his name which usually involves interest. As the person involved in requesting this letter and performing tasks to facilitate this invalid transaction, this would be impermissible. If the buyer and seller take care of this themselves and you are not involved in processing these letters, then that is permitted.
Buyer Paying Before Shipment
This setup corresponds most to Bay’ As-Salam (sale in advance). For this to be correct, the following conditions should be met.
Bay’ As-Salam
According to Fatwa Hindiyyah:
As for its interpretation, Salam is a contract by which ownership is established in the price immediately and in the priced item in the future. [3]
There are a total of 16 conditions: 6 for the capital or payment, and 10 for the product or shipment.
Conditions for the Capital or Payment [4]
(One of them) is a statement of the genus, that it is dirhams or dinars or from the measure of wheat or barley or the like.
(The second) is a statement of the type [currency], that it is Ghatrifiyyah or Adaliyah dirhams or Mahmudiyyah or Harawiyyah dinars. This is if it is in a country that has different currencies. However, if there is only one currency in the country, mentioning the type is sufficient.
(The third) is stating the description, whether it is high grade, low grade, or average. This is in Al-Nihaya. [This is when the capital/payment is not in cash]
(The fourth) is stating the amount of the capital, even if it is indicated in what is related to the contract according to its amount, such as the measured, weighed, and counted.
Conditions for the Shipment [5]
(First of them) is a statement of the genus of the Musallam Fih (item/shipment), whether it is wheat or barley [etc.].
(The second) is a statement of its type, whether it is irrigated wheat, or cheap wheat, or mountainous wheat, or plain wheat.
(The third) is a statement of the description/quality [grade of the product], whether it is good wheat [high-quality], bad wheat [low-quality], or average [medium-quality].
(The fourth) is that the quantity is known by measure or weight or number of cubits [length].
(The fifth) is that the thing that is being delivered should be deferred for a known period, so that if it is delivered immediately, it is not permissible.
(Sixth): That Musallam Fih (item) exists [in the market] from the time of the contract until the time of the place [of delivery].
(Seventh): The item being sold must be something that is specifically identified, so that Salam is not permissible in dirhams and dinars [currency].
(Eighth): That the subject/item of the Salam be from the four types: measures, weights, similar items that are sold in number, and cubits [in length].
(Ninth): Clarification of the place of fulfillment in what has burden [transportation] and hardship, such as wheat and the like.
(The tenth): Is that the two exchanges do not include one of the two qualities of the cause of Ribā Al-Fadl (interest by excess), and it is quantity and type.
Buyer Makes Upfront Payment After the Product is Delivered
This is what normally happens in financial transactions. It is permissible to give the payment after the product is delivered. The amount, currency, method, date or timeframe of payment, and other details should be clarified at the time of the contract.
Buyer Makes Payment at the Delivery Port Before/After the Product is Sent
If payment is given before the product is delivered, there may be a chance it may get damaged or lost in delivery. That is why it is necessary to follow the conditions for Bay’ As-Salam (sale in advance) for this transaction to be correct.
Buyer Makes Payment After the First Product Shipment in the First Month Has Arrived
If the buyer pays for a shipment after it arrives following the terms of the contract, there is no issue. When paying for future shipments, the conditions of Bay’ As-Salam should be followed. The buyer can pay after the first shipment like normal and then make a Bay’ As-Salam agreement for future shipments.
Buyer Makes Payment Before or After Every Shipment Has Arrived Monthly for the 12 Months
Payment before shipment should follow the Bay’ As-Salam condition. Payment after shipment should follow the terms of the contract.
Can the Seller Choose Whatever Option He Wants from Above as He Possesses the Product?
The seller cannot break the contract and change the agreed-upon method of payment without the buyer’s permission as doing so could lead to Nizā’ (dispute). When making the contract, both parties must clarify the nature and method of payment. They should follow the conditions of Bay’ As-Salam if the product will be delivered later. If the product is already present, payment can be taken at the time of the contract or even after at a specified date or timeframe.
Only Allah knows best.
Maulana Abdurrahman Mohammad
Checked and approved by: Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
[1] https://www.investopedia.com/terms/l/letterofcredit.asp
[2] https://www.investopedia.com/terms/l/letterofcredit.asp
[3] أَمَّا تَفْسِيرُهُ فَالسَّلَمُ عَقْدٌ يَثْبُتُ بِهِ الْمِلْكُ فِي الثَّمَنِ عَاجِلًا وَفِي الْمُثَمَّنِ آجِلًا.
(Al-Fatāwā Al-Hindiyyah, vol. 3, pg. 178, Al-Maṭba’ah Al-Kubrā Al-Amīriyyah)
[4]
(فَأَحْدُهَا) بَيَانُ الْجِنْسِ أَنَّهُ دَرَاهِمُ أَوْ دَنَانِيرُ أَوْ مِنْ الْمَكِيلِ حِنْطَةٍ أَوْ شَعِيرٍ أَوْ نَحْوِ ذَلِكَ
(وَالثَّانِي) بَيَانُ النَّوْعِ أَنَّهُ دَرَاهِمُ غِطْرِيفِيِّةٌ أَوْ عَدَالِيَّةٌ أَوْ دَنَانِيرُ مَحْمُودِيَّةٌ أَوْ هَرَوِيِّةٌ …
(وَالثَّالِثُ) بَيَانُ الصِّفَةِ أَنَّهُ جَيِّدٌ أَوْ رَدِيءٌ أَوْ وَسَطٌ كَذَا فِي النِّهَايَةِ
(وَالرَّابِعُ) بَيَانُ قَدْرِ رَأْسِ الْمَالِ وَإِنْ كَانَ مُشَارًا إلَيْهِ فِيمَا يَتَعَلَّقُ الْعَقْدُ عَلَى مِقْدَارِهِ كَالْمَكِيلِ وَالْمَوْزُونِ وَالْمَعْدُودِ …
(وَالْخَامِسُ) كَوْنُ الدَّرَاهِمِ وَالدَّنَانِيرِ مُنْتَقَدَةً …
(وَالسَّادِسُ) أَنْ يَكُونَ مَقْبُوضًا فِي مَجْلِسِ السَّلَمِ …
(Al-Fatāwā Al-Hindiyyah, vol. 3, pg. 178-179, Al-Maṭba’ah Al-Kubrā Al-Amīriyyah)
[5]
(وَأَمَّا الشُّرُوطُ الَّتِي فِي الْمُسَلَّمِ فِيهِ) (فَأَحَدُهَا) بَيَانُ جِنْسِ الْمُسَلَّمِ فِيهِ حِنْطَةٍ أَوْ شَعِيرٍ (وَالثَّانِي) بَيَانُ نَوْعِهِ حِنْطَةٍ سَقِيَّةٍ أَوْ بَخْسِيَّةٍ أَوْ جَبَلِيَّةٍ أَوْ سَهْلِيَّةٍ (وَالثَّالِثُ) بَيَانُ الصِّفَةِ حِنْطَةٍ جَيِّدَةٍ أَوْ رَدِيئَةٍ أَوْ وَسَطٍ…
(وَالرَّابِعُ) أَنْ يَكُونَ مَعْلُومَ الْقَدْرِ بِالْكَيْلِ أَوْ الْوَزْنِ أَوْ الْعَدَدِ أَوْ الذَّرْعِ…
(الْخَامِسُ) أَنْ يَكُونَ الْمُسَلَّمُ فِيهِ مُؤَجَّلًا بِأَجَلٍ مَعْلُومٍ حَتَّى إنْ سَلَّمَ الْحَالَّ لَا يَجُوزُ وَاخْتُلِفَ فِي أَدْنَى الْأَجَلِ الَّذِي يَجُوزُ السَّلَمُ بِدُونِهِ عَنْ مُحَمَّدٍ – رَحِمَهُ اللَّهُ تَعَالَى – أَنَّهُ قَدَّرَ أَدْنَاهُ بِشَهْرٍ وَعَلَيْهِ الْفَتْوَى كَذَا فِي الْمُحِيطِ…
(السَّادِسُ) أَنْ يَكُونَ الْمُسَلَّمُ فِيهِ مَوْجُودًا مِنْ حِينِ الْعَقْدِ إلَى حِينِ الْمَحَلِّ…
(السَّابِعُ) أَنْ يَكُونَ الْمُسَلَّمُ فِيهِ مِمَّا يَتَعَيَّنُ بِالتَّعْيِينِ حَتَّى لَا يَجُوزَ السَّلَمُ فِي الدَّرَاهِمِ وَالدَّنَانِيرِ…
(الثَّامِنُ) أَنْ يَكُونَ الْمُسَلَّمُ فِيهِ مِنْ الْأَجْنَاسِ الْأَرْبَعَةِ مِنْ الْمَكِيلَاتِ وَالْمَوْزُونَاتِ وَالْعَدَدِيَّاتِ الْمُتَقَارِبَةِ وَالذَّرْعِيَّاتِ كَذَا فِي الْمُحِيطِ…
(التَّاسِعُ) بَيَانُ مَكَانِ الْإِيفَاءِ فِيمَا لَهُ حَمْلٌ وَمُؤْنَةٌ كَالْبُرِّ وَنَحْوِه…
(الْعَاشِرُ) أَنْ لَا يَشْمَلَ الْبَدَلَيْنِ أَحَدُ وَصْفَيْ عِلَّةِ رِبَا الْفَضْلِ وَهُوَ الْقَدْرُ أَوْ الْجِنْسُ
(Al-Fatāwā Al-Hindiyyah, vol. 3, pg. 179-181, Al-Maṭba’ah Al-Kubrā Al-Amīriyyah)
