Q: I have been asked a question by someone of the following matter. Just setting out the case. The person needing the advice is a businessman who is dealing with an agent of another party. The agent comes with a tender to provide in bulk an item for the third party. By agreement the businessman tells the agent of the third party that he will give him 7.5 percent commission on the amount of the bulk. In order to give the 7.5 percent commission, the businessman inflates his usual price of the item in order to incorporate the 7.5 commission i.e if the businessman would usually sell an item for R10 000 he would now quote the price as R10 750 so that the agent of the third party can get the commission of R750 from the businessman . The way in which this works is that the agent will get the quotation approved to the amount of R10 750 and get the cheque to that amount of which he will give R10 000 to the businessman and will retain the R750 for himself and the goods will then be supplied. Bare in mind that the businessman still only makes an actual invoice of R10 000 and the transaction takes place only between the businessman and the agent of the 3rd party in which the 3rd parties information is not disclosed to the businessman. Is such business practice permissible? If not, what is the way forward in keeping this business relationship, again baring in mind that if the businessman does not give any incentive to the agent the agent will no longer transact with the businessman and together with that the businessman does want to lose out on the profit based on his normal prices and hence inflates the price to provide an incentive to the agent of the third party. I am an academic and I need more insight on the islamic perspective and permissibility of such a case and what is the best course to follow.
A: It is permissible.
And Allah Ta’ala (الله تعالى) knows best.
Answered by:
Mufti Ebrahim Salejee (Isipingo Beach)