Is Returning Gold and Buying a Heavier Piece Considered Riba?

Answered by Shaykh Muhammad Carr

Question

I bought a bracelet weighing 4 grams. I went home, and within an hour, I returned to the shop and asked to return it, and instead purchase something else, paying the difference since the new item would weigh more. I chose an item weighing 5 grams. The seller showed me on a calculator the amount I had paid for the returned item and told me, based on the calculation, how much additional money I needed to pay.

I did not physically take back the cash for the returned item before adding more money to complete the purchase of the new one. Is this transaction halal, or would it be considered riba? If it is a ribawi transaction, what should I do with this gold bracelet?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

Returning the 4 grams of gold constitutes an iqala arrangement, which is valid and recommended. Under an iqala arrangement, the seller reimburses the price of the 4 grams of gold.

According to the relied-upon view in the Shafi‘i School, you must pay for the 5 grams of gold, and reciprocal possession of both the gold and the currency must take place within the contractual setting. Acquittance or set-off is not permitted in usurious transactions. [See: Ramli, al-Nihaya]

Iqala

It is permissible for the contracting parties to mutually rescind the contract even in the absence of any defect. This is the meaning of the recommended iqala in favor of a seller or buyer who regrets the transaction. In Tuhfa, quoting Rafi‘i and Nawawi, it is stated that if the buyer and seller mutually undo the sale from the outset without any specific reason, this is permissible and is considered a valid iqala. [Ahdal, Umdat al-Mufti]

The Second Arrangement

Because the second sale involves usurious commodities on both sides of the transaction—namely, five grams of gold exchanged for fiat currency—mutual possession (taqabud) must be actual. Accordingly, hawala (alternate remittance) and acquittance are not permitted, even if the exchange takes place within the contractual setting. [See: Ramli, al-Nihaya]

Rules of Buying and Selling Gold

The Prophet (may Allah bless him and give him peace) said: “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt – like for like, equal for equal, and hand-to-hand; if the commodities differ, then you may sell as you wish, provided that the exchange is hand-to-hand.” [Muslim; Tirmidhi]

Thus, If gold is exchanged for silver (or another currency), their amounts may differ, but the following conditions are obligatory:

• that the exchange be immediate; and
• that the properties exchanged must be in the respective possession of the buyer and seller before they part company. [Misri, ‘Umda Al-Salik]

When the buyer pays via electronic fund transfer, the seller is deemed to have taken constructive possession of the price despite the delayed reflection of the price in his account due to common affliction (umum al-balwa).

I pray this is of benefit and that Allah guides us all.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.