SS 48: Options to Terminate Due to Breach of Trust (Trust-Based Options)
What this standard is about
A sale contract is supposed to be honest. The buyer should get what was described, in the condition described, at a fair price. This standard covers what happens when that trust is broken.
It sets out three separate rights for the buyer. The first covers verbal deception (khiyar al-taghrir): the seller says something untrue that makes the buyer pay more than the market price. The second covers deceptive conduct (khiyar al-tadlis): the seller makes the item look better than it really is. The third covers price gouging (khiyar al-ghabn): the price is far above what experts say the item is worth.
This standard does not cover faulty goods (that is SS 51) or cooling-off periods (SS 52 and SS 54). It only deals with dishonesty and overcharging.
Why it exists
Islamic law treats a sale as a trust. The default rule is that what is sold should be free from hidden problems and fairly priced. When a seller breaks that trust through lies or manipulation, the buyer should not be trapped in the deal. This standard gives buyers a clear, limited right to walk away, and it sets the conditions so the right cannot be abused.
The key rules, simply put
- If the seller verbally deceives the buyer (khiyar al-taghrir), the buyer may cancel the contract and return the item within the period normally allowed for returns.
- Verbal deception includes lying about the cost price in a markup sale, fake bidding at auctions to push the price up (najsh), false claims that an item is unavailable elsewhere, and misleading company announcements meant to pump up share prices.
- If the seller's conduct makes the item look better than it is (khiyar al-tadlis), such as false branding, painting an old car to look new, or adding substances to improve its appearance, the buyer may return the item or keep it. If the buyer keeps it, no compensation is owed.
- For the conduct-based right to apply, the deception must come from the seller, the buyer must not have known about it, and the deception must still be in effect.
- If the buyer is charged far above the market price (khiyar al-ghabn), judged excessive by expert valuers according to normal business practice, the buyer may cancel or accept the deal. Accepting means no compensation, but the two sides may agree on a payment instead of cancellation.
- Price gouging covers cases such as selling to a trusting buyer who does not negotiate (mustarsil), brokers colluding with sellers to inflate prices, and exploiting an exporter's ignorance to buy below market price.
- These rights lapse if the item is destroyed or used up before the buyer acts, if the buyer delays returning it without excuse when return is possible, or if the buyer resells it after discovering the problem.
- None of these rights pass to the buyer's heirs if the buyer dies.
An everyday example
A man buys a used car after the dealer paints over rust and rolls back the odometer to make it look newer. A week later a mechanic shows him the hidden rust. Under this standard, the buyer can return the car and cancel the sale, because the seller's conduct portrayed the car as better than its actual condition.
Words to know
- Khiyar al-taghrir — the right to cancel a sale because of the seller's verbal deception.
- Khiyar al-tadlis — the right to cancel a sale because of the seller's deceptive conduct.
- Khiyar al-ghabn — the right to cancel a sale because the price was far above market value.
- Najsh — fake bidding at an auction to drive the price up.
- Mustarsil — a buyer who trusts the seller and does not negotiate the price.
Source
- AAOIFI Shariah Standard No. 48 — full text in the 2015 Shariah Standards book — https://aaoifi.com/download/24233/