Is a Fixed Commission per Sale Permissible in Islamic Law?

Answered by Shaykh Muhammad Carr

Question

Suppose Party A hires Party B to sell their product and receives a fixed fee of $3 from each sale, while Party B retains the remainder of the selling price. Would this arrangement be valid under Islamic law, given that the payment is a fixed amount rather than a share of the profit?

Answer

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

I pray you are in good faith and health. Thank you for your question.

Allah says, “O you who believe, devour not your wealth between you through falsehood; but only through trade by your complete mutual consent.” [Quran, 4:29].

As it stands, the above arrangement is structured in a manner that the remuneration is a component of the employee’s economic output. This falls under the ambit of ‘the miller’s measure’, which the Prophet (Allah bless him and give him peace) prohibited. [Bayhaqi]

Structured as a ji‘ala, the service level agreement above would be considered valid. In such an arrangement, the remuneration is not constructed as a portion of the price. The employer undertakes to pay the employee $3 for every sale and not retain $3 for every sale.

Ji‘ala

Ji‘ala, legally defined, involves committing to pay a stipulated recompense in exchange for a known or unknown service. [Khatib, Mughni al-Muhtaj] This type of contract finds its basis in the narration of Abu Sa‘id al-Khudri, who recited the Fatiha to successfully cure a man stung by a scorpion in exchange for a recompense of thirty sheep. The Prophet (Allah bless him and give him peace) affirmed such transactions and requested a portion of the flock be assigned to him.

In a Ji‘ala contract, the recompense must be clearly defined. Commissions, often calculated as a percentage of the selling price, exemplify this principle, as the selling price is predetermined, thereby establishing the commission amount. Khatib al-Shirbini elucidates this concept, stating, “If a person specifies, for instance, that whoever returns my slave will receive his clothing or a quarter of his value, they will be entitled to the agreed-upon amount provided they are aware of its terms.”

Miller’s Measure 

The miller’s measure refers to a transaction where a miller is hired to grind grain in exchange for a portion (a measure) of the resulting flour, rather than a fixed, known wage. This was prohibited because it involves uncertainty (gharar) and potential unfairness, as the exact amount of flour is not known at the time of the contract.

Abu Sa‘id al-Khudri said, “The Messenger of Allah (Allah bless him and give him peace) forbade the stud fee for the stallion and the miller’s measure.” [Bayhaqi]

Alternate View on the Miller’s Measure 

“If a person were to pay a weaver with spun yarn to weave it into cloth, the scholars of Balkh — such as Nasr ibn Yahya, Muhammad ibn Maslama, and others — permitted this type of hire in the case of textiles, because it was the established custom of the people of their town. Custom is a valid proof by which analogy may be set aside, and transmitted reports may be qualified.

Accordingly, this form of hire is permissible in textiles based on custom, meaning that the text concerning the measure of grain for the miller is specified by it. The text applies to the miller, not to the weaver, but since the weaver is analogous to the miller, the text indicates to his case.

Therefore, when we refrain from applying the indicative implication of that text to the weaver while still acting upon the text itself in the case of the miller, such refraining constitutes specification rather than abandonment. And specifying a textual rule by custom is permissible.” [Shami, Muhammad Amin]

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.