In the Name of Allāh,

the Entirely Merciful, the Especially Merciful

Praise is due to Allāh, Lord of the worlds, may the blessings and peace be upon our master Muḥammad, the last of prophets, on his family, and all his companions.

Resolution No. 51 (2/6) Installment Sales

The Council of the International Islamic Fiqh Academy of the Organization of the Islamic Conference, holding its 6th session in Jeddah, Kingdom of Saudi Arabia, on 17–23 Shaʿbān 1410h (14–20 March 1990),

Having examined the research papers submitted to the Academy concern- ing Installment Sales,

Having listened to the discussion on the subject,

Resolves

First: It is permissible to fix an increased price for a commodity sold on de- ferred payment, as compared to its cash price. It is also permissible to mention different prices for cash and deferred sales. Even the deferred prices can vary according to the different periods specified for payment, and such variance can be expressly disclosed by the seller to the customer. But the sale cannot take place until the parties agree to contract a particular mode of payment and spec- ify whether the payment is in cash or deferred. Therefore, if the sale takes place without specifying a single particular mode of payment, leaving it uncertain whether the buyer shall pay in cash or in installments, the sale is not permissi- ble according to Shariah.

Second: It is not permissible, in installments sale, to fix the spot price on cash basis, then to charge interest expressly tied with different periods, as separate from the price of the commodity, no matter whether the parties have agreed on a particular rate of interest or have left it to the current market rate.

Third: If the buyer/debtor delays the payment of installments after the spec- ified date, it is not permissible to charge any amount in addition to his princi- pal liability, whether it is made a pre-condition in the contract or it is claimed without a previous agreement, because it is Ribā, hence prohibited in Shariah. Fourth: It is prohibited for a solvent debtor to delay the payment of the installments from their due dates. However, it is not permissible to impose a

compensation in case he delays the payment.

Fifth: It is permissible for the deferring seller to impose a condition in the

sale agreement to pay installments before their deadlines when the debtor/buyer delays the payment of some installments, provided that the buyer had agreed to it when entering into the sale agreement.

Sixth: The seller has no right to secure the ownership (of the sold commod- ity) after the sale has taken place. However, it is permissible for him to impose a condition that the buyer shall mortgage the sold commodity with the seller to secure his right of receiving the deferred installments of the price.

Recommendation

To postpone the examination of certain aspects related to installments sale, pending sufficient research and studies, with regard to:

1. Discounting the bills of exchange through
2. Payment of the debt before its due date in exchange for a rebate (the issue of pay-early-and-take).
3. Effect of the death (of either parties) on remaining

Indeed, Allāh is the Giver of success.