Original question: I was wondering what are the rulings on auctions and how does it relate to biddings and situations nowadays , for example ebay etc where similar functions exist
Answer: Bidding is classified under a type of sale contract known as Bai’ Muzayadah (بيع المزايدة). Bai’ Muzayadah refers to the process where a seller offers goods for sale in a marketplace, and multiple buyers compete by offering progressively higher prices. The sale concludes when the highest bidder purchases the item, which aligns with the modern concept of an auction.
The majority of scholars consider Bai’ Muzayadah permissible under Shariah. This ruling is based on the following hadith:
عن أنس رضي الله عنه قال:
“أن النبي صلى الله عليه وسلم باع حلساً وقدحاً، فقال: من يشتري هذا الحلس والقدح؟ فقال رجل: أنا آخذهما بدرهم. فقال النبي صلى الله عليه وسلم: من يزيد على درهم؟ فأعطاه رجل درهمين فباعهما منه.”
Anas (رضي الله عنه) reported that the Prophet (ﷺ) sold a carpet and a water vessel while calling for buyers. A man offered one dirham, upon which the Prophet (ﷺ) asked for a higher bid. Another man then offered two dirhams, and the Prophet (ﷺ) sold the items to him. (Narrated by Tirmidhi)
This hadith establishes the legitimacy of seeking higher bids, thereby permitting the concept of bidding or auctioning in Islam.
However, the auction process has to abide by several ethical boundaries. For instance, there is another hadith from the Prophet (ﷺ) that explicitly prohibits bidding over an existing bid:
لَا يَسِمِ الْمُسْلِمُ عَلَى سَوْمِ أَخِيهِ
“A Muslim should not bid over his brother’s bid.” (Narrated by Bukhari)
This is called Saum ‘ala Saum Akhihi (سوم على سوم أخيه) (bidding over another’s bid in an unethical manner) whereby scholars such as Ibn Juzayy explains:
- The prohibition applies when a buyer (A) has already decided to purchase an item from a seller (B), and the contract is nearly concluded. If another buyer (C) then approaches B and offers a higher price, this would be impermissible.
- Similarly, if after A has committed to the purchase, seller (C) approaches A and offers a similar item at a lower price, intending to disrupt the existing agreement, this is also prohibited.
- It also applies when a sale has been finalized, and C tries to convince A to revoke the sale in order to buy from him instead.
In these cases, there is an intention to undercut an already established agreement, which is deemed unethical. However, in a Bai’ Muzayadah , the process remains open to all bidders until the highest bid is placed, and only then is the sale finalized. Therefore, modern-day bidding and auctioning are permissible as long as Shariah-compliant principles are upheld.
Secondly, one should also refrain from bid manipulation or ‘shill bidding’. This is called Bay’ Najsh in Islam where it is prohibited according to a hadith by Abdullah bin Umar R.Anhuma, he said:
نَهَى النَّبِي صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ عَنِ النَّجْشِ
“Allah’s Messenger forbade Najsh.” [Sahih al-Bukhari (2035) and Sahih Muslim (1516)]
Najsh literally means to hide, and typically refers to the practice of bidding with no intentions of buying, in order to artificially inflate the bid price, oftentimes in collusion with the seller. This would fall under the general ethical prohibition of deception as the Prophet (ﷺ) also mentions:
” مَنْ غَشَّنَا فَلَيْسَ مِنَّا ”
“Whoever deceives us is not from us” (Sahih Muslim, 102)
Therefore, it is permissible in principle to use platforms such as eBay for auctioning as long as ethical boundaries are upheld, as the seller does not agree to sell an item to any of the bidders; rather, they anticipate the highest bid and then sell it accordingly. However, it is crucial to remember two things when participating in virtual auctions:
- Firstly, the specifications and details of the item being purchased must be clear and free from excessive ambiguity, as bay’ al-gharar (sale of an item with excessive ambiguity) is unlawful in Shariah.
- Secondly, it is important to ensure that the auctioneer is legitimate by reviewing their past sales to avoid any scams.
May Allah guide us all to make transactions that are permissible and pleasing to Him. And Allah knows best.
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