Sarf (exchange of money for money: its conditions of mutual receipt, equal weight, no option, no deferment, the kinds of exchange, defective coins, and copper coins)

In language sarf can mean returning a thing, spending, selling, or surplus; hence the money-changer (sayrafi). As a term, for most jurists it is the sale of one price for another, the exchange of money for money of the same or different kinds; for the Hanbalis it is the exchange of property for property by transfer of ownership. ^{1 2} It is one kind of sale in the general sense. It differs from riba, an excess stipulated by one party in an exchange: if the conditions of sarf are broken, riba enters it. It differs from salam, which is the sale of a deferred good for a prompt price, and from barter (muqayada), the exchange of goods other than money. ²

Sarf is lawful when its conditions are met, since it is a kind of sale and God has allowed sale and forbidden riba. Several sound reports establish it, among them the report of 'Ubada ibn al-Samit (may God be pleased with him) on exchanging gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates and salt for salt, equal for equal and hand to hand; the report of Abu Sa'id forbidding gold for gold except equal for equal; 'Uthman's report against exchanging a dinar for two dinars; and Abu Hurayra (may God be pleased with him)'s report on excess and seeking more. ^{2 3 9}

First: mutual receipt of both prices in the session

Jurists agree that both sides must take possession of both prices in the session before the parties part; Ibn al-Mundhir reports a consensus that the exchange is corrupt if they part before receipt. Parting means the bodies of the two parties leaving the session. If they leave together for one's house or the money-changer's shop and receive there without either leaving the other, the majority allow it; the Hanafis count sleep or fainting as not parting. A transfer by bill of exchange (hawala) does not count as receipt. ^{3 4} The Malikis forbid any delay in sarf; they regard a short delay without parting as disliked or allowed by two views. Appointing an agent to receive is valid in the majority view, provided the agent receives in the presence of his principal in the session; in the preferred Maliki view appointing another to receive voids the sarf. ^{4 5}

Second: receipt of part of the prices

If only part of the price is received and the parties part, the sale is void for the unreceived part by agreement. The Hanafi and Shafi'i majority validate what was received and void the rest; another view voids the whole. ^{5 6 7}

Third: no option of stipulation

The majority hold that sarf is not valid with a stipulated option, since the option prevents ownership from passing and so spoils the receipt. Among the Hanafis, if the option is waived in the session the contract becomes permitted, against Zufar. The Hanbalis hold that the sale stands and binds on parting. Options for defect or for inspection do not prevent receipt. ⁷

Fourth: no deferment

By general agreement a deferred term may not be attached to sarf, since receipt of both prices is required before parting. A term for either side or both voids it. For the Hanafis, if the holder of the term waives it before parting and they receive, the contract becomes valid, against Zufar. ⁸

Fifth: equality for the same kind

When gold is sold for gold or silver for silver, equal weight is required, and differences in quality or workmanship do not matter for the majority; so worked silver may be exchanged for coin, and a bar for a vessel, provided the weight is equal. Equality must be known at the contract; if it was sold by guess and equality appears in the session the Hanafis allow it, but not after parting. A report of Anas, about a Kisrawi vessel sold for its weight and more, which 'Umar refused, is used by the majority to show that workmanship is not counted. ^{8 9 10} The Hanbalis have a view that sound coins may not be sold for broken ones, since workmanship has value. Ibn Qudama allows a goldsmith to be paid a dirham for his work alongside a ring weighed against two dirhams without it counting as dirham for two. ¹⁰ The Malikis name the exchange of one money for the same kind by weight murataba, by count mubadala, and sarf for gold against silver. They forbid excess in any exchange of the same kind, but allow a small excess in mubadala under conditions: the coins are counted and not weighed, fewer than seven, the excess is in weight not in number, the excess is a sixth or less of each dinar or dirham, and the exchange is a kindness, not a bargain. They allow a traveller to hand uncoined metal to a minter and pay the minting fee, and in necessity to exchange a dirham for food and silver under conditions. Murataba is not allowed any excess, though it is allowed if one whole side is better than the whole other. ^{10 11 12}

Kind one: one money for the same kind

Equal and hand to hand, equal in weight and measure, excess and deferment are forbidden by agreement. ⁹

Kind two: one money for another kind

Excess, equality and exchange by estimate are all allowed by agreement, since the kinds differ, provided receipt takes place in the session before parting, to avoid riba by deferment. ¹²

Kind three: money for money with goods added

If one side is money and the other is money of a different kind with goods added, the sale is valid with receipt in the session, whether by estimate or with excess. If money is exchanged for money of the same kind with something added, such as two dirhams for a dirham and a measure of dates, the jurists differ: the Shafi'is and the Hanbali school forbid it; the Hanafis and some Hanbalis allow it if the price exceeds the plain money; the Malikis forbid selling an ornamented item for its own metal except on three conditions: the ornament is permitted, is fixed so that removing it would cause loss, and is a third or less of the value. ^{13 14 15}

Kind four: a bundle of coins for a bundle

The majority (Malikis, Shafi'is, Hanbalis, and Zufar among the Hanafis) hold that the sale is void, because dividing one property over another leads to excess or to not knowing equality. The Hanafis, other than Zufar, allow it by treating each kind as matched with the other. ^{15 16}

Kind five: sarf on credit

If a man buys dirhams for a dinar and each lends the other the sum he is to give, the Hanafis, Shafi'is and Hanbalis hold it valid if both receive in the session; the Malikis void it, since a loan is apt to delay receipt. If both prices are debts, the Shafi'is and Hanbalis forbid it as a sale of debt for debt; the Hanafis allow the debtor who owes ten dirhams to sell a dinar to his creditor for them by setoff, as a juristic preference. The majority allow taking one money in place of another at the day's rate, when it is received in the session, on the basis of Ibn 'Umar's report about camels at al-Baqi'; al-Bayhaqi held the report to be stopped at Ibn 'Umar. Ahmad hesitated where the sum due was deferred. ^{17 18 19}

Kind six: adulterated dirhams and dinars

Jurists allow dealing in adulterated coins that circulate by custom. The Hanafis treat a coin whose alloy predominates as goods, so it may be sold for pure coin when the pure part exceeds what it contains; with equal alloy it is treated like the dominant metal. The Malikis allow selling an adulterated coin for another adulterated or for pure coin, on the better view, on condition that it is sold to someone who will break it down or hoard it, and disliked to sell to one who would pass it on. The Shafi'is forbid selling pure for adulterated coin at all, and the Hanbalis allow it only where the alloy is equal and known. ^{19 20 21 22}

Kind seven: copper coins

Copper or iron struck as coin (fulus). Jurists agree that they may be sold. On exchanging them for money on credit, or for one another with excess, two lines exist: the Shafi'is, the Hanafis except Muhammad, and the Hanbalis in the familiar view hold there is no riba in copper coins counted by number, since they are not measured. The Malikis and Muhammad forbid selling one fals for two and exchanging fulus for gold or silver on credit. Ibn Taymiyya favours prohibition, since current coins take the rule of money. The editors' footnote notes that earlier jurists did not discuss paper money, since it did not exist in their time, and that some modern scholars hold paper money to be a price in its own right with the rules of the two precious metals. ^{23 24 25}

A defect option does not stop the contract from being complete, so it applies to sarf. The Hanafis: if the price received was a specific coin and is returned for a defect, the contract is dissolved; if it was a debt and the defective coin is returned in the session, the contract is dissolved, and after parting it is void according to Abu Hanifa and Zufar, but not according to Abu Yusuf and Muhammad if the exchange is made in the session of return. The Malikis: a defect found in the session allows the contract to stand with a claim for the rest or a replacement; after parting or delay it stands only if the defect is accepted, otherwise it is undone. The Shafi'is: if one of the coins proves to be copper the contract is void; if part proves so, it stands for the rest. The Hanbalis: a defect of another kind voids the contract; a defect of the same kind leaves the buyer the choice of keeping or returning. ^{25 26 27}

The majority (Malikis, Shafi'is, and Hanbalis in the familiar view) hold that dirhams and dinars are fixed by being named in the contract, so a specific coin is owed and may not be replaced. The Hanafis, and the Hanbalis in one narration, hold that money is not fixed by being named, so it may be replaced and the contract is not voided if the coin proves to be seized. ²⁷