Ruling on selling on consignment

Selling on consignment
means that a person buys some goods and agrees with the seller that if he
does not manage to sell them, then he will return them to the seller;
whatever he sells of them he will have bought them. 

The scholars clearly stated that this kind of transaction is
not allowed, because it involves ambiguity. Neither the seller nor the buyer
knows how much will be bought, and whether all or some or none of the goods
will be returned. 

It is narrated that the Prophet (peace and blessings of
Allaah be upon him) forbade ambiguous transactions. Narrated by Muslim
(1513). An ambiguous transaction is any in which the outcome is unknown. 

Ibn Qudaamah said in al-Mughni (6/325): 

If he stipulates that if
the product is sold, that is fine, otherwise he will return it, this is an
invalid condition, but does it invalidate the sale? There are two opinions.
Al-Qaadi said: the texts from Ahmad indicate that the transaction is valid.
This is the view of al-Hasan, al-Sha’bi, al-Nakha’i, al-Hakam, Ibn Abi Layla
and Abu Thawr. The second view is that the transaction is invalid. This is
the view of Abu Haneefah and al-Shaafa’i, because it is an invalid
condition, so it invalidates the transaction. End quote. 

Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) was
asked about selling on consignment and he said: 

What this means is when a person says, I sell these goods to
you and whatever you manage to sell is what you have bought, and whatever
you do not manage to sell, give it back to me. This transaction is haraam,
because it inevitably involves ambiguity, because neither the buyer nor the
seller knows how much of these products will be sold, so the matter is
unknown, and it is narrated that the Messenger (peace and blessings of
Allaah be upon him) forbade ambiguous transactions, and this is undoubtedly
an ambiguous transaction. 

But if it is necessary
for the two parties to do the transaction in this manner, the seller should
give his goods to the other party to sell as his agent, and pay him for his
work as an agent. This will serve the interests of both parties, and the
second party will be an agent of the first and be paid for that, and there
is nothing wrong with this. End quote.

 Liqaa’aat al-Baab il-Maftooh,
3/183.