Can a retailer retain the deposit if the transaction is cancelled upon the request of the purchaser?

earnest-money-deposit

Question:

Can a retailer forfeit a deposit if the transaction is cancelled upon the request of the purchaser?

Answer:

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

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, a transaction cannot be unilaterally cancelled.  To rescind a purchase, both parties have to mutually agree to terminate the transaction.

Deposit is commonly referred to the amount forwarded in the beginning of a transaction to show one’s commitment to the transaction.

In terms of Sharī`ah, the above deposit is regarded as earnest money or a down payment and is a percentage of the total price.

In the event of a mutual rescindment of a transaction, the seller is obliged to return the deposit and cannot forfeit the right of the buyer.  The deposit funds will remain a trust in the possession of the seller and must be given to buyer.

And Allah Ta’ālā Knows Best

(Mufti) Faraz Adam al-Mahmudi,
www.darulfiqh.com

About the author:

. Follow him on Twitter / Facebook.