What are the hadiths of the Prophet about commerce and commercial ethics?

The Details of the Question

- How is profit rate and price determined in trade?
- Will you give information about commercial ethics?

- According to our religion, what is the maximum profit rate?

The Answer

Dear Brother / Sister,

The religion of Islam did not introduce a certain profit rate. What determines the profit is the market conditions. Goods can be sold at a price a bit higher or lower than the market price. It is not permissible to sell something at an exorbitant price to deceive the customer.

The Messenger of Allah (pbuh) saw a man selling wheat. He asked the man,

"How do you sell the wheat?"

The man told him how he sold it. Meanwhile, the Messenger of Allah received a divine inspiration:

"Plunge your hand in the wheat.”

The Messenger of Allah (pbuh) plunged his hand and saw that the wheat was wet. Thereupon, he said,

“Why did you not put the wet part on top so that people would see it? He who deceives us is not one of us.” (Muslim, Iman, 164)

As it is stated in the hadith, Islamic economic system based trade on honesty and the understanding of serving the individual and the community.

Commercial activity, which means transferring goods from the producer to the consumer, which necessitates both capital and labor and which can end in profit or loss, was rendered halal and even encouraged since it increased the benefits of goods. If it is take into consideration that the Prophet (pbuh) said, “Nine-tenths of profit come from trade” (Munawi, Faydul-Qadir, 3/220), the degree of this encouragement is understood better.

On the other hand, two of the most important of the five basic principles of Islamic belief, hajj and zakah, are peculiar to rich believers; they are also like encouraging people to be rich through legitimate ways. The hadith “the hand that gives is superior to the hand that takes” (Muslim, Zakah, 106), which is a decree that encourages people to give, can be evaluated in the same context. 

However, the following hadith should not be forgotten in trade, which is the most important means of obtaining goods and wealth:

“Every ummah has a fitnah (means of testing). The fitnah of my ummah is wealth.” (Tirmidhi, Zuhd, 19)

For, the greed to make money in trade is one of the handicaps that the soul is addicted to. A greedy person is like a pitcher; even if its belly is full, its mouth does not close. Even if you try to pour the sea into a pitcher, it cannot get more than its capacity. A greedy person is like a stove or brazier; as fuels like wood and coal are put in it, it does not go out but its flames and heat increase. The Prophet states the following about a greedy person: 

“If the son of Adam had two valleys of money, he would wish for a third, for nothing can fill the belly of Adam's son except dust.” (Bukhari, Riqaq, 10; Muslim, Zakah, 116)

Because of this greed, man resorted to incalculable tricks and deceptions in trade. That is why, many tribes were destroyed. The world is full of so many incorrigible people. There have always been rich people who devoured the rights of the poor, the homeless, widows, orphans and the needy like a vampire instead of taking care of them by giving them zakah, sadaqah, etc. despite their wealth.

The issue of the religion is spirit. The body is a burden for spirit. The religion does not aim to bring happiness to the body. On the contrary, it aims to make spirit dominant over the body. In trade, we should restrain our greed at a certain level lest we should go to extremes and be unhappy both in the world and the hereafter. It would be a dream beyond reach to seek peace in a society that is full of profiteering merchants, thieving administrators and bribe-takers.

Allah Almighty states in the Quran that the people of Madyan and Ayka, who were the tribes of Hz. Shuayb, were ruined because of their corrupt behaviors in trade and wants the people to come after them up the Day of Judgment to take lessons from them. Therefore, it is a very big crime that will destroy a nation to deceive people in trade, to earn haram money and to crush the weak. The Messenger of Allah (pbuh) states the following:

“May Allah perish the slave of gold coins, silver coins and thick soft clothes! If a greedy person is given what he wants, he is pleased; otherwise he is dissatisfied.” (Bukhari, Riqaq, 10; Jihad, 70; Ibn Majah, Zuhd, 8)

When somebody was praised, Hz. Umar asked the person who praised three things:
“Have you been his neighbor, travelled with him and done business with him?”
When the man said that he did none of them with him, Hz. Umar said,
“I think you saw him nodding his head while reading the Quran in the mosque.”
The man said,
“O Umar! Yes. I saw him like that.” Thereupon, Hz. Umar said,
“Then, do not praise him because sincerity is not in the neck of a person.” (see Kharaiti, Makarimul-Akhlaq, 1/185)

The criterion given by Hz. Umar here is not to be deceived by the appearance and to have a view about a person based on his deeds and social relations. It indicates the danger of acquitting a person who has not been tested for his material interest.

As it is seen, trade reflects the inner world of a person. That is, the inner world of a person is like his trade. Therefore, the Prophet stated the following in a hadith:

“Allah does not look at your prayers and fasting but at your financial relationships.” (see Kanzul-Ummal, h. No: 8435, 8436)

In the hadith, it is indicated that it is necessary to evaluate a person based on his practices related to social life, which are called muamalat. This does not mean that deeds of worshipping like daily prayers are unimportant. However, what is essential in social life related to shopping, trust and reliance is a person’s attitudes and deeds related to them.

According to Islam, a buyer and a seller should not criticize an article deliberately when buying it and should not praise an article more than it is when selling it. One should not ask a higher price than the market price by making use of the weakness of the buyer. The seller should not deceive the customer by overcharging; one should not black-market, practice usury, cheat while weighing and measuring goods, should avoid vowing and selling haram things that will harm the community. 

The Prophet (pbuh) introduced the rules of trade in a nice way:

“Unnecessary words and vows are uttered in trade; Satan and sins intervene. Purify your trade with sadaqah.” (Abu Dawud, Buyu 1; Tirmidhi, Buyu 4; Nasai, Ayman 7)

“Merchants will be fasiqs (sinners) on the Day of Judgments except those who acted honestly.” (Tirmidhi, Buyu, 4; Ibn Majah, Tijarat, 3)

It is necessary to inform a seller who does not know about the value of his goods. It is regarded as ghabn (deceiving) to benefit from his ignorance, lack of experience and gullibility. Those who fear Allah and who want to attain His consent act very carefully and sensitively regarding the issue.

Abu Hanifa asked a woman who brought him a silk dress that she wanted to sell the price of it. The woman said, 

“O Imam! One hundred dirhams.” He objected:
“No, it is worth more.”
The woman was surprised and increased the price one hundred dirhams. Abu Hanifa did not accept it. The woman increased one hundred dirhams again and another one hundred. He said,   
“No, it is worth more than four hundred dirhams.” This time, the woman said,
“O Imam! Are you mocking me?”

Thereupon, the Imam summoned somebody who was good at fabrics so that the woman would find out the real price of the dress. The man determined the price of the dress as five hundred dirhams and Abu Hanifa bought it at that price.

For, he knew that to give up honesty, to hide the faults of the goods and to ignore weighing and measuring truly would lead man to bad consequences. 

The Ottoman community was brought up based on this high ethics and the community attained peace and happiness in a way that would impress even the unbelievers. The following incident, which took place when two priests wandered in Istanbul after the conquest in order to inspect the Ottoman shopkeepers, reflects it very well:

The priests went to a grocer’s early in the morning and wanted to buy something. The grocer said to them,

“I have made my first sale today. Go to my neighbor who has not sold anything this morning.”
Thereupon, they went to the other grocer’s. He said the same thing. 
“I have made my first sale today. Go to my neighbor who has not sold anything this morning.”
Thus, the priests went to the next shop. They heard the same statement. Finally, they went back to the first grocer’s and bought from him.

Our ancestors were brought up and lived in such an altruistic and self-sacrificing environment. People think of one another in this environment, which consists of Islamic ethics. Cheating is a big crime for a Muslim. A Muslim cannot lie and deceive people. Being deceived is a sign of stupidity. It does not fit a Muslim. The prophets, who are guides for humanity, have the attributes of “honesty” and “wisdom”. A Muslim who follows them has to be wise and alert. Allah Almighty states the following to warn us to be careful about those who try to deceive:

“To those weak of understanding Make not over your property, which Allah hath made a means of support for you...” (an-Nisa, 4/5) 

As for those who deceive people, they are warned by the following hadith:

“Three are three people with whom Allah would neither speak on the Day of Resurrection, nor would look at them nor would absolve them, and there is a painful chastisement for them.”

When Abu Dharr heard that the Messenger of Allah (pbuh) repeated this statement three times, he asked,

“O Messenger of Allah! They failed and they lost; who are these people?”

The Messenger of Allah (pbuh) answered:

“They are: the dragger of lower garment, the recounter of obligation and the seller of goods by false oath.” (Muslim, Iman, 171)

On the other hand, it is regarded a very bad deed to black-market, that is, to stock goods and wait until the price goes up to sell them. It means to exploit the community. The Prophet (pbuh) damned those who black-marketed. He said,

“He who supplies to the market gains; he who waits in order to sell at a higher price is damned by Allah.” (Ibn Majah, Tijarat, 6)

Islam shows its rule related to trade in earning and using activities. The Quran regards the commercial transactions in which both parties give consent halal and others haram and says, “Eat not up your property among yourselves in vanities.”

The full verse in question is as follows:

“O ye who believe! Eat not up your property among yourselves in vanities: But let there be amongst you Traffic and trade by mutual good-will: Nor kill (or destroy) yourselves: for verily Allah hath been to you Most Merciful.” (an-Nisa 4/29)

The statement “Nor kill (or destroy) yourselves” includes an important subtle point. It warns us against being people of Hell by destroying spiritual life. On the other hand, attention is drawn to the fact that some of the fights and murders originate from eating up property in vanities and the greed to make money. One can be saved from those dangers by acting in compliance with the rules of trade imposed by Islam. To avoid interest is the most important issue here.  

Interest is the manifestation of exploitation since it does not include any risks or efforts. It helps the rich to be stronger and causes the needy to be oppressed more. There are frightening hadiths of the Prophet (pbuh) about interest. The Messenger of Allah (pbuh) stated the following in the Farewell Sermon:

“All kinds of interest (usury) are under my feet.” (Darimi, Manasik 34)

Thus, he rendered all kinds of interest (usury) haram. The verses express the divine threat regarding the issue as follows: 

“Those who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness. That is because they say: "Trade is like usury," but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (The offence) are companions of the Fire: They will abide therein (for ever).

Allah will deprive usury of all blessing, but will give increase for deeds of charity: For He loveth not creatures ungrateful and wicked.” (al-Baqara, 2/275-276)

The threat stating that divine wrath will be manifest due to interest (usury) in the following verses is terrible:

“O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed believers.

If ye do it not, Take notice of war from Allah and His Messenger: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly.” (al-Baqara, 2/278-279)

Who can win the war against the Creator of the universe and the Messenger of Allah, for whom the universe was created?

If a believer deals with interest, he will lose either his wealth or his belief. When a fasiq (sinner) deals with such wrong ways, his wealth increases so that he will be fit for the penalty he will be given. That is, that way becomes profitable for him. For, Allah Almighty gives respite but never neglects. Such people will have some respite up to the time when they will be punished. It is necessary to be careful about the divine threat in the verse. Otherwise, it will be very bad. Hz. Jabir states the following:

“The Messenger of Allah (pbuh) cursed the accepter of interest and its payer, and one who records it, and the witnesses and he said, ‘They are all equal.’” (Muslim, Musaqat, 106)

The state of Abu Hanifa is so nice. He did not even sit in the shade of the tree that belonged to his debtor so that there would be no doubt of interest.    

There are definitely many reasons for the prohibition of interest. The most important ones are increase in unemployment, causing artificial increase in prices, weakening humane and ethical virtues like helping, solidarity, love, mercy and compassion, increasing egoism and boosting the greed to make money and to be influential.

Having prohibited interest due to those reasons, Islam encourages people to lend money without interest for the sake of Allah if they can; it regards lending money to a person who is in need better than giving sadaqah.

However, honest, truthful and trustworthy businessmen are always in minority. The Prophet (pbuh) mentions great rewards for honest businessmen probably for this reason. The following is stated in a hadith: 

“An honest merchant (businessman) is in the shade of the Throne on the Day of Judgment.” (Ibn Majah, Tijarat 1)

“An honest, truthful and trustworthy businessman (merchant) is together with prophets, loyal people and martyrs.” (Tirmidhi, Buyu, 4)

Abu Hanifa was a very rich person who bought and sold goods. However, he had a deputy to look after his business since he himself was busy in ilm (religious studies); he checked whether his trade was carried out legitimately or not. He was very sensitive regarding the issue. Once, he sent his partner, Hafs bin Abdurrahman, to sell some fabric and said to him, 

“O Hafs! This fabric has such and such defects. Therefore, tell the customer about them and sell it at this price.”

Hafs sold it at the price that the Imam said but he forgot to tell the customer about the defects in the fabric. When Abu Hanifa learned of this, he said to Hafs,

“Do you know the customer who bought the fabric?”

When Hafs said he did not know the customer, the Imam gave away all of the money of the fabric to the poor as sadaqah. For, he always acted in compliance with the following statement the Messenger of Allah (pbuh) said to Amr:

“O Amr! Righteous goods are so nice for a righteous person.” (Ahmad b. Hanbal, IV/197, 202)

He acted based on the criteria of taqwa related to halal and haram. For, being careful about halal and haram is an obligation for the cleanliness of the wealth entrusted to us and for being able to give an account of it on the Day of Judgment.

My father, Musa Efendi, narrated the importance and blessing of halal food and the issue of not including any haram things in trade as follows:

We had an Armenian neighbor who had become a Muslim. Once, I asked him why he had become a Muslim. He narrated me the following incident:

"I became a Muslim due to the high ethics of Rabi Mulla, who owned the field next mine, in trade. He earned his living by selling milk. One night, he came to our house and said,

"This milk is yours. Here you are." I was surprised. I said,

"Why? I did not want any milk from you." That elegant person said,

"I saw that one of my animals entered your field and grazed there. Therefore, this milk is yours. In addition, I will bring you her milk until the grass she ate from your field completely leaves her body.” I said,

“Do not mention it. She ate only some grass. I do not demand anything from you about it.” However, Mulla Rabi said,

“No. Her milk is your right.” Thus, he brought us the milk of that animal until all of the grass she ate from my field left her body.

This act of that blessed person affected me very much. Finally, I was awakened and I felt the sun of guidance in my heart. I said to myself,

“The religion of a man with such high ethics is definitely a lofty religion. It is not possible to doubt the trueness of the religion that brings up such an elegant, rightful, perfect and pure person.” Then, I uttered kalima ash-shahada and became a Muslim.”

Along with such beauties, it is sad that the heedlessness mentioned in the following hadith is unfortunately seen everywhere:

“A time will come when one will not care how he gains one's money, legally or illegally.” (Bukhari, Buyu, 7, 23)

In fact, the penalties caused by the violation of the rules imposed by the religion are individual and most of them are given in the hereafter but the penalty for haram earnings will affect the offspring of a person. Besides, the penalty will be given in this world before the hereafter.

It is a fact that those who receive inheritance from haram wealth do not usually follow the right path. For, there is a secret in money; it goes from the way it comes. An inheritor who receives haram money is dragged by that wealth to bad ways. Such wealth resembles a snake. A snake enters into the hole from which he comes out. Wealth is spent based on the way it is earned.

It is expressed in a verse by the tongue of Hz. Musa (Moses) that a wealth that is not used in the way of belief and taqwa will be dragged to sins and unbelief:

“Moses prayed: "Our Lord! Thou hast indeed bestowed on Pharaoh and his chiefs splendour and wealth in the life of the present, and so, Our Lord, they mislead (men) from Thy Path. Deface, our Lord, the features of their wealth, and send hardness to their hearts, so they will not believe until they see the grievous penalty.” (Yunus, 10/88)

It is strange that some people act as if one cannot make money if he acts honestly in trade. They are nonsensical words of those close their eyes to the truth and deny the divine program of distribution. According to those who make this mistake, Hz. Abu Bakr, who gave away all of his wealth several times and who never abandoned honest trade, would have been among the poorest of the Companions. However, it is a historical fact that he was always among the richest ones of the Companions. Although he gave away all of his wealth for the sake of Allah and His Messenger, he gained wealth again through divine blessing so many times.

Therefore, we have to make money through legitimate ways and spend it on legitimate things. A conscious merchant should not ignore the profit of the hereafter, which is bigger than the profit of the world, while dealing with trade in the world; he should think of the eternal bliss and should not leave the divine way. The following verse reflects the cordial life of such people in a nice way:

By men whom neither traffic nor merchandise can divert from the Remembrance of Allah, nor from regular Prayer, nor from the practice of regular Charity: Their (only) fear is for the Day when hearts and eyes will be transformed (in a world wholly new).” (an-Nur, 24/37)

The people who do deal with trade like that are those who act in accordance with “tijaratan lan- tabur” (a commerce that will never fail) mentioned in a verse, that is, those who deal with real trade. As a matter of fact, Allah states the following about real trade:

“Those who rehearse the Book of Allah, establish regular Prayer, and spend (in Charity) out of what We have provided for them, secretly and openly, hope for a commerce that will never fail:

For He will pay them their meed, nay, He will give them (even) more out of His Bounty: for He is Oft-Forgiving, Most Ready to appreciate (service).” (Fatir, 35/29-30)

May Allah Almighty enable us to live in accordance with those verses! May He enable us to read the divine book with the eye of the heart, to prostrate with an awe that will elevate us to Miraj, to make money legitimately, to spend it without extravagance and to spend the boons He gave us in His way!

O Lord! Enable our brothers who deal with trade to be among the people “from whose hands and tongues believers benefit from” mentioned in the hadith and to be good people for our country and nation! Enable them to do righteous deeds that will be a means of mercy and blessing in the world and the hereafter! Amin!

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