The Messenger of Allah (saw) said:

The owner of the good can sell it at the price he is pleased with, and he can refuse to sell it at the price he is not pleased with. Therefore it is permitted for the good’s owner to set two prices for the good,a price for immediate (sale), and a specific price for one specific period or an instalment price for numerous periods. Hence it is permitted for the seller to bargain with the buyer for any of the two prices he will accept to sell. All this is bargaining over the price and not a sale. If they both agree over a specific price and the seller sells to the buyer for the immediate price and the buyer accepts, or he sells for the deferred price and the buyer accepts, then this is valid as it is bargaining over the sale and not the sale. Bargaining is permitted because the Messenger (saw) bargained. Ahmad narrated from Anas bin Malik

And the sale of an auction is bargaining. It has been establied that the prophet (saw) bargained. It is narrated by Ibn Majah from Suwayd bin Qays who said:

As for the end of the bargaining, the sale has is contracted by the mutual consent of the two contractors upon one specific price for the sale so the sale is valid. This is if there was bargaining over the price of the good whether immediately or deferred then the contract occurred over one of the two specifically and individually. Similarly it is permitted for the seller to sell his good for two prices, the first for cash and the other for credit. So if one person said to another, ‘I sold you this good for fifty in cash and sixty in credit’ so he said to him, ‘I bought it for sixty in credit.’ Or he said, ‘I bought it in cash for fifty’ the sale is valid. Similarly if he said to him, ‘I sold you this good for sixty in credit with an increase of ten over its original price in cash due to the delay in paying the price’ and the buyer said, ‘I accepted’ the sale is also valid. And of greater precedent if he said to him: ‘The price of his good is thirty in cash and forty in credit’ and he said, ‘I bought it for thirty in cash’ or he said, ‘I bought it for forty in credit’ so the seller said, ‘I sold it’ or ‘Take it’ or ‘It is for you’ then the sale is valid because in this last example the bargaining occurred over two prices and the sale over one price. As for the first examples, the sale occurred over two prices. It is permitted in the sale contract to set two prices for one good, an immediate price and a deferred price i.e. a cash price and a credit price as a debt due to the generality of the evidences that came in permitting trade. Allah (swt) said:

And this is general. As for that for which there came no Shari’ah text forbidding a specific type of sale like the sale of risk for which there came a text forbidding it, then it is an allowed sale. The generality of Allah’s statement: “Allah allowed trade” covers all types of trade as allowed except the types for which a text came forbidding them so they became haram by the text excluding from the generality. There did not come any clear text against setting two prices for any good, an immediate price and a deferred price so it became allowed by taking the generality of the ayah. Also he (saw) has said:

And the two contractors here have an option and the sale was completed with both their consent. The majority of the fuqaha have stated that it is allowed to sell something for greater than its daily price due to deferment i.e. due to delaying the payment of the price. It is narrated from Tawus, Al-Hukm and Hammad that they said there is no harm if it is said: ‘I sell to you in cash for so much and in credit for so much’ so he goes for one of the two. Ali (ra) has said:

Hence this demonstrates the bargaining over two prices for one good then the contract takes effect over one of them by the consent of both and this is permitted, and the sale in this form is valid. Similarly it is clarified that contract’s offer takes effect over two prices and the buyer’s acceptance of one of the two prices in an explicit clear way with complete specifications, this is similarly permitted due to the generality of the evidences and because there is no clear text forbidding this type of sale. As for what Ahmad narrated

Its meaning is that in a situation when there are two contracts in one contract like one says: ‘I sell to you this house of mine on condition that I sell you another house of mine for so much’ or ‘on condition that you sell me your house’ or ‘on condition that you marry your daughter to me.’ This is not valid because his saying, ‘I sold you my house’ is a contract and his saying ‘on condition that you sell me your house’ is a second contract and they have gathered in one contract and this is not permitted. It is not meant to prohibit increasing the price due to delayed payment nor the making of an offer on two payments and the acceptance over one of them specifically.

As for what Abu Dawud narrated that the Messenger of Allah (saw) said:

Its meaning is where there occurs two sales in one good like where one sells a good for a price for a period, then when the period arrives with non-payment of the price seller defers the price for another period increasing the named price i.e. considering the good’s price as a bargaining price for another period so he would have sold two sales in one good. Or he sold him the good for a specific price so the buyer buys the good then he seeks delaying paying the price to a specific period. So the buyer accepts, then he sells him the good another sale for a higher price for a named period i.e. the price is increased and the period deferred. This and its like are two sales in one sale so for him is the lesser of the two i.e. the lesser of the two which is the first price. It came in the Sharh Sunan of ibn Rusulan in the explanation of this hadith: ‘This is that he pays in advance in dinars for a qafiz of wheat for one month then when the period arrives and he seeks the wheat from him, he says: Sell me the qafiz in two months so this becomes two sales in one sale because the second sale entered into the first, so it is restricted to the lesser of the two which is the first.’ Whatever is said in explaining the hadith, its stated text and understanding, the occurrence of two sales in a sale i.e. the occurrence of two sale contracts in one sale contract it is not regarding two prices in a contract or one contract upon two prices, so it does not apply upon the instalment sale or upon credit sale. What is prohibited is the occurrence of two contracts in one contract which applies upon all two-contract sales occurring in one contract or one agreement, nor does it apply upon other than this situation no matter how its forms increase.

In conclusion, if one of the contractors said to the other, ‘I sold you my house for one thousand upon your selling me your house for one thousand’ and he says, ‘I have accepted’ in this one sale contract there occurred two sales which is not permitted since the Prophet (saw) prohibited two sales in a sale and two agreements in one agreement. If he said to him, ‘I sold you this house for one thousand’ and he said, ‘I have accepted’; then he said to him, ‘Give me one month to pay the price’ and he said ‘I increase the price for you’ then sells the same house for a period with a price increased on the original price nominated for the sale. This is not permitted because two sales occurred in one sale or in one good or in one contract with one of the two being increased over the other. In this situation the sale is valid but that which is obliged is the lesser price, and if he took the greater price it would be riba because the Messenger (saw) said:

I.e. the lesser of the two or it becomes riba. His statement “the lesser of the two” indicates the validity of the sale and the obligation of the lesser price, so the rule of the lesser obligates the validity of the sale.

Hence it is clarified that what traders do of selling a good with two prices, a specific price if he pays cash and greater price if he pays in instalments, then this sale is permitted. The Shari’ah rule in it is that it is permitted. And what some peasants and owners of gardens do in buying wheat, clothes, animals or tools upon the condition of paying its price at a fixed period until the end of the harvest, and the price is increased for them over its immediate price in exchange for deferring payment to the harvest, this is also permitted even if it were setting two prices for a good, a cash price and a deferred price i.e. a debt. However it is a condition of increasing the deferred price over the immediate price of one good that there should not be clear fraud therein like what is done by usurers who dominate over the people. If there is fraud in this sale, the fraud is forbidden and there applies upon it the rule of fraud in sale and advance credit sale. The forbidden is not a deferred sale for a price increased over the price which would be paid immediately