Question
Please comment on the following Fatwa pertaining to laybye sales: "Layaway (lay-by in Australia, New Zealand and South Africa) is a way of purchasing an item without paying an entire cost at once. However, rather than taking the item and then repaying the debt on a regular schedule, as in most instalment plans or hire purchases, the layaway customer does not receive the item until it is completely paid for. There is sometimes a fee associated, since the seller must "lay" the item "away" in storage until the payments are completed. If the transaction is not completed, the item is returned to stock and the costumer's money is returned minus a fee. (en.m.wikipedia.org/wiki/ layaway) According to the principles of Islamic finance and economics, the money paid as a deposit by the customer will be regarded as an Amanat (trust) in the hands of the seller and will only be regarded as a payment for the purchased item when the last instalment is paid off. The reason being that when a person places a deposit for an item, he is in essence merely reserving that particular item for himself and not purchasing it. (As Ijaab and Qabool doesn't take place). Thus it will be permissible to purchase an item on lay-by. The following laws will also apply in this transaction: 1. If in the event that the customer decides not to purchase the item his deposit will have to be returned to him. It is an Amanat in the hands of the seller, which on demand must be returned in full. 2. If the customer does not return to pay the instalments until the designated grace period, then the item may be sold to another customer and all deposited monies returned to the original customer. It would however, be preferable to give the original customer a bit more respite and to try and make contact with him, so as to remind him to come and conclude the deal. 3. If the customer does not come to collect his deposit, then the seller is not permitted to give it away in Sadaqah or to any Madrasah. The seller will have to keep the deposit by himself till the owner dies or he comes to collect it. 4. If perchance the customer fails to pay the instalments within the agreed time, then it will not be permissible for the seller to charge him an extra penalty fee. 5. The seller must not use any words of sale such as "the item is now sold to you." The customer merely saying "keep the item for me as lay bye" does not constitute a sale/business contract. 6. The seller is allowed to charge the customer a fee for keeping his money as a trust."
Answer
We disagree with the Fatwa. (1) In commercial transactions, the meaning is the determinant. When a laybye sale is transacted, it is a valid sale. The customer selects an item, and pays part of the price. Both the seller and the buyer understand and believe that it is a sale transaction.
(2) The contention: "..when a person places a deposit for an item, he is in essence merely reserving that particular item for himself and not purchasing it, as Ijaab and Qabool doesn't take place.", is incorrect and baseless.
Ijaab and Qabool do take place when making a laybye sale. Denying this fact is presumptuous and baseless. It is a denial of reality. Furthermore, there is no transaction in the Shariah whereby one makes a payment to reserve an item. The Shariah does not recognize such a transaction.
What is the purpose of the 'deposit'? In point No.1, the Mufti states that the deposit will have to be returned if the customer decides not to take the item. So what then is the maqsood of the deposit? If the customer has the right to ignore the fact of the reservation and demand the return of his money, then by the same token, the trader has the right to ignore the promise of reservation and sell the item at his whim, whenever he wishes.
If the transaction is regarded as a promise between the parties, namely, the trader promises to keep the item for the person for three months to make a decision to buy, and the customer promises to buy the item within three months, then this will belong to the moral domain. Paying money or leaving money as an amaanat to secure honouring of the promise is in conflict with the Shariah.
In terms of the laybye deal, the promise interpretation is baseless. In addition, the customer makes repeated payments until he has paid the full price. It is thus not merely a promise by the parties.
(3) The sale is finalized at the time of the transaction when the deposit is paid. The deposit is part of the thaman (price). The seller has the right to retain possession of the mabee' (item of the sale) until he has been fully paid. This is what happens in a laybye sale. The seller retains possession until the customer has paid the full price.
(4) The money which the customer pays for the laybyed item is not an Amaanat. It is the mielk (property) of the seller. The deposit and the subsequent payments made by the buyer are all part of the price which belong to the seller. The subsequent payments are not made for 'reserving' the article, nor is there any system in the Shariah which condones repeated monetary payments for upholding a promise.
Both parties understand that the deposit and the monthly payments are part of the thaman, hence all of this is deducted on the invoice from the purchase price. The view that it is an Amaanat is baseless.
(5) The customer has no right to unilaterally cancel the sale after its finalization. If the seller agrees to cancel the sale, it will be Iqaalah. But the seller is not under Shar'i obligation to cancel the sale.
(6) If the customer does not return within the prescribed time limit to collect his article, then the seller may sell it for its real market value or for more. If he sells it for more than the original price, then all of the excess will be profit for the buyer because it is his property which was sold. The seller is entitled to take only his price, and keep the profit in trust for the buyer.
(7) If the buyer does not come to collect his article and after waiting a year, the seller loses all hope of him returning, then the money should be treated like Luktah(lost article found), and given in Sadqah. Since there is no way of establishing the whereabouts of the buyer, it is impractical to hang on to the money lifelong and after one's death for one's heirs to keep the money in trust and so on from generation to generation. After giving the money to Sadqah, if the buyer returns, the seller will have to reimburse him the full amount from his own funds, and he (the seller) will receive the thawaab of the Sadqah.
(8) Point No.5 of the Mufti is a denial of reality. In real life, Ijaab and Qabool do take place during a laybye sale. It is therefore meaningless to say that words of sale should not be used. They are in fact being used, hence it is a valid sale. The reality cannot be imagined away.
- Source
- themajlis.co.za
- Published in
- The Majlis Vol 22 No 06
- PDF page
- 9
Appears under LAYBYE SALES (approximate).