NAME: ASAD MASOOD QAZI

Registration No: 09-arid-406

CLASS: BSIT

SECTION: A

ASSIGNMENT OF: PROFESSIONAL ETHICS

TOPIC: Islamic Rules in Business

(With the help of Quran & Hadith)

NAME OF INSTRUCTOR: Mr. Faisal Durani

Date: 27-10-2010
 ISLAMIC RULES IN ISLAM

Islam is an entire way of life, and Allah's Guidance extends into

all areas of our lives. Islam has given detailed regulations for our
economic life, which is balanced and fair. Muslims are to
recognize that wealth, earnings, and material goods are the
property of God, and that we are merely His trustees. The
principles of Islam aim at establishing a just society wherein
everyone will behave responsibly and honestly. The fundamental
principles of the Islamic economic system are as follows:

• Muslims are not to deal in interest. "Those who devour

usury will not stand....Allah has permitted trade and forbidden
usury.... Allah will deprive usury of all blessing, but will give
increase for deeds of charity..." (Qur'an 2:275-6). "O you who
believe! Devour not usury, doubled and multiplied. But fear
Allah, that you may really prosper" (Qur'an 3:130) This
prohibition is for all interest-based transactions, whether giving
or receiving, whether dealing with Muslims or non-Muslims. It is
reported that the Prophet Muhammad (peace be upon him)
cursed those who pay interest, those who receive it, those who
write a contract based on it, and those who witness such a
contract.

• It is forbidden to gain property or wealth by fraud, deceit,

theft, or other falsehoods. "...Give just measure and weight,
and do not withhold from people the things that are their due.
And do not do mischief on the earth after it has been set in
order. That will be best for you, if you have faith" (Qur'an 7:85).

• It is particularly hateful for a guardian to take from an

orphan's property. "To orphans restore their property (when
they reach their age). Do not substitute your worthless things
for their good ones, and do not devour their property by mixing
it up with your own. For this is indeed a great sin" (Qur'an 4:2).

• Forbidden are earnings from gambling, lotteries, and the

production, sale, and distribution of alcohol. "O you who
believe! Intoxicants and gambling, sacrificing to stones, and
divination by arrows are an abomination of Satan's handiwork.
Eschew such abomination, that you may prosper" (Qur'an
5:90).

• It is unlawful to hoard food and other basic

necessities. Everyone should take what they need and no more.
"And let those who covetously withhold of the gifts which Allah
has given them of His Grace, think that it is good for them. No,
it will be the worse for them. Soon it will tied to their necks like
a twisted collar, on the Day of Judgment. To Allah belongs the
heritage of the heavens and the earth, and Allah is well-
acquainted with all that you do" (Qur'an 3:180).

• A Muslim should be responsible in spending

money. Extravagance and waste are strongly discouraged.
"[The Servants of Allah are] Those who, when they spend, are
not extravagant and not stingy, but hold a just balance
between those extremes" (Qur'an 25:67). "O Children of Adam!
Wear your beautiful apparel at every time and place of prayer.
Eat and drink, but waste not by excess, for Allah loves not the
wasters" (Qur'an 7:31).

• Muslims must pay Zakat (alms). "And they have been

commanded no more than this: to worship Allah, offering Him
sincere devotion, being true in faith. To establish regular
prayer, and to give zakat. And that is the religion right and
straight" (Qur'an 98:5). Every Muslim who owns wealth, more
than a certain amount to meet his or her needs, must pay a
fixed rate of Zakat to those in need. Zakat is a means of
narrowing the gap between the rich and the poor, and to make
sure that everyone's needs are met.

• Muslims are encouraged to give constantly in charity. "Your

riches and your children may be but a trial. Whereas Allah, with
Him is the highest reward. So fear Allah as much as you can,
listen and obey, and spend in charity for the benefit of your
own souls. And those saved from the selfishness of their own
souls, they are the ones that achieve prosperity" (Qur'an 64:15-
16). The Prophet Muhammad once said that "nobody's assets
are reduced by charity."
Trade and commerce have always been a part of Islam. From pre-Islamic
days, the Holy City of Mecca has been the center of commercial
activities. It was indeed the annual trading center of Mecca that provided
Prophet Mohammad the forum for preaching Islam.
The early Muslims were not only engaged in trade but they went to
distant lands in connection with business. Islam in fact reached East and
West Africa, East Asia through the business people.
Islam encourages work in general, and trade and commerce in particular,
Prophet Mohammad was himself engaged in this profession before he
became a prophet. He was a successful businessman. Known for
integrity, he bore the honorific title, the Trustworthy, The Quran states:
"God has made business lawful for you"
In addition, the Qur'an includes rules not only for manners and hygiene,
marriage and divorce, but it also lays down detailed rules for commerce
and politics, interest and debts, contracts and wills, and industry and
finance. Islam has permitted and in fact encouraged business. Islam lays
out the basic principles of our economic behavior as consumers,
producers and owners of wealth.
The Islamic principle in business is based on individual enterprise and
correspondingly individuals reward. It is basically based on benefiting the
humanity while maintaining God’s orders.
In business relationships Islam strictly forbids any discrimination between
people based on their religion, sex, or gender.
There is no basic conflict between good business practice and profit
making in Islam. Islam looks at profit as secondary way to measure
efficiency.

Business ethics in Islam

Trust:

Trust of God's creation and all that is in it. God has created and perfected
the whole universe then Man is set over it all with delegated. So as
Muslims we realize that we are just trustee for God’s universe and we
truly do not owe anything in this life. That kind of belief along with your
knowledge that God sees all what you do, will make you work under
constant surveillance, and keeps your performance at its best while
following God’s defined conduct.
(Quran 45-13): and He has subjected to you, as from Him, all that is in
the heavens and on earth: behold, in that are Signs indeed for those who
reflect.
(Quran 6:164): It is He who hath made you (His) agents, inheritors of the
earth: He hath raised you in ranks, some above others: that He may try
you in the gifts He hath given you: for thy Lord is quick in punishment: yet
He is indeed Oft-Forgiving, Most Merciful.

2. Justice and Honesty:

Justice can be defined as just conduct, fairness exercise of authority in

maintenance of right and fair dealing between each other regardless of
faith is strictly laid down in Islam. Honesty incorporates the concepts of
truthfulness and reliability and covers all aspects of relationships in
human life thought, word and action. It is more than just accuracy; it is an
attitude with integrity.
(Quran 4:135): O ye who believe! Stand out firmly for justice, as
witnesses to Allah, even as against yourselves, or your parents, or your
kin, and whether it be (against) rich or poor: for Allah can best protect
both. Follow not the lusts (of your hearts), lest ye swerve, and if ye distort
(justice) or decline to do justice, verily Allah is well-acquainted with all that
ye do.
(Quran 6:115): Perfected is the Word of thy Lord in truth and justice.
There is naught that can change His words. He is the Hearer, the
Knower.
(Quran 11:85): O my people! Give full measure and full weight in justice,
and wrong not people in respect of their goods
”O you who have attained to faith! Do not devour one another’s
possessions wrongfully not even by way of trade based on mutual
agreement and do not destroy one another: for behold, God is indeed a
dispenser of grace unto thee!
Oh ye who believe! Eat not up each other's property by unfair and
dishonest means." (4:29)

3. Mutual Respect:

The third principle is mutual respect and consideration for others is also
inherent in the moral teachings of Islam.
The application of this has come to mean that self interest only has a
place in the community in as much as it takes into account the interests of
others. So a person or organization can not under self benefit measures
takes an action or start a business that will harm the community or
 environment more than providing good to it. The prophet (PBUH) said:
"You will not attain righteousness, unless you give of that which you
love. And said "God loves kindness when you deal with any matter" And
also said: "You will not enter Paradise until you have faith and you will not
have faith until you love one another". What is forbidden in business in
Islam?

1. Islam has not permitted producing, selling and purchasing of

goods, which are prohibited in Islamic law. Alcohol, Drugs.. The
Prophet of Islam has said: "When God prohibits a thing He
prohibits (giving and receiving) the price of it as well."
2. Islam has also prohibited any kind of transaction involving
uncertainty, as this could lead to quarrel or litigation. The Prophet
of Islam has forbidden transaction involving unspecified quantity,
acceptance of money for fish in the river or bird in the air as there is
element of uncertainty. Similarly the Prophet of Islam has
prohibited sale of fruit till they are ripened. However; if the element
of uncertainty is very small, the transactions are permissible.
3. Islam condemns hoarding to make high profit at the cost of
public interest (when it is needed or so it will become needed).
Islam, however; allows normal trade - buying and selling of goods
again and again at a reasonable profit.
4. Islam prohibits fraud in business dealings. The Prophet has
said: "Sell the good and bad separately. He who deceives is not of
us" The sin of fraud is greater if the seller supports it by swearing
falsely. The Prophet has said, "Swearing produces ready sale but
blots out blessing".
5. Islam prohibits buying or selling what’s legal if we know that it
will be used for illegal use: weapons, abortion drugs, drugs for
meth making, and so on.
6. INTEREST: Muslims are not allowed to pay or receive
interest. This is a shared value in all religions. The Quran is explicit
about it and says, "God- has permitted for you trade and prohibited
interest" (2: 275).

Depositors in an Islamic bank would be treated like shareholders, would

receive dividends when the bank makes a profit, and would lose capital
when it suffers a loss.
The prohibition or fixed interest flows from Islam's concern for social justice
Interest is said to reinforce a tendency for wealth to accumulate in a few
hands
So how would you by buy a house for example? A new trend has recently
started that work as follows: An Islamic financing company buys the house.
The house then is leased back to you for a fixed period of time. You pay
the finance group the rent value plus an additional amount for the house
purchase. The value or the lease home will be reassessed every year, and
the rent will be adjusted accordingly. In Closing
To close let me reassure that it is the responsibility of every Muslim to be
ethical in their daily business practices and to act responsibly toward the
community in which it serves. To review its business practices and remove
from its organization any unlawful activities and devote themselves to
productive and lawful activities that benefit mankind.
It is everyone’s responsibility to take a long and serious look at their
organization and implement policies and procedures that are conducive.
As a general guide to Muslims in business we should adopt the following
overriding principals:
• Love God and his commands more than your trade or business
• Be honest and truthful
• Keep one’s word
• Be humble in how you conduct your life
• Do not deal in fraud
• Do not bribe
• Deal justly

Business and Economics

Islamic finance and economic practice, including real estate

financing, business ethics, and the ban on usury/ interest.
Economic System of Islam
Islam has given detailed regulations for our economic life, which
is balanced and fair. Muslims are to recognize that wealth,
earnings, and material goods are the property of God, and we are
merely His trustees. Here is an overview of the basic principles of
Islamic economics, including discussions of interest/usury,
gambling, fraud, extravagance, and greed.
Islamic Mortgage.
Many Muslims, especially those living in non-Muslim countries,
give up on the idea of ever owning their own home. Many families
choose to rent for the long-term rather than participate in a bank
loan which involves the taking or paying of interest. In recent
years, however, the market has opened up to Islamic mortgage
offerings which are compliant with Islamic law.
When the poor are permanently poor, and the rich, permanently rich, that
is oppression! All around the world today that economic oppression exists,
and is constantly increasing, - the poor grow poorer and the rich, richer.
Riba is the cause. A predatory global elite, centered in the West, but also
present around the world, is constantly sucking the wealth of mankind and
impoverishing the masses through riba. Their ultimate objective is to utterly
enslave all of mankind in a new sophisticated slavery. Political, legislative,
judicial and legal systems, the media etc., are all created by the oppressor,
and all function to preserve the system of economic oppression. Allah, the
Most High, has strictly prohibited riba. Yet the world today, including the
Muslim world, is saturated with riba. This has confirmed the ominous
prophecy of Prophet Muhammad (s) who prophesied, in a hadith received
from Abu Hurairah (ra), the following:

There will come a time, he said, when you will not be able to find a single
person in the world who will not be consuming riba. And if anyone claims
that he is not consuming riba then surely the vapor of riba (In another text
the dust of riba) will reach him. (Abu Daud, Mishkat)

Dealing with riba (usury or interest) has spread widely among many
Muslims today; to the point that many Muslims do not see any problem
with it, either because of lack of knowledge or absent-mindedness. Despite
the fact that all Muslim scholars agree that dealing with riba (usury or
interest) is a major sin because the prophet (S.A.W.) mentioned explicitly
in a hadith reported by Imam Bukhari and Muslim, "Avoid the seven
destructive sins", then he mentioned one of them as, "and dealing with
riba (usury or interest)"

Muslims are very particular about Halal and Haram. The confusion whether
interest is same as usury (Riba) or not, needs a clarification for good. This
is a historic fact that usury has been prohibited in all original texts of Torah,
Qur'aan.

However, practically, Usury or interest is same as a guarantied return to

the lender regardless the borrower makes a profit or not. The Islamic view
is truly just and humanitarian. It requires a lender to participate in the profit
as well as loss of the borrower if any. From Shariah point of view, interest
is Riba and it is Haram.

MAY ALLAH ALMIGHTY GIVE US ABILITY TO FOLLOW THE ISLAMIC

RULES IN REAL MEAN.
(AAAMEEEN)