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All praises be to Allaah, Lord and Sustainer of the worlds, and may the peace and blessings of Allaah be upon our Prophet Muhammad (peace be upon him) and upon his family and companions.
Allaah Subhanahu-wa-Ta’alaa says in soorat-al-Hajj:

“And for every nation We have appointed religious ceremonies, that they may mention the Name of Allaah over the beast of cattle that He has given them for food. And your God is One God (Allaah), so you must submit to Him Alone. And give glad tidings to the Mukhbitin (those who obey Allâh with humility and are humble from among the true believers)”. [al-Hajj (22):34)

“ Mentioning the Name of Allaah over the beast of cattle “ in this aayah refers to the Sacrifice of animal on Eid-ul-Adhaa, a sunnah of Prophet Ibraheem (peace and blessings of Allaah be upon him) and a sunnah of Prophet Muhammad (peace and blessings of Allaah be upon him).

The stronger opinion of scholar that is more supported by the evidence is that the sacrifice of Eid-ul-Adhaa is obligatory, because Allaah Subhanahu-wa-Ta’alaa says:

“And for every nation We have appointed religious ceremonies , that they may mention the Name of Allaah over the beast of cattle that He has given them for food. And your God is One God, so you must submit to Him Alone (in Islam)…” [al-Hajj (22):34]

And Allaah Subhanahu-wa-Ta’alaa says:

Therefore turn in prayer to your Lord and sacrifice. (Al-Kawther 108:2)

And Abu Hurayrah (may Allaah be pleased with him) reported that Allaah’s Messenger (peace and blessings of Allaah be upon him) said, “ Whoever can afford to offer a sacrifice but does not do so, let him not approach our place of prayer .” (Reported by Ahmad and Ibn Maajah; classed as saheeh by al-Haakim. Hafiz Ibn Hajr said in Fath al-Baari that its men are thiqaat).

Any one who intends to do the slaughter on Eid-ul-Adhaa has to follow certain rules. These rules can be summerised in four main categories:
Rules concerning the animal of sacrifice
Rules related to the person offering the sacrifice
Rules concerning the time of sacrifice
Rules related to the meat and other parts of sacrificial animal
Rules concerning the animal of sacrifice

1. That the animal has to be one of the cattle approved by the Shari’ah; as Allaah says;

“And for every nation We have appointed religious ceremonies, that they may mention the Name of Allaah over the beast of cattle that He has given them for food. And your God is One God, so you must submit to Him Alone (in Islam)…” [al-Hajj 22:34]

Allaah Subhanahu-wa-Ta’alaa describes these in Soorat-al-An’aam:

Eight are the pairs: of the sheep two (male and female), and of the goats two (male and female). Al-An’aam 143

And of the camels two (male and female), and of oxen two (male and female). [al-An’aam (6) : 144]

A sheep or goat is used as a single offering and is sufficient for one household;

Abu Ayyoob al Ansaree (may Allaah be pleased with him) said : “At the time of the Messenger of Allaah (peace and blessings of Allaah be upon him), a man would sacrifice a sheep on behalf of himself and the members of his household, and they would eat from it and give some to others .” (Reported by Ibn Maajah and al-Tirmidhi, who classed it as saheeh)

A camel or cow can be shared by seven people, because of the report narrated by Jaabir (may Allaah be pleased with him) who said: “ We sacrificed at al-Hudaybiyah with the Prophet (peace and blessings of Allaah be upon him), a camel for seven and a cow for seven. ” Narrated Muslim
2. The animal has reached the required age;

The Prophet (peace and blessings of Allaah be upon him) said: “Do not sacrifice anything but an adult animal, unless it is difficult for you, in which case you may slaughter a six-month old lamb (jadh’ah) .” Narrated by Muslim.

The adult age is:

One year for a goat or a sheep.

Two years for a cow.

Five years for a camel.
3. The animal is free of an obvious defect;

the Prophet (peace and blessings of Allaah be upon him) said: “ There are four that will not do for sacrifice: a one-eyed animal whose defect is obvious, a sick animal whose sickness is obvious, a lame animal whose limp is obvious and an emaciated animal that has no marrow in its bones . ” (Saheeh, Saheeh al-Jaami’, no. 886).

There are milder defects that do not disqualify an animal, but it is makrooh to sacrifice such animals, such as an animal with a horn or ear missing, or an animal with slits in its ears, etc.

4. The animal is in full possession of the one who is offering the sacrifice; i.e. it is not stolen or taken by force, is of joint possession or held in pledge .

5. The animal can not be sold or given away once selected or bought for sacrifice, unless exchanging for something better. If an animal gives birth, its offspring should be sacrificed along with it.

Rules related to the person offering the sacrifice
1. Being a Muslim:

The sacrifice of Eid-ul-Adhaa is an act of ‘Ibaadah and and is not accepted from any one other than a Muslim.
2. Not removing any hair or nails for the ten days of Zhul-hijjah:

It is necessary for the one who intends to offer the sacrifice that he/she does not remove any hair, nail or skin from the sunset on last day of Zhul- Qa’dah until the sacrifice is done on the Eid day.

Umm-Salamah (may Allaah be pleased with her) reported that the Prophet (peace and blessings of Allaah be upon him) said: “ When you see the new moon of Zhu’l-Hijjah, and if any one of you intends to offer a sacrifice, let him not remove anything from his hair or nails until he has offered his sacrifice .” Narrated Muslim

This hadeeth is reported by all the famous muhadditheen apart from al-Bukhaari.
3. Doing the slaughter with one’s own hands:

This is the sunnah. The Messenger of Allaah (peace and blessings of Allaah be upon him) did his slaughter with his own hands and his companions also did the same as there is great reward in doing so.

Though if one is not able to do so then he/she can appoint some one else to do the slaughter on his/her behalf, In such case one should witness his/her slaughter if at all possible as the Messenger of Allaah (peace and blessings of Allaah be upon him) told his daughter Fatimah (may Allaah be pleased with her) , “ O! Fatimah get up to witness you sacrifice “ Al-Mosooat Al-Faqhayyah.

Here there is an important point to note. Although the slaughter of people of book is permissible for us to eat they can not be appointed for the sacrifice of Eid-ul-Adhaa as this is an act of ‘Ibaadah and and is not accepted from any one other than a Muslim.
4. Making an intention:

It is a necessary condition of the sacrifice that the animal be slaughtered with the intention of offering a sacrifice (udhiyah). The intention must be in the heart, and should not be spoken out loud.
5. Taking the Name of Allaah at the time of slaughter.

One should however say Bismillaah and Allaahu akbar when slaughtering, because Anas (may Allaah be pleased with him) reported that: “ The Prophet (peace and blessings of Allaah be upon him) slaughtered two rams with his own hand, and he said Bismillaah and Allaahu akbar .” Narrated by al-Bukhaari, 7/130, no. 5554; Muslim, 3/1556, no. 1966; Ahmad, 3/115.

Saying “Bismillaah and Allaahu akbar “ is not the intention and it does not mean that you are speaking the intention out loud.

Rules concerning the time of sacrifice

The time for offering the sacrifice, begins after the dawn on the tenth of Zhul-hijjah and lasts until the sun sets on the thirteenth of Zhu’l-hijjah. However it is necessary for the validity of the sacrifice that it be done after the Eid prayer on Eid al-Adha.

from al-Bara’ ibn ‘Aazib (may Allaah be pleased with him), that the Prophet (peace and blessings of Allaah be upon him) said: “ Whoever slaughters (his sacrifice) before the prayer, it is meat that he has brought to his family, but that is not the sacrifice. ” Al-Bukhari

And Jundub ibn Sufyaan al-Bajali (may Allaah be pleased with him) said: “I heard the Messenger of Allaah (peace and blessings of Allaah be upon him) saying, ‘ Whoever slaughters the sacrifice before he prays, let him replace it with another.’ ” Al-Bakhari

Scholars agree that doing the sacrifice on the first day is more blessed, as Allaah says:

“And race towards the forgiveness from your Lord, and for Paradise as wide as are the heavens and the earth, prepared for Al-Muttaqûn” . Aale-’Imraan :133.

Rules related to the meat and other parts of sacrificial animal
Eating on the day of Eid from the meat of sacrifice:

Buraydah (may Allaah be pleased with him) said: The Messenger of Allaah (peace and blessings of Allaah be upon him) did not go out on the day of (Eid) al-Fitr until he had eaten, and he did not eat on the day of (Eid) al-Adha until he came back, then he would eat from his sacrifice . narrated Ahmad

It is recommended to divide the meat into three: one third to be eaten, one third to be given as gifts and one third to be given in charity. This was the opinion of Ibn Mas’ood and Ibn ‘Umar (may Allaah be pleased with them).
No part of the slaughter can be sold or given as payment:

The Prophet (peace and blessings of Allaah be upon him) said: “ Whoever sells the skin of his udhiyah, there is no udhiyah for him (i.e., it is not counted as udhiyah).” (Classed as hasan in Saheeh al-Jaami’, 6118).

The butcher should not be given anything of it by way as payment, because ‘Ali (may Allaah be pleased with him) said: “The Messenger of Allaah (peace and blessings of Allaah be upon him) commanded me to take care of the sacrifice and to give its meat, skin and raiment ( covering used for protection ) in charity, and not to give anything of it to the butcher as a compensation . He said, ‘ We will give him something from what we have .’” (Agreed upon).

We ask Allaah to help and guide us to do all that He is pleased with and his Peace and blessings be upon His last Prophet Muhammad.

From thepathtoparadise.com