The Two Prohibitions: Riba and Gharar
Riba (رِبَا — unlawful increase): The Quran prohibits riba in four verses, making it among the most strongly condemned acts — Allah “declares war” on those who persist in riba after being warned. Classical fiqh identifies two types:
- Riba al-fadl: exchange of the same commodity in unequal amounts (e.g., 1 kg gold for 1.1 kg gold)
- Riba al-nasi’a: deferred exchange where the increase is the payment for the delay — the basis of interest-bearing loans
Gharar (غَرَر — uncertainty/hazard): Sales are void when excessive uncertainty attaches to the subject matter, price, or timing:
- Subject: the goods must be existing, owned by the seller, and deliverable
- Price: must be fixed and known at contracting
- Delivery: time and method must be specified
Minor gharar is tolerated (selling fruit on the tree before full ripeness is permitted by some schools for practical necessity).
Valid Sale Types
Bay’ al-Musawama (bargain sale): Standard cash-for-goods exchange. The simplest and paradigm case.
Bay’ al-Murabaha (cost-plus sale): Seller discloses the cost price and adds an agreed profit margin. Widely used in Islamic banking as an alternative to conventional loans — the bank buys the asset and resells it to the customer at cost-plus, with deferred payments.
Bay’ al-Salam (advance payment): Payment in full now for goods delivered later. Permitted despite deferred delivery because the full price is paid up front and the subject matter is precisely specified (grain, dates, fungibles).
Bay’ al-Istisna’ (commission manufacture): Contract to manufacture a specified item. Used in construction and industrial finance; payment and delivery both can be deferred by scholarly consensus.
In Bohra Community Commerce
Dawoodi Bohra merchants historically operated under strict observance of halal trade principles. The Dawat structure has from early times emphasized halal rizq (lawful livelihood) as a religious obligation alongside prayer.
See also: Fiqh Al Ijarah, Fiqh Al Wasiyyah, Fiqh Al Mawarith, Fiqh Al Sadaqa, Waqf, Dai Al Mutlaq