’Arboun (Earnest Money) - Appendix B (The Shariah Basis for the Standard)

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1. Shari ’ah Standard No. (53): ’Arboun (Earnest Money) Appendix (B) The Shari’ah Basis for the Standard ■ The basis for permissibility of ’Arboun (Earnest Money) is a narration that Nafi’ Ibn Abdul-Harith purchased a building in Mecca to be used as a prison from Safwan Ibn Umayyah, provided that if Umar (may Allah be pleased with him) approves the sale, then the sale is considered to be effected by him (Umar) and on his behalf (Umar’s), and if not, then Safwan shall be paid 400 dinars. Also, there is a narration that Ibn Sirin said: “A man said to a lessor of ride camels: prepare your camels, so that if I did not leave with you on so and so day, you get 100 dirhams. Then he did not leave with him”. And Shurayh said: “He who voluntarily makes it incumbent upon himself to do something (with a condition and without coercion), then he shall have to honor the condition”. Hence, ’Arboun is similar, where a buyer pays part of the price and says: “If I did not confirm the sale, the ’Arboun is yours to keep”. Payment of the ’Arboun either at time of contract or later at the time of relinquishing it is valid. ■ The basis for impermissibly of ’Arboun in Sarf and Salam contracts is that ’Arboun is embedded with a cooling-off option ((Khiyar Khiyar al-Shart al-Shart), ), which according to the majority of Fuqaha (of the Four Schools of Fiqh) is impermissible in Sarf contracts (currency exchange transactions). This rule was deduced from the Hadith: “Gold for gold, silver for silver... like for like, equal for equal, and hand to hand. If these types differ, then sell them as you find proper, provided it is hand to hand” hand”. Ibn Umar (may Allah be pleased with both of them) is reported to have said: “O, Messenger of Allah, hold on that I may ask you a question: I sell camels in Baqi’, so that I sell for dinars and receive dirhams, and I sell for dirhams and receive dinars. I take so and so of this and pay so and so of that? Then the Prophet (peace be upon him) said: “No harm that you apply 1242
2. Shari ’ah Standard No. (53): ’Arboun (Earnest Money) the market rate unless you (you and the counterparty) leave the transaction session without settlement of dues” dues”.. Therefore, this was an evidence on the requirement to take possession of both countervalues (Qabd) at the contracting session (Majlis (Majlis al-’Aqd). al-’Aqd). ’Arboun is also impermissible in Salam contract, because in Salam, payment of the price (capital of Salam) shall be settled at the contracting session. The Prophet (peace be upon him) said: “Whoever pays money in advance for dates (to be delivered later) should pay it for a known specified weight and measure (of the dates)….”. This implies that unless the price is paid in full before the two parties leave the contracting session, the transaction is not deemed to be Salaf (or Salam). ■ The basis for determination of a specific term for ’Arboun is to avoid Gharar that may result from an unknown term (Jahalah that involves ’Arboun term). ■ The basis for the seller being liable for the object of sale before delivery and for the buyer being liable for it after delivery is the Shari’ah maxim: “Ownership (title) shall be established upon the conclusion of the contract, while liability is contingent upon delivery (Qabd)”. ■ The basis for attributing growth connected to the original is that it represents an integral part of it. ■ The basis for attributing growth and yields, separate from the object of sale, to the object of sale is the saying of the Prophet (peace be upon him): “Al-Kharaj Bi al-Daman” (i.e., entitlement to revenue is based on bearing liability for the revenue-generating asset). 1243