CHAPTER 9Istisna


Istisna is the second sales contract, in addition to Salam, that is an exception to the Shariah requirements for a valid sales contract. These Shariah requirements are that the asset being sold must exist at the time of the contract, the seller should be the owner of that asset and the asset should be in the possession or control of the seller, either physically or constructively. The word Istisna is derived from the Arabic word Sina'a, which means to manufacture a specific commodity. Shariah scholars allow the Istisna contract as an exception to a valid sales contract since it helps meet the needs and requirements of individuals and organizations which cannot be financed through standard sales contracts.

Istisna is a sales contract in which the buyer contracts with the seller to manufacture, produce, construct, fabricate, assemble or process any asset in accordance with given specifications, descriptions, quality and quantity identified, and within a specified period and at an ...

Get Fundamentals of Islamic Finance and Banking now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.