The Effect of Ghubn in Islamic Sales Contracts
All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
In all its particulars, Islamic Sharia has worked to preserve human life through a civilized methodology, by safeguarding religion, intellect, life (self), lineage, and wealth.
In this regard, I will delve into a sub-branch of financial earning in Islam, for which the Noble Sharia has established legitimate ways, calling for the regulation of sales contracts' methods, their parties, forms, prerequisites, and effects. The Noble Sharia warned against a major defect, which is deception and fraud in financial earning. Allah The Almighty Says (What means): "O you who have believed, do not consume one another's wealth unjustly but only [in lawful] business by mutual consent. And do not kill yourselves [or one another]. Indeed, Allah is to you ever Merciful." [An-Nisa'/29].
Among the issues discussed in this regard is a buyer being subjected to Ghubn (excessive price discrepancy/exploitation) by purchasing goods at an inflated price, whether the increase is slight or exorbitant. This may occur due to deception from the seller, or perhaps without deception. Here, questions arise, including: Does the Sharia permit the annulment of a sale due to Ghubn? What are its controls? And what prompted jurists to discuss this matter?
All of this will be answered through:
Firstly: The Concept of Ghubn:
Ghubn linguistically: The root letters Ghayn, Ba, Nun (غ ب ن) denote weakness and oppression. It is said: "Ghubina in his sale," meaning he was oppressed in it. And "Ghubina in his opinion" meaning his opinion was weak. The analogy in both words is the same. [Mu'jam Maqayis Al-Lughah, by Ibn Faris//vol.4/pp.411].
As for its Sharia terminology: When we speak about the definition of Ghubn, we find definitions from Islamic scholars, including:
A. Qadi Iyad's definition: "Ghubn in sales, with a sukoon on the baa', is when one's item is taken from him for less than its value, and its origin is deficiency." [Mashariq Al-Anwar 'Ala Sihah Al-Athar by Qadi Iyad/Vol. 2/P.128].
B. Al-Fayyumi defined Ghubn as: "Egregious Ghubn (Ghabn Fahish) is when the increase exceeds what is customarily normal." [Al-Munir fi Gharib Al-Sharh Al-Kabir by Al-Fayyumi/Vol.2/P.436].
C. Ibn Abidin's definition: "Egregious Ghubn (Al-Ghubn Al-Fahish) is that which does not fall under the valuation of valuers." [Hashiyat Ibn Abidin, Vol.1/P.251].
After contemplating the preceding definitions of Ghubn, I have concluded to define it as follows:
Ghubn terminologically is: "A financial diminution of the right of the seller or the buyer," and its cause is the lack of expertise of either the seller or the buyer, such that the contract deviates from the boundaries of normal, customary commercial dealings. Its precise determination refers to custom (‘Urf) and experts.
The reasons for lack of expertise are numerous:
-One of the parties being a minor, like an orphan, and his guardian's transaction causing him egregious Ghubn.
-One of the parties to the contract lacking knowledge of commercial custom and price valuation.
-One of the parties using deception (Taghreer) to complete the deal in his favor.
Slight Ghubn (Ghubn Yaseer) is excusable, and transactions are rarely free from it. As for Egregious Ghubn (Ghubn Fahish), the way to ascertain it is through custom and common practice. The Hanafi scholars determine egregiousness by the valuation of valuers: what falls under the valuers' estimation is slight, and what does not fall under their estimation is considered egregious.
By "what falls under the valuers' estimation," they mean what experts would typically estimate, such as buying something for ten, and an expert estimates it at eight, nine, or ten, for example; this is slight Ghubn.
By "what does not fall under the valuers' estimation," they mean if the sale occurred for ten, for example, and some valuers said it was worth five, others six, and others seven; this is egregious Ghubn because it did not fall under the estimation of any one valuer. Majallat Al-Ahkam Al-Adliyah (Article 165), in accordance with the opinion of Nasr ibn Yahya, estimated it as half of a tenth (5%) in commercial goods, a tenth (10%) in animals, and a fifth (20%) in real estate, or more. [Al-Fiqh Al-Islami Wa Adillatuh, Wahbah Al-Zuhayli/Vol. 4/P.576].
Secondly: The Ruling on Ghubn and Its Effect on the Contract:
The original ruling on Ghubn is that it is forbidden (mamnu' and muharram) religiously. Ibn Al-Arabi said: "Ghubn in this world is forbidden by consensus in worldly judgments; as it is a type of deception which is religiously forbidden in every religion." [Ahkam Al-Quran by Ibn Al-Arabi/Vol.4/P.261]. However, not all Ghubn has an effect according to the jurists, especially when the buyer and seller are competent and there is no practice of deception (Taghreer). The default is the enforceability of the contract. Imam An-Nawawi (may Allah have mercy on him) said: "Mere Ghubn does not establish the option (of annulment), even if it is egregious. If someone buys a glass bottle for a high price, imagining it to be a jewel, he has no option, and no consideration is given to the Ghubn he incurred; because the shortcoming was from him for not consulting experts." [Rawdat At-Talibin by An-Nawawi/Vol.3/P.473].
It is stated in [Majallat Al-Ahkam Al-Adliyah/Article 356]: "If egregious Ghubn is found in a sale and no deception (Taghreer) is present; the victim of Ghubn does not have the right to annul the sale. However, if Ghubn alone is found in the property of an orphan, the sale is not valid. The property of a Waqf (endowment) and public treasury have the same ruling as the property of an orphan."
However, jurists paused at certain scenarios and clarified that Ghubn has an effect in them, as detailed below:
1. The Issue of Meeting Riders (Talaqqi Al-Rukban):
In the issue of meeting riders, if the buyer met them and bought goods from them, and Ghubn became apparent to them upon arriving at the market, or before that, then they have the option of annulment due to Ghubn immediately, similar to the option of annulment due to a defect. However, if the riders themselves sought the sale, or they knew the real price, then Ghubn has no effect. It is stated in [Mughni Al-Muhtaj]: "(And they have the option if) they were exploited and (knew of the Ghubn) even before their arrival, based on what Al-Bukhari narrated: (Do not meet goods until they are brought down to the market. Whoever meets them, the owner of the goods has the option [of annulment])." This option is immediate, by analogy with the option of annulment due to a defect. But if they sought the sale from him, even with their ignorance of the price, or they were not exploited, such as if he bought from them at the market price or less, and they were aware, then they have no option; due to the absence of the previous meaning. Similarly, they have no option if the meeting occurred after entering the town, even outside the market, as they could ascertain prices from others than the one who met them. [Mughni al-Muhtaj by Al-Khatib As-Shirbini, Vol. 2/P.49]. I say: The Hadith that As-Shirbini (may Allah have mercy on him) relied upon from Al-Bukhari was mentioned by Al-Bukhari from the Hadith of Abdullah Ibn Umar (may Allah be pleased with both of them), and its text from the Messenger of Allah (peace and blessings be upon him) is: "(Let not some of you sell over the sale of others, and do not meet goods until they are brought down to the market.)" This is what Al-Bukhari narrated without the addition: "Whoever meets them, the owner of the goods has the option." This addition is not in Al-Bukhari, but it has a conceptual basis mentioned by Moslim in his Sahih, in his (peace be upon him) saying: "(Do not meet the goods that are being imported. If anyone meets them and buys something from them, then when its owner comes to the market, he has the option [of annulment].)"
The annulment of a contract due to Ghubn in the issue of meeting riders was not limited to the Shafi'is; the Hanbalis also affirm Ghubn in the issue of meeting riders, as well as in the issue of Najsh (bidding up a price to deceive others without intending to buy), and in the issue of selling to Al-Mustarsil (one who is unskilled in bargaining). [Al-Mughni by Ibn Qudamah/Vol.3/P.498].
What led the Hanbalis to adopt the option of Ghubn for one who is unskilled in bargaining is what came in the Hadith from Abdullah Ibn Umar (may Allah be pleased with both of them), that a man mentioned to the Prophet (peace be upon him) that he was being deceived in sales. The Prophet said: "(When you buy, say: 'No deception!')" [Agreed upon]. Al-Imam An-Nawawi (may Allah have mercy on him) said: "Scholars differed regarding this Hadith; some made it specific to him, and that mutual Ghubn between contracting parties is binding, with no option for the victim of Ghubn because of it, whether it is slight or great. This is the position of Ash-Shafi'i, Abu Hanifah, and others, and it is the more authentic of the two narrations from Malik. However, the Baghdadi Maliiks said that the victim of Ghubn has the option based on this Hadith, provided that the Ghubn reaches one-third of the value; if it is less, then no. The correct opinion is the first one; because it is not proven that the Prophet (peace be upon him) established the option for him. Rather, he told him to say: 'No Khilabah (deception),' and this does not necessarily imply the establishment of an option. Furthermore, if an option were established for him, it would be a specific case with no general applicability, so it cannot be extended to others except with evidence, and Allah Knows Best." [Sharih An-Nawawi 'Ala Moslim/Vol.10/P.177].
2. Ghubn in the Management of Wealth by a Supervisor:
A supervisor of wealth may either be by virtue of a specific guardianship, such as a guardian over a minor's wealth, or be a general supervisor, such as one responsible for a Waqf (endowment) or public funds. In all these aspects, the management must be characterized by trustworthiness and acting in the best interest. This is only achievable in our time through scientific plans that must be prepared and implemented for funds, whether a minor's wealth or public funds, as the management must be according to what is best. Allah The Almighty Says (What means): "And they ask you concerning orphans. Say: 'Improvement for them is best." [Al-Baqarah/220]. From this, Article 356 of [Majallat Al-Ahkam] stipulated: "If egregious Ghubn is found in a sale and no deception is present; the victim of Ghubn does not have the right to annul the sale. However, if Ghubn alone is found in the property of an orphan, the sale is not valid. The property of a Waqf and public treasury have the same ruling as the property of an orphan."
Ibn Abd Al-Barr said: "The sale by fathers, guardians, and the ruler's delegates is permissible if it is in the best interest of those under their care. However, if Ghubn, undue favoritism, or injustice becomes apparent in a sale by any of these, it shall be annulled." [Al-Kafi fi Fiqh Ahl Al-Medina, Ibn Abd Al-Barr/Vol.2/P.731].
The Jordanian Civil Law, in Article 149, states: "A contract is not annulled by egregious Ghubn without deception, except in the property of a minor (interdicted person), Waqf property, and state funds."
