Wa`alaykum as-salamu warahmatullahi wabarakatuh.
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
Islam permits selling by auction and does not forbid it, according to the most correct and well-known opinion of the scholars.
Shedding more light on selling by auction, the prominent Saudi scholar and lecturer Sheikh M. Saleh Al-Munajid, states:
The basic principle with regard to transactions is permissibility unless there is a specific injunction indicating otherwise.
Only when the general Islamic parameters that secure justice and fairness are infringed upon, a particular transaction turns to be impermissible.
The Ruling on Selling by Auction
Islam permits selling by auction and does not forbid it, according to the most correct and well-known opinion of the scholars. This is based on the following proofs:
1 – Jabir said: A man had decided that a slave of his would be manumitted after his death, but later on he was in need of money, so the Prophet (peace be upon him) took the slave and said, “Who will buy this slave from me?” Nuaym ibn Abdullah bought him, and the Prophet handed the slave over to him. (Al-Bukhari and Muslim)
Al-Bukhari included this hadith in a chapter titled “Bay` al-Muzaayadah (Selling by Auction).”
Ibn Hajar quoted Ibn Battal as he said: The words of the Prophet “Who will buy this slave from me?” indicate that he was offering him to the highest bidder so that the needs of the bankrupt man for whom he was selling him could be met. (Fath al-Baari, 4/354)
2-Ataa said: I met some people who saw nothing wrong with selling booty to the highest bidder. (Al-Bukhari)
In an auction, the vendor offers his goods for sale, and the purchaser offers to buy them for a certain price. If the vendor does not accept that price, that is the end of the matter and there is no transaction.
Then he will say, “Who will offer more?” A second purchaser can then offer a higher price, and so on.
In this case, each offer is a separate and independent deal; and there is nothing wrong with that.
Allah Almighty knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.