Is a pre-arranged agreement (Muwata'ah) to exchange dissimilar items or currencies sequentially (like selling bad dates for good dates via an intermediate medium of exchange) permissible?

Chapter on Riba (Usury) and Exchange (Sarf)

Al-Mughni

Book of Sales

Book 12 · Issue 4 · Bab 3

Open in Qurani

Primary text

If there is a prior agreement (Muwata'ah) for such a transaction, it is impermissible as it constitutes a forbidden artifice (Hilah Mahramah). The rationale is that artifice aimed at circumventing religious laws is prohibited.

Supporting text

Abu Hanifa and Al-Shafi'i held that it is permissible provided that the arrangement was not explicitly stipulated within the contract itself.