Fiqh Academy Resoluton No. 73/3/8
Quote - The Council of the Islamic Fiqh Academy,
holding its Eight Session in Bandar Seri Begawan, Brunei Darussalam,
from 1 to 7 Muharram 1414H (21-27 June 1993).
examined the research, received by the Academy on the
subject of ''Auction Contracts''
to the debate on the matter.
Given the fact
that auction sales are a common practice today and in some
instances have involved certain excesses which have made it necessary
to regulate its usage in a way that would preserve the rights of the
parties to the contract in conformity with Islamic Shari'a rules,
as they have been adopted by institutions and governments under
specific administrative regulations. and in order to elucidate the
Shari'a rules with respect to such contracts .
- 1. An
auction contract is an exchange contract involving an invitation to
interest parties, verbally or in writing, to partake in the auction.
The contract is concluded with the consent of the seller.
auction contract may vary in nature according to its object, and
ramify into a sale or lease or other types of contract. According to
its nature it may also be either optional such as ordinary auctions
amongst individuals, or compulsory such as in the case of auctions
dictated by law. It may be required by public and private
institutions as well as governmental bodies and individuals.
auction contract procedures in terms of written records,
arrangements and administrative and legal terms and conditions
must not be in contradiction with the rules of Islamic Shari'a.
a deposit from those wishing to enter the auction sale is
permissible in terms of Shari'a. Their deposits must be re
instituted to all the participants who have not been the last
bidders. The deposit is deducted from the selling price for the last
is no objection from Shari'a point of view to levying
entrance fees (value of the schedule of conditions, not exceeding
actual value) as it represents a cost thereto.
Islamic financial institution or any other party may initiate
investment projects so as to secure a higher benefit for itself,
whether the investor is a party in a Mudaraba contract with the Bank
(Deception in bidding) is prohibited by Shari'a. It include
the following practices:
with no intention of buying offers higher bids just to entice the
earnest buyer into making higher offers.
not really intending to buy pretends to admire the commodity as an
expert, and extol its benefits to the buyer, thus effecting a higher
the owner of the commodity, the agent or the broker, claims falsely
that a specific price has been paid for it, so as to mislead the
forms of "Najash" prohibited by Shari'a include the
use of the media, whether audio, visual, or in print to ascribe to
the commodity unreal characteristics, or increase the price so as to
seduce the buyer and entice him into entering the contract.
Allah knows best........Unquote
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