Assalaamu alaykum wa rahmathullaahi wa barakaatuhu. We are running a goat farm. Allah willing, this year on Eid Al-Ad-hah, we are planning to auction of the goats. The one who offers the highest sum will buy on the spot. What is the ruling in the Islamic Shariah in the light of the Quran and Hadith? May Allah reward you.

All perfect praise be to Allah, the Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad, sallallahu ‘alayhi wa sallam, is His slave and Messenger. 

The auction sale is permissible provided that two conditions are met:

First, that it does not involve deliberate harm against anyone.

Second, that the bidder really wants to buy the commodity; otherwise, it is considered Najash (bidding to raise the price without intention to buy), which is prohibited.

The difference between auctions and outbidding or overriding a sales transaction is that the outbidder wants to override the sales transaction of his fellow Muslim by offering the seller a higher price after concluding the sales contract and before leaving the contract session, or during the period of Khiyaar Ash-Shart (the right of one or both or a third party to confirm or cancel a contract within a period of time). As to overriding a sale transaction, it occurs after agreement on the price between the seller and the buyer and before finalizing the sales contract. The auction, on the other hand, denotes offering a higher price for a commodity before the seller agrees on a specific price offered by another buyer.

The Kuwaiti Encyclopedia of Fiqh reads:

“The scholars excluded the sale by auction from the category of overriding a sale transaction. It means that the commodity is put up for sale and the potential buyers offer their prices until the seller accepts one offer (the highest price). This sale transaction is valid according to the consensus of Muslims. The Hanbalis underlined the permissibility of such a transaction and declared it a valid transaction and did not regard it to be disliked. The Shaafi‘is stipulated that there must not be an intention of harming others and that the intention of buying the commodity must be present; otherwise, offering a higher price in this situation would be unlawful because it falls under the category of Najash.”

Thus, the questioner realizes that there is no religious impediment to selling his goats in the manner which he has planned as described in the question.

Allah knows best.