#1149: On the Ruling of Inflating Prices of Contract Goods and Labor Wages by a Contractor in order to Maximize Gain

QUESTION:

Assālamu’Alaykum Warahmatullāh Wabarakātuh Ustādh.
Bārakallāhu Fīkum
May Allāh bless your time and may Allāh increase you in knowledge.

Please I want to ask the following questions and I apologise if the questions are much but they are all related and will help one to understand the complete scenario.

1. If a client contracts you as an engineer to supervise a work from A-Z and the money agreed on, is small compared to the service rendered. But you accepted the amount so that you can feed your family. Now, can you tell the laborer you bring to work for the client to inflate his price so that he can give you a return later?

2. Can one bargain price with the client and later bring laborers to do it at a reduced price, and if one consumes the remaining money, is it Halal?

3. If the client asks one to bargain price with the laborers and the price agreed for example is #1000 and you add #500 on it,is this halal too?

4. In a complex work where construction goes in stages, if the client asks you to give an estimate of a particular stage, can you inflate both the price of laborers and materials to be bought? If the price of materials is reduced for you as a customer at the point of purchase or you bargain below the estimated price is agreed, can you take the remaining balance, and the remaining materials after finishing the work?

In conclusion, if you incur loss due to unforeseen damages, feeling underpaid or otherwise and the client is not ready to do anything about it,can you in inflate the estimate or take the remaining materials to remedy the loss. Remember, the engineer is paid for his supervision from A-Z, only that he was not well paid .
Jazākumullāhu Khayran Ustādh.

ANSWER:

Know, may Allah be pleased with you, that the law of contract in the Shar’iah is clearly guided and spelt out. The limitations of business relations, fairness and transparency are defined already by the Rasul salallahu alayhi wasallam.

That said, there are 4 matters to look at here.
Standing by the stipulations of that contractual agreement becomes binding thereafter
The first, that whenever two parties contract or transact, it is left to their negotiations and agreements and whenever they have agreed, the Shar’iah works with their agreements provided their agreements, stupulations, clauses and contracts do not in any way contradict with any Injunctions in the Shar’iah.

About it, Allah ta’ala said:

يَا أَيُّهَا الَّذِينَ آمَنُوا أَوْفُوا بِالْعُقُودِ

“O You who Believe, fulfill the Terms of the Contracts”

المسلمون على شروطهم؛ إلا شرطاً حرمًّ حلالاً أو أحل حراماً

And the Rasul salallahu alayhi wasallam said:

“Muslims are bound by the conditions and stipulations they agree to, except for stipulations that make Haraam Halaal or make Halaal what is Haraam”. This is recorded by Imaam Abu Isa At-Tirmidhi rahimahullah.

Thus, whenever you agree to a contractual obligation, it is obligatory upon you to stick to it, there is no circumstance under which you can renegade from it unless that which is at loggerheads with the Shar’iah. What this implies is that if you make a contractual agreement and you agree to the rewards and remuneration that will be given to you accordingly, there is no room for you to seek other means of escalating the prices where not otherwise stipulated that renegotiation can be initiated if certain market prices prove to be different. If you feel that you may need to renegotiate if certain unknowns to you become known or thereabout, then it was your preregotive to indicate that during the agreement.

The second, that an Agent (Wakil) is a Representative of His Client (Mutawakkil) in the Shar’iah and whatever he does, it is done on behalf of him.

What this means is that if an Agent represents his client, whatever he does in the name of representation is held and considered in the Shar’iah in exact full recognition as that which was done by the Client whom he represents. What this means is that if you negotiate the price of a commodity on behalf of your client, whatever amount you purchase it, that is the amount your client has purchased it, and whatever remains of the money in balance must be returned to your Client. This is due to the Hadith that was recorded by Imaam Al-Bukhaari from the Hadith of Urwaa bn Ja’ad Al-Baariqi – radiyallahu anhu, that the Rasul salallahu alayhi wasallam gave him a Dinar to purchase for him a ram. So he bought two rams with the Dinaar and then sold one of the rams for a Dinaar and came to the Rasul salallahu alayhi wasallam with a ram and a Dinaar. The Rasul salallahu alayhi wasallam prayed for him for Barakah and collected both from him.

In the Riwaayah of Imaam Ahmad, he said: “This is your Dinaar and this is your Ram”

The Ulamaa said:
Were this Dinaar to be for ‘Urwaa, the Rasul salallahu alayhi wasallam would have handed it over back to him. It therefore becomes clear that whenever you make purchase for someone or you make sales on his behalf, whatever extra you get by way of your bargaining belongs to him and not you, it is his right and it is your responsibility to get it back to him.

In the Riwaayah of Imaam Ahmad, the Rasul salallahu alayhi wasallam said after ‘Urwah explained to him:

اللهم بارك له في صفقة يمينه

“O Allah bless for him whatever transactions and deals he puts his hands in”

And he said: “And I have seen myself (years to come) standing by Kunaasah in Kufah gaining 40,000 before returning to my home”

‘Urwah was truthful to the Rasul salallahu alayhi wasallam and fulfilled the trust of representation, the Rasul salallahu alayhi wasallam blessed his transactions and his business dealings and he saw those blessings come to fruition in the later parts of his life.

And in some Narrations of Al-Bukhaari it was said that due to this Du’a, were ‘Urwah to be transacting Sand, he would have seen the Barakah of that Du’a in it.

There are many benefits to be derived from the Hadith but what concerns us here is to say that it is not permissible to take the change from a transaction in which you are representing someone else as yours because the ruling of a representative in the Shariah is the ruling of the represented, and Allah knows best.

Betraying this trust can take different forms, taking of bribes, cheating, adding that which is not inclusive as a way of escalating profits, deceiving the client, etc.

The third, the Ulamaa are at a consensus that Labour is a form of trust and it is not permissible to betray it.

In the Hadith that was recorded by Abu Daawud As-Sijistaani rahimahullah and Haakim An-Naysaaburi the Rasul salallahu alayhi wasallam said:

(من استعملناه على عمل فرزقناه رزقاً فما أخذ بعد ذلك فهو غلول)

“Whomsoever we employ to carry out some responsibility and we apportion him some provision, whatever he takes after that is Ghulul”

Ghulul is to steal or hide from the booty, or to take from it before its inventory is taken and recorded for the Split and this is clear.

Fourth, Projects that are awarded or given out in lumpsums without the nitty gritty details of pricelists are permissible provided the lunpsum is agreed by both sides of the transaction. Any cuts or portions that are taken by individuals from transactions upon which they are entrusted without directive or permission from the Client or business owner is Haraam by consensus.

What we mean here is that were an individual who wants a wall erected for him to get a bricklayer and said to him how much will you errect this building? If the bricklayer gives a lumpsum which includes his cost of material, Labour and other things, and the Client agrees to it, it is permissible for the bricklayer to take it and exercise his discretion in the Costings, the bargaining and everything and whatever is left belongs to him.

This is because the agreement between him and the client is the erection of the wall for that amount which includes his Labour, his representation and everything cost he might incurr in the process of the work given to him.

And the like of this is like the one who is selling a commodity to a buyer, the buyer has an amount which is offered to him by the seller and the seller already factored all his costs and profit margin into the offered price. There is no harm in this.

Thereafter, based on the forgoing, we proceed to respond to the scenario depicted in the question asked

1. It is not permissible for you to ask your laborer to inflate price on your client because this is a form of cheating and betrayal of trust. We already preceded with a foundation that says any form of kickbacks that ensure an extra amount is laced into the pocket of the employed after his fair amount has been apportioned by his Client is a form of Ghulul and Haraam by consensus. If you know that your Labour is higher than you are offered, it was upon you to state it and to demand for more, not to trick the client into trusting you and then proceed to stab him in the back. Rather, your Client entrusted you with supervising which means you are there to represent him and ensure that everything is done in accordance with specification. It was upon you to make sure he wasn’t even cheated by the laborer, not to do the opposite. To do that is to betray a trust and tontwie a Haraam home to you family.

It had been recorded from the wife of one of the Salaf that she would say, whenever her husband goes out to seek for sustenance:

“Fear Allah as regards us and do not feed us that which is Haraam, for we can be patient with hunger but we can’t be patient with Naar”

اتق الله فينا ولا تطعمنا حراماً، فإنا نصبر على الجوع ولا نصبر على النار.

2. If you bargain a price that includes labor and cost of materials and you have a conclusion with the client that does not include a breakdown of the cost materials. Provided the Client is OK with the lumpsum and agrees to it, it means you are at a discretion to implement it with the kind and quality of materials that you have agreed with him and the details of it is left to you then there is no harm in this. However if the client tasks you with the responsibility of only supervising the work and your agreement or contract does not include getting the work done, then you must make the client understand the details of what transpired and return the excess of the money to him unless he asks you to take what remains thereof, and Allah knows best.

3. This is Haraam without a doubt. You must not inflate prices in order to make a cut for yourself.

4. It is obligatory upon you in quotation of prices to be truthful and fair and to be just and not to betray the trust of employment. This is what brings Barakah to your work. In such a case, make it clear to the Client that your consultancy and your Labour takes such and such an amount, let him pay you for that, don’t inflate prices above their reality in the market.

5. It is not permissible for you to exercise your discretion to remedy your damages by Inflating prices and escalating costs on your client. It was your responsibility to negotiate your wage well at the beginning or to stipulate that renegotiation will be entered if damages occur.

And Allah knows best

Lastly, it is important to draw the attention of everyone who is involved in employments of such kind to the truth about employments and it is the fact that they are trusts entrusted to you about which you shall be questioned before Allah on the Day of Qiyaamah. There is no running from that. Do not stay aloof, escalating prices, cutting corners with sharp practices that will guarantee the punishment of Allah upon you on the Day of Qiyaamah,

We ask Allah to protect us from the caprice of our own soul.

And Allah knows best

Barakallahu fikum
Jazakumullahu Khayran

Abū Āsim

24th Rabiu Thānī, 1443AH

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