No Profit Limit in Trade Provided There Is Agreement between Buyer and Seller
Fatwa No: 424753

  • Fatwa Date:16-7-2020 - Thul-Qi'dah 26, 1441
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Question

Assalamu'alaikum warahmatullahi wabarakatuh. Dear Scholar(s). I'd ever seen a fatwa saying that we are prohibited from selling goods at prices above the market price. I have seen a fatwa in an Islamic question and answer site that selling goods above market prices where if people are not smart in negotiating, then he can be fooled by these prices, then it is forbidden. But in contrast, I'd ever seen a fatwa on another salaf website saying that prohibiting the sale of goods at a price above the market price applies if the goods have a benchmark price applicable in the market adjusting to the amount of demand and supply, as in the case of food stockpiling . If the goods sold do not have a benchmark price, then we are free to sell at any price(s). These kind of case where the price of goods above market price is very often seen on traders who sell goods with a Dropshipping system where the seller makes a profit from the price difference between the supplier's price and the price he offers to the buyer. Even though the sale with the Dropshipping System is legal in Islam. On another site I'd ever seen a fatwa stating that we may sell goods at prices above the market price as long as we are obliged to list or mention the prices prevailing in the market and the price we are offering. Thus, the buyer has several price options. If so, is it permissible if I sell goods by the dropshipping way on the internet at a price above the market price without listing or mentioning the applicable prices in the market, such as Fashion products like shoes, clothings, jeans, etc. ? Hope for your explanation(s). Syukron Jazakallahu khoiron.

Answer

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad,  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

In brief, the answer to your question is that, according to the basic rule, it is permissible for a trader to sell his commodity at whatever price he wishes as long as the buyer accepts it, and there is no limit to the profit a trader may obtain. A trader is not required to abide by the price at which other traders sell the commodity. What counts in this regard is the agreement between the two parties of the sale contract on the price. However, it is disliked to exploit the needs of people and to overburden them with high prices that cause them overwhelming hardship. A resolution issued by the International Islamic Fiqh Academy in Jeddah, stated the following:

First: the basic principle that is established by the Sharee‘ah texts and rules is that people are free to buy, sell, and dispose of their possessions and property (in any lawful manner) within the framework of the honorable Islamic Sharee‘ah and its conditions, acting upon the general indication of the Saying of Allah, The Exalted, that reads (what means): {O you who have believed, do not consume one another’s wealth unjustly but only [in lawful] business by mutual consent.} [Quran 4:29]

Second: there is no restriction on the percentage of profit traders may make in their transactions. Rather, it generally depends on the market conditions and the nature of trade and commodities. Care should be given, however, to the moral values established by the Sharee‘ah such as moderation, contentment, tolerance, and facilitation.

Third: the Sharee‘ah texts collaboratively proved the obligation of keeping the financial transactions devoid of all what is unlawful as well as the unlawful actions accompanying it such as cheating, deception, fraud, trickery, distortion of the truth about the profit, and monopoly that harms the public and private interests.

Fourth: the ruler should not be involved in fixing prices except when an obvious disorder is noticed in the markets and prices due to fabricated factors. In this case, the ruler (state) should intervene by applying possible just means that would eliminate those factors, the causes of defects, and excessive price increases or decreases.” [End of quote]

Accordingly, there is nothing wrong with selling your trade goods at an equal or higher or lower price than the market price, according to the mutual agreement between you and the buyer. However, it is incumbent on you to avoid selling identified commodities before having ownership of them. If a buyer requests a commodity that you do not have, you must not conduct a sale contract with him before you buy it.

Allah Knows best.

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