The first: someone purchases a commodity intending to use it—for eating, drinking, clothing, riding, housing, or similar purposes. This is the sale that Allah has made lawful.

The second: someone purchases it intending to trade in it, either locally or elsewhere. This is the trade that Allah has permitted.

The third: neither of these is his purpose; rather, he needs money. Unable to obtain an advance, whether through a loan or a prepaid forward sale, he purchases a commodity to sell it and receive its price. This is tawarruq. It is disliked according to the stronger of the scholars’ two opinions, which is also one of the two positions reported from Ahmad.

As ‘Umar ibn ‘Abd al-‘Azīz said:

“Tawarruq is the sister of usury.”

Ibn ‘Abbās said:

“If you establish a cash valuation and then sell for cash, there is nothing wrong with that. But if you establish a cash valuation and then sell on deferred payment, that is dirhams exchanged for dirhams.”

His words “if you establish a valuation” mean “if the commodity is appraised.” That is, if the commodity is appraised at a cash price and you purchase it on deferred payment, your sole purpose is to exchange dirhams for dirhams. This is how tawarruq works: a person establishes the commodity’s immediate cash value, then purchases it on deferred payment for more than that.

He may say to the other party, “I want you to give me one thousand dirhams; how much profit would you want?”

The other replies, “Two hundred, or thereabouts.”

Or he says, “I have this property, worth one thousand