Early settlement discount

· 12 Jumada II 1441 AH1 min readEnglish
Business and DealingsTradeValid & Invalid transactions

Question

Please advise if the following type of transactions are valid, not valid or improper:

A business has an agreement with a supplier to pay after 30 days from date of delivery with a limit of R50 000.00.

1. The business puts a condition on all purchase orders, that should the supplier request an earlier payment, it will incur a early settlement discount of x% on a daily basis.

2. At times the business goes over the limit of R50 000.00 , hence early payment now becomes binding in order for the supplier to deliver further orders, can the business in this situation claim the x% early settlement discounts.

Answer

This is not permissible.

And Allah Ta'ala (الله تعالى) knows best.

Answered by
Mufti Ebrahim Salejee (Isipingo Beach)
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