Question about A Certain Business Contract

Friday, December 4th 2009, RiMarket.Net asked Ash-Sheikh Badr Al-Utaybee the following question:

As Salaamu Alaikum wa rahmatullahi wa barakatu Oh Noble Sheik Badr, one of the brothers asks: “Is it permissible for us to work for a company that makes it a condition upon us to sell a certain amount of their product in a year, and if we don’t reach that amount we have to pay a fee of $2000.00?

بسم الله الرحمن الرحيم

So Ash-Sheikh Badr Al-Utaybee responded by saying:

Wa alaikum as salaam wa rahmatullahi wa barakatu, to proceed:

From the things that make a contract null and void is “Al-Gararu,” deception, and “Al-Jahaala,” —i.e. when the thing being sold is not present (Such as selling the unborn donkey)—And in this type of contract there includes deception and jahaala, because there is no guaranteed amount you will see of the product in the year. Rather the product may not sell at all, or the consumers may not buy the amount you need them to buy. So therefore this is not permissible.

However,  they can correct the contract, by agreeing to pay you less, and they (the company) then can say ‘If you sell more than such and such amount of the product, then we will pay you a bonus of $2000.00, this is better and more correct, and there is no problem in this.

Allah knows best.

Your Brother,

Bady Al-Utaybee