ON RIBA

(Unlawful interest)

Riba is of two kinds:

(a) Riba in transaction

(b) Riba in loans.

Riba in transaction means: selling a certain quantity of commodity in exchange for a quantity of a commodity of the same kind with some extra quantity on one side of the transaction, like selling 100 kilo of wheat for 110 Kilo wheat or 50 kilo wheat for 50 kilo plus $5 or some quantity potentially extra like selling 20 kilos wheat for 20 kilos payable after a certain period of time. Whether Riba in a transaction is associated only in buying and selling or it can take place in other exchanges too, there are two views about it, according to a more clear view, Riba can take place only in exchanges between two substances of a commodity, regardless, such exchange takes place in the form of buying and selling or in a settlement with both parties consent such as when a party says, "I agree to settle this issue on grounds that this $20 be for you in exchange for $5 for me." If the exchange is not between two substances of a certain commodity like the case of a settlement wherein a party is saying, "I agree to your giving me this $10 in exchange for $5 which I give you, or my waiving $5 in your favor in exchange for your relieving me of owing you $10 etc." In such a case the contract is clearly valid. About the presence of Riba in a transaction there are two conditions: (a) The two substances of the commodities to be exchanged, must be of the same kind of substance according to the common sense even if some of their qualities be different, thus, it is not lawful to sell 100 kilos wheat of good quality for 150 kilo of lower quality or likewise in the case of rice. In the exchange of certain quantities of the commodities of different kind of substance Riba does not take place: like selling 100 kilos wheat in exchange for 100-kilo rice. (b) Riba can also take place in a transaction when both commodities to be exchanged are sold by weight or measurement, thus, if the commodities are exchanged by numbers like certain number of eggs, etc., in such a case, one egg can be exchanged for two eggs.

CR (204) A transaction wherein Riba is involved is absolutely void and invalid, regardless, the parties know it or not or that the ignorance is because of not knowing the rules or inability to distinguish the form of the transaction wherein Riba may take place. Therefore, in a transaction where Riba has taken place the parties must return the commodities to each other as mentioned in CR 57.

CR (205) Wheat and barley are considered of the same kind in substance in a transaction, thus, selling 100 kilos of wheat for 200 kilos of barley is not lawful, even though in the case of zakat (a certain form of income tax) wheat and barley are two different kinds of commodities, therefore, in order to raise a certain quantity of wheat to the standard taxable quantity one can add barley to it. If one has equal to half of the standard taxable quantity of wheat and the same quantity of barley, he does not have to pay zakat.

CR (206) Obviously salts (a wheat looking grain) is not wheat and a grain that looks like barley, is not barley.

CR (207) Meat and all dairy products are different because of different animals. Thus, it is lawful to sell 1 kilo of lamb meat for 2 kilos of beef and the same CR applies to their milk; in all these cases the extra quantity on one side does not affect the transaction.

CR (208) All kinds of dates are of the same category in regard to the rules of Riba and each kind of grain is of different category in this matter like wheat, rice, peas and beans etc.; each is a different category.

CR (209) Sheep and goats are of the same category, so are cows and buffaloes; camels and bukhate (a kind of camel) are of the same category. Of birds each category known by a certain name, is a category as opposed to the other kind, which has a different name, thus, sparrows are different from pigeon and even different kinds of pigeons are different species and categories. In the matter of fish, according to one view, all are one category and each kind a different species; according to another view which, in fact, is the strong one.

CR (210) The wild and the domestic animals are considered different from each other like in the case of the wild cows and the domestic ones. It is lawful to exchange them with extra numbers or quantities on one side of the transaction and the same CR applies to domestic and wild donkeys and sheep.

CR (211) Each kind and its derivatives have the same CR like wheat, wheat flour, bread and milk, cheese, butter, buttermilk and ghee and different dates of different quality like very fresh and still fresh and dates and very dry dates.

CR (212) If some commodity is exchanged by weight and measurement and its derivatives are not exchanged by weight and measurement in this case, it is lawful to exchange that commodity with its derivatives with extra amount or quantity on one side like wool that is weighed and woolen fabric that may not be exchanged by weight and the same CR applies to cotton and silk and cotton and silk fabrics.

CR (213) If a commodity in certain condition is exchanged and sold by weight or measurement and in other conditions not in this way. In the first case it is not lawful to exchange two quantities of it with some extra on one side of the transaction, but in the second case it is lawful.

CR (214) It is lawful to exchange the meat of an animal with a live animal of different kind, like sheep and cows. Because of precautionary reason it is not lawful to sell beef in exchange for live cow, although according to a more clear reason it is lawful.

CR (215) If one commodity is found in two conditions like fresh and dry forms of certain commodities like two states of dates or grapes and raisins, fresh bread and very dry one in such cases it is lawful to exchange dry for dry of the same kind with no extra quantity on one side of the transaction, but an exchange of fresh for dry in equal amounts is open to objection, although because of a more clear reason it is lawful but detestable, however, with some extra quantity on one side of the transaction is not lawful even if when dried they become equal quantities.

CR (216) If a certain commodity is exchanged by weight or measurement in one town and by a different manner in another town, in each town it will be dealt with according to the demands it is exchanged. Thus, it is lawful to exchange it with some extra quantity on one side of the transaction in the town where it is exchanged in some way other than weighing and measuring and not lawful with extra quantity on one side where it is exchanged by weight and measurement. If in most towns weight or measurement, because of necessary precaution exchanges it, it must not be exchanged with some extra quantity on one side of the transaction.

CR (217) One way to free transaction from Riba is adding a certain quantity of a different kind of commodity to the lesser quantity in the transaction, like selling 100 kilo of wheat and one dollar for 150 kilo of wheat or adding some to both sides in the same way with extra on both sides like selling of 100 kilo of wheat and $200 for 150 kilos of wheat and one dollar.

CR (218) Riba, there is no objection, does not take place in transactions between father and son. Thus, they can exchange the commodities of the same kind even with some extra quantity on one side of the transaction. The same CR applies to wife and husband and to the transaction of a Muslim person and non-Muslim who is not a tax payer of the Islamic state when the Muslim receives the side of the transaction with extra.

CR (219) Because of a more clear reason, it is not lawful to have a deal wherein Riba is involved with a tax paying non-Muslim, but after a transaction is concluded, the Muslim in this case too can receive extra because of the CR of binding contract.

CR (220) The currency notes which are not of the commodities exchanged by weight or measurement, is not in the category of the commodities that may involve Riba. Thus, it is lawful to exchange them with some extra amount on one side of the transaction but if in the transaction the amounts on both sides of the transaction are not individually well identified in this case it is necessary for the validity of the transaction to distinguish the commodity and the price for it, like selling Iraqi Dinar for Irani riyal but it is not lawful to sell Iraqi Dinar for its kind payable by the other party.