Receiving advanced payment on non-stock goods

22-12-2013 | IslamWeb

Question:

Asw as a auto spares trader and due to the multitude of available parts, potential customers enquire about items which are not in stock. Is it permissible to obtain prices and establish availability from suppliers, mark up and offer for sale to customers, then if they want to buy they must pay for goods which are then ordered and delivered to customers after delivery is received from suppliers. Many times unpopular items have been ordered and paid for but customers never arrive to buy them which is the reason for this approach. We are not agents of our suppliers.

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His Slave and Messenger.

The transaction according to what you mentioned is not valid. However, if you agree with your customers to act as an agent on their behalf and deliver the goods to them at  the price determined by the supplier in return for a fixed fee that you set for yourself, then there is nothing wrong with that. In this case, the goods will be property of the buyer, and you are not entitled to increase the price but you may take the fee which is agreed upon.

You may also agree with the customers that you will supply the goods according to certain specifications within a set period of time, say, a month or more or less, in return for a set price which you receive in full at the time of contract, in accordance with the laws pertaining to the Salam contract. (A Salam contract is a contract in which payment of goods is received before the good are ready to be received by the buyer).

But it is not permissible to receive payment for an order on the basis that you will supply the goods and the buyer is obliged to buy it at a price determined by you. However, you may take a promise from the customer to purchase the goods and then take full or partial payment as a guarantee of commitment. Then if the customer declines to buy after you had already bought the goods and you incurred a loss from that, then, according to the strongest opinion, you can demand compensation from the customer according to the extent of the damage only. The following was adopted by the Islamic Fiqh Council on the sale of Muraabahah: “A promise – which is individually issued by the requester or requestee – is binding from a religious point of view unless there is a sound excuse for breaking the promise. It is also legally binding (in the court) if it is conditioned on a specific term or physical or monetary loss is incurred as a result of the promise. In this case, the effect of obligation is determined either by fulfilling the promise, or compensation for actual damages from the unexcused non-fulfillment of the promise.”

Following is a quote from "Al-Ma’aayeer Ash-Shar’iyyah” about 'margin of commitment': “In case of making a  promise binding, it is permissible for the institution to take a cash payment called a margin of commitment, where the agent makes a payment at the request of the institution in order to confirm the financial ability of the agent, and ensure the possibility of being compensated for the damage caused in case the customer does not fulfill his binding promise. Thereby, the institution does not need to claim compensation for any damages but deducts that from the amount from the margin of commitment. The margin of commitment is not considered a down payment. So, this amount paid to ensure commitment can either be a trust, which the institution preserves and does not own, or a deposit for investment, that is, the agent authorizes the institution to invest it on the basis of an Islamic Mudhaarabah (profit-sharing contract) between the agent and the institution.”

Allaah Knows best.