Short answer
A sale is valid in Islam when both sides agree freely, the item is lawful, owned by the seller and deliverable, and the price and goods are clearly known. Riba, excessive uncertainty (gharar), cheating, hiding defects, false oaths and selling what you do not own are forbidden.
Buying and selling is permissible and praised when its pillars and conditions are met: offer and acceptance, a lawful item of value that the seller owns and can deliver, and a known price. A sale involving riba, major gharar or a forbidden item is void or defective (fasid), and deception in trade is haram.
Other madhhabs
- Shafi'i
- Does not separate a defective (fasid) sale from a void (batil) one: a sale missing a condition is simply void and transfers no ownership.
- Hanbali
- Likewise treats a defective sale as void, with no transfer of ownership even after possession.
Explanation
"Allah has permitted trade and has forbidden interest" (2:275). Trade is one of the most praised ways to earn, and the Prophet ﷺ was a merchant before prophethood. The core rule is in 4:29: wealth changes hands lawfully through trade by mutual consent, not through injustice.
What a valid sale needs:
- Offer and acceptance, freely given by people able to contract.
- A lawful item with value: no alcohol, pork, idols, stolen goods or gambling products.
- Ownership and ability to deliver: you cannot sell what you do not have, and in most goods you must take possession before reselling. See Is dropshipping halal?
- A known price and a known item, with the payment terms fixed at the start.
What is forbidden: riba; gharar, such as selling a fish still in the sea; fake bidding (see auctions); undercutting a deal another person has already settled; hoarding necessities to push up prices (see Is hoarding haram?); and lying about the goods.
Business manners. The Prophet ﷺ said that if buyer and seller are truthful and make things clear, their sale is blessed, and if they hide and lie, the blessing is wiped out. He prayed for mercy on the person who is easygoing when he buys, sells and asks for repayment. Disclose defects, avoid swearing to sell, pay on time and keep your promises (5:1).
For profit margins, see How much profit is allowed?
The evidence
Quran, Surah An-Nisaa 4:29
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تَأْكُلُوٓا۟ أَمْوَٰلَكُم بَيْنَكُم بِٱلْبَٰطِلِ إِلَّآ أَن تَكُونَ تِجَٰرَةً عَن تَرَاضٍۢ مِّنكُمْ ۚ وَلَا تَقْتُلُوٓا۟ أَنفُسَكُمْ ۚ إِنَّ ٱللَّهَ كَانَ بِكُمْ رَحِيمًۭا ﴿٢٩﴾
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.
Lawful trade rests on free mutual consent.
Quran, Surah Al-Baqara 2:275
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ ﴿٢٧٥﴾
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Trade is lawful, riba is not.
Quran, Surah Al-Mutaffifin 83:1
بِسْمِ ٱللَّهِ ٱلرَّحْمَٰنِ ٱلرَّحِيمِ وَيْلٌۭ لِّلْمُطَفِّفِينَ ﴿١﴾
Woe to those who give less [than due],
Cheating in measure and weight is condemned.
Sahih al-Bukhari 2110
Sahih... البيعان بالخيار ما لم يتفرقا فإن صدقا وبينا بورك لهما ...
"Buyer and seller have the option until they part; if they are truthful and make things clear, their sale is blessed."
Honesty and disclosure bring blessing to trade.
Sahih Muslim 1513
Sahih... عن بيع الحصاة وعن بيع الغرر ...
"He forbade the pebble sale and the sale involving gharar."
Sales with excessive uncertainty are forbidden.
Sunan Abi Dawud 3503
Graded sahih... لا تبع ما ليس عندك ...
"Do not sell what you do not have."
The seller must own what he sells.
Where the ruling is recorded
- al-Hidaya, Kitab al-Buyu'. The pillars and conditions of a valid sale.
- Radd al-Muhtar (Ibn Abidin), Kitab al-Buyu', Bab al-Bay' al-Fasid. The Hanafi difference between a void and a defective sale.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.