Question:

Asalam O Alaikum warahmatullahi wabarakatuhu.

Mufti sab, if we pay some amount as security deposit that in case if midway we want to break contract then they can keep that amount else if we pay all our amount without breaking contract then they can return that amount in the end? Is it permissible in shariah?

Jazakumullah Khairan

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

Waalaikumussalam.

That would not be allowed in the Shariah, as that amount has no عوض (counter-value) and therefore will be considered riba.

In the Shariah, if two parties enter into a transaction then the transaction becomes binding. One party cannot thereafter cancel the transaction without the agreement of the other party. If both parties agree to cancel it, the entire money must be refunded. For one or both parties to agree to lose a certain amount of the payment in the case of cancelling the transaction is not allowed.

And Allah knows best.

Mufti Faizal Riza
6/02/2021
Darul Ifta Australia
www.fatwa.org.au

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