Is an agent permitted to sell property for less than its market value or less than the price set by the principal?
General Chapter
Al-Mughni
Book of Agency
Primary text
The agent is prohibited from selling below the market price or below the price stipulated by the principal. This view is held by Al-Shafi'i, Abu Yusuf, and Muhammad. The supporting evidence relies on the principle that an unrestricted mandate in a contract of exchange (mu'awadah) necessitates the market price, analogous to purchasing, which the opponents concede requires the market price. If the agent sells for less than the market price or the stipulated price by an amount not typically overlooked in trade transactions (taghabun), the transaction is treated as if the agent lacked authorization to sell.
Supporting text
Abu Hanifa holds that if the mandate for selling is unrestricted, the agent may sell for any price because the permission given is absolute. Furthermore, one ruling from Ahmad states that such a sale is valid, but the agent must guarantee the difference (nuqsan), reasoning that if a sale at the market price is valid, a sale for less is also valid, similar to the ruling concerning a sick person's sale. Under this view, there are two considerations for the amount of the guarantee: either the difference between the market price and the sale price, or the difference between the amount considered within normal margin of trade and the amount outside it.